Top 10 Ethics and Compliance Trends 2016

© 2016 NAVEX Global, Inc.
All Rights Reserved.
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Top Ten Ethics & Compliance Predictions
and Recommendations for 2016
January 12, 2015

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P R E S E N T E D B Y
Vice President, Advisory Services
NAVEX Global
Ed Petry, Ph.D.
NAVEX Global
Andrew Foose, J.D.

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Agenda
• Introductions & Overview
• Predictions & Recommendations
1. Addressing The Millennial Mindset
2. E&C Goes Global
3. Maturing Board Oversight Expectations
4. Politics Invades the Workplace
5. Increasing Prominence of Sports Scandals
6. Forging New Alliances With HR
7. New Whistleblower Initiatives
8. Anti-Bribery, Corruption and Third-Party Risk
Management
9. Addressing Cynicism Head On
10. Expanding the Scope of E&C
• Q&A

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T R E N D # 1
The Rise of the Millennial Mindset

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• Millennials—born between 1975 and 1995—will comprise 75% of
workforce by 2025
• Highly influential—others are adopting a “millennial state of mind”
• Some of the changes that can be traced to the millennial
mindset include:
• Increasing skepticism that business will do the right thing when faced with a
tough decision
• Far more emphasis on the importance of an organization’s social
responsibility and environmental impact
• Changed expectations about how we learn and acquire information
Visit the Pew Research Center online and take their “How Millennial Are You?” quiz
Keeping Pace With a Changing Workforce

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1. Plan for change. Start innovating now
2. Assess learning styles for your organization. Adapt
to employee’s preferred learning methods—
including interactive online codes, training
and policies
3. Don’t jump to conclusions. Studies with findings that
suggest millennials are more likely to cross ethical
lines can be misleading.
4. Expect to be surprised. Millennials often have a
preference for face-to-face communications.
Key Steps For Organizations To Take

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T R E N D # 2
Transitioning to a More Global Center of
Gravity for Ethics and Compliance

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U.S. No Longer Center of E&C Momentum
• Until E&C scandals began to implicate non-U.S. headquartered
companies, E&C momentum was largely based in the U.S.
• Regulatory initiatives and best practices are now less likely to come
from the U.S.
• U.K. Modern Slavery Act 2015
• ISO 19600
• European Court of Justice’s Safe Harbor judgment
• U.K. Anti-Corruption Plan
• Russian Federal Act on Data Protection
• These developments have broad application and often are replicated in
other jurisdictions

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1. Get help to stay informed. Enlist the help of
local legal liaisons to keep you up-to-date
2. Identify your organization’s obligations.
Understand which provisions apply to you.
3. Keep key decision makers up-to-date. Prioritize
developments that impact your organization
4. Keep an open mind. Work to overcome any
“not created here” biases that may exist in
your organization.
5. Develop targeted communications and
training. Help those directly impacted by new
regulations understand the implications.

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T R E N D # 3
Board Expectations for Ethics & Compliance
Oversight Get More Specific, Uniform and
Comprehensive

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April, 2015—U.S. Department of Health &
Human Services, Office of Inspector General
(OIG) released comprehensive set of
guidelines: Practical Guidance for
Health Care Governing Boards on
Compliance Oversight
Guidance part of a broader trend to hold
E&C programs—and boards—to more
uniform standards
New Frameworks for Board Oversight

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Boards Will Be Expected to Know More & Do More
• April, 2015—U.S. Department of Health & Human Services, Office
of Inspector General (OIG) released comprehensive set of
guidelines: Practical Guidance for Health Care Governing Boards on
Compliance Oversight
• Guidance part of a broader trend to hold E&C programs—and boards—
to more uniform standards
• Boards need to take very specific and proactive roles relative to their
compliance oversight duties
• Boards need to gain a better understanding of the adequacy and
effectiveness of their organization’s E&C programs, set the right
expectations and ask the right questions

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1. Jump-start your board’s engagement.
 To meet their obligations, boards need to gain a better understanding of
the adequacy and effectiveness of their organization’s E&C programs, set
the right expectations and ask the right questions
 Provide questions to your board and/or senior leadership to help them
think through their roles and responsibilities related to the
E&C program
• For a list of questions you can use, see our blog article
“Real Guidance (Finally) On the Compliance Oversight Role of
Boards”
 Help your board take very specific and proactive roles relative to their
compliance oversight duties

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2. Reassess your current board training
 Find an approach that addresses unique board-related risk areas
 Add a discussion of E&C risk areas that pertain specifically to
board members
 Help board members understand how to interpret E&C data
 Develop a plan for how to “credit” board members for training
they receive and encourage them to share best practices from
other organizations
 Utilize specific expertise of board members and involve them in
creating or facilitating board training

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3. Make the most of the space allotted in the
report to the board
 Don’t assume too much
 Provide information on aspects of your E&C
program beyond the helpline
 “Don’t” data dump
 “Do” use data to support the “why” and
“how” of your overall effectiveness

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T R E N D # 4
Politics Invades the Workplace

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US’s 2016 election dominating news,
social media and many employee
conversations
Creates a unique set of compliance
problems:
 Campaign financing
 Quid pro quo deals
 Misuse of company resources
 Inevitable clash of political views can
lead to policy violations and
discriminatory behavior
2016 Election Will Dominate Many Employee
Conversations

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1. Review your code of conduct and policies. Make sure they’re clear
and up-to-date about political contributions, political activity, and
campaign financing.
2. Keep an eye on transparency initiatives. Look out for shareholder
resolutions expanding political spending disclosures.
3. Over-communicate. Be clear about limits on using company resources
for political activities.
4. Reinforce role-specific policies. This is particularly important with
senior executives.
5. Be prepared to make hard decisions. Political issues and decisions are
charged issues that can be very difficult to handle. Be ready.
6. Know when to say when. Guard against political discussions in the
workplace that become derogatory and offensive.

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T R E N D # 5
The Wide World of Sports Scandals and
How They Impact Our E&C Discussions

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Cause for public discussions of ethics
More attention has been given to
behavior off the field
 Bribery and corruption
 Performance enhancing drugs
 Personal transgressions and
accountability
 Violence, racism and drug use
 Athlete safety and exploitation
Sports Scandals Provide Opportunity for More
E&C Conversations

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1. In your E&C training and case studies, consider replacing Ken Lay
(Enron) with Sepp Blatter (FIFA)
 Employees more likely to connect and engage
 Sports-related case studies bring home importance of culture–and highlight
areas of dysfunction
2. Don’t plan any major U.S. initiatives for the second half of March or any
meetings June 14-July 15, 2018
 Americans spend nearly 700 million hours watching the college basketball
championship games
 Resulting in annual losses of $1.9 billion due to distracted and
unproductive workers

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T R E N D # 6
Working With HR—Time to Try Again

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Better Alignment With E&C and HR Has Positive
Ripple Effect
• No corporate function has more opportunity to contact employees as
often as HR
 Recruiting, hiring, on-boarding, performance reviews, promotions,
investigations, discipline, reorganizations, terminations and exit interviews
 HR is often the primary channel for reporting E&C concerns
• 24 years ago, U.S. Sentencing Guidelines for Organizations emphasized
importance of the HR function in creating and maintaining an effective
compliance program

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Coordination between HR and E&C is
often strained by
 Duplication of efforts
 Inefficiencies
 Fear that confidential employee
information will not remain
confidential
 Turf battles
Everyone Wins When HR & Compliance Work
Well Together

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1. First things first: bury the hatchet
2. Build (or re-build) trust
3. Recruiting and onboarding
4. Get on the same page with communications and
training
5. Track all the channels used by your employees
for reporting
6. Work with HR to incorporate E&C standards into
performance management processes
7. Ensure consistent discipline
8. Get over it; no more turf battles

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T R E N D # 7
Renewed Focus On Boosting Whistleblower
Rights and Squashing Retaliation

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Two legal developments that
bear watching
 U.S. Occupational Safety and Health
Administration (OSHA) drafted guidelines to
help organizations design programs to
protect whistleblower rights
• Implement a retaliation
response system
• Conduct anti-retaliation
compliance training
• Monitor and audit
 Berman v. Neo@Ogilvy LLC: Interpretation of
“whistleblower”
Legal Developments Shine Spotlight on
Whistleblowing & Retaliation

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1. Review and comment on the new
OSHA guidelines
2. Implement a publicized retaliation
response system, including a
helpline/hotline and independent
assessment of claims of retaliation
3. Develop anti-retaliation training

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T R E N D # 8
Getting Serious About Anti-Bribery and
Corruption Efforts and Third-Party
Risk Management

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Increase in respondents highly challenged by
the issue of ABC
Management of third parties poses
the greatest challenge
More than one-third of respondents do not
formally identify high-risk third parties
ABC considerations too low a priority by
companies preparing to acquire, or merge
with, other corporations across borders
Lack of resources to manage ABC risk
ABC risk assessment is one of their
companies’ top challenges
Third Party Risk Still a Blind Spot
Source: KPMG Anti-Bribery and Corruption Survey 2015

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1. Conduct a robust corporate risk assessment
2. Identify and address your company’s third-party risks
 Scrutiny should increase as “red flags” surface
 Understand business rationale for engaging with a third party
 Ongoing monitoring of third party relationships
3. Review your ABC mitigation plan for completeness
4. Create or update written policies and procedures to address these
risks—particularly the highest risks
5. Train third parties on your organization’s policies
6. Devise a plan to implement changes in demonstrable,
documented stages

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T R E N D # 9
Cynicism, Fatigue and Compliance Pushback—A
Problem We Can No Longer Ignore

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Employee Disengagement Creates Major Risk
• 37% of respondents thought employee cynicism was the top threat to
the effectiveness of their E&C training programs
• Look for the signs (if you haven’t seen them already):
 The silent elevator, eye-roll, snicker or harrumph
• Just as likely for leaders to lack engagement and just be going
through the motions
• Compliance pushback most often seen with training
and communications
• Lack of engagement/alignment can impact helpline usage
• Left unchecked, this can erode even your best efforts

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1. Don’t assume “it can’t happen here”
2. Focus on leadership at all levels
3. Start with the most egregious sources that fuel
cynicism and compliance pushback: Insincerity,
wasting employees’ time, inconsistency, lack of
transparency
4. Re-position E&C office as a strategic ally, not just
the people who say no
5. Pay attention to public sentiment and how it
impacts your employees

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T R E N D # 1 0
Expanding the Scope of E&C: Is This the Year for
Pushing Boundaries and Increasing Authority?

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Is the scope of our E&C programs too
narrowly focused?
High-profile areas with clear E&C
components are often over-looked as
not “part of the job”
 Cyber security, sustainability,
marketing, advertising, philanthropy,
human rights, community
engagement
Long term goal, but look for short
term opportunities
Thinking Outside the E&C Box

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1. Ask questions about who owns key
risk areas. Confirm that E&C issues
related to each risk area are being
addressed
2. Find common ground. Corporate
social responsibility, human rights,
sustainability: it’s in everyone’s
interest to make sure E&C issues
related to these areas are identified
and addressed
3. Pay attention to advertising,
marketing and your values. Watch
for disconnects between your core
values and your marketing campaigns

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Conclusion

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• The opportunity for E&C to influence the decisions of the organization are
greater than ever before. As ethics and compliance professionals, we need to
be ready to take on that responsibility.
• Position the E&C office strategically. Look for opportunities to broaden your
influence. Find more, different and better ways to work with HR.
• Change your approach from addressing the needs of “millennials” to managing
the “millennial mindset.”
• Don’t ignore the all-pervasive influence of sports, politics and other priorities
of the public that influence perceptions about ethics.
• Cast a broad net for best practices and regulatory trends. We can’t afford to
be parochial.
• Make third-parties and due diligence a priority.
• Identify and address the root causes of cynicism and compliance fatigue.
Key Takeaways & Ideas to Consider
Implementing in 2016

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I’d Like to Talk with a NAVEX Global Solutions Expert About…
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regulatory requirements
 Creating a training plan that covers all my risks and audiences
 Making sure my investigations are legal and effective
 Automating manual processes in my program (policies, incident
management, third party due diligence, etc.)
 Getting deeper analytics on my organization’s hotline data
 I have a different challenge I’d like to discuss with an expert

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Thank You For Submitting!
If we run out of time to address
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Have a Great 2016!
Ed Petry, Ph.D.
epetry@navexglobal.com
Andrew Foose, J.D.
afoose@navexglobal.com

www.navexglobal.com
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