LRN ethics and compliance survey preliminary findings

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LRN’s fifth annual Ethics & Compliance Leadership Survey Report presents detailed benchmarking findings and specific recommendations, based on an extensive survey of more than 150 ethics & compliance …

LRN’s fifth annual Ethics & Compliance Leadership Survey Report presents detailed benchmarking findings and specific recommendations, based on an extensive survey of more than 150 ethics & compliance leaders from across industries and geographies. The data and insights offered in the report can guide you in evaluating your program strategy and execution against those of your peers, and help you make a more compelling case about ethics & compliance to your senior management and Board of Directors.

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  • 1. Summary of Key Findings Confidential
  • 2. 1. A Growing Number of Companies Project an Increase in E&C Budgets Q: For next year, your projected E&C functions annual budget will:KEY INSIGHTS 6% 5% 42% of E&C leaders project their budgets will increase this year, a 7% Increase increase compared to 42% Remain last year. 53% Unchanged 22% of E&C leaders Decrease expect that their budgets will increase by a margin of 2% to 5% in 2012. N = 172 Education and 6% communications remains Q: Not including salaries and benefits, how do you plan to allocate your E&C function’s annual the biggest budget line budget next year? Please indicate estimated percentages for each budget item (adding up to 100 percent): item for 2012, followed 35% 35% Education and Communications 43% 27 % by Administration then 14 % Administration Consultants. Consultants 51% 55% 9% Technology 8% Investigations 10% 8% Travel and Entertainment 7% N =172 Risk Management 6% Other 5% © 2011 LRN® LRN Proprietary and Confidential. Not for Redistribution.
  • 3. 2. Staffing Levels are Projected to Remain Unchanged Q: What changes do you project in your E&C staff size next year?KEY INSIGHTS 75E&C staffing levels are N = 170 69%projected to remain largely 69%unchanged for 602012, continuing the 2011trend. 45ADDITIONAL FACTS 18% of participating companies have only one 30 dedicated E&C employee 55% of participating 15 companies have two to 15% nine E&C employees 9% 27% of participating 2% 2% 1% 1% 0 companies have 10 or Incr. by 1 Incr. by 2-5 Incr. by 6-9 Incr. by 10+ Remain Decr. by 2-5 Decr. by 6-9 more E&C employees employee employees employees employees unchanged employees employee © 2011 LRN® LRN Proprietary and Confidential. Not for Redistribution.
  • 4. 3. Reporting to the General Counsel is Most Prevalent Q: To whom does the E&C function directly report to?KEY INSIGHTS Not surprisingly, the General Counsel / Law 57% majority of all E&C functions continue to CEO 15% report directly to the Audit Committee of 12% General the Board of Directors Counsel, followed by a Other C-Suite 5% Executives direct line to the Chief Executive Officer. Other 4% This is also reflected in the importance of Human Resources 2% functional relationships Finance 2% for E&C programs. E&C leaders indicate that Other Board of Directors committees 1% General Counsel / Law (96%) is of critical Risk 1% importance for their E&C N =162 program Internal Audit 1% effectiveness, followed by the CEO (92%), Audit 0 15 30 45 60 (89%) and Board of © 2011 LRN® Directors (87%). LRN Proprietary and Confidential. Not for Redistribution.
  • 5. 4. Conflicts of Interest is the Most Critical Ethics & Compliance Risk Q: Please indicate your company’s most critical E&C risks.KEY INSIGHTS67% of E&C leaders indicate 75that Conflicts of Interest is the 67%most critical compliance risk 65% 65% 63% 62%area, followed closely by 60Bribery & Corruption and 55%Gifts & Entertainment. 49% 48% 48% 47% 45ADDITIONAL FACTSMost risk areas E&C leadersspecified as critical in this year’s 30E&C survey are consistent withlast year’s findings. One notableshift is the increased focus onGifts & Entertainment with a 46% 15to 67% jump. The top five E&Crisks from 2011 were: Conflict of Interest (72%) 0 Data Privacy (64%) Electronic Data Protection (60%) Environment, Health and N = 131 Safety (51%) Aggregate Percentage : (5) = High Priority & (4) Moderate-high Priority Bribery & Corruption (50%) Scale: 5 = High Priority, 1= Very Low Priority © 2011 LRN® LRN Proprietary and Confidential. Not for Redistribution.
  • 6. 5. Helpline and Investigations Data is the Top Metric Reported to the BoD Q: What ethics and compliance metrics do you report to the Board of Directors?KEY INSIGHTS Helpline and investigations Data and Trends 85%While E&C leaders almost Code of Conductalways report tactical data Violations 78%on helpline trends and Education CompletionCode violations, they rarely Rates and Certification 70%discuss the year-over-year Relevant Regulatory Developments 70%effectiveness of the E&Cprogram with the Board of Results of Compliance 65% AuditsDirectors. Key Risk Assessment and Mitigation Plans 63%ADDITIONAL FACTS Ethics and Compliance- 53% 49% of participants updated Related Dismissals their Board on the E&C Ethical Culture Survey Results 46% program quarterly, followed Year-Over-Year Trends on by 22% annually and 12% the Effectiveness of the E&C 43% bi-annually. We don’t report metrics to Only 11% of participants the Board of Directors 6% update their Board more than four times a year. Other 1% N = 141 0 15 30 45 60 75 90 © 2011 LRN® LRN Proprietary and Confidential. Not for Redistribution.
  • 7. 6. Promoting an Ethical Culture a Key 2012 Priority Q: How important are the following E&C program goals to your company in 2012?KEY INSIGHTS Increase Employee Comfort With Speaking Up 73%The three biggest 2012priorities for E&C leaders Strengthen Ethical Leadership 68%center on promoting anethical culture. Increasing Strengthen the Ethical Culture 66%employee comfort withspeaking up on alleged Adapt Ethics and Compliance Program 64% to Changing Business Needsmisconduct is a top goal, notsurprisingly in the aftermath Promote Alignment Between Core Values and Day-to-day Operations 62%of Dodd-Frank. Build a More Consistent Global E&C Program 61%ADDITIONAL FACTS Manage Shifting RegulatoryThe 2012 priority focus on promoting Expectations 61%an ethical culture suggests a longer Innovate Design and Delivery of E&Cterm trend in which ethics and Education 57%compliance programs are moving Build a Stronger Case for Ethics andaway from traditional control and Compliance as an Enabler of Business 49%risk management activities. Last Performanceyear’s key priorities also focused Drive E&C functional efficiency 48% N = 144on culture:1. Promote Alignment Between Core Values and Day-to-day 0 15 30 45 60 75 Operations Aggregate Percentage : (5) = Very Important & (4) Important Scale: 5 = Very Important, 1= Not Important2. Increase Employee Comfort © 2011 LRN® With Speaking Up LRN Proprietary and Confidential. Not for Redistribution.
  • 8. 7. E&C Programs Not Seen as Very Effective in Providing Business Support Q: How do you perceive the effectiveness of the E&C program in the following areas?KEY INSIGHTSE&C leaders perceive thattheir program is most Corporate Conscience (e.g., promoting an ethicaleffective in traditional areas culture through education 66% 71% and addressing employeeof promoting culture and concerns)managing risks. Yet, theystruggle to align theirprogram with business Overseer (e.g., focusing ongoals. controls, risk management 67% 64% and investigations)ADDITIONAL FACTSWhile 25% of E&C leaders Business Enablerassess their program on a (e.g., providing advice/counsel, enabling 58% 58%need basis (e.g., because of better decision making)new regulatoryrequirements), 44% evaluatetheir program annually and 0 15 30 45 60 7514% do it every other year. Aggregate Percentage : (5) = High Effectiveness & (4) High-moderate Effectiveness N = 156 Scale: 5 = High Priority, 1= Low Effectiveness © 2011 LRN® LRN Proprietary and Confidential. Not for Redistribution.
  • 9. 8. Organizational Complexity is the Largest Barrier to Promoting an Ethical Culture Q: What are the biggest obstacles to building a strong ethical culture in your company?KEY INSIGHTS 75 69% N = 131 Organizational complexity 60 (i.e., dispersed operations) is the most significant obstacle to 45 building a strong ethical 40% culture. 36%ADDITIONAL FACTS 30 26%The most critical obstacles 21%reported in 2011 were: Organizational complexity 15 (58%) 8% 8% 7% 5% Lack of appreciation of culture as a business driver 0 (34%) Lack of support by middle management (34%) © 2011 LRN® LRN Proprietary and Confidential. Not for Redistribution.
  • 10. 9. A Minority of E&C Leaders Believe That Education Has a High Impact Q: What impact does your current E&C education have on employee behavior and decision-making?KEY INSIGHTSOnly 6% of E&C leaders 50believe that their education N = 129has a high impact onemployee behavior anddecision-making. 40% 38% 25 12% 3% 6% 0 Low Low-Moderate Moderate Moderate-High High Impact Impact Impact Impact Impact © 2011 LRN® LRN Proprietary and Confidential. Not for Redistribution.
  • 11. 10. Lack of Relevance to Work is the Biggest Educational Challenge Q: What are the biggest challenges you face when providing E&C education?KEY INSIGHTS 75E&C leaders continue to N = 130struggle with making 59%education applicable to 60daily work and online 49%education fatigue, similarto last year’s challenges: 45Online Education Fatigue (59%) 34% 32%Relevance of Education to Day- 30 27%to-Day Work (49%)Technology Constraints (34%) 15% 15 12%Cultural Differences in 9%Global Locations (32%) 7%Limited Financial Resources 0(27%) © 2011 LRN® LRN Proprietary and Confidential. Not for Redistribution.
  • 12. 11. The Intranet is Top Channel to Raise Awareness about E&C Programs Q: Which communications channels do you use to raise awareness and reinforce your E&C program? Please select all that apply:KEY INSIGHTS Intranet 87%The Intranet continues tobe the top channel to raise E-mail campaignsawareness and reinforce 77%E&C programs, followed by: Print materials (e.g., quick E-mail campaigns (77%) reference guides, brochures) 60% Print materials (60%) Newsletters 52% Newsletters (52%) Team meetings (46%) Team meetings 46%ADDITIONAL FACTS Award or recognition programs 24%In 2011, 84% of participantsused the Intranet as a channel Web-enabled Interactive Code 22%to raise awareness andreinforce their E&C Social media 6%programs, followed by: E-mail campaigns (72%) Other 5% N = 131 Posters (62%) Newsletters (50%) 0 15 30 45 60 75 90 Team meetings (38%) © 2011 LRN® LRN Proprietary and Confidential. Not for Redistribution.
  • 13. Download Your Copy of the Full Report Visit to download last year’s fullEthics & Compliance Leadership Survey Report & sign up for this year’s survey. © 2011 LRN® LRN Proprietary and Confidential. Not for Redistribution.