SCCE ‐Prague: Leveraging Data to Drive Cultural …...2 © 2014NAVEXGlobal,Inc. AllRightsReserved....

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© 2014 NAVEX Global, Inc. www.navexglobal.comAll Rights Reserved.

SCCE‐ Prague:LeveragingDatatoDriveCultural

Transformation

SCCE‐ Prague:LeveragingDatatoDriveCultural

Transformation21st of March 2016


Share largest benchmarking data set in the Compliance and Ethics community and discuss best practices to strengthen your own practices in our respective companies and teams.

Open and informal discussion sharing practical tactics, tools and case studies to overcome critical challenges in your ethics and compliance programmes.

Objectives

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Introduction

Setting the Scene

Benchmark Results

Open Q&A and discussion throughout

Agenda

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OurEthics&ComplianceEcosystemOurEthics&ComplianceEcosystem

Employee Awareness

Standard & Ad‐Hoc Reporting

Expan

ded Intake

INTEGRATED COMPLIANCE DATAINTEGRATED COMPLIANCE DATA

ADVISORY SER

VICES

NAVEX GLOBAL GATEWAY

PROFESSIO

NAL SER

VICES

Case M

anagement

Policy Man

agement

Third Party Risk Mgm

t.

Hotline

Onlin

e Training

Annual Certifications

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AChallengingEnvironmentAChallengingEnvironment

3. Increasing Operational Complexity:

Company growth depends on new products, technologies, increasing number of partner companies, and expanded geographic reach

85% of your peers expect the complexity to increase

4. Intense Pressure from Stakeholders:

Senior executives are faced with—and exert— increased pressure for greater risk assurances.

83% of your peers expect the pressure to increase.

1. Busier Regulators:

83% of your peers expect more regulations in more regions around the world

86% of your peers expect an increase in the scope of regulatory enforcement

2. Higher Employee Exposure:

Greater access to sensitive company data and more channels through which that data might leak

72% of your peers expect these trends to increase


WhyDon’tEmployeesReportMisconduct?WhyDon’tEmployeesReportMisconduct?

• Fear of retaliation

• Fear of non‐anonymity

• Belief that report will be ignored

• Belief that someone else will report it

• Unsure of who to contact

• Lack of clarity on what can/should be reported

• Many other reasons…

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Reportersvs.Non‐ReportersReportersvs.Non‐Reporters

Source: Inside the Mind of a Whistleblower, 2012 – Ethics Resource Center

79%

75%

63%

49%

59%

46%

39%

24%

Don't report Report

Hadananonymousreportingoption

Feltsupportedbymanagement

Believedcorrectiveactionwouldoccur

Feltthatnooneelsewouldreportincident

Believednothingwould

occur

Fearedretaliation

Couldnotreportincidentanonymously

Believedsomeoneelsewouldreportthe

incident


Corporate Culture

Risk Management

LowerComplianceMisconduct:CELCresearchfindsthatemployeesinhigherintegrityculturesare67%lesslikelytoobservesignificantinstancesofbusinessmisconductthanemployeesinlowerintegritycultures.

ImprovedRiskDetection:CELCresearchfindsthatemployeesinhigherintegrityculturesaremorelikelytoreportnoncomplianceandoperationalfailuresthanemployeesinlowerintegritycultures.

Business Performance

HigherEmployeeProductivity:JointCELCandCLCHumanResourcesresearchfindsthatmanagerswhoexhibitcorporatevaluescanimproveemployees’performanceby12%.

BetterStrategicManagement:CorporateExecutiveBoardResearchrevealsthatcompanieswithstrongopennessofcommunicationdelivershareholderreturns5% higherthantheirpeers.

ImprovedBusinessPerformance:CELCdataanalysisfindspositivecorrelationsbetweenbusinessperformanceandspecificaspectsofcorporateculture.

WhatisatStake&theDualBenefitWhatisatStake&theDualBenefit

Source: CEB

Companieswithculturesthatvaluetransparencyaroundkeyethicsandcomplianceissueshavehigh“integritycapital.”

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OrganisationalJusticeOrganisationalJustice

74% Organisational

Justice

73% Organisational

Justice

26%AllOtherIntegrity

Components

27%AllOtherIntegrity

Components

DefinitionEmployees’degreeofagreementthat:• Theircompanyrespondsquicklyandconsistentlytoverifiedorprovenunethicalbehaviour

• Unethicalbehaviourisnottoleratedbytheirdepartment

• Clarityofexpectations• Comfortspeakingup• Departmentclimate• Directmanagerleadership• Toneatthetop

Drivers of a Culture

of Integrity

2008 2009


• So much data, but not always clear what it means

• Need to demonstrate programme effectiveness

• Reporting meaningful and actionable data to leadership

• Comparing your performance to peers and others

• Finding context

OngoingChallenges

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2016HOTLINEBENCHMARKREPORT2016HOTLINEBENCHMARKREPORTN AV E X G l o b a l B e n c hm a r k i n g


• Report Volume

• Report Categories

• Repeat Reporters

• Anonymous vs. Named reporters

• Follow‐up Rate

• Substantiation Rate

• Anonymous Substantiation percentage

• Case Closure Time

• Reporting Intake Method

• Retaliation Reports

WeCurrentlyCalculate:

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ReportVolumeper100EmployeesReportVolumeper100Employees

2010 Benchmark 2011 Benchmark 2012 Benchmark 2013 Benchmark 2014 Benchmark

Call Volume Per 100 Annually



Call Volume per 100 Annually

Call Volume per 100 Annually

Median 0.9 Median 1.1 Median 1.2 Median 1.2 Median 1.3

Range 0.2 ‐ 3.9 Range 0.3 ‐ 6.0 Range .4 ‐ 4.9 Range .5 ‐ 4.0 Range 0.3 ‐ 8.3

The 2014 median rate represents a 44 percent increase in the Report Volume per 100 Employees over the previous five years.

Source: NAVEX Global's 2015 Ethics and Compliance Hotline Benchmark Report

Too many calls is not good news…

Too few isn’t good either

The 2015 median rate remained flat at 1.3 reports per annum per 100 Employees


TrackAllReportChannelsinOneCentralSystemTrackAllReportChannelsinOneCentralSystem


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Allegation Categories 2010 Median 2011 Median 2012 Median 2013 Median 2014 Median

Accounting, Auditing & Financial Reporting

3% 3% 3% 3% 2%

Business Integrity 17% 16% 17% 18% 17%

HR, Diversity and Workplace Respect

69% 68% 69% 73% 69%

Environment, Health and Safety

7% 9% 7% 7% 6%

Misuse, Misappropriation of Corporate Assets

5% 7% 6% 6% 6%

RemarkableConsistencyAcrossAllegationCategoriesRemarkableConsistencyAcrossAllegationCategories



IndustrySpikesbyAllegationCategoriesIndustrySpikesbyAllegationCategories


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AllegationsVersusInquiriesAllegationsVersusInquiries


There has been a significant increase of inquiries over a five year period.


ReportIntakeMethodReportIntakeMethod


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90%ofInformationonBusinessMisconductGoesUnaddressed90%ofInformationonBusinessMisconductGoesUnaddressed

Observed

100%

Unreported 40%

Reported 60%

ReceivedbyEthics&Compliance

10%

Source

CEB Compliance and Ethics Leadership Council


Source of frustration for ethics officers and senior leadership because of missing data and inability to talk directly with the reporter

Senior leaders often push back on accepting anonymous calls due to:

Fear of malicious calls

Fear of inability to resolve case

Strong belief that reporters with real issues should be willing to give their name

E.U. requirements re: handling of anonymous reports

AnonymousReportingAnonymousReporting

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© 2015 NAVEX Global, Inc. All Rights Reserved.

www.navexglobal.com© 2015 NAVEX Global, Inc. All Rights Reserved.


www.navexglobal.com

MedianAnonymousReportingRateMedianAnonymousReportingRate


Anonymous report rates drop below 60% for the first time.




www.navexglobal.com

OverallMedianSubstantiationRate– AllTimeHighOverallMedianSubstantiationRate– AllTimeHigh


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www.navexglobal.com

SubstantiationRatesBetweenAnonymous&NamedReportersSubstantiationRatesBetweenAnonymous&NamedReporters





www.navexglobal.com

Repeatvs.FirstTimeReportersRepeatvs.FirstTimeReporters

2010 Benchmark 2011 Benchmark 2012 Benchmark 2013 Benchmark 2014 Benchmark

Repeat Reporters Repeat Reporters Repeat Reporters Repeat Reporters Repeat Reporters

Repeat 24% Repeat 27% Repeat 27% Repeat 31% Repeat 32%

Substantiated Rate 2013 2014

First Time Reporters 35% 40%

Repeat Reporters 38% 42%

Caller Type

Accounting,

Auditing &

Financial

Reporting

Business

Integrity

HR, Diversity &

Workplace

Respect

Environment,

Health

& Safety

Misuse,

Misappropriation

of Corporate

Assets

First Time

Reporter 20141% 13% 76% 7% 3%

Repeat Reporter

20143% 10% 81% 4% 3%


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www.navexglobal.com

MedianCaseClosureTimeinDaysMedianCaseClosureTimeinDays





www.navexglobal.com

CaseClosureTimebyAllegationCategory(inDays)CaseClosureTimebyAllegationCategory(inDays)


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FINALTHOUGHTSFINALTHOUGHTSN AV E X G l o b a l R o u n d t a b l e

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WhatMayCauseChangesinReportingTrends?WhatMayCauseChangesinReportingTrends?

• Training and communication initiatives

• Published (or rumors of) internal cases and disciplinary actions

• Internal restructuring/management changes/layoffs

• Policy changes: Code or HR

• Mergers, acquisitions, changes in lines of business

• Regulatory changes

• News articles re: industry, competitors, or the latest compliance scandal

• A real problem

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TheFiveMostCommonMistakesTheFiveMostCommonMistakes

1. Discouraging callers with questions or requests for advice

2. Investigations missteps:

Investigations that take too long

Poorly trained investigators

Maintaining objectivity and professionalism

Not vigorously protecting confidentiality

3. Not publishing sanitised outcomes to employees

4. Not looking for trends and related variables

5. Call data to Board and senior management without context

©2014 NAVEX GLOBAL ALL RIGHTS RESERVED.


SomeAdviceandBestPractices:SomeAdviceandBestPractices:

• Use a robust case management system

• Run your data different ways

• Research anomalies

• Drill down to locations and businesses, issue types and topics, anonymous calls, substantiated allegations

• Sometimes you “don’t know it until you see it”

• Follow your gut instincts on brewing problems

• Track and report on quality of case management and investigations

• Track disciplinary actions by offense, level of employee, or group…

©2014 NAVEX GLOBAL ALL RIGHTS RESERVED.

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ThankYou!ThankYou!

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