Effective Compliance Communication and Training

Effective Compliance

Communication and

Training

Joel Katz Larry Parsons

Senior Vice President, Vice President, Legal and Chief

Chief Ethics & Compliance Officer Ethics & Compliance Officer (former) CA Technologies

Types of compliance issues

 Bad people doing bad things:

 Remedy: Effective internal controls & encouraging others to report such conduct

 Generally good people doing bad things to meet deadlines, hit targets because they are overwhelmed by pressure:

 Remedy: Strong leadership

 Generally good people doing bad things because they don’t know any better:

 Remedy: Effective compliance training & communication

Guiding principles

o Let’s be reasonable

o Take the emotion out of the situation

o If something ―just doesn’t feel right,‖ it is probably wrong

Tips for making this work

1. Have a plan 2. Know thyself

3. Engage your audience

4. Use multiple and varied communication vehicles 5. Market your training

Plan your work, work your plan - training

• Have a training plan

• What topics should you cover? • Build or buy?

• Communication Plan around training

• Ask yourself: What are you trying to accomplish? • Are you trying to raise awareness or create in-depth

knowledge

• Probably awareness on a broad scale, but expertise for certain populations (i.e. lawyers)

• Pay attention to other corporate training initiatives – avoid training fatigue

How we built our plan

 Visited 6 countries in Q4 to discuss CA’s BP&C Program and gain a global perspective

 Face to face meetings with 75 managers in all parts of business to discuss BP&C program and Issues

 Held 11 employee focus groups with employee groups ranging from 10-25 employees

 Conducted town halls at newly acquired entities to introduce BP&C organization to newly acquired employees

Focus Groups

 Asked employees a series of questions related to

Program and allowed employees to vote anonymously  Fairly consistent feedback from country to country:

1. Employees would like training conducted live and in local language, when possible

2. Employees feel that issues are not escalated out of fear of retaliation and/or desire to ―not get involved‖

3. Employees feel most comfortable reporting unethical behavior to their manager

4. Vast majority of employees don’t feel pressure to act unethically

Plan your work, work your plan

-communications

— Have a communications plan

− Plan the year in December/January

− Communications vehicles and audiences

− Flexibility to respond to developments in the media and the law

— Identify the resources available to you and the support you need

− Corporate Communications, Human Resources − CEO and other senior management briefings − Internal communications opportunities

Freescale internal program

communications 2011 (list for all

employees)

— January 21 – On My Mind: The Foreign Corrupt Practices Act and other

Anti-Bribery Laws – Alive and Enforced

— February 25 – Real Biz Short: “If Found” – Reporting and Retaliation — March 25 – On My Mind: Freescale’s Code of Business Conduct and

Ethics

— March 25 – Real Biz Short: “Private Eyes Only” – Protection of

Confidential Information

— June 3 – Real Biz Short: “Cornering the Cookies” – Fair Trade and

Competition

— July 8 – Real Biz Short: “Cracking the Code” – Code of Business

Conduct

— July 11 – All Employee Email – Trade Compliance Commitment — September 2 – Real Biz Short: “Kickback by Schmazbro” – FCPA

— November 18 – Real Biz Short: “The Tradey Bunch” – Insider Trading — December 9 – Real Biz Short: “Your Blog is Showing” – Social Media

“Know thyself”

— Know what you know and know what you don’t know — Don’t live in an ivory tower when constructing

communications and training – get down in the trenches to understand what is really going on

— Honestly evaluate your business and prioritize risks and training needs – evaluation should be ongoing as things can change quickly

— Be realistic in what you can accomplish – Rome was not built in a day

“Know thyself” cont.

— Engage with the business and your employees

− Helps you understand their issues and concerns

− Helps you understand where they ―just don’t get it‖

− Training will be of limited effectiveness without business buy-in

− Communications must address issues that employees actually face

Know thyself cont.

 Look in the mirror

 How is compliance perceived in your organization?

 Are you referred to simply as Compliance? Ethics and Compliance? Business Practices?

 Are you less effective because of your image?  Do you have the right level of trust?

The role of senior management

— Senior executives must assume personal responsibility to ensure effective implementation of high standards.

— Imperative that senior managers regularly communicate the importance to the company that high standards of ethical conduct be followed.

− Help them by providing information they can use in their communications meetings

− Make it easy for them – provide one or two easy to present slides

— Role model in business conduct and personal decisions. — The ―Google‖ test: Don’t do anything to embarrass the

company.

— Query: should a different standard of conduct apply for Senior Managers? Compliance? Legal? HR?

Engage your audience

— The Code of Conduct as a training tool

— On-line Training

— In-person training - lecture

- discussion/case-based

Engage your audience cont.

— Make training interesting, relevant and useful

— Choose examples that will be relevant to your target

audience (training salespeople and software developers with the same material is a recipe for disaster)

— Keep training as short as reasonably necessary to get the message across – strive for courses that are ½ hour or less — Useful – are you really giving your employees something

they can use or just telling them what to be afraid of?

— Use stories whenever possible – real life examples are best – adults retain most learning through storytelling.

Engage your audience - substance of the

training

— Practical direction on common issues to the extent possible.

— More than ―call your attorney‖ or ―do good and avoid evil‖ — Not a ―check the box‖ exercise

— Create a ―culture‖ of substantive compliance within the company.

— Must provide employees with the answers to the question: ―What is expected of me?‖

Use Multiple and Varied Communication

Vehicles

Freescale Examples

− Summit (Freescale Employee Intranet Portal) articles

− Ethics in action

− Test Your ethics IQ

− Real Biz Shorts (monthly- short article accompanying videos)

− Recurring specific subjects (Insider Trading, Confidential Information, Export Compliance)

− Materials for management to use in communications meetings

Sample Communications – Test Your

Ethics IQ

Test your ethics IQ:

What would you do?

14 August 2011

We all face ethical choices each day as we carry out our responsibilities for Freescale. Test your ethics IQ by reading the scenarios below and selecting the best course of action. Do your responses support Freescale’s

commitment to Impeccable Ethics?

Scenario one:

You have worked with a particular supplier representative for a number of years. During that time, you’ve learned about a number of common interests that he and his wife share with you and your husband. One of those interests is sailing, and you recently learned that the supplier owns a sailboat that he has docked in San Diego. The supplier invites you and your husband to join him and his wife for a week of sailing onboard their boat off the California

coast…(cont.)

Should you accept the offer?

Our Code requires that all business decisions and actions must be based on the best interests of Freescale, and must not be motivated by personal considerations or

Sample Communications – Freescale

Intranet Article

Disclosure of confidential information key factor in insider trading probe

Last month, I wrote about the importance of protecting Freescale’s confidential information,

such as our trade secrets, product plans, customer evaluations, communications regarding issues resolution and proposed acquisitions (Access the article: Protect our Confidential Information). Improper disclosure of confidential information may result in the loss of a competitive advantage for Freescale; it might also put you at personal risk under the securities laws of the United States and other countries.

Over the past few weeks, the media has reported almost daily on the Galleon Group insider trading scandal. In sum, this scandal involves allegations of trading of securities by hedge fund managers and others after illegally obtaining material, inside information of upcoming mergers and acquisitions from company executives and lawyers. In other words,

employees improperly disclosed company confidential information, or “tipped” traders about upcoming events that might affect stock prices.

To date, more than twenty individuals have been charged with crimes in this probe, and prosecutors allege that more than $50 million in illegal profits were realized as a result of trades made on inside information…

Sample Communications – Ethics in

Action

Freescale's Ethics in Action

Each employee must diligently protect Freescale’s Confidential Information

16 June 2011

Maintaining our commitment to Freescale’s Impeccable Ethics fundamental requires constant diligence in our daily job responsibilities. Periodically, we publish a summary of a recent matter handled by Freescale’s Office of Business Conduct and Ethics (OBCE), including the outcome and how the situation should have been handled consistent with our Code of Business Conduct and Ethics (the Code) and commitment to a culture of

impeccable ethics.

Obviously, discussing any issue handled by the OBCE has an educational and awareness benefit that must be balanced against issues of privacy and confidentiality. As such, all identifying information (such as names and

places) has been removed from this summary. If you are familiar with the situations described in this article, we ask that you not disclose the names of the individuals involved or any other details.

Use multiple avenues to reach employees

- Helpline/Webline

Awareness Campaign

— CA Technologies maintains both an employee Helpline (telephone) and Webline

(internet) that allow employees to raise compliance issues and concerns.

— Last Fall, new Helpline/Webline awareness posters placed in every CA Technologies office around the world.

Use multiple avenues to reach employees

- quarterly newsletter

Use multiple avenues to reach employees

- race to the finish

Have a Drink,

Drop Your Pants

& Give Me Twenty!

Believe It or Not

– Veggie Tales

— Employee claims her manager engaged in

inappropriate sexual conduct when he asked for a

hug. When she complied, he pressed his private area against her left thigh.

— She felt something hard pressing against her thigh and attempted to pull away from him.

— The manager laughed and . . .

— . . . pulled a cucumber out of his pants pocket.

— Several other female employees claimed they had also been victims of the ―cucumber incident‖

What is Harassment?

— Harassment can take many forms, but generally refers to any

unwelcome action, word, comment, or joke about things protected by anti-discrimination laws (i.e. a person’s sex, race, color, ancestry, age etc.)

— Verbal: repeated requests for dates, sexual innuendoes, racial or sexual epithets, derogatory slurs, foul or obscene language, off-color jokes, propositions, threats, or suggestive or insulting remarks or

sounds;

— Visual/Non-verbal: inappropriate written materials (including e-mail), derogatory posters, cartoons, or drawings; suggestive objects or

pictures; graphic commentaries; leering; or obscene gestures;

Engage your audience: All politics – and

most training – is local!

— Avoid being too U.S.–centric: Try to train in local language, reference to local law and local customs — If you are global, make sure your training reflects the

global nature of your business and conduct in the local language, whenever possible

— Find people around the world who will review training materials and give feedback BEFORE you roll the

training out

— Where it is not apparent, make sure you are explaining why the training is important to both the individual and the company

Marketing your training

— Be prepared to sell the value of what you are doing – make sure you have good salespersons

— Hold face to face meetings, town halls, focus groups, send out surveys etc.

— Find $ in your budget to travel – face to face meetings are always more effective; when traveling, get as much done as you possibly can to make good use of your

Spread the word!

— Get others involved – the more evangelists you have, the easier it is to spread the gospel

— Legal and HR are obvious candidates to help spread the message

— Prepare toolkits for managers that make it easy

— Be open-minded about what ―training‖ means – there are formal presentations as well as short, informal sound

bites

— Consider tying training requirements to both carrot and stick – rewards for the best evangelists, punishment for those who fail to evangelize at all

Train the trainer

 Issue - Coverage across a large entity while achieving penetration

 Credible presenters

 Expertise in the area – trained thoroughly

 Support from Sr. Management, SMEs and managers  Presented in local language, focusing on local issues

Themes and takeaways - I

 Be creative, start early and keep the pedal to the metal  Find ways to make this stuff fun

 It’s OK to poke fun at ourselves

 People always enjoy humor and it is an effective training and communications tool

 There are lots of ways to communicate and train – blogs, videos, newsletters, in-person, web meetings, etc.

 Make sure to incorporate into new hire training, manager training etc.

 Formal, informal, short, long – it does not matter – just keep getting the message out

Themes and takeaways - II

 Constant and consistent communication  Keep compliance top of mind

 One size does not fit all: Design a training and awareness program that will fit your company and different audiences within your company

Contact information

JOEL KATZ

SENIOR VICE PRESIDENT,

CHIEF ETHICS & COMPLIANCE OFFICER CA TECHNOLOGIES

631.342.2328

[email protected]

LARRY PARSONS

FORMER VICE PRESIDENT, LEGAL and CHIEF ETHICS AND COMPLIANCE OFFICER FREESCALE SEMICONDUCTOR, INC.

512.797.7658