Corporate Culture Index Market Overview 2.0


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Corporate Culture Index Market Overview 2.0

  1. 1. Corporate Culture Index™ Overview July 23, 2010 DISCLOSURE: Michael Brozzetti is CEO & President of Boundless LLC, an internal audit and risk advisory firm and is Chairman of the Business Integrity Alliance™ which is a joint venture between zEthics, Inc. and Boundless LLC. Michael Brozzetti is a Certified Internal Auditor® in good standing with the Institute of Internal Auditors and certifies his accountability to the principles within the Institute of Internal Auditor „s Code of Ethics. Michael is a CIA Learning System training partner with the Institute of Internal Auditors, Villanova University, and the Holmes Corporation. Michael Brozzetti is currently under consideration for the zEthics, Inc. Board of Directors.
  2. 2. Information Demand Market Stakeholder Groups Company & Internal Audit Consumers Research & & General Academics Public “True” state of the Company External Workers & Audit & Labor Regulators Investors & Advisors 2
  3. 3. Common Stakeholder Challenges Level of transparency into Board and Company culture  No practical way to measure the “Soft controls” that shape cultural norms and risk appetites. Ethics  Limited foresight into the cultural risks Governance that manifest misconduct and fraud. Risk Management Disclosure and flow of risk information Compliance Internal Control  Often filtered and/or distorted. Communication & Trust Accountability and culpability Corporate Culture Index™ When the “top” and “bottom” are not in sync are the  Case law suggests that not middle activities and related disclosures really effective? knowing and ignorance is a defensible claim. 3
  4. 4. Corporate Culture Index™ (CCI) Introduction The CCI™ brings market level transparency to the layer of business integrity that matters most – the People. People Business Integrity Hierarchy ™ People Process Ethics Process & Values Technology Technology Governance, Risk, and Compliance Internal & Enabler of “real-time” Enterprise Quality of risk and External communication of risk Risk control information Adjudication and control information Management is a secured 3rd party information service that brings dynamic risk information into the hands of Companies and market place stakeholders - empowering them to identify and thoughtfully respond to the people risk and safety on the horizon. 4
  5. 5. Data Structure & Reporting  The Corporate Culture Index™ is yielded from the information service that administers and manages employee surveys and data submission for subscriber reporting. Corporate Culture Index ™ 10-point scale 1 2 3 4 5 6 7 8 9 10 Poor Excellent  There are eight (8) key reporting categories rated on a 10-point scale, which cover the following cultural dimensions:  Ethics & Governance  Risk Management  Strategic Planning  Management  Communication  Organization  Empowerment  Compliance (Audit & Quality) 5
  6. 6. Data Structure & Reporting..cont’d  #1 – Questionnaires & Surveys  Mirrors the organizational hierarchy at the Company level, Business Unit level, and Management level within four (4) personnel responsibility levels:  Board Fiduciaries  Officer Fiduciaries  Non-Officer Fiduciaries  Key Functional Management (non-fiduciaries)  #2 - Ethics Action Reporting (“EARs”)  Interactive communication for supporting;  Complaint validation and documentation  Case management  Whistleblower protection  #3 - Suggestion Reporting  Identify and initiate improvement ideas that drive business returns 6
  7. 7. Example CCI™ Dashboard Business Unit & Executive Survey Business Unit Survey Business Unit 1 Business Unit 2 Business Unit 3 Business Unit 4 Business Unit 5 Ethics & Governance 4.6 4.7 2.4 5.3 4.3 Risk Management 4.3 4.9 1.0 5.3 3.9 Strategic Planning 3.7 4.0 2.8 5.0 3.9 Management 3.6 4.1 1.3 4.9 3.5 Communication 5.0 5.6 4.3 5.9 5.2 Organization 4.0 4.8 2.5 5.1 4.1 Empowerment 4.5 4.9 2.8 5.6 4.5 Compliance (Audit & Quality) 5.2 5.4 3.8 5.6 5.0 CCI™ Composite Rating 4.4 4.8 2.6 5.3 4.3 Drill down and gain dynamic views into the organizational corporate culture for internal benchmarking BU #3 Executive Survey CEO CFO COO VP HR CIO Ethics & Governance 8.6 8.2 2.1 1.6 5.8 Risk Management 8.0 7.2 3.1 3.0 5.8 Strategic Planning 7.4 7.6 3.6 3.4 5.2 Management 7.6 7.8 1.4 1.8 5.4 Communication 5.4 6.0 1.1 1.0 4.8 Organization 6.2 7.8 1.8 2.0 5.8 Empowerment 7.2 7.6 2.5 2.0 5.4 Compliance (Audit & Quality) 8.0 4.8 2.3 2.0 6.6 CCI™ Composite Rating 7.3 7.1 2.3 2.1 5.6 7 This is fictitious data for illustrative purposes only
  8. 8. Example CCI™ Dashboard Cultural Trend Analysis Note: Chart is for illustrative purposes only. PY = Prior Year and CY = Current Year trending. 8
  9. 9. Example CCI™ Dashboard Industry Analysis Note: Chart is for illustrative purposes only. Y = Year. 9
  10. 10. Disclosure Policy Information Access by Subscription Type Information flow that supports market stakeholder groups Company and External Audit Investors and Workers and General Internal Audit and Regulators Advisors Labor Public Generalized Information Company X X X X X Questionnaire Company Company voluntary / Survey X subpoena X X Company voluntary 8 Dimensions Executive Company voluntary / Survey X subpoena X1 X Company voluntary 8 Dimensions Ethics Action Company voluntary / Company voluntary / X subpoena subpoena X Company voluntary Reports (EAR) Specific Suggestion X Company voluntary Company voluntary X Company voluntary Information Reporting X = Information Access 1 Executive name fields are restricted to the company and internal audit, reporting for this subscriber identifies the 10 executive in a standard responsibility level; Board Fiduciary, Officer Fiduciary, Non-Officer Fiduciary, or Key Manager.
  11. 11. Company Benefits  Quickly identify high risk areas of the business, including non-compliance, weaknesses, mismanagement, fraud, and corruption  Quantify how company goals, strategies, and objectives affect management philosophy and operating style  Plan for and manage the risks associated with organizational change events  Support strategic decisions that affect organizational changes and restructuring of authority and responsibility  Transparency, accountability, and integrity that support the risk oversight duties of care, loyalty, and prudence  Demonstrate risk oversight and responsible corporate citizenship by disclosing risk information and cultural trends in the proxy.  Ensure that D&O liability coverage exclusions are not invoked (i.e. for fraud, negligence, non-compliance, etc.) 11
  12. 12. Internal Audit Benefits  Empower Internal Audit with a source of risk intelligence that;  Support dynamic audit planning  Utilize resources more effectively  Reduce audit cycle times; and  Improves governance, internal control, and risk management  Test, measure, and monitor the effectiveness of the Tone at the Top and the corporate culture on a relative scale  Become a catalyst for corporate culture excellence by fostering honesty, loyalty, mutual trust and respect  Support Internal Audit opinions and compliance with Institute of Internal Auditors (IIA) Standards 12
  13. 13. External Auditors & Regulator Benefits  Fast-track valid whistleblower complaints  Timely access to original, independently derived information  Improve transparency into the corporation to aid in audit planning, investigations, etc.  Support dynamic audit planning  Utilize resources more effectively  Reduce audit cycle times  Effectively audit governance, internal control, & risk management  Readily identify aggressive corporate cultures that discount risk  Readily determine where delusion ends and dishonesty begins  Early warning of fraud and misconduct at corporations  Check & balance against disclosures in public filings  Assist SEC with building the Investor Protection Fund 13
  14. 14. Investor & Advisor Benefits  Proxy access – board evaluation, selection, nomination and risk disclosures  Say on pay – leverage to reign in excessive compensation  Address shortcoming in the marketplace for due diligence  Credit ratings are unreliable and impossible to measure  The external audit report identifies limitations in finding fraud  Stock analysts are not independent – often unreliable and biased  Access to timely, reliable and comprehensive information about fraud and high risks  Early warning of potential problems  Check & balance against public disclosures  Collaborate with other investors to actively engage companies within investment portfolios 14
  15. 15. Worker & Labor Benefits  Gain confidence that the peoples voice “will be heard” by participating in periodic company and executive surveys.  Gain confidence knowing a 3rd party reviews and validates complaints while protecting workers anonymity.  Qualified “whistleblowers” share in rewards and bounty programs.  Gain confidence that competent Certified Internal Auditors® will help you understand how to complete and validate complaints. 15
  16. 16. General Public Benefit  Know the unbiased truth about corporations  Easy access to reliable information for due-diligence  Readily identify aggressive corporate cultures that discount risk  Safeguard investments and retirement savings  Make better buying and investing decisions 16
  17. 17. Business Integrity Alliance Founders  Michael Brozzetti, CIA®, CISA®, and CGEIT®  President of Boundless LLC  Internal audit Quality, Training, Education and Support  Ethics, Governance, ERM speaker and workshop leader  Qualified IIA Instructor  Chairman of Business Integrity Alliance™  Chairman of the Chief Audit Executive Roundtable  Adjunct Instructor with Villanova University  Mark Rome  Founder of zEthics, Inc  Co-Founder of Business Integrity Alliance™  Member NACD, IIA and IMA  Media and Publications  Rome, Mark (2010), How CFO's can evolve the Corporate Culture to drive Business Returns,  Rome, Mark (2010), Using Analytics to Restore Public Trust, Taylor & Francis  Brozzetti, Michael (2009). A New Era for Internal Auditors. IIA Insight.  Brozzetti, Michael (2010). Internal Auditing and Fraud Interview (2010). Comcast MoneyMattersTV 17
  18. 18. Strategic Partnerships Case Study Highlights  Villanova University  Instrumental to the 2008 inception of the IIA/Villanova CIA Learning System university partnership program.  Supported marketing and growth of the program increasing registration by over 150% from its inception.  Over 85% of students rated instructor overall performance as exceptionally good during 2010 program.  Holmes Corporation  Successful collaboration and delivery of corporate on-site CIA training programs  Over 100 course seats served  IIA Philadelphia Chapter  Founder and Chairman of the 2010 CAE Roundtable that attracted over 50 participants in 2 sessions  100% of CAE participants rated Chairman performance as exceptionally good (35%) or above average (65%)  95% of CAE participants rated overall value of roundtable as exceptionally good (15%) or above average (80%)  Business Integrity Alliance™ Joint Venture  Co-Founder and Chairman of the Business Integrity Alliance™ a joint venture with zEthics, Inc. committed to advocating corporate governance excellence and supporting corporate governance market initiatives  Awarded as one of only 11 consulting firms to participate in the California Public Employee Retirement System (CalPERS) Corporate Governance Research Spring-Fed pool over the next 3-5 years to support market place.  Aline  Collaborative partnership to support the application of governance, risk, and performance methods to improve organizational accountability, transparency, and integrity. 18
  19. 19. Contact Information Contact Information Contact Information Michael Brozzetti Mark Rome CEO, Boundless CEO, zEthics, Inc. 3513 Bowman Street 980 9th St., 16 Floor Philadelphia, PA 19129 Sacramento, CA 95814 (215) 687-7376 (602) 358-9586 19