Justifying Compliance Budget Increases€¦ · well compliance risks and policies are understood...
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1 Justifying Compliance Budget Increases Julie Moriarty, The Network Jimmy Lin, The Network 2 “State of the Function 2014 Survey Results – CEB” Budgets ARE Growing $0.93 $0.76 $0.36 $0.08 $0.42 $0.08 $0.12 $0.08 $0.04 $0.04 $0.04 $0.01 $0.48 $1.17 $0.40 NA* $0.35 $0.07 $0.08 $0.07 $0.03 $0.03 $0.03 $0.01 2012 2014 C&E Mean Budgets per 1,000 EE: • All Companies Median in 2014: $97,333 • All Companies Median in 2012: $84,800 Regulatory Intensity Lower Higher Banking and Financial Services Insurance Health Care and Health Insurance Aerospace and Defense Pharma., Biotech., and Chemicals Utilities High Technology and Telecommunications Food, Beverages, and Consumer Goods Distribution and Transportation Energy Manufacturing and Auto. Retail
Transcript of Justifying Compliance Budget Increases€¦ · well compliance risks and policies are understood...
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Justifying Compliance Budget Increases
Julie Moriarty, The Network
Jimmy Lin, The Network
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“State of the Function 2014 Survey Results – CEB”
Budgets ARE Growing
$0.93
$0.76
$0.36
$0.08
$0.42
$0.08 $0.12 $0.08 $0.04 $0.04 $0.04$0.01
$0.48
$1.17
$0.40
NA*
$0.35
$0.07
$0.08
$0.07$0.03 $0.03 $0.03
$0.01
2012 2014
C&E Mean Budgets per 1,000 EE:• All Companies Median in 2014: $97,333 • All Companies Median in 2012: $84,800
Regulatory Intensity Lower Higher
Banking and Financial Services
Insurance
Health Care and Health Insurance
Aerospace and Defen
se
Pharma., Biotech., and Chem
icals
Utilities
High Technology and
Telecommunications
Food, B
everages, and Consumer
Goods
Distribution and Transportation
Energy
Manufacturing and Auto.
Retail
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5.56
7.91
3.27
0.501.10 1.12
0.85
0.33 0.21 0.29 0.16 0.08
4.13
10.00
4.59
0.621.02 0.87 0.67 0.43
0.12 0.25 0.160.08
2011 2013
C&E Full‐Time Employees per 1,000 EE:• All Companies Median in 2013: 0.55• All Companies Median in 2011: 0.57
Banking and Financial Services
Insurance
Health Care and Health Insurance
Aerospace and Defen
se
Pharma., Biotech., and Chem
icals
Utilities
High Technology and
Telecommunications
Food, B
everages, and Consumer
Goods
Distribution and Transportation
Energy
Manufacturing and Auto.
Retail
Regulatory Intensity Lower Higher
“State of the Function 2014 Survey Results – CEB”
Staff Resources Remain Flat
Doing More in Polices & Training
Compliance owns a significant number of activities in:
• Training and Communications
• Policies and Procedures
“State of the Function 2014 Survey Results – CEB”
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Doing More in Risk Management
• Compliance risk assessments will increase
• Third party concerns on the rise
“State of the Function 2014 Survey Results – CEB”
Doing More in Reporting Metrics
• Program effectiveness can be one of the most effective ways to gain funding buy‐in
“State of the Function 2014 Survey Results – CEB”
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ROI and Program Effectiveness
• Evaluate as many data points as possible
• Look at all E&C activities
• Look outside E&C activities
• Work with other areas of organization to identify existing metrics
“Policy Management Benchmark” – GRC 20/20 Research
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ROI and Program Effectiveness
Your workload is relevant
• Measure what you have done and are doing:
– Code/policy /procedure updates
– Issues managed
– Investigations undertaken
– Inquires addressed
– Initiatives completed
• Course completions, communications, certifications, attestations, surveys
– Employees and third parties reached
– Plans for future
Three‐Year Education
and Communication Plan
2014 2015 2016
Q1Code of Conduct Training
Code of Conduct Training
Code of Conduct Training
Q2Speak UpCommunica
tion
Anti‐bribery
Communication
Social Media Training
Q3Conflicts of Interest Training
Speak Up Training
Privacy Training
Q4Respect
Communication
Confidentiality
Communication
Gifts & Gratuities Communica
tion
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© 2014 CEB. All rights reserved. CELC9495514SYN
n = 65 companies.Source: CEB analysis.
73%
OrganizationalJustice
27%
All Other IntegrityComponents
■ Clarity of Expectations
■ Comfort Speaking Up
■ Trust in Colleagues
■ Direct Manager Leadership
■ Openness of Communication
■ Tone at the Top
Organizational Justice is employees’ degree of agreement that:
■ Their company responds quickly and consistently to verified or proven unethical behavior and
■ Unethical behavior is not tolerated in their department.
Key Drive in Culture of Integrity
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“Predictive Monitoring – CEB”
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Organizational Justice on Display
Communicate, in summary and aggregate, compliance incidents and follow‐up actions/results
Reiterate no‐tolerance for unethical behaviors
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Measure Understanding
Use employee surveys to gauge how well compliance risks and policies are understood
Understand how compliance messages are received and perceived by frontline employees
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Over‐Reliance on Hotline Data
Less than 10% of incidents reporting through hotline
More than 65% of incidents are reported to managers
CEB Survey Analysis; The Network Benchmarking Reports
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Middle Management Buy‐In
Gain insights from managers by ensuring capture of incident conversations
Train managers on how to have the conversations and process for capturing incident information
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ROI and Program Effectiveness
Ethical Culture Metrics
• Survey/assessment results
• Entry/Exit interview data
• Performance evaluations
• Examples of ethical leadership, behavior that are rewarded
• Helpline (inquiries as opposed to complaints)
• Employee communications (nature and number)
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ROI and Program Effectiveness
The Negatives
• Lawsuits
• Administrative actions
• Complaints
• Fraud incidents
• Investigation costs
• Fines
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Organizational Metrics
• Sick days
• Worker’s comp claims
• Accidents
• Theft
• Employee complaints
• Customer complaints
• Retention rates
• Recruiting costs
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ROI and Program Effectiveness
Engagement Metrics
• Management participation and sponsorship of Code and overall E&C program
• Reminders needed to complete initiatives or obtain information
• Employee:
– Feedback/suggestions
– Participation in company initiatives
– Interest shown in improving organization
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Maintaining Program Support
Demonstrate link between E&C initiatives and benefits to business
• Better oversight & policies = better business practices
• Better E&C compliance = better compliance in all areas (safety, financial integrity, asset protection, etc.)
• Middle management & employee engagement = better engagement in all areas
• Ethical culture = better teamwork and productivity
• Stronger E&C program = better public image, better recruiting & retention
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Maintaining Program Support
• Evaluate all available data to identify potential problems
• Centralized visibility– Track everything – Totality of circumstances– Aggregate view
• Conduct regular audits of controls and processes
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Maintaining Program Support
• Maintain leadership/Board visibility to your program status and initiatives
• Continually assess risk and employee attitudes using multiple vehicles
• Adjust program as necessary to improve effectiveness
• Don’t forget about informal avenues for obtaining program support and feedback
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Ensuring Program Success
Don’t do it alone
• Engage others to:– Help manage workload– Provide input– Support and drive program
• Work of others helps establish ownership outside of E&C office
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Ensuring Program Success
Have a plan
• Identify short‐term wins that can be quickly implemented
• Develop a multi‐year plan with goals for each element
• Write it down and track against plan
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Keep up the Momentum
• Prioritize phased activities by risk (geographic, relationship types, dollars, etc.)
• Conduct regular status meetings
• Keep moving forward, even in small steps
• Provide regular updates regarding program status to leadership
• Share process with Risk Management and Internal Audit to identify synergies that can be leveraged
Jimmy Lin, GRCP
VP of Product Management and Corporate Strategy
The Network
Julie K Moriarty
General Manager, Training and Communications Strategy
The Network
Q&A
