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SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
“Finding a Way to Answer the Question: D...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
BAE Systems
Our home market strategy builds significant ind...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
Market Segment Activities
© BAE Systems 2012 3
* Breakdown ...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Tone at the Top
4© BAE Systems 2012
We a...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
The Big Picture
5
Policies
&
Charters
Pr...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Some Current Measures
6
Helpline
Types o...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
The Challenge
• Design an Ethics & Compl...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
So what is available to us to start to answer the question:...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
C.A.R.E. – Some Definitions
• Collate: t...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Collate - Internal Controls (Direct Indi...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Collate - Indirect Indicators
Ethics Hel...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Collate
12
Pull together all appropriate...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Analyse
13
Remember that most of what yo...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Review
Look to test, confirm and prepare...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Exploit
Using the knowledge gained, get ...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Action Planning
16
REVIEW EXPLOIT ACT
Pr...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Outcomes Management
• An outcome involve...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Intervention Options
18
TRAINING
COMMUNI...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Interventions – Some Basic Principles
• ...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Measures
• Most organisations want to be...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
What would good look like?
• There is consistency in awaren...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
An Example for Analysis - Business Unit “A”
DIRECT INDICATO...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
© BAE Systems 2012
Summary
• There is a huge amount of data...
SCCE 11th
Annual Compliance & Ethics Institute
- 16th
Oct 2012
Thank you
© BAE Systems 2012, unpublished, copyright BAE Sy...
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[606] “Finding a Way to Answer the Question: Does It Work & How Do You Know?” SCCE Compliance & Ethics Institute 2012

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[606] “Finding a Way to Answer the Question: Does It Work & How Do You Know?” SCCE Compliance & Ethics Institute 2012

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[606] “Finding a Way to Answer the Question: Does It Work & How Do You Know?” SCCE Compliance & Ethics Institute 2012

  1. 1. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 “Finding a Way to Answer the Question: Does It Work and How Do You Know?” David Harris Head of Business Conduct SCCE 11th Annual Compliance & Ethics Institute – 16th October 2012 1
  2. 2. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 BAE Systems Our home market strategy builds significant indigenous capability and footprint, often through mutually beneficial partnerships with investment in local businesses and the sharing of skills and technologies, providing sustainable employment for local people. OUR VISION “ To be the premier global defence, aerospace and security company.” OUR MISSION “ To deliver sustainable growth in shareholder value through our commitment to Total Performance.” * Employee numbers as of 31 December 2011 © BAE Systems 2012 2 Australia 5,600 United States 37,300 United Kingdom 34,800 India 100 KSA 5,800 BAE Systems Home Markets Global Business Development Offices
  3. 3. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 Market Segment Activities © BAE Systems 2012 3 * Breakdown shown is for 2011 Results
  4. 4. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Tone at the Top 4© BAE Systems 2012 We are committed to developing a Company culture of Total Performance, where our work is not just about what we do, but how we do it. Goal BAE Systems is committed to becoming a recognised global leader in business conduct by continuing to embed policies and processes across the Group, and integrate them into day-to-day business practice. Strategy We are placing business conduct at the heart of our business through implementation of our global Code of Conduct, our comprehensive response to the Woolf Committee Report, and our commitment to Total Performance. Our Code of Conduct sets out the principles and standards we require all our employees to adopt. Used in conjunction with our Responsible Trading Principles, it supports our business activities.
  5. 5. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 The Big Picture 5 Policies & Charters Procedures & Processes The Board (and Committees) Code of Conduct Internal Controls & Assurance Risk Framework Mandated Policies Integrated Business Plans Programme Management Performance Management TRUSTED We deliver on our commitments TRUSTED We deliver on our commitments INNOVATIVE We create leading edge solutions INNOVATIVE We create leading edge solutions BOLD We constructively challenge and take the initiative BOLD We constructively challenge and take the initiative EXTERNAL ENVIRONMENT GOVERNANCE FRAMEWORK
  6. 6. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Some Current Measures 6 Helpline Types of calls/violations Volume and trends Anonymity Rate Days to Close Substantiation Rate Risk Assessment •Volume and trend of misconduct •Material Risks Helpline Statistics •Volume and types of Calls •Reports versus guidance requests •Anonymity Rate Training •Ethics Training •Compliance Training •Target Audience •% Completion •Feedback Benchmarking External Assessment & Assurance Cultural Assessment •Employee Surveys
  7. 7. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 The Challenge • Design an Ethics & Compliance programme for success – define what success will look like • Measure the effectiveness of policies • Ensure that employees know how to follow and apply “Principles-based” policies • Policies to cover existing and emerging risks • Guidance to be current and adequate • Know and manage stakeholder expectations • Build training, communications and other interventions that target the right audiences in the right way to achieve the desired outcomes 7
  8. 8. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 So what is available to us to start to answer the question: “Does it work, and how do we know?” A simple process of: Collate – Analyse – Review – Exploit Act C.A.R.E. before Action 8© BAE Systems 2012
  9. 9. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 C.A.R.E. – Some Definitions • Collate: to bring together (often disparate and disconnected) pieces of data and information and compare them in detail, dismissing that which is not useful • Analyse: examine the data and information, in great detail, to understand it better and/or discover more about it • Review: examine and challenge the results of analysis to assure adequacy, accuracy, correctness and usefulness • Exploit: use or develop the findings to gain a benefit 9
  10. 10. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Collate - Internal Controls (Direct Indicators) Business Controls: • Delegated Authorities and Approvals • Stakeholder Relations – i.e. Investor Community • Communications policy • Sponsorship, fundraising and donations • Export Control • Product Safety • Risk Management and Assessments • Business Continuity • Assurance Statements • Internal Audit 10© BAE Systems 2012 Workplace Controls • People • Gifts & Hospitality • Facilitation Payments • Conflicts of Interest • IT Acceptable Use • Health & Safety • Security • Environment • Real Estate Exist to assure: • Reliability and integrity of information • Compliance • Safeguarding of assets
  11. 11. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Collate - Indirect Indicators Ethics Helpline 11 Ethics Officers Leadership Development Employee Opinion Surveys Ethics and Compliance Training Benchmarking Internal Audit Management Actions Communications Employee Engagement Influences and Pressures
  12. 12. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Collate 12 Pull together all appropriate data and information from direct and indirect sources that are reliable, accurate and maintained Find a way to filter out the noise; decide what is most relevant and pertinent Add in other “intelligence” as necessary What’s important? What’s reliable? What’s new? What’s different? What are the Risks? What is the Focus?
  13. 13. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Analyse 13 Remember that most of what you see at first will be “symptoms” Look for meaning and reasoning behind what has been filtered, as far as is practicable What makes sense and what doesn’t? Trends and Patterns Inconsistencies Proportionality Conduct Comparisons Quantify Risks Identify Causes and Drivers Document Assumptions
  14. 14. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Review Look to test, confirm and prepare the results of analysis for reporting and action Share the results with others – gain sense checks and clarification Confirm what you now know – go back if necessary 14 Identify Significant Trends and Risks Plot Performance Indicators Identify “what wasn’t anticipated” Test Assumptions Adjust Filters What’s missing? Re-analyse Report and discuss Findings Define Action Plan REVIEW
  15. 15. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Exploit Using the knowledge gained, get to as granular level as possible in determining what and where the issues and risks are – causes? For the issues identified – consider intervention options for addressing it, selecting the one(s) that will get the biggest return for the least investment Begin to develop Actions to address those issues and risks 15 REVIEW EXPLOIT
  16. 16. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Action Planning 16 REVIEW EXPLOIT ACT Prioritise – use consistent criteria for determining priority Identify what needs to be done versus what could be done – define the desired “outcomes” Identify and get agreement on ownership of actions From determined actions –develop the interventions, by type and method
  17. 17. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Outcomes Management • An outcome involves an intentional imposition of change on the “system” with a resulting end state that can be measured • From an overall Ethics Programme perspective: • Outcome Management is the set of activities designed to monitor and adjust, as required, the way in which the Ethics Programme, and its associated products, processes and services meets the needs of BAE Systems “Manages meeting the needs of the organisation” • From an Interventions perspective: • Outcome Management is the set of activities designed to manage and oversee the change in a way that ensures it contributes to improving the capability and or capacity of the Ethics Programme to meet the needs of the organisation “Manages the development of capabilities that supports meeting the needs of the organisation” 17
  18. 18. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Intervention Options 18 TRAINING COMMUNICATIONS REVISED POLICIES GUIDANCE LOCAL ACTION PLAN “DEEPER DIVE” CORRECTIVE ACTIONS MONITORING SURVEYS ENGAGEMENT IMPACT-DRIVEN OUTCOMES-FOCUSSED TARGETED MEASURED IMPROVED “GATHERING” MODIFIED MEASURES INTERVENTIONS DESIGN AND DELIVERY (EXAMPLES) “Did we achieve what we set out to achieve?” ACTION PLANNING
  19. 19. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Interventions – Some Basic Principles • Know the problem or issue you are trying to address • Is it real or perceived? • Who owns it and who is responsible for fixing it? • Clearly define Aims and Objectives for the intervention • Think about what “good” will look like – as an outcome • Describe the change and end-state that you are trying to attain • Determine if the change can be attained with one or a number/series of interventions? • Decide how you will monitor progress towards end-state and know when you have attained it • How will you know that the problem or issue has gone? • How will you demonstrate success? 19
  20. 20. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Measures • Most organisations want to be able to “count” things that are “tangible” • Not always possible – but does not mean that “change” cannot be measured • Use measures already in place with the Direct and Indirect sources of data and information, wherever possible • Try not to establish new ways of measuring things • Reliability may be low where you rely upon the input of others against unfamiliar (to them) requirements • You may not be able to measure in “absolute” terms – but you can see change • Measures must be able to answer the question “Did we achieve what we set out to achieve?” • Associated communications must describe the desired and achieved outcomes – not the things we did 20
  21. 21. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 What would good look like? • There is consistency in awareness, understanding and application of standards set out by our Code of Conduct and our Policies • Leaders are consistent in word and action and role model the expected behaviours throughout • All employees genuinely know what doing the right thing means and have full appreciation for their responsibilities and accountabilities • There is a desire to know about and have early indication of ethical dilemmas and we have a cultural environment that supports it • Decisions are taken after careful identification and consideration of ethical risks and there are clear (and worn) paths of escalation • We know (and can demonstrate to others) that what happens is what was intended 21© BAE Systems 2012
  22. 22. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 An Example for Analysis - Business Unit “A” DIRECT INDICATORS •Background • Currently in 3rd restructure in 2 years • High success in winning business and performing for many years •E&C training • Significant deficit in employee mandatory requirements •Assurance Statement • States Compliant, with no ethical issues •Internal Audit of Code of Conduct • Indication of poor management behaviours from employee interviews •Health & Safety • One death • Increase in lost work day case rate INDIRECT INDICATORS •Ethics Helpline • Few Reports • High Substantiation and Anonymity Rates •Ethics Officer • Many Reports • > 50% Intimidation/Harassment • Finds it difficult to gain management “acceptance” – doors closed •Employee Survey • Low trust in management • Willingness to Speak Up: • Exec Mgt: > 90% • Employees: < 50% •Employee Grievances (no hard data shared) • Apparently high compared to other businesses • Suggestion that > 90% in favour of company • History of “unfair dismissal” claims 22© BAE Systems 2012
  23. 23. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 © BAE Systems 2012 Summary • There is a huge amount of data and information available to assist in the development of impact-driven and outcomes-focussed interventions, whose desired effect can be described and achieved effect measured • Know where that data and information is • Know how to get access to it, on a regular and consistent basis • Look at it – by piece part, cross-matched, combined and compared • Decide how useful it is • Be wary of reacting to symptoms rather than causes • Decide what it is you want to achieve before deciding what you are going to do • Communicate the change more than the interventions that will bring it about Apply C.A.R.E. before you Act 23
  24. 24. SCCE 11th Annual Compliance & Ethics Institute - 16th Oct 2012 Thank you © BAE Systems 2012, unpublished, copyright BAE Systems all rights reserved. Proprietary: no use, disclosure or reproduction without the written permission of BAE Systems plc. 24© BAE Systems 2012

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