Ethics for Front Line Managers

1www.PaulFalconeHR.com
www.PaulFalconeHR.com
Paul@PaulFalconeHR.com

Overview
Sarbanes-Oxley Act = reforms in corporate
governance. The goal = transparency to investors.
Congress passed SOX on July 30, 2002 in response to
well-publicized financial fraud, including:
 Arthur Anderson (Houston): shredding documents and destroying evidence
 Martha Stewart: insider trading
 WorldCom, Enron, Global Crossing, and Adelphia declared bankruptcy as
massive accounting regularities were revealed

Overview
Ethics . . . a definition
Creating an ethical environment
SOX and conflicts of interest
Ethical issues in your day-to-day work

Sarbanes-Oxley Act (SOX)
Corporations failed to report shortcomings in public reports filed with
Wall Street just as the stock market bubble was bursting.
Wall Street failed to accurately disclose corporate shortcomings for
fear of losing clients (because brokerage houses had their own in-
house research teams that touted particular stocks that were being
sold by the firms themselves).
Investors kept investing in good faith, reasoning that any short-term
downturns in stock performance were temporary.
The stock market bust of April 2000 resulted, and from 2000 – 2003,
$7 - $9 trillion was lost in the equities market.

SOX (cont.)
Result: The major stock markets, including the NYSE
and NASDAQ, changed their standards governing
listed companies. The latticework of reforms resulted
in a new corporate governance regime, no longer
market-driven but now highly rule-driven.
The Act changed corporate governance, including the
responsibilities of directors and officers, the
regulation of accounting firms that audit public
companies, and financial reporting and enforcement.

SOX (cont.)
Publicly traded companies now have to certify that
their companies’ annual and quarterly financial
reports are accurate and not misleading and that they
have met their responsibility for evaluating internal
controls.
Penalties for “defective certification” include fines
up to $1MM and/or imprisonment up to ten years.
Penalties for willful noncompliance (fraud) include
fines up to $5MM and/or imprisonment up to 20
years.

SOX (cont.)
Sarbanes-Oxley compliance now includes:
Corporate governance standards
Published codes of conduct (ethics statements)
Employee whistle-blower protection
Audit committee rules and regulations in terms of
policies, procedures, systems, and controls
Management certification requirements

HR’s Role in SOX Compliance
Our company strives to maintain a work environment that upholds
the highest standards of business ethics and workplace behavior
throughout all of our operations
Our Business Conduct Statement addresses a wide variety of business
situations and should serve as a guide to both the letter and the spirit
of our policies
Consult your supervisor, human resources representative, or a
compliance officer for detailed interpretations, questions, or concerns

Our Policy is based on:
Laws affecting our workplace, and
Our view of management practices
necessary to comply with the law and to
maintain an ethical and productive
workplace
Laws > policies > practices

This Statement is Not Exhaustive
The company has other policies and rules which are
also important
These rules are the current standard and supersede
earlier inconsistent rules
If more detailed rules exist, they apply
If you become aware of any violation or would like
further clarification, consult your supervisor, HR
representative, or a compliance officer

Your Responsibility to the Company: Avoid Conflicts
of Interest
You have a primary business responsibility to
our Company -- both your division, if
applicable, and to our corporate parent
A conflict of interest exists when your outside
business or personal interests adversely affect or
have the appearance of or the potential to
adversely affect your judgment or performance
at work

Disclose Potential Conflicts of Interest
Disclosure is essential
Disclose to your Company's General Counsel via your
reporting chain any personal or business interest that
may interfere with your undivided loyalty to your
Company or may have the appearance of doing so
Our policy is one of disclosure and review: together
we will reach a solution

Conflicts of Interest:
Prohibited Activities
Absent specific, prior approval, you may not:
Accept a personal benefit which obligates you in any way
Accept a benefit from or provide a benefit to a customer,
supplier or competitor, other than nominal, reasonable and
appropriate entertainment (Our company’s threshold =
$200)
Accept or offer cash (in any amount) under any
circumstances

Conflicts of Interest (cont.)
Have a financial interest in a customer, supplier or
competitor, other than less than 1% of a publicly held
company
Take a business opportunity from the Company
Do personal business with a customer, supplier, or
competitor or the Company itself, except as a regular
consumer
Have an undisclosed family relationship with an
employee, customer, supplier or competitor of the
Company
www.PaulFalconeHR.com 14

Equal Employment Opportunity (EEO)
We place a high value on providing equal employment opportunity
and maintaining a diverse workplace, free of discrimination
We strive to make our work force reflect the rich diversity of our
society and our customers
Our firm recruits and hires without regard to race, color, sex, religion,
national origin, ethnicity, age, marital status, sexual orientation,
disability, veteran status or any other basis prohibited by law

EEO (cont.)
We strive to administer all personnel actions such
as hiring, compensation, promotions, benefits,
transfers, layoffs, company-sponsored training,
education tuition assistance, terminations, social
and recreational programs in a consistent manner

Harassment-Free Workplace
Supervisors are expected to make a personal commitment to our Equal
Employment Opportunity Policy
Be sensitive to the warning signs
Everyone must work together to maintain a workplace committed to
diversity and free of discrimination
Be mindful of how your conduct affects others
Watch out for harassment based on any protected characteristic: race,
color, sex, religion, national origin, ethnicity, age, marital status,
sexual orientation, disability, veteran status, etc.
Harassment can take place on duty or off, in the office or on the road.
Treat co-workers with respect and dignity
Supervisor/supervisee personal relationships must be disclosed

Harassment-Free Workplace (cont.)
Conduct which may constitute sexual
harassment (quid pro quo):
Offering employment benefits in exchange for
sexual favors
Unwanted sexual advances or propositions,
including leering, gesturing, displaying suggestive
objects or pictures, cartoons, and requiring the
other person to participate
Threatening reprisals if rebuffed

Conduct which may constitute sexual harassment
(hostile environment):
Physical contact: unwanted touching, impeding or blocking
movements
Verbal abuse of a sexual or graphic nature or comments about an
individual’s body
Nonverbal conduct: leering, gesturing, etc.
Sexual letters, notes, posters, voicemail, or email
Dirty jokes, screen savers, off color comments which can be
overheard

Any incidents of discrimination or harassment
must be reported to any one of:
Your Supervisor
Your Department Head
Your Human Resources Representative
Our company’s Compliance Officers
Reporting is required.

Reporting Harassment
What will happen if I make a report?
Prompt investigation by knowledgeable
staff
Appropriate action to enforce the policy
No adverse consequences for good faith
reports
A false report is a violation in itself

NO RETALIATION
Our company prohibits retaliation for lodging
complaints under the harassment-free workplace
policy
Retaliation would be a separate violation of the
policy and could subject an employee to immediate
termination, even for a first offense

Health, Safety and the Environment
Our policy is to comply with all applicable health, safety and
environmental laws and regulations
Failure to do so can have serious consequences for you, our company,
and the safety of others
Our firm and its employees may be liable not only for the costs of clean-
up, but also for civil or criminal penalties for violations of environmental
laws
Everyone is responsible for preventing incidents and for responding and
reporting promptly should they occur

Use of the Company Time, Property and Supplies
The Company’s systems are for company business
(Any personal use should be limited and reasonable)
Your email and voicemail are company property
Do not use the Company’s Internet connection for
inappropriate activities
Respect the copyright laws: do not download
unauthorized software, music, or other intellectual
property
When in doubt, ask your supervisor

Implementation of this Statement
Compliance Officers’ responsibilities:
1. Ensure the Statement gets to you
2. Review operations for compliance
3. Review the Statement to keep it current
4. Direct investigations of reported or suspected
violations
5. Determine action for violations
Compliance officers report to the Audit Committee of the
Board of Directors

Reporting Violations
Reporting violations is required
Early reporting is most effective.
All reports will be treated as confidential to the
extent appropriate
Abuse of the system is a violation
Failure to detect violations could be a violation
(Standard: “know or should have known”)
You are obligated to be aware

How Do You Report?
In person or in writing
Report to any one of the following:
Your Supervisor
Department Head
Human Resources Representative
a Company Lawyer, or
a Company Compliance Officer

How do You Report? (cont.)
You are not restricted to your reporting chain
Anonymous reports are better than none, but they
make the appropriate resolution more difficult

Investigations
All reports will be investigated:
At the direction of the Compliance Officers
with the help of HR, Legal, and Labor Relations
Cooperation with an investigation is a
requirement of employment
Relevant documents or data may not be
destroyed
You may not conduct your own investigation

Disciplinary Actions
Actions up to and including termination may be
taken for:
Actual violations
Withholding or destroying information
Failure to supervise violators
Retaliation against a whistle blower
Failing to report a violation

Behavior We Expect From All Employees….
Maintain a work environment that upholds the
highest standards of business ethics and workplace
behavior throughout all of our operations
Respect the law and look to the Company Business
Conduct Statement for guidance on a wide variety of
business situations. Honor both the letter and the
spirit of our policies.
Consult your supervisor, human resources
representative, or a compliance officer for detailed
interpretations, questions or concerns

Additional Notes
Additional Business Conduct Training may include:
Financial Accounting / Prohibited Conduct
Insider Information and Confidentiality
Anti-Trust and Competition
Political & Charitable Contributions
International Business
Foreign Corrupt Practices Act
Anti-Boycott Laws and Embargoes

Q&A: Questions and Actions
Paul Falcone
www.PaulFalconeHR.com
Paul@PaulFalconeHR.com

Ethics for Front Line Managers

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (17)

Similar to Ethics for Front Line Managers

Similar to Ethics for Front Line Managers (20)

Recently uploaded

Recently uploaded (16)

Ethics for Front Line Managers

Editor's Notes