Principled

S7E14 | How can boards advance ESG priorities through a values-based culture?

What you'll learn in this podcast episode

With increasing demands from institutional investors, employees, consumers, and shareholders around ESG priorities, how are company boards assuring that they are shaping business strategy to be responsive to these expectations? In this episode of the Principled Podcast, Dr. Marsha Ershaghi Hames, partner at Tapestry Networks, explores the role of boards in bringing a strategic mindset to advancing ESG issues with Virginia Addicott, former president and CEO of FedEx Custom Critical and board member of both CDW Corporation and Element Fleet Management. Listen in as the two discuss how the board’s own diversity can humanize the elements of creating sustainable corporate cultures and creating meaningful organizational change.

 

Featured Guest: Virginia Addicott

Virginia Addicott recently retired as president and CEO of FedEx Custom Critical®, a leading North American expedited freight carrier located in Green, Ohio. Virginia joined FedEx Custom Critical in 1986 and quickly worked her way up the ranks, holding director positions in various departments where she placed a strong focus on organizational culture, customer satisfaction and developing people. In each role, Virginia used technology to improve productivity. By streamlining processes she has improved efficiency and enhanced communication capabilities to move the company forward. 

Virginia has been recognized for her leadership both at work and in the community. In recent years she has been inducted into the Northeastern Ohio Business Hall of Fame (2013), received the Women of Power Award from the Akron Urban League (2013), and also received the Leadership Excellence Award from the National Diversity Council (2014). She has also been named to the Inside Business Power 100 list for the past six years (2011-2016) and the Crain’s Cleveland Business Power 150 (2014). She was also named honorary chair for the 2015 Bridgestone Invitational Tournament, the first-ever woman to be named honorary chairperson for the tournament. 

Virginia earned a Bachelor of Science degree (‘85) and an EMBA (‘95) from Kent State University. In 2013 she was appointed by Ohio Governor John Kasich to the Kent State Board of Trustees. She is past chair of The Boys and Girls Club of the Western Reserve and past chair of the Greater Akron Chamber of Commerce. She also serves on a number of other boards, including Akron Children’s Hospital, the Akron Community Foundation and FIRST (For Inspiration and Recognition of Science and Technology).

 

Featured Host: Marsha Ershaghi Hames

Marsha is a partner with Tapestry Networks and a leader of our corporate governance practice. She advises non-executive directors, C-suite executives, and in-house counsel on issues related to governance, culture transformation, board leadership, and stakeholder engagement.

Prior to joining Tapestry, Marsha was a managing director of strategy and development at LRN, Inc. a global governance, risk and compliance firm. She specialized in the alignment of leaders and organizations for effective corporate governance and organizational culture transformation. Her view is that compliance is no longer merely a legal matter but a strategic and reputational priority. 

Marsha has been interviewed and cited by the media including CNBC, CNN, Ethisphere, HR Magazine, Compliance Week, The FCPA Report, Entrepreneur.com, Chief Learning Officer, ATD Talent & Development, Corporate Counsel Magazine, the Society of Corporate Compliance and Ethics and more. She hosted the “PRINCIPLED” Podcast, profiling the stories of some of the top transformational leaders in business.

Marsha serves as an expert fellow on USC’s Neely Center for Ethical Leadership and Decision Making and on the advisory boards of LMH Strategies, Inc. an integrative supply chain advisory firm and Compliance.ai, a regulatory change management firm.

Marsha holds an Ed.D. and MA from Pepperdine University. Her research was on the role of ethical leadership as an enabler of organizational culture change. Her BA is from the University of Southern California. She is a certified compliance and ethics professional.

 

Principled Podcast Transcription

Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace changemakers.

Dr. Marsha Ershaghi Hames: With increasing demands from institutional investors, employees, consumers, shareholders around ESG priorities, how are corporate boards ensuring that their companies are assessing, measuring, and shaping business strategy to be responsive to these expectations?

Hello, and welcome to another episode of LRN's Principled Podcast. I'm your guest host, Dr. Marsha Ershaghi Hames, a partner at Tapestry Networks. Today, I'm joined by Virginia Addicott, the former president and CEO of FedEx Custom Critical. Virginia serves on the board of CDW Corporation and Element Fleet Management. We're going to be talking about the critical role of boards in shaping ethical corporate culture and why board diversity is essential to creating meaningful organizational change.

Virginia is a real expert in the space, having carved out an impressive career in operations and innovation in logistics at a time when relatively few women were in the industry. Virginia joined FedEx Custom Critical in 1986 and quickly worked her way up the ranks holding director positions in various departments where she placed a strong focus on organizational culture, customer satisfaction, and developing people.

Virginia has been inducted into the Northeastern Ohio Business Hall of Fame. She's received the Women of Power Award from the Akron Urban League and received the Leadership Excellence Award from the National Diversity Council. Virginia, thank you for coming on the Principled Podcast.

Virginia Addicott: Well, thank you very much for having me. It's a pleasure to be here. Thank you.

Dr. Marsha Ershaghi Hames: So let's get started from the top. You had such an accomplished career. You retired as president and CEO at FedEx Custom Critical before turning to a distinguished career of service on both corporate and nonprofit boards. Maybe to start, just share a little bit more about your journey and how these experiences have helped shape and prepare you for the lens of oversight and board service.

Virginia Addicott: Yes, Absolutely. As you have mentioned, I had a really terrific career at the FedEx corporation leading the FedEx Custom Critical organization. I was with the organization for a little over 33 years. Unbelievable in this day and age I think. But I really did have a terrific career because I started out in the ranks and moved my way up quite quickly. I think really starting out really... I'll say doing the doing, having your hands dirty, and really in the operations really did shape and prepare me for ascending to the role of president and CEO because I really understood how the organization worked, how the people worked together.

And through that 33 years, one of the biggest things that I did see was that culture is everything to an organization and how you treat your employees with fairness and dignity and making sure they know that they're valued in their work really makes the difference in how you can execute a strategy. And I love strategy, but without having a really engaged workforce, it's very difficult to take any strategy and put it into play.

Dr. Marsha Ershaghi Hames: As you came through this, I would say, observation of the importance of the intersection of not just the execution, but the how we get there, there were relatively few examples of female leaders in your industry. A lot of how we look at the lens of decisions can be informed by our own personal and professional experiences. Tell us a little bit more about how your experience of perhaps being the first woman or the only woman in a room shaped how you took your next steps in your career and maybe some of the lessons that you're carrying forward into the boardroom.

Virginia Addicott: Well, definitely when I began my career back in the '80s, the later '80s and 90s, you're right, there weren't that many women in the leadership levels of our industry and the transportation industry. And of course today, much different story to that. But one of the things that it was absolutely apparent to me is the whole need for diversity around a table, because one of the things that I witnessed was that when you have the same types of people all sitting around a table and they've had maybe similar backgrounds, similar experiences, et cetera, they come to the table with similar viewpoints.

When you start bringing people to the table who have had diverse background, experience, you really do start to get a whole new possibility of how you'll take something forward, how you'll shape your strategy, how you'll handle and work with those people who are working with you and for you. So I really do think that the opportunity to be that person who was maybe the only or one of very few gave me the context as to how that feels and how important it is to have the diversity, but also how to embrace and engage and work with people who come from many different types of backgrounds.

Dr. Marsha Ershaghi Hames: So I think embrace is a great characterization here because it starts with the willingness to be open and inclusive of ideas or points of view that may differ from your own. I've certainly been in dozens of conversations now with corporate directors that continue to reveal this pressing need for boards to really improve their understanding of diversity, equity, inclusion.

And there's a lot of dialogue around the board's role in the governance of DEI, especially as investors and employees are demanding more progress from institutions. I'd like to get your reflections a little bit more on this. I mean, to what extent, both within your own industry, and I think more holistically, are you seeing progress around inclusivity, diversity, even gender parity, and what is really the responsibility that you feel is of the corporation in being more intentional about driving us forward?

Virginia Addicott: Well, I have the luxury up sitting of course on a couple of boards. And I can tell you, on both of our boards, we have a really firm look at the entire ESG and we talk about it. But the number one thing we understand before you even get to ESG is how important diversity is.

So it's not doing it because somebody just said, "Hey, we have this thing called ESG and this is what you need to do," it's really understanding, and again, embracing the idea that when you have people from different backgrounds, whether it's gender, whether it's ethnic, whether it's background of an experience, when you get those people around a table, you get a better answer.

I can't quote them off the top of my head, but there's studies out there that show that when you do have this diversity, a company is much more likely to thrive, grow, and be profitable. So it's a no-brainer to know that that's important. Now, I'll tell you that the boards I sit on, we do talk about this at the board meeting and we do have metrics around it and have the human resources or the chief operating officer. But we include all of the C-level players at these companies in talking about, how are we doing?

How can we do better? And really working around the ideas of acceptance of other ideas, embracing other people's thoughts and experiences. So it's an ongoing conversation and a dialogue. And again, it's not one done just because of ESG, it's done because we all understand that diversity will help our company be even better.

Dr. Marsha Ershaghi Hames: Well, I mean, it's really a testament to the cultures of the boards you sit on too in terms of some of the progressive design and openness to keep this as a priority on agendas, to be more inclusive of some of the C-level executives. Not every board today is taking those approaches, so that's fantastic example.

Virginia Addicott: At least my experience has been when you see a board that has good communication amongst themselves, good dialogue, and good dialogue, of course, with the C-level and even those below that level, when you've got good communication, and I'll say respectfulness of thoughts and opinions, that maybe I'll bring something up and maybe the chief operating officer, the CEO or somebody maybe they agree, maybe they disagree with my thought, but they're open to hearing the thought.

I think that's where it all begins, is you've got to be respectful of each other and communicating with each other and open to each other's ideas first. Then when you start talking about diversity, certainly that then spills over into it. But I think you have to start with this notion that we are all here for the good of the whole, for the good of the company, for the good of the shareholder, and that we need to be open to ideas so that we don't go down the wrong path or make unnecessary twists and turns. But by listening to each other, we can come up with the best ideas.

Dr. Marsha Ershaghi Hames: It's so important to point out just the simplicity, but the power of respect and respectful communication and good listening skills.

Virginia Addicott: Yeah, absolutely. And it's great when you're sitting in a boardroom and people come up with ideas and we can banter them around. The board is not trying to certainly tell the executives how to run their company, but we're all in it together to advise and to talk about it and to have that good dialogue so that we can come up with the right answers to situations or strategy, et cetera.

I think one of the things that I've really witnessed, I can say personally, what I've witnessed is this move from... with ESG coming out, is move from having a plan to become more diverse in an organization and maybe even over a couple of years where you see the plan and it gets presented again and we're not really making that great of a headway or... et cetera. For me, what I'm seeing is we are seeing the plan and we're seeing headway because we, the board, are saying, "Okay, so you didn't get to move the needle as much here, tell me what you're going to do next time."

And then again, we banter it around, we talk about best practices we've seen other places, maybe some creative ideas defining diversity to come in or raising people up within the organization. But I think that this ESG certainly has prompted the notion that you can't just keep putting numbers up and them not moving. You need to see movement, and then let's get creative on how we're going to do that.

Dr. Marsha Ershaghi Hames: Well, building a little bit on ESG issues. So you and I initially we met... You're part of our audit committee network and you have been fantastic contributor to our ethics, culture, and compliance network. However, every committee, I think, that you're on and you're a part of seems to be morphing into some sort of ESG committee. There's just so much focus now on climate risk, people, talent, cyber, tech transformation, and all these issues.

And these are great examples around, how do we go from the plan to making headway on the plan? What would be your guidance for our listeners? How can boards start to really approach thinking or planning differently around oversight of these issues? What are some strategies you picked up where boards could be doing better?

Virginia Addicott: I think one of the things that we've got to... at least we bring this one up, is that post... and I don't want to say post-COVID because obviously COVID is still alive and well, but I'll say post-vaccine, one of the things that we're seeing is a big stretch on people because of people exiting the workforce or moving companies. So I think one of the things is there is a heightened focus on climate and people and cyber, et cetera, as you've mentioned, and then we have this exit of people.

So one of the things we have to do is really understand who is in charge of each of these things? What is the team, the committee? And make sure that they are staffed correctly to get the work done. Because what I'm seeing is quite a bit of stress in workforces just in general. So I think it's really making sure that when you look at each of these areas that are very important to us, that who is on point for it and what resources do they have to do this? The other piece for me that I'm seeing a lot of, which I really love, is the collaborative effort across the companies to address these issues.

For instance, cyber is not an IT or technology issue, yes, probably the leadership and ownership sits there from the standpoint of the CIO or whoever it is in that organization, but it's the operations, it's the human resources, it's the marketing, it's the legal, and they all have to collaborate to make sure that we're in compliance, that we are on track with the cyber possibilities and the cyber threats. So one of the things I've seen through all of this is really a nice collaboration. We were just talking the other day, I was at a board meeting, and one of the things we were talking about, and this is around the diversity piece especially, was how everybody has to own diversity.

And it's got to be a part of the fabric of each organization within the company. And it's not something we're checking off so that we can have an ESG score, it has to be woven into the fabric of everyday things that we do to make sure that people are, one, from the very beginning that we've got a diverse slate of candidates when we have jobs available, that we're working with let's say universities or colleges, or depending upon what the job is other people, to how do we develop a new slate of candidates?

Then within our companies, making sure we're working from within the company to make sure people are getting the right development to move up. But it has to be, each and everything we have to do, are we doing things each day to make sure people feel included, that we're listening, and that we are valuing the opinions and inputs of people who may not look like us, may not come from the same country we do, may not worship the same way, may not like the same people that we do, et cetera? So for me, I'm seeing much more collaboration. And again, let's weave it into the fabric of the organization. This is not a number to check off.

Dr. Marsha Ershaghi Hames: Yeah, no, this is an excellent example. And what I'm really hearing from you here is the ownership and the threading into the DNA as you're saying [inaudible 00:16:39] it in. How can boards activate this expectation? Because there's a lot of conversation around, who in management owns it? How much time do they have to be visible at the board level in terms of what's being measured and what's changing? But I've also heard, if the board is not demanding or asking of, are we able to affect change? So I'm just wondering, it's this tension between who's driving what? Who's taking those first steps?

Virginia Addicott: Right. Definitely, the human resources type function or the chief diversity officer is going to present information. And of course, we want to see that and we want to see those metrics move. But I think one of the places that boards can really... let's say when a new position is coming available, a high-level position is coming available, are we asking, what does that slate of candidate look like? And I'll use the word demanding, but are we really pushing the idea that we need to see a diverse slate?

But I think the other place where it's really a bit of a no-brainer and it's super easy to do is let's say the operations is reporting out on something, that we are asking that operational leader, the chief operating officer, or somebody, a director, et cetera, we're going to be asking them questions of their organization and what does their organization look like and how have they been taking other people's opinions and new ideas into putting them into play?

I think it's asking the questions to many people, not just in that one section where we talk about diversity, equity, and inclusion. But really asking questions as we go through the entire board meeting and putting an emphasis on that. I think that really helps people get the idea that this isn't a check the box, it's a I need to live my life like this.

Dr. Marsha Ershaghi Hames: Yeah. Yeah. Yeah. So much of this is a purpose, values orientation, but then it goes a little bit back to the culture of the board. Maybe that helps us shift to this topic of, you've been an active contributor to the ethics, culture, and compliance network. We formed a culture measurement working group earlier this year and you contributed to helping create a framework that boards can leverage as a guiding tool to assess culture. Tell me a little bit about how do you see frameworks like this helping directors really move the needle. How are you thinking or leveraging this even within your own boards?

Virginia Addicott: I can tell you, when I was talking to one of my boards about being involved in this ethics, culture, and compliance network, they said, "Oh good. I really look forward to seeing what your outcomes are and maybe see how we can use it." So I think number one, from my standpoint, is certainly talking about it and talking about the work that we have been doing. And it was a great group that you all put together. I think there's a lot of boards that really want to do more around this, but maybe don't know how to get started or exactly what does this mean?

So I think these frameworks help to frame the question, and what is culture? And what is diversity? What is inclusion? And then giving some good ideas on how the board can... as we just talked about, how can the board in their role as advisor, how can we help to either direct, redirect, or just ask those probing questions to make sure our organization is really embracing diversity, equity, and inclusion all the way through the organization?

Dr. Marsha Ershaghi Hames: Well, Virginia, I want to ask one last question before we wrap up, and this is going to be a little more personal. I want to go back to your life, your professional journey, building your career. As you mentioned, 33 years is an exceptional tenure, one that we just don't see in today's professional landscape. But I want to peel back the concept of mentorship. In all my interactions with you, you're incredibly confident, you draw from a strong notion of, "I've tried this." I'm confident asking even the questions that I don't know the answers to.

And that's not always easy, especially for us as women, as we're building our careers. I've certainly had a number of mentors that have opened doors for me and that I've drawn upon and have guided me. I want to turn to you and see, were there any significant mentors, or shall I even call them professional sponsors, that maybe had an impact on examples or opening up the trajectory of your career path and how do you, looking back, look at their guidance and how do you in turn give back in terms of your mentorship?

Virginia Addicott: Well, this is definitely a topic that I enjoy talking about it because I think it's really important. And absolutely I have had mentors and I have had champions. For me, just to clarify, I say a mentor is somebody that you can sit down and really talk about things with and, "Hey, this is the dilemma going on. Maybe how should I handle it?" Or, "Hey, I'm thinking about this career, I'm thinking about this job. Help me to develop myself for that role." That's to me a mentor.

A champion or a sponsor for me is somebody who when I'm not in the room, they're the person saying, "Hey, Virginia would be great at that. Let's put Virginia in charge of that." Or new possibility coming up is speaking out and saying, "Oh, let's put her in that role." And I'm very much a person who wants to mentor men and women because I think everybody needs this. So I think sponsoring somebody, so speaking up for them on their behalf when they're not even there, and really being their champion and mentoring, helping to guide, are very important things.

Yes, I've had plenty of them myself. And I still have them, so don't mishear me. I still have people who I go to and talk to. But I also am very keen always to help people who are in this upward climb of the corporate ladder, if you will. So I do spend quite a bit of time. I love doing it because it gives me the opportunity to share some of my experiences. And I will tell you, I'm very quick. In fact, I'm mentoring a young woman out of Chicago who has great upward mobility.

And I was telling her something the other day, she was going to give a presentation, and I said, "Listen, I would love to work with you on the presentation if you want me to because I was given tremendous feedback that was so helpful to me." And I explained to her what I had done wrong and how it impacted me and how through some coaching that I got from an outside firm my presentations got so much better. So to me, it's not about, this is what you should do, but also giving experiences where it didn't work out so great for me and these were some of the things, the lessons I learned, and maybe I can impart that to you.

But I really think it's very helpful for men and women to help those who are in these lower levels and have this upward trajectory and the desire to really take the time to stop, turn around, and as people say, lend a hand to pull somebody up along with you. As a woman, I think it's important to have mentors who are men and mentors who are women, because when we talk about diversity, people come at things from different angles, and people who have diverse backgrounds and experiences, not just somebody in your business line or your organization. So you get the idea.

But I'm really big on mentoring. I love to do it, I love to spend the time with people, and it's so... I always say it, all through my career, the most rewarding piece of my career was not my upward mobility and climbing, but it was to see people that you were working with or that you had maybe hooked up with, another coach or mentor, to see them move ahead. That development to me was worth everything from the standpoint of making me feel like, okay, we are really accomplishing something here. So I certainly suggest to everybody that they get to be mentors and hopefully they're champions for people as well.

Dr. Marsha Ershaghi Hames: No, you couldn't have said it any better. It can be so rewarding. And it's a very positive, if not infectious behavior. So I hope we can spread more of that. Virginia, I could speak to you for hours. I've learned so much through your reflections. But we're going to be respectful for our listeners' time. So I want to thank you for opening up and sharing a lot of your thoughts on all of these matters from ESG to the trajectory of your career, mentorship, being a good champion, the importance of diversity and culture. There's so much that we covered. But thank you Virginia for your time.

Virginia Addicott: Thank you, Marsha. I really appreciate being asked to participate on your podcast. I hope that our discussion here today triggers something in somebody's mind to think differently about maybe whether it's ESG or culture or mentoring. It would be great.

Dr. Marsha Ershaghi Hames: Thank you. Thank you. And to you all, I'm going to close up. This is Dr. Marsha Ershaghi Hames. I want to thank you all for listening to the Principled Podcast by LRN.

Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustained values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.

 

S7E13 | How corporate purpose is foundational to business innovation and success

What you'll learn in this podcast episode

As the business world makes an overdue shift from shareholder to stakeholder capitalism, is it possible that we will see an erosion of innovation? How does a company’s purpose impact its success? In this episode of the Principled Podcast, LRN Chief Advisory Officer Ty Francis MBE talks about how corporate purpose and stakeholder capitalism fuel innovation with Mark R. Hatch, CEO of clean energy startup SiLi-ion, Inc., an instigator of the maker movement with the founding of TechShop, author of The Maker Movement Manifesto and The Maker Revolution, and researcher on the influence of “organizational purpose” on innovation and business transformation at Pepperdine University. Mark has dedicated his career to educating the business community on innovation and advanced manufacturing and has spoken at the White House on these topics. Listen in as the two discuss what it means to help people—and companies—around the world do the right thing.

 

Featured Guest: Mark Hatch

Mark R. Hatch is an advanced manufacturing entrepreneur, writer, and sought-after speaker and advisor on innovation, the maker movement, digital strategy, and advanced manufacturing. He has held executive positions for innovation, disruptive technology, entrepreneurship, and intrapreneurship in various industry sectors.

Mark is the CEO of clean energy startup SiLi-ion, Inc. and an advisor to Studio MFG, an advanced spatial-web innovation consulting and manufacturing design firm. Mark has dedicated his career to educating the business community on innovation and advanced manufacturing and has spoken about these topics to various audiences—including the White House, TEDx, Global Fortune 500 firms, and Harvard University. He has appeared on prominent media outlets such as ABC, CBS, NBC, Bloomberg, CNN, and Fox, and has been quoted in Bloomberg Business, FastCompany, Forbes, The New York Times, The Wall Street Journal, The LA Times, and The San Francisco Chronicle among other publications.

An avid researcher on the influence of “organizational purpose” on innovation and business transformation, Mark is working on his DBA at Pepperdine University and is a faculty member for digital innovation and strategy at Pepperdine's Graziado School of Business. He is also an entrepreneur in residence at UC Berkeley. Mark holds an MBA from the Drucker Center at Claremont Graduate University and a BA in economics from UCI.

 

Featured Host: Ty Francis

Ty Francis MBE is a Welsh-American business development, operations executive, and subject matter expert in Corporate Governance, Ethics, Compliance and Culture and is currently LRN’s Head of Advisory Services, and a member of the Executive Team as a Special Advisor to the CEO. 

Ty has utilized his expansive network of industry experts and thought leaders to help companies enhance corporate character, culture, D&I and transparency and has launched E&C programs and forums in the US, UK, France, Hong Kong, Japan, Brazil, Singapore, Brazil and the Middle East. He spent over a decade in New York City where he was EVP of Global Programs at the Ethisphere Institute and prior to that led the Corporate Board member business at the New York Stock Exchange’s Governance Services division. 

In 2019, he was awarded an Honorary Doctorate in Business by the UK’s Solent University for his outstanding contribution in the field of corporate governance and international trade. In 2017, Ty was appointed a Member of the Most Excellent Order of the British Empire (MBE), by Queen Elizabeth II, in recognition of services to business. 

Ty also studied at Stanford’s Rock Centre for Corporate Governance and Oxford University’s Said Business School and is a Certified Compliance & Ethics Professional (CCEP). 

 

Principled Podcast Transcription

Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders, and workplace change makers.

Ty Francis: As the business world makes an overdue shift from shareholder to stakeholder capitalism, is it possible that we'll see an erosion of innovation? How does a company's purpose impact its success?

Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Ty Francis, Chief Advisory Officer LRN. Today I'm joined by Mark Hatch, an accomplished entrepreneur, advanced manufacturing expert, and sought after speaker on topics of innovation, disruptive technology, and the future of work. Mark holds an MBA from the Drucker Center at Claremont Graduate University. And is presently pursuing a DBA, a doctor of business administration, from Pepperdine University.

We are going to be talking today about corporate purpose, stakeholder capitalism, and what it means to help people, and companies around the world do the right thing. After several successful decades in business, Mark is now researching the influence of organizational purpose on innovation and business transformation at Pepperdine, while simultaneously serving as CEO of the clean energy startup, SiLi-ion, amongst other things.

Mark Hatch, thanks for joining me on the Principled Podcast.

Mark Hatch: Thank you very much, Ty. It's great to be here.

Ty Francis: Okay so, for those of us saying to ourselves, "Where have I heard this name before," please tell us a little bit about your professional history.

Now, we know you as the founder of TechShop, and an instigator in the maker movement. What else? Oh, yes, you've spoken at White House about advanced manufacturing, and at the Clinton Global Initiative, something my wife [inaudible 00:01:58] was actually involved in during her time at Swiss Re.

Mark Hatch:   Oh, how fun.

Ty Francis: Yeah, she was at Swiss Re for about 10 years and worked very closely with President Clinton. So, that's a name, it's all too familiar in my household. But I also know you're involved in the Singularity University, which sounds very Star Trekky, which is an interesting side note, especially since we're talking about purpose today.

So, I've given an overview, but can you give us a little bit more about your backstory Mark?

Mark Hatch:   Oh, hit a couple high points. I'm a former green beret, so I was in the army for three years coming out of high school, which was quite entertaining. And then, I started my first company, an interactive multimedia company back in '80s. One of the things I've discovered that I'm really good at is jumping into something way too early. And then, getting beaten up for years and years until it becomes the obvious next thing.

The interesting thing about that interactive media though, was that John McAfee of McAfee Antivirus was one of my first investors. I actually got to know John before he became infamous, I guess. I spent a little bit of time at Avery Dennison, a big package goods company. A little bit of time at Kinkos, where I launched the e-commerce portion for Kinkos. And pulled T1 lines around the United States to wire them all up. Spent a little bit of time doing a health benefits ASP and so forth. But most people, if they know who I am at all, is from the maker movement days wrote a couple books in it, and spent a lot of time traipsing around the globe trying to get people to make things again.

Ty Francis: Well, I want to touch a couple of those things. So now, you aren't the average professor, as we've just heard, because you've got some real bites to your bark. Within what you just told me, I did read that you raised over $20 million and turned TechShop into that leading brand in the maker movement, growing it from 1 to 12 locations. And more impressively membership and revenue 20X in five years. I got that right, 20X?

Mark Hatch: 20, yeah. As long as you start from a very small base, it's really easy to hit those high numbers.

Ty Francis: I think you and I have got a different definition of the word easy. 

If that wasn't impressive enough, you also grew that $200 million business at Kinkos by 18%. But I think more impressive than that, and someone who runs a P and L you cut costs by 15 million in a single year.

Mark Hatch: In a single year, yeah.

Ty Francis: That is both impressive. And I get, your students get a kick out of all that experience. We had a pre-conversation before. And I mentioned that I'm lucky enough to know Sir Richard Branson. And he told me years ago how he went into a bookshop, and pulled a bunch of books off the library that were about business. I think the first 20 he counted, none of the authors had actually been in business, or run a business, and were anecdotal at best.

Looking at what you've done and what you've succeeded, how has that happened? And how has that paradigm shifted to you now?

Mark Hatch: One, I do actually tend to live in the future. It's a bad habit. I've got a very, very clear view of what I believe is going to happen. And I clearly did not take my desert training in the Special Forces very well, where they beat into your head, never mistake a clear view for a short distance. It will kill you.

So, I saw interactive multimedia early. I saw dot com early. I've seen many of these things. What I managed to do with TechShop was raise funds, and grow the base quickly enough so that we actually survive for a solid 10 years.

But what I do is innovation. My entire career has been on the edge between in a research and development, or the most recent trends, and then commercializing them, turning them into something that a consumer can understand, and acquire.

Ty Francis: So, I am seeing a Star Trek theme in all of this, by the way. Seeing into the future. A Q-esque type person here. But this is fascinating. And you, obviously, have an incredible foundation [inaudible 00:06:08] what you are doing, looking at the past, predicting the future. But I do want to tap more into the research you're doing at Pepperdine. And as part of your DBA, again, I'm looking at this and I have an honorary doctorate, and I feel very, very small right now.

Mark Hatch: Congratulations. That's quite impressive actually.

Ty Francis: Yeah, but apparently when the air cabin crew asks if there's a doctor on the plane, I'm not allowed to raise my hand. When they say, "What can you help this person with?" I can say, "Well, I've got an interesting anecdote about business."

So the DBA you're pursuing right now, I mean, I particularly admire the notion of going back to school for an advanced degree. I've had a limited amount of business success. And during the lockdown, I took three courses, one at a side business university at Oxford, one at Stanford, and one at the London School of Economics. The recurring theme through all of those courses... One was executive leadership. One was DEI and leveraging business through it. And the other was international relations and global politics. Organizational purpose was a common theme through all of those postgraduate and diplomas. And it was fascinating how that was a theme, and linking back into business.

So, I want you to talk about your work on organizational purpose. But first of all, can you give me, or us a definition of your definition of organizational purpose?

Mark Hatch:    There are like three versions of what purpose means. But to get a little bit technical, the short version is really simple. Like the single word, the single concept is why a corporation exists. That's what purpose means, why?

Now, usually, when you use the term, what is your corporate purpose? You're not thinking of the single thing that the word means. You're thinking of a corporate purpose statement, or a development of a series of concepts. Or, as they say in business speak, it's a construct. So, I have adopted George et al's from 2021, which is interesting. Most of this good work has happened just in the last few years. So, purpose in the for profit context captures the essence of an organization's existence by explaining what value it seeks to create for its stakeholders. So, you're creating value.

But then he goes on and defines it a little bit more, which I like. "In doing so purpose provides a clear definition of firm's intent, creates the ability for the stakeholders to identify with and be inspired by the firm's mission, vision, and values, and establishes actionable pathways, and an inspirational outcome for the firm." Sorry, that's very technical, but that's the best broad version that includes mission, vision, and values, which people tend to associate with purpose when you ask them what a corporate purpose is.

But let me back up a little bit. So, the reason I got intrigued with this was, well first of all, I'm very purpose driven personally. I was, usually, involved with technologies that I found intriguing, and could improve humanity in some way. But my experience at TechShop was at a completely different level. People were joining because of the purpose of this idea that we could remake our lives by going to a shop that had, basically, democratized access to the tools of the industrial revolution. We were giving the average Joe access to tools that they had never had access to, unless they were 80 years old, had come up at three machine shop or something. But we were giving them laser cutters, and 3D printers, and so forth. 

And I personally got a level of satisfaction out of that. And I got my staff members to perform at levels I had never seen before. We had members that are evangelists. I mean, it seemed like sometimes they would go out on the street and tell people, "Have you heard of this place? You've got to come in." We had this one member, he quit his job. And he didn't have a great job to begin with, but he quit his job as a night watchman, came up and couch surfed. Like that was a thing for a while, couchsurfing.com where you could go and spend the night at somebody's house randomly. This was well before hotel folks came along. He would evangelize each couch that he slept on became a member, like not the couch, the people. Every place that he went, we got new members. And we thought about maybe paying him just to hang around, and sleep on a new couch every night because he was our best attractor.

And so, this got me really interested in this concept of what is your corporate purpose? And how does it play out and impact the organization at large?

Ty Francis: I think the biggest question that we have, and I have is when people are talking about this concept, how organizations are dealing with this, how are you articulating this to companies, to brands, to leaders, and how to actually put this into practice? Because many of the conversations I have with boards, with GCs, with anyone, they understand the problem. They see what's happening. They read and they see blogs, and they have conversations with the fellow board members. But it's actually the tangibility of creating a strategy that puts this into place. And something they can follow.

I guess what's the sticky sauce? What's the magic wand that you throw over your clients, your peers on how do I actually put this into play?

Mark Hatch: So the research that I'm doing specifically came out of kind of the question, how do I deal with the naysayers? How do I convince a board, or a C-suite folks that are like, "Yeah, yeah, yeah, whatever, whatever, whatever. I've got my ESG guy and they're going to keep me between the lanes, and everything's going to be fine." I started down this path as like, what do we actually know about corporate purpose? Where did it spring from? Actually, I go all the way back. What's the original concept of a corporation? Where did that come from? And it goes all the way back. It's crazy. It goes all the way back to pre-Babylonian times. And I won't bore you with all of that, but it turns out you couldn't have a corporation without having a purpose of some kind. It wasn't allowed. The state would not allow it. The king would not allow it.

I've got a great quote out of the Law of Corporations 1702, "The sole purpose of a corporation is to improve the society and support the king." Full stop. You can't say, "Okay, I'm here to do like, blah, blah, blah. And I'm going to make this." No, no, no, no. How are you going to help your customers? How are you going to improve society? And how are you going to support the king? And if you don't have an answer to that, I'm sorry, not only will I not give you corporation, if I happen to have given you one, and you have strayed too far, I will shut you down. And this was actually the norm up to about 1880 globally.

And there's this great quote. It was Massachusetts Bay Company and they charged this poor sod 200 pounds for overcharging his customer. And then, on Sunday morning, the preacher got engaged talking about the egregious greed, and what can happen. And it was simply against the law. And then, things changed with the 14th amendment, some other bizarre things. But we've had this like weird era, and that's how I would describe it, between 1886 to about 1950, we were set loose. You didn't have to have a purpose at all. You actually didn't need any purpose at all. You could just go down to Delaware and say, "I want to set up a company." And they go, "Great." They still would ask, what are you going to do? And so, in your mind, you had to at least have a customer, or somebody you were going to steal money from. You had to have some idea. So even today in your charters, you have to say, "Okay, I'm going to be in this industry segment," which by the way, you just send them a note and that can change.

But about around 1950, that started to shift. So, that was a long winded way of saying, so how do we deal with these guys? And what I wanted to do, and what I'm doing is I'm a practical guy, I'm a practitioner. I don't want to sell them something that doesn't work. What does that mean for your purpose? And so, I'm really intrigued with this idea of empirically based management tools. How do you know something works? Not one of those 19 books that Sir Branson was talking about, but the one that comes out of the trenches.

So, I've gone back and I've done a fairly significant review of all of the literature on corporate purpose. What's actually known from a theoretical perspective from doing interviews, which I don't put a lot of weight into because you get what you want out of your interviews. But actual empirical work that's been done in this space. And it turns out those corporations that do have a purpose that's more than simply serving customers, they have substantially superior financial returns. And actually, I think your firm is an example that promulgates that point of view based on research you guys have done in the past.

Ty Francis: Our tagline is, principle performance. And I'll add that some research we did last year echoes most of what you're saying. I mean, all of what you're saying. My own advisory team released a report alongside our marketing team. And we called it our LRN Benchmark of Ethical Culture, which is a multi-year, it's a collaborative research effort, which draws data from nearly 8,000 employees, 17 industries, 14 countries. And that study conclusively proves that ethical cultures don't just protect corporate reputations, but they propel the bottom line. Companies with the strongest ethical cultures, strongly outperform by approximately 40% those with weakest ethical cultures. And that was across all measures of business performance, customer satisfaction. You talked about employee loyalty, innovation, adaptability, and growth.

It's very simple, and you can make a lot of links to this. But if you keep people happy, if people believe in what you are doing, they will stay. If they stay, they will not leave. If they will not leave, they will not take IP with them. They will not go somewhere else. So, all that money you've invested in hiring them, training them, making them better people they will not take that somewhere else.

Mark Hatch: Yeah, your brand positioning, your ability to [inaudible 00:16:32]. The theory is actually pretty well illuminated. Actually, the step that I'm taking... I think we have, in fact, proven that having a higher purpose can, or will result in superior financial success. So, there's my answer to the naysayers. This is really simple besides being the right thing to do, and to feel good about yourself, and your company when you go home at night, and you talk to your kids about what you're doing, your returns are higher.

But the next question that I asked is, okay, show me how? Just throwing a purpose together and announcing it from the mountaintop is not the right answer. Now, we are getting results, so kudos to the companies that are executing. But I'm trying to answer the question, okay, how do you operationalize a superior purpose? What are the actual specific financial drivers that create superior firm performance?

Innovation, and then specifically radical innovation is historically the largest way that firms create superior returns by far. There are other ways of doing it: brand, financial management, operations, Six Sigma, blah, blah, blah, blah, blah, blah. But the number one way of improving your financial performance is actually to do innovation. And then radical innovation in particular. That's my little chunk that I'm chewing on is can I show that firms with a higher aspirational purpose actually get superior innovation returns and superior radical innovation returns?

And the quantitative numbers have come in. I'm now working on writing it up. And it's clear like it's 0.0001 chance that it's false. In fact, a higher purpose does drive radical innovation in a very significant way. It explains 30% of the variance of that. And like 35 to 37% of all variance in your innovation. It's huge. So, my answer is, okay, install, purpose, and innovate. Point this amazing effort that you've created, point this missile down the range at radical innovation because you're going to get an enormous return out of it.

Ty Francis: You've actually answered the next question I was going to ask about, what this means for the future of business, and what is your vision for how company leaders can apply these insights? As you said, it's not enough for somebody to read in a book about what's happening. It's how they can relate that and put that into practice to change the dynamic of their own companies.

We're not just talking about this. Investors are asking companies point blank, define your purpose. What are you doing to make the world around you better? Larry Fingers, writing to CEOs every single year. In the UK, the banking industry are asking, "Yes, we get it. You're raising capital for people, but what else are you doing?" It's a little bit, what have you done for me lately kind of thing.

Mark Hatch: We've come full circle now. In 1886, we decided, okay, you don't have to have a purpose. But now, we are rewriting the laws. The SEC in the US, the UK, as you mentioned, the French have done it. The Italians have done it. The Germans did it ages ago. But there's an enormous amount of pressure now on corporations to be able to explicitly measure what their social good is. They don't necessarily call it your purpose, but that's what they're getting at.

When I came at this, of course, I have the context of working at Singularity University as a speaker. And I know, I know a friend of mine is Salim Ismail, who's driving this whole exponential organization's effort globally. And, in it, he said, sidebar conversation. "So Mark, I've tried to do these exponential innovation efforts without a massively transformative purpose at the beginning of the effort because the corporation was like, 'Yeah, you're making me feel kind of weird about this idea of changing the world and all that. We're an X company, let's just do the execution part and skip the massively transformative purpose part.'" And he said, "Every single time we did that, it failed. Every single time. We got nominal innovation out of it."

And it actually makes sense when you think about the internal resistance of individuals in their risk profiles. Typically, you go to work and you want to have things normal. And then, what's going to happen all day long, and you're competent and so forth. But when you start doing innovation and, particularly radical innovation, you don't know what tomorrow looks like. You don't understand who your customer is. You don't know what the value is per se. And you're thrown in the deep end and you got to figure it out. Now, it's not quite that bad, but it is substantially different than your day-to-day. And it's hard. Doing radical innovation is the hardest part of being in business because you don't know how it's going to come out.

That as a background, is like, "Oh my goodness, you're kidding me. You just told me that one of the keys to being able to execute this isn't actually reaching for the stars." It's not like, can we get a 15% increase in this? Or can we cut costs by 10% or 5%? It's can you cut cost by 50%? Can we double our market share? Can we open up an entirely new market segment? Just saying those words creates a new tension in somebody's head. You bring them in and say, "Okay, we're going to get 10% here, and 15% there." And everybody goes, "Oh cool, I don't have to change anything. I can go back to my desk and keep stamping those pieces of paper. And I'm good." You come in and say, "I want a 50% increase. And I need a 30% reduction over here," actually you've lost the audience because for the next five minutes, all they're going to be wondering is whether or not they have a job. Am I qualified to do this? That's what got me going.

And we live in the most exciting time in all of human history. We've got more technologies coming on stream in amazing and radical ways, and how they're interacting with one another is absolutely stunning. So, this is the best time in all of human history to do radical innovation. This is the best time to go after actually deep purposes. And I feel sorry for these corporations who are going, "Okay, let's try to get a 12% bump over the next two years." They're doomed. In my mind it's like, forget it. You and I and others in this world are going to teach the executive suite that radical innovation is possible, it will drive the bottom line, make them feel better and will, in fact, change the world. And I'm proving it empirically. That's kind of what I'm excited about.

Ty Francis: It reminds me of a quote that was a famous NFL coach. And I can't remember it now and I'll come back to you by the end of the podcast. But it was about reaching for perfection that you'll never attain it. But on the way down, you will hit excellence. And I think this is an area why people aren't reaching for the stars is surprising because it's that competitive advantage. When we talk about how this is a competitive advantage, not just on a social scale, but on a business scale, we've been talking to board directors. We had a collaboration with a group called Tapestry Networks. We spoke to 40 directors of publicly traded companies, I mean 40, 50 companies. And they represented about 70 or 80 different companies across their different board positions.

We did this specifically to talk about purpose and culture. We released the findings in a report called Activating Culture and Ethics for Boards late last year. And the results, albeit mostly predictable, the boards want to put culture at the top of their priority list, but they still don't fully understand how to measure it. The refreshing part was that they see that the paradigm shifted from board members having a nose in, fingers out ability to more having nose and fingers in because they are starting to see this as a competitive benefit to having both strategy and culture and purpose aligned. And with that, I think they're seeing they have a better understanding of what corporate purpose should be. I think we're trying to see a tangible move in the... I'm using quotation marks here, a "tone from the top" conversation on how boards are impacting priorities, and are influencing culture.

So, how does that help your research for what you are doing now for the future of work?

Mark Hatch: You've done the surveys, you know what the answers are. But what I'm trying to do is start a small renaissance around, prove it to me. What are the actual ways that you operationalize it? It's like, okay, employee retention. Okay, measure employee retention. But don't just measure employee retention, invest in your employees. If you know that they're going to hang around longer, don't just sit on your hands, and say, "Oh cool, they're going to be here longer. Woo hoo." No, no, no. What that means is you can't actually invest in them in ways that your competitors can't.

That's operationalizing this idea of this competitive advantage, invest in your customers, invest in your brand. What are you doing specifically to drive your brand in relations in a deeper way? You've created this competitive advantage. You've got this great purpose now sitting on the shelf. Great. How are you going to operationalize it? And can we measure it? That's my point. It's can we actually measure it and see what the returns are?

Ty Francis: The measurement, that's the trick. Everyone knows what they should be doing, but they don't know how they should be doing it.

Mark Hatch: And if you don't measure it, then you don't care about it.

Ty Francis: Wasn't that the famous misquote from Peter Drucker what you can't manage, you can measure, or the other way around?

Mark Hatch: Right.

Ty Francis: So we've been talking a lot about boards and purpose, but we know the SEC, and we're talking about the US. Obviously, although I'm American, I'm also Welsh. So, I'm curious if your research extends to Europe, or other regions. I mean, is this universal? Or is it just stage one USA, stage two [inaudible 00:25:55]?

Mark Hatch:    It does work at least in the UK. So, I chose my sample's 50/50, US/UK. 50/50, male/female. Native English speakers, try to control for some other variables. This is clearly true in the UK and the US. My suspicion, obviously, is that it's true in a lot of other parts of the world as well.

Other research suggests that it is at least pan-European. Gartenberg's work and others. Gartenberg did some quantitative research that had 500,000 companies in it from around the globe. And they were able to show empirically that purpose does, in fact, drive superior financial returns, similar to what your research did.

Ty Francis: When you're talking about this corporate purpose, I've noticed working in the States for a long time, that there is in the States and, to a certain extent, in the UK as well, there's a shareholder driven purpose kind of alignment where there's in broader Europe, France, and Germany, and Italy there's more of a stakeholder driven perception. So, there you see in Germany where you've got the different kind of board levels, and with the very straight labor laws in France, you are seeing that connection between leadership, and the employee base having to be aligned because they've got no choice because if they don't like what their companies are doing, they can change it, and quite dramatically. So, that would be interesting to see how that dynamic between the UK and the US, but then certainly further afield of that, how the European companies and organizations are actually using this corporate purpose vehicle to their competitive advantage.

Mark Hatch: Right. One might hypothesize that corporate purpose, that's a fundamental driver. But how you operationalize it may vary from region to region. Maybe brand is a better tool than radical innovation. Maybe employee retention is a better one. I'm not sure.

I doubt it, frankly. I think innovation is one of the fundamental things that you do as a business. Drucker would say, you're not even an entrepreneur, if you're not doing innovation. You can call yourself a businessman, but you're not an entrepreneur. And so, I suspect that innovation. And then as we're moving, again, the opportunity set available now to innovate is phenomenal. Radical innovation, it should be a fundamental strategy for any business that's trying to drive purpose into their organization, and with their stakeholders.

Ty Francis: Well, before we sign off, and before I get a raft of my very angry American listeners asking why this British guy is talking about American football? It was Vince Lombardi, [inaudible 00:28:28]. And his quote was, and I'll see if I can get this right, "Perfection's not attainable. But if we chase perfection, we can catch excellence."

Mark Hatch: Yeah.

Ty Francis: So Mark Hatch, this has been a fascinating conversation and one that we have merely pricked the surface of. And I'd like to have you back to talk a little bit more definitively, especially when the research is done, to look at those results. Thank you for sharing your thoughts with me today and us on this episode.      

My name is Ty Francis. I want to thank you all for listening to the Principled Podcast by LRM. If you have enjoyed the conversation today, please do give us a top rating on your favorite podcast app. Goodbye for now.

Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values.

Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.

S7E12 | Creating a culture of privacy matters for GDPR and CCPA compliance

What you'll learn in this podcast episode

The world of data privacy and protection continues to evolve at a rapid pace. From the growing number of US states adopting privacy laws to the growing list of rulings under GDPR, the EU’s General Data Protection Regulation, it’s a lot to keep track of. What can organizations do better to adapt to these regulatory shifts and adopt a greater culture of privacy? In this episode of LRN’s Principled Podcast, host Aitken Thompson talks with Andrew Lachman, the head of legal and data protection officer at Contentstack, about data privacy and protection and how to create a privacy culture in the modern workplace. 

 

Learn how you can get involved in today’s conversations around data privacy and protection with these organizations mentioned: 

• The International Association of Privacy Professionals (IAPP) 
• Future of Privacy Forum 
• TechGC 

 

Featured Guest: Andrew Lachman

Andrew Lachman has nearly 19 years of experience in privacy space, having founded the privacy practices committee at Move.com and co-founding the Congressional Tech Staff Association while Legislative Director for Congressman Ted Lieu who represents most of the Silicon Beach area. He is currently Head of Legal and Data Protection Officer for Contentstack after running his own firm for a number of years working with startups and growing companies. Andrew is a co-founder and chair of the LA County Bar Association's Privacy and Cybersecurity Section, a member of TechGC, the California Lawyers Association Privacy Section and has been a member of the International Association of Privacy Professionals since 2007 when he received is Certified Information Privacy Professional certification. 

 

Featured Host: Aitken Thompson

After starting his legal career at Kirkland & Ellis, Aitken became interested in the then-nascent field of educational technology.  He left law firm life and co-founded Thompson Educational Consultants and, subsequently, Taskstream, LLC.  Taskstream quickly became a leading company in assessment and accreditation for higher education. Aitken served as Chief Operating Officer, leading the legal, human resources and finance functions of the business. Beginning in 2016, Taskstream underwent a rapid expansion, merging with five other ed-tech companies in a span on 18 months and, in the process, becoming Watermark, LLC, and creating the “Educational Information System” category of ed-tech.  During this period, Aitken’s legal and HR focus expanded to encompass private equity investment and the transition between primary sponsors, cultural and process integration amongst the various merged entities, and the management and harmonization of legacy client and vendor contracts. 

 

Principled Podcast Transcription

Intro: Welcome to the Principled Podcast brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change makers.

Aitken Thompson: The world of data, privacy and protection continues to evolve at a rapid pace, from the growing number of U.S. States adopting privacy laws, to the growing list of rulings under the EU General Data Protection Regulation, it's a lot to keep track of, and that doesn't even include following your own company's data privacy policies. What can organizations do better to adopt to these regulatory shifts and adopt a greater culture of privacy?

Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Aitken Thompson, Chief Legal Officer at LRN. And today I'm joined by Andrew Lachman, the head of legal and data protection at Contentstack. We're going to be talking about data privacy and protection and how to create a privacy culture in the modern workplace. Andrew's a real expert in this space. He's been working on the topic of data privacy his entire career, consults on public policy, and his actively leading conversations about this with GCs and Tech. Andrew Lachman, thanks for joining me on the Principled Podcast.

Andrew Lachman: Oh, thank you. It's my pleasure to be here with you and with LRN.

Aitken Thompson: Your legal career in Tech goes back to the earliest days of internet technology. You've been on the front lines of data, privacy and protection for more than 20 years. We often talk at LRN about an ethical culture in the workplace, but you also talk about privacy culture. What does privacy culture mean?

Andrew Lachman: Privacy culture means making privacy decisions for the benefit of your customers as a part of the operation of your company and ingraining that in your culture. It's a difference between for instance, what you see companies like Apple do, where they have really made privacy and privacy by design and everything else that they do a part of the company and understanding that maintaining that customer trust is important. There's a lot of allure out there in data, but it also presents a very big target for hackers and for abuse, as we've seen with some of the headlines that have come out recently, and a lot of the decisions that have come out of the European Union about technology such as Google Analytics, for instance, and a variety of others.

Aitken Thompson: Well, you touched on it right there and the regulatory environment or topic is what privacy is constantly evolving and changing on a month to month basis, it would seem. So thinking about privacy culture as an attribute to ethic culture is worthwhile. So how can we best prepare the company's leaders, product developers, business analysts, et cetera, to keep privacy in mind on a day-to-day, moment to moment basis?

Andrew Lachman: Well, I think first of all, it's important to always review with leadership and everyone what the cost is of not engaging in a culture of privacy. It can affect the trust in your company, it can do reputational damage. It can do financial damage. If you think about it, GDPR, we're starting to see out of a number of jurisdictions, some very large fines. It can be as much as 20 million Euro. It can be as much as 4% of your gross revenue, if they're able to establish especially after repeated engagement, that there's no longer a good faith effort to try to comply with the law. So there's the financial damage, there's the operational damage in terms of the morale of the company. So, there's a lot of reason. And then, of course, there's dealing with investors. And if investors don't have faith and dealing with also activists investors, if you're a public company, that kind of damage can take up a lot of resource as well. So I think that's the number one thing to do is review what the cost is.

And then the second thing you can do is empower these various leaders to understand your analysis and how you look at things and what the benefits are. And I think the third is doing a real financial analysis and asking yourself, not just financial but also a data analysis. Everyone wants to hold on to data because it could be useful at some point, but with GDPR and CCPRA in California and other laws around the world, Brazil as well, even Philippines, China just passed laws as well. You can only hold the data for the purpose in which you collect it, and you can't hold onto it forever. You can only hold onto it in an identifiable fashion for the period in which you're empowered to use it in relation to the service being provided. That is, if you don't do that, then you expose yourself to investigations and audits. And those all take a lot of time and resources as well that could be spent on building your customer base.

And so when you do that analysis, you can really look at it and say, okay, well, is this particular data we're collecting, we want to collect? What is the actual use? Is it related to the purpose in which we collect it? Recently, the French Authority said that you can't even use data to improve products that aren't related to the original product that the data was collected from. So you really have to ask yourself, "why am I using this data? Why do I need it? Is it related? And is there other ways in which we can collect or separate out this data without building profiles or things that would run a foul of various regulatory authorities?" So you've got things like pseudonymization, where instead of throwing together a bunch of data on an individual in one place, you can separate it out into different places and use a token that can't be directly linked without some sort of exceptional effort to the various pieces of data. And that can also, at a very low cost and a low operational impact, protect the company.

Aitken Thompson: Got you. And so I can understand since I'm a GC, and I understand the balance between business goals and these privacy other concerns, I worry about that. I think about that. How do I get people sort of the rank file people, the product developer, the marketing department, to keep this in front of mind from a logistical or education standpoint, or however you want to take that question.

Andrew Lachman: So GDPR requires that you have to do annual privacy trainings. And of course, companies will generally speaking to privacy training. It's like on a broad level sometimes and say, "Hey, this is personal data." What you're really better off doing is breaking down and doing sub trainings as well. And talking with your sales team, your marketing team, and your product teams to have them understand. And by the way, also your engineering and technology teams to make sure that each of them understand how this applies to them. So you're making them partners. If you're in the situation where you're the only one who are asking these questions, then you're making your job much, much harder. And so you are much better off empowering your teams that you work with some of the tools of analysis so that they can ask you these questions and it becomes a part of what they do. 

And that makes a big difference. And that can be a challenge, especially in a high growth environment, because everyone wants to get it out right away and get it done. But if you build in, what's called privacy by design, which is mandated by GDPR early in the product development process. When they're starting to put together, you can help answer those questions early on, and they're not rushing to clean things up. Proactivity is often a lot easier said than done, especially in this world of what was it, Ready, Shoot, Aim, but that we have and fast failing and things like that, but the whole purpose behind privacy by design and the principles around it is to get you involved in that process early, so that you're not in that situation.

And if people are having regular meetings with your teams, talk about these issues and being a part of every product development process early on makes a difference. Maybe it makes sense if you have a product to just base the entire hosting out of Europe. So that way you're not spending the money you'd have to separate out the data. And frankly, as GDPR and American standards continue to get closer and closer together, it might make sense just to go for the highest denominator as opposed to spending the money to separate everything out.

Aitken Thompson: Got it. And it's interesting. I agree that we're seeing the American or the U.S. version of GDPR which would body in sort of CCPA, or it's actually not called CCRP, but [inaudible 00:08:21].

Andrew Lachman: It's going to be called CPRA as of 2023. And in 2023, it gets more GDPR like, so, a lot of the standards, a lot of the rights are more similar as well. So including by the way most of the other states have a business to business exception, with respect to data that's being provided in connection with a service. Right? You work for a company, you have to provide your email and your work email and your login and your history of the use of the product in connection with that under Colorado and Virginia and the law that's coming out from Connecticut as well, that is accepted and is not considered personal data. And there are exceptions in Canada as well with that, but in California and in Europe, it's all treated the same and you don't have a business to business exception.

Aitken Thompson: Gotcha. And all these new regulations come out and then coalesce around what will probably be a global standard. Have they gotten the balancing right? Do you think that regulators, there are certainly an argument to say, "Look, the regulations have gone too far." Certainly the gathering and analysis of data has created an incredible amount of interesting business insights and certainly value to customers and companies alike. Do you think they're getting that balance between privacy and commerce correct, as a general matter?

Andrew Lachman: It's a always going to be a constant battle. I think there are a couple of challenges. And I remember this from my days both when I was on Capitol Hill, I followed very closely the commenting process around CCPA and the appointment of the folks on the Data Privacy Agency Board as well. Challenge. Number one is that regulations move much slower than the technology changes. And so governments have gotten better at regulating from a set of principles as opposed to a set of strict standards. And that gives them the flexibility and then they can adapt accordingly. GDPR did a very good job with that. CCPA, a CPRA I think did a better job with that. We'll see is the regulations come out because it's still a push and pull. But the other big issue that comes up is that sometimes privacy advocates don't have an understanding of how technology works in the flows.

And so there is a tendency to have a set of abstract principles out there without thinking how it goes through a user experience, how it goes through and how data actually flows with the technology that exists. A good example is sort of the Universal Opt-Out button right now. CCPRA says, "You're not supposed to have it. The attorney general really wants one and has been pushing very hard for it." But getting universal technologies like that adopted takes a very long time in working it into your code, et cetera, in a private workplace. So I think in that particular case, you have this disconnect where there are these theories that exist, but actually understanding how they can be put in practice creates a problem where the aspirations can be very difficult. If not impossible to reach, it's not like environmental regulations, there's technologies out there and people are there and they're constantly working to meet certain standards.

And there's a strong impetus in the marketplace to do these kinds of things. Cause people can make money from it. And that kind of thing. That's not quite yet there. And so you've got really good organizations, that want to protect your data and protect your rights to privacy, but they have never been in the place of actually seeing how the data flows work and understanding how to take these principles and plug them in to the real life application of data, and how companies will work through them. And I think if we can bridge that gap, we'll see a much better set of regulations that meets those goals and also takes away the advantage of some companies that frankly their approaches, well, we just can't do it. And no one has asked them why let's walk through it. Let's see where we can plug into your process.

A while back Google was saying, "Oh, we can't ever change, go analytics. We have to collect IP addresses." And the regulators in Europe went through a very long process of discussion with Google and believe me, it wasn't an easy slog, but they did it. And now Google analytics and its next version will not collect IP addresses, which is going to change the entire advertising space and in a lot of other areas, but it takes a lot of discussion to make that happen. I know that was a very long answer, but it's a very, very complex issue.

Aitken Thompson: So certainly data privacy and protection is an issue for essentially all companies these days. Because everyone uses computers and gathers some sort of data, but does the regulatory burden or people should looking for change or significantly get larger depending on what industry a company is in?

Andrew Lachman: Oh yes. Very much so if you're in a financial space or if you are in a healthcare space, there's much more extensive regulatory regime and environment. As an example, we've got Gramm-Leach-Bliley and the New York Financial Services Regulations Around Financial services, but the banking industry itself has come up with its own set of separate regulations about cybersecurity. And if you're working with banks, for instance, you need to adapt to those. If you're in the healthcare space, you have to deal with HIPAA and Ransomware and High Tech. And then even the cures act now, which has some changes as well. And there's which updates a lot about electronic health records and ePHI, when I work with a Contentstack, which is a content management platform, they have to deal with all kinds of customers and that making sure that they're adapting and working with the various companies out there on the special models that they have to deal with as well.

And finally, I forgot to mention children as well, which is a very highly regulated area. You've got Copa and California has its own separate regulations around children, but GDPR and the privacy regulations out there as well, which affects marketing. You really can affect your outreach to children. So you need to know who you're serving and make sure that you've got those particular kinds of risks in mind as well when you're dealing with regulations based on your market, and what particular areas that you're serving.

Aitken Thompson: Absolutely. These are very [inaudible 00:14:37] issues. We LRN had a product launched delayed because of the Google Analytics issue in France and Austria. I believe that was the country. Do you want to tell listeners just a brief sketch of what exactly why we're talking about IP addresses and Google Analytics?

Andrew Lachman: Your IP address is considered personal data in California and Europe everywhere else. And the reason is even if you're using a dynamic IP address, like on your phone, your IP address, isn't static. It can be traced and be used to identify you as an individual and under European law in particular, their constitution gives individuals a right of control and not just privacy, but a right of control as well in data that's collected about them. And that's why GDPR has set the standards of rights of correction and that sort of thing. And that jumps over into those IP addresses and other things can be used to create a profile on you. As well, which can be used in all kinds of different ways by advertising companies and Google Analytics how they make their money is that they build profiles and they use those profiles to increase their advertising dollars.

So there's been a real logger heads between the European Data Regulatory Authorities, which are saying you have this information that can really be used to identify you as an individual, especially on a computer more, even much more so than a phone and companies that are relying on this construct of collecting the IP addresses to build these kinds of profiles. And so the authorities finally said, look, you've been told over and over again, we've been asking you questions about your industry to understand it better that this IP address information is just too personal. It tells too much about you and really can help to identify you. And so you need to find other means other than IP addresses, if you want to collect information because you're putting them in a situation where you can't turn off the IP address and not share it. And that's a fundamental of European data regulation and we'll be in California as well.

Aitken Thompson: Gotcha. So there actually are other tools we're using Google Analytics, just for internal page counts, to understand usage of our site, parts of our site. There are actually other ways of doing other pieces of software don't collect IP addresses. You said Google's going to be changing their analytics package to not track IP. Do you know when that's going to happen?

Andrew Lachman: I think people were saying whatever version four is, so it's going to be coming out in the next couple of months. I don't recall an exact date.

Aitken Thompson: Got you.

Andrew Lachman: But they are responding to it. And also I think what Apple has done as well in terms of really moving toward privacy and disabling some of the tools that Facebook and Google have relied on to collect information on their users of their services has moved and forced people to move as well. So sometimes when one major market player decides to embrace privacy as core value, it can ripple out and affect other partners as well, and force them to the table in ways in which big companies they don't turn on a dime. So it takes a lot in order to move them in a direction. And I think also what Apple did made a big difference. Tim cook recently spoke at the world the global privacy summit that the IAPP does every year in Washington, D.C. And talked a lot about those values.

Aitken Thompson: Got you. So the conversation we're having just points to me and it's every conversation I have about privacy and data protection illustrates. It's a complicated, fast moving area of law that you really need to cut. Go on to date with. I understand you're also among your other activities, a founding member of Tech GC. Can you tell me about what the mission of that organization is?

Andrew Lachman: There are a number of great organizations. If you're a GC that you should be involved with. I would say Tech GC is certainly one of them. It's been probably they association of corporate council is also great, but Tech GC particularly deals around the Tech Industry and is an association I'm one of the relatively early members in this that allows GCs to talk to other GCs and share their experiences. Sometimes it can be a good therapy session too, by the way. It's a great area for you to find resources, to ask questions and to be able to learn from each other about your experiences and the issues that you face as a GC in the tech area. I would also, by the way, very much recommend if you're interested in privacy, joining the international association of privacy professionals, I've been a member since 2007.

They have certifications now, which are pretty much the standard in the field. There's also an association for data governance, which is other group that's come in, but IAPP frankly, really set the standards. And when you go to their conferences that they do and they have them all over the world, you always pick up something really useful that you can take back at. The last one I was at, we had the top folks from commerce and the European Data Protection Board coming and talking about what changes were coming with respect to a success or to privacy shield.

As you know, it was thrown out about a year and a half ago. And we've all been dealing with the tremors from that, which have made transatlantic data flows very, very difficult. And one of the differences in changes, the administration has been The Biden Administration has been very good in terms of really embracing this and making sure that those avenues remained open and they've come up with a process and by June or July, they're supposed to have all the rest of the details worked out, but this is the kind of stuff you can pick up at IAPP that you can't pick anywhere else.

There's also organizations like future privacy forum, which is also, I think it's a smaller group, but a really good standard and a good place to learn and keep on top of all the changes happening in this particular field. So those are a couple of really good resources, both from a Tech GC perspective, general council perspective, but also from a privacy perspective, to make sure that you're really staying on top of this very rapidly moving field.

Aitken Thompson: Got you. And go, and going back to a culture of privacy in a corporation or a company, I would see a stakeholder being the GC HR there, any other people you would suggest to get together, if for someone who's been implementing or strengthening their privacy culture in their company, how would you go about that from a stakeholder standpoint?

Andrew Lachman: That's just the tip of the iceberg. HR, obviously you've got regulations around employment privacy as well, but your product team, your marketing team and your sales teams and your engineering teams all need to be a part of this discussion, because that's what makes a difference. And I just give an example very early on in my career, when I had my own firm, I had a company come to me and say, by the way, our engineering team just decided that they're going to implement this one technology out there that tracks everything people do on our site. And it's like, well, that kind of has an impact on GDPR. So let's.

I would recommend you pause that and make sure that you review it. But also, frankly, you also need to make sure that your engineering team understands what it is they need to do so that they don't get the company in trouble, because that's the things that will catch you. You can have a privacy policy, but it's those little details out of the marketing and the technology ends. If you're not making sure that they match up to what you say you're doing on paper, whether you've got SOC two compliance, ISO 27001, or just your general privacy policy. All of those will open up your company to lawsuits or potentially open up your company to lawsuits and costs. And they can be catastrophic. They can be company enters, not withstanding the trust of what it would affect in your company.

So you really need to make sure that all of those teams are involved. A lot of the big fines that have come out of Europe, they've been against companies, but it's not been marketing companies, it's been regular companies. It's been telecommunications companies that are tracking information on the back end and didn't realize that they were doing it. And then very suddenly they find out that you got a complaint because someone finds out.

Another really good example that we've seen out there, not from a Data Breach Perspective. The target had a catastrophic data breach that existed because they kept their HVAC Software on the same server as their credit card information. And some guy was fixing the HVAC system and plugged in his USB and ended up downloading a virus into the database, into the computer. And because there was no separation ended up being one of the largest tax of credit card information at the time in the world as a result. But also there's an example of somebody was in a family, a daughter who was worried that she was pregnant, was doing searches on her own about pregnancy tests. And her parents were on Google, I think it was or something.

I want to say it was Google, but it was somewhere that very suddenly Adds started popping up for, are you pregnant? Obviously, the privacy issues not just for children, but between adults who live in the same household and who may use the same computer are pretty scary. And so it's just an example of how trust in your company can really be hurt as a result. And when the trust in your company is hurt, it attracts more regulatory scrutiny. When you have more regulatory scrutiny, there are more legal bills because now you're having to deal with all these audits and investigations that weren't there before.

Aitken Thompson: Oh, absolutely. Well, those couple stories just shows how much more we could cover here, but we're running out of time. Andrew. So thank you for joining me for this episode. My name is Aitken Thompson. I want to thank you all for listening to The Principle Podcast by LRN. Thanks Andrew.

Andrew Lachman: Thank you for having me.

Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in Global Organizations, by helping them foster winning ethical cultures rooted in sustainable values. Please visit us @lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.

 

S7E11 | Cracking the code on effective code of conduct design

What you'll learn in this podcast episode

A code of conduct is your organization’s character and culture written down. It articulates who you are, what you believe, and why you are in business. It also provides a reference for all stakeholders. A reference into what your organization values, and how you live those values. But how do you design and implement a code that communicates effectively? What does “good” look like when it comes to codes of conduct? In this episode of the Principled Podcast, host Jen Uner speaks with Senior E&C Advisor Jim Walton about LRN’s new Code of Conduct Report, which presents a set of best practices in code design and implementation. Listen in as the two unpack the report’s insights from nearly 150 codes of conduct deployed by companies around the world—including codes from 3M, General Motors, and Imperial Brands.

 

Featured guest: Jim Walton

Jim Walton is a member of LRN’s Ethics & Compliance Advisory Services Team – with over 25 years of professional experience in corporate, institutional and government settings, spanning the fields of ethics and compliance; environment, health and safety; and energy management.

Since 2002, Jim has been passionately dedicated to corporate ethics and compliance – designing, developing, implementing and enhancing constantly-evolving, comprehensive, best-in-class, global ethics and compliance programs. Jim has extensive experience in writing, producing and communicating codes of conduct and corporate policies; designing, managing and implementing ethics & compliance risk assessments; implementing anti-compliance and bribery initiatives; conducting third party due diligence reviews; and helping managers at all levels become better ethical leaders.

Jim is a Certified Compliance and Ethics Professional.

 

Featured Host: Jen Üner

Jen Uner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College. 
 

Transcription

Intro: Welcome to The Principle Podcast, brought to you by LRN. The Principle Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.

Jen Uner: A code of conduct is your organization's character and culture written down. It articulates who you are, what you believe, and why you are in business. It also provides a reference for all stakeholders, a reference into what your organization values and how you live those values, and how you design and implement a code that communicates effectively. What does good look like when it comes to a code of conduct?

Hello, and welcome to another episode of LRN's Principle Podcast. I'm your host, Jen Uner, Strategic Communications Director at LRN. Today I'm joined by my colleague, Jim Walton, Senior Ethics and Compliance Advisor at LRN, and resident expert on codes of conduct.

We're going to be talking about LRN's new code of conduct excellence report, which is a work in process, and it presents a sort of best practices in code design and implementation. The report features insights from nearly 150 codes of conduct deployed by companies around the world.

Jim is a real expert in this space and has played a vital role in developing LRN's point of view, and our view that codes are foundational to developing and managing ethical corporate cultures. Jim, thanks for coming on the Principle Podcast.

Jim Walton: Thanks for having me, Jen.

Jen Uner: To start out, I want to validate that codes of conduct is something that people come to us on a regular basis for, right, help in crafting and re-imaging a code of conduct, and you're instrumental in that process. You're meeting with companies on a regular basis to re-invent, re-imagine and even start the process of developing a code of conduct.

Tell us first though why are codes so important? What do they accomplish for companies, and why is a good code of conduct something that really matters?

Jim Walton: Absolutely. As you said at the beginning, the code of conduct, and this is something we feel very strongly about at LRN, that a code should be an organization's character and culture written down. So when you look at a code of conduct you should get a sense of who that company is, what's important to them, what are their values, and how they do business, how they go about interacting with their colleagues, with their customers, suppliers, and the world around them.  

The code of conduct is really the basic document that outlines that for all employees, so really helping to set the foundation for the ethical culture that everyone is trying to achieve.          

We've seen an evolution of codes. In the past they were very rules-oriented, and now we're moving into much more of a principles and values-based code of conduct.

Jen Uner: Which is such a good idea I think as someone in communications. As a part of the process of creating the latest code of conduct excellence report you undertook with a team an assessment of codes by top firms, as I understand it, on four major stock exchanges. Tell us about this.

Jim Walton: We wanted to expand our reach beyond the United States, to cover some of the major markets where ethics and compliance programs should be fairly mature. We expected this to yield a good cross-section of codes of conduct for the study.

So we decided to pick the top 40 companies on the major stock exchanges in the following markets, the S&P in the US, the FTSE in the UK, the CAC in France, and the DAX in Germany. Out of a total of 160 companies we were able to find publicly available codes of conduct for 147 of them.

Jen Uner: That's pretty impressive. Just a quick sidebar, codes of conduct are typically available publicly? If only a handful were not available, would you say that most people are publishing publicly?

Jim Walton: Absolutely. And if you're publicly traded you really should have your code of conduct online. That would be a question that either the listing authority or the regulators who regulate securities in those jurisdictions might ask you about. Why is your code of conduct not publicly available?

Jen Uner: Yeah. Yeah. I could see that. So as you were looking at these codes of conduct, what exactly were you looking for in terms of assessment? What dimensions mattered the most in this process?

Jim Walton: We looked at what we called the eight dimensions of code effectiveness. These are tone from the top, purpose and value orientation, applicability and administration, speaking up, risk topics, knowledge reinforcement, usability, and look and feel.

They're all important in determining whether a code of conduct would be considered best in class or not, so it's really the combination of these dimensions and how they work together that can make or break a code of conduct.

If I had to pick the top three that are absolutely essential to get it right, I'd say purpose and values orientation, which is how closely and clearly the code is tied to the organization's primary purpose and shared values; risk topics, which is how does the code describe the specific behavioral expectations that make the values real and bring them to life on a daily basis; and usability.

It's critical for a code of conduct to be a useful resource that helps employees make ethical decisions, do the right thing, and find the information they're looking for when it comes to ethics and compliance.

Jen Uner: So it kind of sounds like there might be a weighting system going on as you assess these codes?

Jim Walton: Absolutely. Our assessment framework was originally developed in 2015 by former in-house ethics and compliance practitioners, drawing on research and experience on what makes an effective code. Over the past seven years we've continuously updated the assessment criteria to reflect the latest research, regulatory guidance and experience in helping organizations re-invent their codes of conduct.

Within each dimension there are a number of underlying criteria. Each will yield a score from one to five, with one being the worst and five being the best. As a result, we're able to produce an overall score for each code, as well as individual scores for each dimension.

Jen Uner: One of the things that I like about this analysis and this scoring as I was getting familiar with the report is that you didn't just divide the results into even thirds. You really applied kind of an indicator of excellence on each of the dimensions.

I think I saw that a minimum... Obviously with this process there's a minimum bar to hit to achieve a top rating, so the range, the way that I saw the data play out in what I was looking at, there were 17% that were ranked most effective, and the vast majority were effective, in the middle. I think it was like 50%, the remainder qualifying as less effective, which is how I would call excellent, serviceable, and needs work. What were the common markers of the most effective codes? How did these things shake out?

Jim Walton: First of all, I love your characterization of excellent, serviceable, and needs work, because that really describes it really well, about how, you know, it wasn't just looking at the top third, the middle third, and the bottom third.

We wanted to be fair. We'd love every code to have a score of five on every dimension, or at least a four across all dimensions, but that's just not realistic. So even with all of the progress that's been made with codes of conduct over the past five or ten years within the ethics and compliance space there's still a lot of work to do, and the bar just keeps being raised all the time.

So we decided that codes with an overall score higher than 3.5 would be categorized as more effective, or excellent, as you've said. Codes that score between 2.5 and 3.5, we consider those to be in the middle range, or effective, so it meets the basic needs. Nobody is going to get in trouble for missing something really important. Then finally the codes that are below 2.5 are considered less effective and need work, and sometimes a lot of work.

So the fact that exactly half of all the codes we evaluated fell in the middle, or effective or serviceable category, really indicates that many companies understand the need for a code, and they also understand the basic standards and expectations around codes.

On the other hand, the fact that one-third of the codes fell into the lowest category, and less than one-fifth were considered more effective in the top category, that suggests that there is significant room for improvement across the largest companies in France, Germany, the UK and the US.

Jen Uner: In taking a bit of a look at some of these results, was there anything that jumped out at you in terms of... You know, where is everybody tending to do well, like on which dimension, or which region is maybe out-performing the others?

Jim Walton: Yeah, that's a good question. The dimension that really scored the best overall was in tone from the top, so that's really good. That just tells me that... And that was about 50%. That tells me that people really get that. That's something that we've been hearing about for a long time now, and really having that strong support from the top is really essential. If you don't have that, then it's very difficult to create a strong culture of ethics and compliance.

The other area, and I was pleased to see this, was in terms of usability. Just about half or just under half landed in the top category for usability, so this is really encouraging, because I think it shows that there's a recognition that codes are supposed to be a useful resource and it's supposed to help guide employees in making ethical decisions, doing the right thing, and finding the information that they need.

On the other hand, the knowledge reinforcement was the dimension... Only 9% of the codes fell in the highest category for knowledge reinforcement, and this is a huge opportunity, because what we really want to do with a code of conduct is enhance the understanding of the concepts that are outlined in the code.

We do this through the use of real-life scenarios as well as links to related policies, so people can get more detail on a specific topic area, linking it to training, videos, and other types of resources. So there's just a very big opportunity in that area and it's a really critical area.

Jen Uner: It sounds like to improve knowledge reinforcement, it's really about providing additional resources that support the code?

Jim Walton: Absolutely, and making them really... Really integrating them in the codes so people don't have to go anywhere else. If you're going about your job, you see something that doesn't look right, you say, "Oh, is that harassment or is that fraud? Let me go take a look at the code." You pull up the code, you quickly find the section that talks about that topic area. Maybe you need more information. You click on a link. You get a video that talks more about the topic, maybe additional training, and then in the end you're like, "Oh, I think we've got a problem. Let me click on the speak uplink," and you can make a report or an inquiry about that topic area.

Jen Uner: Yeah. So accessibility is actually a really important piece of this?

Jim Walton: Absolutely, so making it available to people regardless of whether they have access to a laptop or a mobile phone, or in cases where you have offline employees, making the code available to them quickly in kiosks or terminals, or even giving people access to tablets and iPads and things like that.

Jen Uner: Yeah, my phone. The phone is a device that I walk around with all the time. It's my external brain. Put the code there.

Jim Walton: Absolutely.

Jen Uner: So I've got to ask, you were looking at publicly traded companies, right, publicly available codes? Which codes... If I wanted to go see an example of something good, who should I be looking at? What are some of the companies that landed at the top of the heap?

Jim Walton: Great question. Out of this group I'd say the best codes that we saw came from General Motors, Imperial Brands and 3M, so two from the S&P and one from the FTSE. 

The first thing, you pull these codes up... And they're all available on the websites, the external websites of these companies. The first thing that makes these codes stand out is their visual appeal. They really reflect each of these companies' business brand, heritage, culture. You really get a sense of who they are. In the case of 3M and General Motors, and even Imperial Brands, you may be familiar with some of those brands, so the code would look very familiar.

Right up front they also talk about how the code helps the organization fulfill its purpose, so what's the reason why we get up in the morning and come to work, how do we enhance people lives, make the world a better place, and lining up with the core values of the company.

Then finally they're very readable and usable, so they're easy to navigate and move around in, find information, and the information is presented in a way that's understandable and digestible for the reader. They're really fantastic examples.

Jen Uner: That's great. I'm sure I'm going to be able to find those links and post them to the show notes for this podcast. So those are again large publicly traded companies. Let's say though I'm an entrepreneur or, better, I'm a venture capitalist, and I'm about to invest in a great kernel of a firm and help it scale up. I can see a big market opportunity for this new business venture. Let's just say I'm one of those VCs who truly understands the value of stakeholder capitalism and I've read the LRN benchmark of cultural report that tells me the most ethical companies outperform their peers by up to 40% across key business dimensions like employee loyalty and customer satisfaction and innovation and growth.

At what point do I, as a leader in a company like this, need to make sure my company is developing a strong code of conduct?

Jim Walton: That's a really good question, Jen. In working with dozens of companies to help them reinvent their codes of conduct over the years and in evaluating hundreds of codes along the way, we're finding that the size of the company does not always determine the maturity level of either their current code or their desire have a state-of-the-art code. We've seen large companies with really underwhelming codes and smaller ones with great ones.

But I will say for the situation you described, the place to really start is with the purpose and values. So really figure out what those are. Articulate them very clearly to everyone, because that's going to go a long way towards building the culture of ethics and compliance that everyone desires.

Once you've communicated those values and people really understand what they are and how to apply them, the next step would be to create a values-based ethical decision-making framework and add that to... Let's say this is a code, but the code is growing. So it may start out at a few pages, and then each iteration just gets a little bit longer. So the next thing is this framework to help people make those ethical decisions and make sure that it's based on the values.

At the same time, it's important to make sure that the code describes the speak-up culture, in which people are encouraged to speak up and ask questions and raise concerns. This means making sure you've got all the right mechanisms in place to facilitate the speaking up, and also, importantly, equipping managers with the tools that they need to listen and to deal effectively with the concerns raised by their teams.

I think those are the places to start. Then you can add more detail to each of those areas and bring in more of the risk topics as you move forward.

Jen Uner: That makes sense. Start with the big picture and then get more and more granular. I think that makes total sense. Jim, it has been such a pleasure speaking with you today about great codes of conduct and the forthcoming report, the code of conduct excellence report. I'm looking forward to that release. I think we're slated for June with that, if I'm not mistaken?

Jim Walton: I think that's right.

Jen Uner: Yeah. And it's going to be available for free with registration at LRN.com. I also want to say as a part of this campaign I'm looking forward to listening to you actually host an episode of The Principle Podcast with one of our client partners, talking about code reinvention. I think that's going to be actually another really great episode on this topic.

Jim Walton: I'm looking forward to that as well.

Jen Uner: Jim Walton, thank you again for joining me on this episode of The Principle Podcast. My name is Jen Uner, and I wanted to thank you all for listening to The Principle Podcast by LRN.

Outro: We hope you enjoyed this episode. The Principle Podcast is brought to you by LRN. Out LRN our mission is to inspire principle performance in global organizations by helping them foster winning ethical cultures, rooted and sustainable values.

Please visit us at LRN.com to learn more, and if you enjoyed this episode subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen, and don't forget to leave us a review.    

 

 

S7E10 | The 2021 Corruption Perception Index: A global call to fight corruption

What you'll learn in this podcast episode

Although anti-corruption efforts have stagnated worldwide, human rights and democracy are under assault. Independent nonprofit Transparency International recently published its annual Corruption Perception Index, one of the most widely used indicators of corruption globally. Its 2021 analysis shows that protecting human rights is crucial in the fight against corruption. So, how can organizations help? In this episode of the Principled Podcast, Yoab Bitran, Head of LRN’s Latin America business, talks about key findings from the 2021 report with Delia Ferreira, Chair of Transparency International. Listen in as the two discuss how business leaders around the world can step up to help combat corruption.

 

Principled Podcast shownotes

• [2:07] - Delia Ferreira explains the work of Transparency International and the corruption perception index (CPI). 
• [6:14] - The factors influencing Russia’s score on the CPI and how it may be affected by the war. 
• [9:43] - Which countries in Europe saw relevant changes in their CPI score this year, and steps they can take to improve anti-corruption efforts. 
• [13:52] - The Latin American fight against corruption. 
• [18:25] - How business leaders can help increase anti-corruption efforts around the world. 
• [21:41] - How can ESG help fight corruption and give us hope for the future? 

 

Featured guest: Delia Ferreira Rubio

Delia Ferreira Rubio is the Chair of Transparency International (elected in October 2017 and re-elected in November 2020).

Delia is a lawyer who graduated from Córdoba National University (Argentina) and a Ph.D. degree in Law from Madrid’s Complutense University (Spain).

She is a member of the Vanguard Committee of the WEF Partnership Against Corruption Initiative (PACI), a member of the Board of the UN Global Compact, and co-chair of the Global Future Council on Anti-corruption of the World Economic Forum.

She served as a member of the Steering Committee of OGP - Open Government Partnership (2018-2021).

She was the chief advisor for several representatives and senators at the Argentine National Congress from 1990 to 2005, advising the constitutional committee of both the House of Representatives and the Senate.She also served as an advisor at the National Accounting Office for two years.

She has consulted on political finance, anti-corruption, and transparency-related issues with various international organizations (IFES, UNDP, OAS, IADB, IDEA, NEEDS, ERIS, CAPEL, DEMOCRACY INTERNATIONAL, COUNTERPART, UNWomen among others) and NGOs around the world.

She was President of Poder Ciudadano in Argentina (2008-2010). She has authored numerous publications on transparency and anti-corruption, political corruption, public and parliamentary ethics, and comparative politics, among other subjects.

 

Featured Host: Yoab Bitran 

Yoab leads LRN activities in Latin America. Before joining LRN, Yoab practiced Law both in the private and public sector, in Chile as well as in the US. Yoab studied Law and holds a Masters in American Law from Boston University and a Masters in Corporate Criminal Law. Yoab is the Academic Director of Thomson Reuters LatAm Compliance Diploma and co-author of the book “Compliance: Por Qué y Para Qué. Claves para su Gestión”. Yoab is a frequent speaker at international conferences and events on compliance and anticorruption.

 

Transcription

Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.

Yoab Bitran: Anti-corruption efforts have stagnated worldwide. Human rights and democracy are under the result. Russian president, Vladimir Putin invades Ukraine on baseless claims. Corruption in the Americas continues to undermine civil liberties, despite increased legislation. And even with multiple regional commitments, 131 countries have made no significant progress against corruption in the last decade. None of this is a coincidence to Transparency International. The independent nonprofit recently published its annual corruption perception index, one of the most widely used indicators of corruption globally. It's 2021 analysis shows that protecting human rights is crucial in the fight against corruption, but how can organizations help?

Hello and welcome to another episode of LRN's Principled Podcast. I'm your host, Yoab Bitran head of Latin America business. Today. I'm joined by Delia Ferreira chair of Transparency International. We're going to be talking about key findings from the 2021 corruption perception index and how business leaders around the world can step up to help combat corruption. Delia is a real expert in this space, having served as the former president of Transparency internationals chapter in Argentina, she has also served as the chief advisor for several representatives and senators at the Argentine National Congress and has advised the constitutional committee of both the house of representatives and the Senate, as well as the national accounting office. Delia many thanks for coming on the Principled Podcast.

Delia Ferreira: Thank you [inaudible 00:02:03] a pleasure to meet you.

Yoab Bitran: For our listeners who aren't as familiar with Transparency International. Can you please tell me a little bit more about your work as an organization and what the corruption perception index is?

Delia Ferreira: Oh yes, of course. Transparency International is almost 30 years old now. We are the leading organization international NGO in the fight against corruption. We have national chapters in more than 100 countries around the world, and we do research and advocacy, and education in many aspects related to the complex issue of transparency and corruption, grand corruption, or petty corruption. One of our most known tools is the corruption perception index that you mentioned in the introduction. But we have other tools also that instead of looking at the perception of experts or academics, looks at the experience of people vis-a-vis corruption in their normal life. And that's our barometer of corruption and we have also one tool, which is the exporting corruption, which analyzes performance of countries. Vis-a-vis the OACD anti rivalry convention of foreign officials.

Yoab Bitran: In this year's corruption perception index. The global average corruption score went unchanged for the 10th year in a row, just 43 out of a possible 100 point. Despite multiple commitments, 131 countries have made no significant progress against corruption in the last decade. Did these numbers surprise you?

Delia Ferreira: Well, in fact, the numbers did not surprise me, they worry me, which is another thing. And just for clarification, for people who are not aware of how the CPI is made of. The CPI, the corruption perception index, which is an annual index, we publish, analyzes the perception of corruption in the public sector of countries, and is the result of 13 sources of research and information from investigative institutes and experts and academic business sector is not a survey on the population of the countries.

Mm. Corruption is becoming more sophisticated each time, more complex, and this requires new approaches. And also the other fact that contribute to this situation is the increase of authoritarian regimes and the populous trends in many countries, where we see leaders competing in elections with the narrative of anti-corruption, but not taking into account the agenda for anti-corruption once they are in office. So we have many factors that contribute to this extermination in the index, concentration of power, lack of accountability, impunity in relation to corrupt acts. And we have to take into account also that we have legislation and commitments and declarations against corruption, but rules which are needed are not enough in terms of fighting corruption effectively, you have to implement those rules, you have to guarantee enforcement of those rules in order to really change the Panorama.

Yoab Bitran: And we will definitely come back to this. It's very aligned with LRN's point of view, the fact that, rules are not enough and you need effectiveness and values to make real progress. But I want to take a minute to talk about Russia, which has been in the news for weeks now. Your report gave the country a score of 29 prior to Putin's invasion of Ukraine. I've also seen you very active in social media about the matter, so I want to highlight that before the invasion again, Transparency International categorize the country as a country to watch because of the corruption taking place. What do you think are some of the major factors that drove the score and how would the current war change the scoring? If at all.

Delia Ferreira: Of course, the problem was very clear in terms of corruption in Russia. It is reflected in the index in several years, and we put that light on the country because of the kleptocracy system that we can find in Russia in terms of capture of state, by corrupt actors that are really exploding the state and the political power in order to enrich themselves and creating an oligarchic elite that is taking money out of the country. Of course, as we have seen, and now the Western countries are reacting in terms of sanctions and even more permanent regulation.

So ill-gotten funds go to tax havens, offshore centers, Shell companies, and complicated and complex corporate structures that allowed these corrupt actors to hide the ill-gotten money and also to enjoy the proceeds of corruption. And for me, that part of enjoying the proceeds without any problem is a great problem because it creates the wrong incentives for a cultural change.

So we have seen real estate, art industry, luxury industry in general, offering these kleptocrats to hide the money and enjoy the proceeds of corrupt tax. And that's the problem that we are seeing very clearly. This is connected with other problems that is in the newspapers in these days, which is the role of gatekeepers in Western countries. Let's talk about bank, lawyers, accountants, real estate [inaudible 00:08:37], the art dealers that should be asking about the origin of money and not performing very efficiently in order to act as gatekeepers of rule of law and transparency and instead of that, becoming enablers of corruption, facilitating corruption. One of the things we were asking for many, many years is the need to have a beneficial ownership transparency. Now we are seeing many countries putting in place these public registers in order to know who is behind the mask, who is behind the Shell company. For instance, in terms of the sanctions that Western countries are trying to apply in order to apply the sanction, you need to identify who the real owner is, not Mickey Mouse, Inc, but the real owner.

Yoab Bitran: Absolutely. Now Russia, isn't the only area within the wider European region that is suffering under corruption. Can you please share which countries in Europe saw relevant changes in their CPI score this year, and what steps do you think they can take to improve their anti-corruption efforts?

Delia Ferreira: This year, we have a decade analysis, although the index is more than 20 years old, but in 2012, we refresh the methodology to really guarantee the comparability year by year, country by country. And so we have now the decade decliners and the decade improvers. And in Europe, the decliners is Western Europe and the EU, the decliners are for instance, Hungary and Poland. In these two cases, it is clear that the authoritarian trend and the concentration of power without respecting checks and balances and the democratic rule has been one of the points that has all the issues that has justified this decline. But we have improvers also in decades terms, let's say like for instance, Austria or Estonia, [inaudible 00:11:02], Italy and Greece in the decade, they are improvers.

Another thing is that we can consider or compare countries and its performance vis-a-vis according to last year. And there for instance, in Europe we have seven countries performing the same, 13 countries that are improvers and 11 that are decliners, but none of this is a statistically significant. So it's one point up, one point down. And when we take the decade, we are considering a statistically significant improves or declines. What to do, of course, it's always the same. You have to guarantee access to information, you have to guarantee the independence of the judiciary, you have to have the proper laws and budgets to guarantee enforcement of the law and the implementation of sanctions against those involved in corruption. Because in fact, corruption is not a victimless crime. The victims of corruption are the citizens, all of us, ordinary citizens. And we suffer the consequences of corruption. But what we need is that those involved in corruption, the actors of corruption acts are the ones suffering the consequences in terms of the legal reaction of state against these criminal activities.

Other thing that we are asking for, and it is something that is concerning us in the last five or six years is to protect and defend civic space and civic liberties. Freedom of speech, freedom of the press, freedom in the use of social media and of course not creating regulations that try to stop civil society organizations from doing what we are doing in terms of holding power to account. This attack on civic space is very clear in many countries around the world. And we have to alert everyone that the defense of freedom of the press and freedom of speech and association and mobilization is defending our own freedoms as citizens. So we need everybody to be alert and to collaborate with civil society organizations and free press in order to guarantee democratic rule.

Yoab Bitran: Right. Now, as head of [inaudible 00:13:55] Latin American business, I need to ask you about our region. I've seen a lot of people talk about an anti-corruption spring years ago when there was maybe a wave of new regulation. Some countries joined the OACD, then you have Operation Car Wash, and we all know where that ended. So despite those regulatory efforts and commitments, it seems like the Americas are paralyzed in the fight against corruption, especially in Latin America. Are you hopeful? Can you tell us a little bit about your view of the region and anti-corruption initiatives?

Delia Ferreira: Of course, I am hopeful and optimistic, if not, I would not be doing this kind of work for years. I think we can change and we can better the situation. I would say that in the Americas as a whole, the problem is not only related to Latin America in particular, you know that Canada and the United States of America are decliners in the decade, both of them, together with Venezuela for instance. So that's an alert that we have to take into account. Of course, one thing is to be a decliner at the top of the CPI and another is to be a decliner, if you are at the bottom. So the situation is different, but we have to take that into consideration. One problem is nice. You talk about the spring of anti-corruption in Latin American particular. It has to do with the OACD in corporation of some countries, but also with the reaction, vis-a-vis case of grant corruption that affect 11 countries in the region.

The other [inaudible 00:15:39] case Lava Jato which started in Brazil, but affected, as I said, 11 countries in Latin America and two African countries also, with the same scheme of corruption and criminal money laundering, et cetera, and illegal political financing of campaigns. And the first reaction in Brazil, and then in some countries in the Americas, was to have cases in courts and the authorities really enforcing legislation against the company and against high level politicians. We were talking about presidents in many countries. That was the source of hope and the idea that, okay, we are at a turning point in Latin America.

Unfortunately, as you already mentioned, we are coming back and some of the decisions and the sanctions applied, has been overruled and removed. By now, in some countries, the procedures are really paralyzed and we are seeing a decline in this energy against these corrupt actors. And this has to do with something that I always repeat, which is, I think clear to see. Some people say that anti-corruption or the fight against corruption is like running a marathon, is a long term endeavor, but I think it is a long [inaudible 00:17:14], but not really a marathon, because in a marathon, everybody goes in the same direction and nobody is throwing stones against the runners.

In fact, when we fight against corruption, we are in a chess board, with some pieces trying to fight against corruption and the [inaudible 00:17:36] and the corrupt actors trying to stop us and making us go a step back. And this is an strategic game let's say. So we have to be aware that we can make progress and that we will be subject to reaction from those who are benefiting from corruption. And we have to be ready to top them and to be firm and keep on working in order to go one step further, but we are not alone in the chess board. There are other actors also that are trying to stop us.

Yoab Bitran: That's a great analogy. I loved it. And you talked about bad and corrupt actors. So this brings me to the larger questions about their role of business in fighting corruption and especially the good actors, the agents of change. Based on your professional experience, how do you envision business leaders, helping sustain and even increase anti-corruption efforts around the world?

Delia Ferreira: I think that, and I have the opportunity to meet many of these business leaders and change makers at the world economic forum in [inaudible 00:18:49] or the global future council on anti-corruption from the world economic forum, which I co-chair with, [inaudible 00:18:56] and good. What we see is that there are many business men and women devoted to go to what I call integrity beyond compliance. Compliance was very important, and it was a new thing, a new issue or topic 10 or 15 years ago, but we have to go and to move one step forward now, because compliance is understood as the compliance with legal issues with the regulation and integrity goes beyond law. It has to do with the culture in organizations.

And I think we cannot really defeat or really effectively prevent corruption without the help of the business sector. And I must say that I am seeing a very positive trend in that field. Of course, there are many things to correct, for instance, the compatibility of the incentive systems in terms of bonds, for instance, or prices for those CEOs performing very well in a company and the ethics code of the company, you can have a wonderful code of ethics, but then if the incentives that the company is offering, that's not much this ethic code, you have a problem. And this is something that has to be taken into account when trying to change the culture, the integrity culture in an organization.

I think the move to stakeholder capitalism, the move to the idea of a public value in a company, the work that is being done in terms of ESGs, is something that is going in the positive way, in order to incorporate business to the fight against corruption, or if you want to put it in the positive, in the fight for integrity in the companies. And we have to keep on working on that because I think many companies have realized that it is in their self-interest to contribute, to have a transparent market and a transparent place where to perform their activities.

Yoab Bitran: And again, that's totally aligned with what LRN believes, exactly, as you said, compliance is an outcome, an outcome of culture and outcome of values and integrity. You mentioned ESG. We see in probably all the West, as, as a big trend, we're seeing new regulation in some countries, new standards, new disclosures, what is your take and how ESG can help fight corruption and help us be more optimistic and hopeful as you said.

Delia Ferreira: I think that DSG is a very useful tool for companies to assess their own performance and also for investors to asses the performance of those companies or projects, where they are putting their money and that the role of investors could be of great help in the fight for integrity. If they really take into account the ESG results of a company. In fact, probably we have to put a lot more attention on the G, the governance structure in a company, where the anti-corruption rules appears and the standards and the organizational places where to issue the controls and to have accountability is place. The E and DS are more visible now probably, or are in the focus are a priority. But I think that without a proper governance structure, including integrity culture, and compliance, and an integral view of these issues, you cannot cut into nudge what the compliance officer do. The climate officer do, and everybody separated. They have to work together in order to really put in place this integrity principles around the whole activity of the company, in the bedrock of this, is the notion of values, of course.

And what we have seen in many societies around the world is that the basic value consensus in society is broken in many countries nowadays. So what is right and what is wrong is not absolutely clear or shared by society. And I remember the Nolan Commission Report in terms of integrity in UK parliament, saying after that, doing surveys and researching these scandals that we have to evaluate, our conclusion is that parliamentarians don't have it clear, what is right and what is wrong. So here are the rules for parliamentary ethics, and that was the origin of the laws and bills on public ethics around the world. You have to be honest, you have to respect the law. You don't have to profit from your position in order to benefit your familiar or your friends or crowns.

So this elementary principles that were part of a consensus many, many years ago, now are in the laws with the force of the law and the power to impose the compliance with this, and to apply sanctions for those who do not comply with these duties, let's say. But in the basic you have values and the need to rebuild agreement on that consensus, which is the only way we can reconstruct trust.

All around the world what we are seeing and Latin America is not an exception, but the North America also, and the rest of the countries in the world, we see a clear lack of trust in institutions, in politicians, in business sector, in banks, even in the press or the NGOs sector. So this lack of trust is one of our problems as a society. We have to reconstruct this trust in order to properly develop a better society for everyone. And I think this should be our common objective, because this is a collective action endeavor. Neither NGOs nor business sector, nor governments can do this alone, the fight for transparency is the fight of every single citizen around the world. I usually say for instance, that if you look at the crisis that we are facing from Afghanistan, to the Lebanon blast, from the Amazon's deforestation to the war in Ukraine, you have two common things. Corruption was there and the victims were simple human beings. So we have to fight together to stop this kind of phenomenon, which is so harmful for society.

Yoab Bitran: Wow. What a great way to end. This is clearly a conversation we could be having all day, but we are out of time for today. Delia, thank you so very much for the joining me on this episode, we appreciate your time and presence here.

Delia Ferreira: Thank you very much. It's been a pleasure and we will keep on talking.

Yoab Bitran: My name is Yoab Bitran and I want to thank you all for listening to the Principled Podcast by LRN.

Outro: We hope you enjoyed this episode. The principled Podcast, is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations, by helping them foster winning ethical cultures, rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcasts on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.

 

S7E9 | How can we make DEI matter to everyone?

What you'll learn in this podcast episode

Can we make diversity matter to everyone? If so, how can we overcome resistance to dealing with tough topics like racism and gender equality and really change people’s behavior? In this episode of the Principled Podcast, host Jen Uner talks with Senior Instructional Designer Felicity Duncan about a new LRN learning model and how it can drive behavior change to support diversity, equity, and inclusion initiatives. Listen in as the two discuss effective DEI training as well as Felicity’s recent work on the new LRN DEI Program, a comprehensive learning campaign that includes a range of essential microlearning assets.

 

Additional resources:

LRN’s new DEI Program provides companies with a multi-faceted training solution—a ready-to-deploy learning campaign with curriculums, asset packs, and customizable courses, plus the option to add bespoke content, learner experiences, and communications campaigns developed in association with LRN’s E&C experts. You can preview some of our most popular course content (just one piece of this program!) by clicking here. 

 

Principled Podcast shownotes

• [1:26] - Why is behavior change particularly important when it comes to diversity, equity and inclusion efforts?
• [4:57] - The three most common barriers to overcome when it comes to inspiring DEI behaviors.
• [7:51] - How does the LRN library approach the behavior change differently?
• [10:45] - Why empathy is so central in getting people to do the right thing.
• [15:02] - The importance of training. 
• [16:51] - How empathy can be inspired on an online course.
• [21:09] - The core behaviors LRN’s new course focuses on.
• [25:45] - Leader led learning and why it’s important.

 

Featured guest: Felicity Duncan, Ph.D.

Dr. Felicity Duncan, Senior instructional designer, believes that training and communication interventions have the power to transform behavior, including driving people toward more ethical treatment of those around them.

 

Felicity graduated with a Ph.D. in Communication from the University of Pennsylvania. After teaching at the college level for several years, she transitioned to workplace education to have a bigger impact on working adults by providing them with the training they need to truly thrive in their roles. At LRN, she is focused on developing high-impact, behaviorally focused content for the LRN Library. Her most recent project saw her working with the Library team to create a powerful new DEI Program that includes not only LRN’s world-class Inspire courses but also a set of microlearning assets designed to support, reinforce, and guide behavior change.

 

Featured Host: Jen Uner

Jen Uner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.

 

Transcription

Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.

Jen Uner: Creating a quality, diversity, equity, and inclusion program is a top concern of organizations today. Quality being key, how can we positively impact people's behavior? Can we make diversity matter to everyone? How do we overcome people's resistance to dealing with tough topics like racism and gender equality. Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host today, Jen Uner, Strategic Communications Director at LRN. Today I'm joined by Felicity Duncan, a Senior Instructional Designer on the LRN Library Team. We're going to be talking about a new LRN library learning model and how it can truly drive behavior change to support DEI initiatives. Felicity has just completed work on the new LRN DEI program, a comprehensive learning campaign that includes a range of exciting micro-learning assets. Felicity, thank you for coming on the Principled Podcast.

Felicity Duncan: Thanks, Jen. I'm excited to be here.

Jen Uner: Just to get us started, I know that for corporate legal operations folks, according to a 2021 survey that I read about recently, standing up a DEI program was really one of the top priorities of 2021. And it certainly was born out by our own traffic to our own website, the things that people were searching for. And so, I'm really excited to see LRN respond to that interest by expanding the offering that we have for our audiences. My first question for you is since you've just worked on this new program expansion, why is behavior change particularly important in the context of diversity, equity, and inclusion efforts?

Felicity Duncan: Well, with a lot of ENC issues, there's so much companies can do in terms of processes that sort of takes the guesswork out of achieving compliance. So if you think about something like, know your customer, the company can establish 10 steps to follow and they could be very well defined. And if employees do that, great, you're compliant, you have no worries. When it comes to something like DEI, what really matters is the quality of interactions among the people in your company. So those thousands of little moments between people and the reality is, just you can't create processes for that, right? You can't give people 10 steps to having perfect communication every time. You have to inspire people to reevaluate how they're treating others and decide to do better every day. So DEI efforts rely on the actions of every single employee.           

And as we probably all know from our own experiences in our careers, if you have one bad apple that was really going to spoil a bunch in a DEI context. So the goal of DEI training has to be to get everybody on board with the ideas behind DEI, and committed to behaving in ways that are consistent with building a great inclusive workplace. So, it's all about behaviors that are not necessarily clearly defined. And it's about everybody behaving in those correct ways every day and in every interaction. So behavior is completely central to DEI in a way that it is not necessarily in these more process-based compliance issues.           

And another point is that behavior change is really hard to measure in a DEI context, partners often ask, how can we measure the impacts of our training? How can we be sure that it's working? And in a DEI context, that can be really difficult because again, we can't create a list of very specific measurable behaviors. So your company might want to see respectful communication, but what does that actually look like? How can a manager monitor it? How can you record it? So the idea of behavior is just really central to DEI. And it's also one of the hardest nuts to crack both from the perspective of defining those behaviors from the perspective of measuring them and from the perspective of inspiring them.

Jen Uner: And yet, we know from our own benchmark of ethical culture survey, that the most ethical companies, the ones with the best behavior, they see up to 40% lift in key business metrics like employee loyalty, customer satisfaction, innovation, growth. So, I mean, it's clearly, it's really important. What are some of the biggest challenges we have to overcome when it comes to inspiring DEI behaviors?

Felicity Duncan: Well, actually what you just said there links to my first point here, and that's, some people don't necessarily see the value of DEI. They don't see how it connects to the bottom line. So there's a lot of people out there who are really focused on the bottom line performance, business goals. And for them, it's not always easy to see what role DEI can play in achieving those. And so things like you've mentioned there, the impacts on employee satisfaction, the impact on performance productivity, all of that is really important, and is the way to overcome that challenge is to really underscore that for people taking our training and actually our DEI introductory course called Diversity Equity and Inclusion, that actually starts off with a section that just explains the value of diversity and what it can do for teams and how it can contribute to success and explains that right upfront to try to overcome that barrier.           

Another very common barrier that we see is, there are people who would prefer to believe that things like racism and sexism are in the past, right? They don't want to acknowledge that this is an ongoing reality because it's a difficult and ugly thing to face, right? And that's why we found in our training, it's so important to use testimonials and stories to show this is a real problem, and it's happening to real people right now. And I think a third challenge that we have to overcome is, that some people think that as long as they aren't doing anything that is explicitly problematic. So they're not harassing other people. They're not saying inappropriate things.           

As long as they're doing these things, they don't have to worry about DEI, right? They don't see a need to necessarily engage in positive behaviors that promote DEI. And that's why our training really tries to focus on the role that everybody can play no matter who they are. And to explain why it's so important that everybody gets involved in creating a positive DEI environment. Because as I said, it's not enough not to do wrong, you have to do good because those behaviors, those active behaviors every day are what underpins successful DEI programs.

Jen Uner: Yeah. Actively do good, really focuses then on outcomes, right? And it's about how things land with others. And I think that's why it is important to know even the most well-intentioned person doesn't even necessarily know where they may be doing something or saying something that is not well received by the audience around them. So I think it does change, good training, I think does change behavior because it introduces sensitivities and promotes empathy in a way that I think doesn't really happen with any other sort of training offered by corporate programs at this point. So for us, what makes the LRN library approach to behavior change different?

Felicity Duncan: Well, I think, and this circles back to what you were just saying, that one of the things that makes our program different in our approach to behavior change different is, we really focus on helping people understand where bias comes from, right? That essentially everyone has biases you, me, everybody, because it's part of how our brains work. They're programmed to use heuristics, to shortcuts things like stereotypes, to make quick decisions, right? And that's actually a good thing. It keeps us safe, right? If you see a large shadowy figure in a dark alleyway, the right thing to do is to run away. You don't want to stop and take time to evaluate whether the person there is dangerous or not. And so essentially being human means that our brains are running on the software that evolved millions of years ago and never got updated, but that doesn't necessarily work well in our complex modern world.           

And so even if you have the best of intentions, even if you are a quote-unquote, good person, you can't help having biases and you can't stop having biases. But what our courses really try to say is, like you can manage those biases, right? You can avoid letting your biases affect the things you say and do in the workplace and the decisions that you make, right? So it's not about being a good person or a bad person, having good intentions, having bad intentions. What it's about is being aware of your own biases and managing them so that you don't have a negative impact on the people around you. Another important part of our approach is about putting a human face on the issue. We really try to get learners to see how these issues, so things like racism or anti LGBTQ plus bias, how they affect real ordinary people.           

We want our learners to think about DEI in human terms, rather than in political or economic terms. It's about people and it's about how people treat one another. I'd also say we try to talk to everyone. We try to talk to people who are perhaps being targeted by problematic behaviors. We talk to people who may be guilty of doing things in the workplace that are inappropriate. And we also talk to people who are by stand and who see things happening, and maybe don't say anything. So we want to create a role for everybody in creating a DEI environment whether it's changing your own behavior, speaking up when you see a problem, reporting your own negative experiences, it's truly like a 360 degree take on behavior. And so all of this actually, I could summarize by saying that our approach is really strongly rooted in empathy, and that that's the core driving value behind how we see the process of inspiring positive behavior change.

Jen Uner: And so why is empathy so central to getting people to do the right thing?

Felicity Duncan: Wait, if you think about it, right? Empathy is the unique human ability to take an imaginative leap, right? And really put yourself in somebody else's shoes, really understand what life can be like for somebody who isn't you. Okay. And so in a DEI context, if you can start to really understand what life is like for somebody who has to deal with microaggressions every day or somebody who's getting passed over promotion for promotions repeatedly because of who they are, when you really understand other people's reality, you can start to find the will to change things. You can realize how your actions, simple actions from you could transform other people's experiences. And that helps you feel empowered to really make a difference. But from the LRN perspective, we're not only talking about people who lack a DEI mindset, finding empathy for others.           

We're actually talking about sort of 360-degree empathy. And that starts with empathy for the learner. So when we design our courses, we start by thinking about our learners as human beings and trying to believe the best about them. A lot of DEI training can be quite, almost aggressive saying, this is wrong. This is wrong. These are bad behaviors. And that's sort of natural, right? Because things like racism, things like sexism are terrible and they are wrong. But if you're trying to inspire people to behave better, then taking that perspective towards your learners is just not going to work, right? People are going to become defensive if you start with that approach and there's no space there for inspiring positive change, right? So we start with empathy for the learner and that really models the empathy that we want to inspire. And then of course, we try to inspire empathy in our learners.           

And that means empathy for one another no matter who. And this is something that can be a little difficult, but what we're talking about here is not only empathizing with the person who's being targeted by say for example on microaggression, it also means empathizing with the person who's responsible for the microaggression, right? Understanding, look, maybe they really do think it's just a joke, and that's why they've become so defensive. Okay. Because when you get to the point where people can really understand one another's perspective, that opens up space to move forward, right? When you can truly say, look, I understand, you think it's a joke, but it's not a joke to her. And that matters. You've hurt her feelings. You need to make that right. No matter what your intentions are. That's the point at which positive behavior can emerge. Nobody needs to be defensive. Nobody needs to be afraid. We can all instead rather work together out of a place of understanding to improve the context and the environment around us. So really empathy is at the heart of inspiring that positive change.

Jen Uner: I love what you said about space to move forward. I think that is a really important aspect of progress and change, right? If we're just throwing up walls and problems, we're not going to be able to move forward. We're not going to be creating a culture of respectful communication, which is vital.

Felicity Duncan: And it can be really difficult, right? If you're in a workplace environment where you're sitting down to some DEI training and you're thinking about, my colleagues, so and so who keeps saying all these terrible things, it can be difficult to try and come to a place where you empathize and understand that person's perspective, but we really are engaged in these human relationships in the workplace. And if we don't have that empathy, we don't have that understanding. We really can't have authentic connections and we can't explain to one another how we can do better. There's just no openness and no trust in those environments, and without that there's really no possibility for improvement. So, I mean, empathy, sometimes people think it's a bit of I don't know, like a wooly concept or a touchy-feely concept, but it's really practical. It's really the foundation for creating a positive environment where people can work together effectively.

Jen Uner: It really is very important. One of the things that we say it's somewhere on our website, I can't exactly remember where, but that, at LRN at our core, we do believe that people generally most all people and certainly people that made it through the vetting process to get into your company, do want to do the right thing, people do want to do the right thing. They may not be equipped necessarily. They may not have gone through the work to examine, how are they really comporting themselves in society. So I think that, making that space and arming people with the tools to help assess and evaluate their own behaviors and not just, I'm not trying to say judge others, but are actually aware of what they're doing. I think it's a really good thing that people can use, not just in the workplace, but in their life in general.

Felicity Duncan: Yeah. And you said earlier, like what can training do, right? If we're talking about treating other people like decent human beings, you'd sort of hope somebody learned that when they were a child, right? But what training could do is what you just said there and can really explain to people like, you might think this is okay, but here's why somebody else might think it's not okay. And here's why that matters, and here's why you need to consider other people. And not just assume that your perspective is the only perspective, right? It's really good opportunity to open up how people are thinking about things, because, if you are, maybe an environment where you're not being exposed to a lot of new ideas about sort of DEI issues, you can get trapped in these routine ways of thinking and training can help you break out of it. So I think there's a really important role for training, even in something that might be as hard to define or hard to pin down as building empathy and inspiring kindness in respect, right? Training can still play a role in that.

Jen Uner: And so how can we and inspire empathy in an online course?

Felicity Duncan: Yeah. People sometimes can think about online courses in a sort of flat way, right. But in fact, you can do in an online course, what you can do in any other context. And one of the most powerful ways that we've found to inspire empathy in our courses is through compelling stories, right? Because stories are really just stories are how human beings understand the world. That's how we learn all our sort of sense of morality, stories are really powerful. And so we try throughout our courses to really leverage the power of stories, to inspire these feelings and this type of understanding. So for example, I'm thinking now of our LGBTQ plus course, our anti-racism course, our microaggressions courses.           

In all of those courses, we have sort of confessional style videos where real people, real ordinary people share their experiences with things like microaggressions in the workplace, with racism, with dealing with the fallout from agenda transition, they just share these really personal narratives about what's happened to them, how they feel about it, what they think about it. Watching stories like that, stories that, you person in an office taking a training, you might not really be encountering in your day to day life that can really start to humanize the issues that we're talking about.           

As I said earlier, like put a human face on it and start to inspire you to think about maybe very difficult to alluded concepts, like racism in these more human terms and in terms of the stories of the impact that they can have on regular folks. And that way, you can inspire empathy even in something that you might not traditionally think of as being a powerful tool for that, like an online course. And I think that in our new sort of revamped DEI program, we've done a really good job of leveraging those kinds of testimonials, those kinds of stories, as well as narratives like real-world scenarios, where you can apply your knowledge and things like that, leveraging all of that to achieve these goals of building, understanding, inspiring empathy, helping to humanize issues. And out of that ultimately encouraging people to behave better to one another.

Jen Uner: Those first-person stories are very powerful. It really provides I think, excellent context, especially if you haven't been exposed to those things and not everybody has, I've grown up in very multicultural places and have seen firsthand microaggressions for example, or the ways that people are just, things are assumed about people and slights are made. And I think that having those first-person stories, just to kind of remind folks about those moments and how prevalent that kind of behavior still is. I think it's really powerful to put that in context of the training right there, right at the moment that you're in a moment to learn. So I want to commend you guys on our learning design team for bringing those real stories to the forum in this training.

Felicity Duncan: No, you're right. And I think you make an important point there is that, everyone is coming to the training with different experiences, right? So some people might have had the experiences you've had, where they are in diverse contexts and they've seen these things happening, but there are people out there who haven't necessarily had the opportunity to hear a lot of these types of stories. And so by having these narratives upfront and by sharing these like sort of really intimate stories, we create this shared understanding among everyone who comes to the training, no matter where they're coming from, what their background is, we can all sort of understand these human stories and that's a great foundation to build on in the rest of the learning where you can say, look, we've understood this. We can see how this impacts force around us. What can we do? Right? Like what are practical things we can do? What are some of the steps that we can take to improve the situation so that, no one has to go through this again.

Jen Uner: So what are some of the core behaviors that our new inspire courses are focused on?

Felicity Duncan: Yeah, a great question. And I think, again, as we said, right at the beginning it comes to DEI. It is really all about behavior. And so we have tried to define a set of behaviors that are really broadly applicable, that are the core things we want people to do after they've taken one of our training courses, whichever it is, whether it's microaggressions or our introduction. So the first thing is really being aware of and managing biases. So beginning there, I started talking about, we all have by biases, you can't help it. You're a human being. You're a member of homo sapiens sapiens, that's it, you come with biases, right? But if you are aware of that, you can manage it. If you are willing to evaluate your own biases and just sort of be real with yourself about that, you can manage them so that they don't impact the people around you so that you're not making decisions or taking actions or saying things from your biases that you're actually giving your conscious mind an opportunity to get involved and not letting your biases control you rather you controlling your biases.           

The second key behavior we emphasize over and over again, is the idea of the pause and reflect, right? Pause and reflect before you make a decision. Pause and reflect before you say something that might be problematic. It's such a simple thing, but just taking two seconds to stop yourself before you decide something, before you say something and say to yourself, how could this land with somebody else?           

Is this decision based on the facts or is it based on something else, right? Just interrogate yourself, get curious about your own motivations and your own behaviors. And just by doing something simple like that, I think it can have just such a powerful effect on how you show up for the people around you. The third core behavior we will look at, and it might sound a little wooly, but it's treating other people like people, treating everyone around you like a human being, right?           

Sometimes we're busy at work and there's pressure and there's deadlines. And we can tend to treat people around us as a means to an end, instead of really seeing them as a person and treating them as a person. And just that simple behavior can really undermine and destroy any kind of aggression or harassment in the workplace. Just saying like, this is a person that I'm talking to, I should have talked to them like a person. A very practical behavior that we really want to see coming out of the training is the idea of speaking up when you see something wrong, companies really rely on people to speak up when there's a problem, especially when it comes to something like DEI, right? If we're talking about a team that where maybe there's one person who has some problematic behaviors, no one is going to know about that in the HR department, unless somebody speaks up.           

So the problems cannot be addressed in the absence of reporting or speaking up. And so we constantly, throughout all of our DEI courses, we say, look, we know it's scary. We know it can feel really risky, but speaking up is a really practical thing that you can do that is going to have a direct impacts on the quality of our workplace. And that can really allow your organization to deal with the problem limbs that exist. Because if they don't know about them, they can't do anything.           

And I think the last behavior and something that I'm surprised I haven't mentioned up to this point, is the idea of allyship being an ally, right? It's quite a buzzword right now you hear a lot about allyship, but in practical terms, what it means is supporting, listening, learning, being there, being a part of the journey and helping the people around you when they're facing tough times. And in a DEI context, being an ally is a way that anybody, no matter who they are, can sort of take an active role in promoting the kind of culture that we're trying to create. That organizations are trying create, right? You can be there for people around you. You can do your own work, do your own learning, and really just be somebody positive in the workplace instead of just being somebody neutral in the workplace.

Jen Uner: Be a positive force. I love that. In a recent session, you were talking about leader-led learning. And I think this came in the context of the new assets that we've created for program managers around communicating around the programs, the learning courses, and delivering them and creating opportunities for conversation. Can you just tell me a little bit more about leader-led learning and why that's important?

Felicity Duncan: Sure. So leader-led learning really comes down to the idea that, it can be really powerful if you see the person you report to everyday, taking something seriously and trying to guide you and inspire you around that behavior or whatever the case may be. It's saying you respect your leaders, whether it's your team leader or your CEO, whoever it is, you respect that person. You want to impress them. You want to support them. And if they take an active part in learning, that can be incredibly powerful, that can help people recall more. It can help people take the learning more seriously. It reinforces the messages of the learning and it just really strengthens the learning experience. And so as part of our DEI program, one of the things that we created was an asset that is an opportunity for teams and, small teams. It doesn't have to be sort like a company-wide thing, but for you, your small individual team to have a conversation about a DEI topic in a setting that is guided.           

So there's guided, there's suggested questions. There's a framework that you can use to have the discussion, but really gives your team and your team leader, an opportunity for leader-led learning where the team leader can sort of ask the questions, prompt the discussion, and it can do a lot of things, right? That can just promote the simple idea of talking about DEI issues, which is really intimidating to a lot of people. It can highlight how important these issues are to your team, to your team leader and to your organization.           

And it can give everyone the sense of confidence that if they want to speak up, that they're going to be supported, that this is an open conversation that's happening in their workplace. And that this is something that matters and it's something that's live, it's a live area of concern for their leader and something that need to take seriously. So we're very excited about that sort of taking the learning outside of the online context rather, into the actual dynamics of the team and giving the team an opportunity to sort of trial run this idea of engagement and empathizing with one another and just talking about tough topics.

Jen Uner: Yeah. Felicity, this is a conversation we could continue to have, I think all day. I mean, it's really clear that if you want to be the change, if you want to see in the world, it starts with you. And I'm glad that we are creating the tools to help organizations have a positive impact and create a speak-up culture and a culture of respect and trust and belonging. Is there any parting thing you want to share with me? Anything I didn't get to ask you about before we go?

Felicity Duncan: No, I would just say, it's great as you pointed out earlier, it's really an interesting time when DEI is something that's top of mind for organizations against a backdrop of sort of difficulties with talent retention and shortages of workers, that nothing is very important than creating a great culture, a culture that people want to participate in, a culture that works. And something like the LRN DEI program can play a really powerful role in promoting that, in supporting that and in inspiring that. So it's great to have the opportunity to talk this through. And I hope that organizations everywhere are thinking about what they can do to create better environments for their workforce so that they can really, achieve all the things you mentioned earlier, like better productivity, happier people, a more engaged and engaging culture, and ultimately, better success in their business goals.

Jen Uner: Absolutely, retention, such a huge topic right now with a great resignation going on. And it's clear that toxic work cultures are like the number one reason why people are leaving. So I'm glad that our offerings, our services and our experts are helping to create more positive and more ethical workplace cultures. Felicity, thanks again for joining me on this episode. My name is Jen Uner, and I want to thank you all for listening to the Principled Podcast by LRN.

Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.

S7E8 | Using ethics and values to rebuild, not just recover, from corporate crisis

What you'll learn in this podcast episode

 

Stories of compliance failures aren’t strangers to news outlets or entertainment networks. But while the circumstances can make for great media headlines, what is arguably more interesting is watching how those companies respond. In this episode of the Principled Podcast, host Emily Miner is joined by Carlos Villagrán Muñoz, Gerente de Compliance (Director of Compliance) at CMPC. Listen in as the two discuss how, over the past decade, CMPC has sought to not just recover from a significant compliance failure, but rebuild—stronger—by focusing on ethics, culture, and values.

Principled Podcast shownotes

• [2:50] - Carlos briefs listeners on his company, CMPC.
• [3:53] - Describing the collusion scheme involving CMPC which took place in the early 2000s
• [8:03] - The potential root causes which can motivate people to commit fraudulent acts.
• [14:10] - How has CMPC sought to rebuild stronger in the aftermath of this misconduct case
• [16:13] - The role of ethics and compliance at CMPC.
• [23:38] - Rules vs. value in company culture.
• [30:25] - The evolving risks at CMPC.

 

Featured guest: Carlos Villagrán Muñoz

Carlos Villagran is a Chilean attorney who graduated from the Pontificia Universidad Católica de Chile with a Master of Laws (LLM) degree from Georgetown University (US). He currently serves as Director of Compliance of CMPC, a 100 years old Chilean-based holding, one of the worldwide leading manufacturers of pulp, paper, packaging, personal care, and other forest products. With more than 19,000 employees, CMPC has industrial operations in 8 countries (LatAm) as well as commercial offices in the US, Europe, and China, selling and distributing its products to more than 45 countries around the world.

He has previously served as Compliance Officer for the Chilean operations of Liberty Mutual Insurance and Mitsubishi UFJ Financial Group, as well as Legal Intern at the World Bank’s Integrity Compliance Office.

 

Featured Host: Emily Miner

Emily Miner is a Senior Advisor in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.

 

 

 

S7E7 | Breaking barriers: Navigating E&C as a woman of color

What you'll learn in this podcast episode

What does it look like to navigate and excel in today’s business and legal worlds as a woman of color, and how does having an E&C background impact that experience? In this episode of the Principled Podcast, LRN Strategic Communications Director Jen Uner talks with Nadine Jones, General Counsel of Kuehne + Nagel USA and co-founder of The Initiative: Advancing the Blue and Black Partnership, an organization born in the weeks following the murder of George Floyd. Listen in as the two discuss Nadine’s professional path, her productive approach to activism, the value of DEI programs in the workplace, and her advice for E&C professionals advancing their own careers. 

 

Additional resources:

LRN’s new DEI Program provides companies with a multi-faceted training solution—a ready-to-deploy learning campaign with curriculums, asset packs, and customizable courses, plus the option to add bespoke content, learner experiences, and communications campaigns developed in association with LRN’s E&C experts. You can preview some of our most popular course content (just one piece of this program!) by clicking here. 

 

Principled Podcast shownotes

• [2:25] - How Nadine got her start in the law industry.
• [6:15] - Nadine’s experience in ethics and compliance
• [13:13] - How Kuehne + Nagel shapes their DEI programs.
• [20:32] - Nadine’s intentions as she enters her new leadership role.
• [23:55] - Nadine’s opinions on the notion of breaking barriers.
• [28:25] - The genesis of The Initiative.
• [32:37] - How The Initiative’s programs were received by police officers.
• [37:18] - Advice for the next generation of legal and ethics and compliance professionals.

 

Featured guest: Nadine Jones

Nadine Jones is a graduate of Howard University School of Law and a seasoned Vice President of a multibillion global logistics company. She is a collaborative leader, solutions-oriented, and has expertise in developing and maintaining a corporate ethics & compliance program for a multi-billion logistics company. As a graduate of Howard University School of Law, Nadine also has a strong sense of social justice and equity. In June 2020, she co-founded along with two other Howard Law alumni an organization called The Initiative: Advancing the Blue & Black Partnership (“The Initiative”). The Initiative was established to end systemic police violence and implement a collaborative approach to building healthy, scalable, community policing models.

 

Featured Host: Jen Uner

Jen Uner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.

 

Transcription

Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled podcast brings together the collective wisdom on ethics, business, and compliance, transformative stories of leadership, and inspiring workplace culture. Listen in to discover valuable strategy from our community of business leaders and workplace change makers.

Jen Üner: Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host today Jen Üner, strategic communications director for LRN. Today, I'm joined by Nadine Jones, general counsel of Kuehne+Nagel USA, as of April 1st, actually, which is part of the 18 billion global logistics company. Nadine is also co-founder and associate executive director and immediate past director of the initiative, Advancing the Blue and Black Partnership. This is an organization she founded with friends from Howard University in the weeks following the murder of George Floyd. We are going to be talking about the initiative, but we're also going to be talking about her career, her advice for E&C professionals advancing their own careers, the unique challenges women of color face navigating business and legal worlds and her own, I must say hyper-productive approach to work and to activism. It's women's History Month in the US, and so I think it's a good time to reflect on where we are. Nadine, thank you for joining me on the Principled Podcast.

Nadine Jones: Thank you, Jen. Thank you for having me.

Jen Üner: Nadine, I have such admiration for what you do. I'm kind of amazed at how you actually do all the things that you do. You're one of those women who like slays dragons and leaps tall buildings in a single bound. I know this because we had the chance to work closely together for the launch of the initiative last summer, or at least the launch of the courses that we produced for you and are continuing to produce for the initiative. We're going to talk about that a little later though. I want to focus first on your career. You were just promoted to general counsel and congratulations on that, by the way. I think our audience of E&C professionals they'd really like to learn from your trajectory and your experience like how did you get where you are today? I mean, this is a very big job. I know about Howard University, but not much else. Can we start at the beginning? Can we start with your background? Like where did you grow up? How did you choose Howard? Get me started.

Nadine Jones: I actually grew up in Montreal, Canada, working class parents, working class family. I did visit Howard, not as a student, we visited for homecoming. Howard's homecoming is the world renowned, practically. And I didn't really think anything else about it. I did always want to be a lawyer, but I never seen anyone in my family be a lawyer. And I didn't think I was smart enough to be a lawyer. And it was just, might be nice, but that's not for me. Get a good job and which I did. And it was Ama, who is one of the co-founders of the initiative and we'll talk more about later, she got into Howard Law. So we did undergrad together and she went on to Howard Law and I mentioned, I always wanted to be a lawyer, but I'm not smart enough. And she's like, "But we're the same. If I can do it, you can do it." And I thought, we actually are the same, right. Because we'd been friends for years by then, herding together. I don't think she'd mind if I shared that and whatever shenanigans we were getting into.

And I had just never really thought about it in that way, that we are the same. And it was a great example of representation mattering. And I believed her when she said, if I can do it, you do it. And so I applied and I got in and I don't mind saying I did great. I was pretty good at it. But it took someone breaking down a barrier and showing me that it was possible. And somebody that I could relate to showing me that it was possible. And I then believed that it was possible and she was right, it was possible. So that's how I got my start at Howard. And I've been in the United States ever since then. It's my adopted home. I love it and we can talk about it's flaws, it's challenges.

Jen Üner: Oh my God.

Nadine Jones: I see it. But I...

Jen Üner: We have so many.

Nadine Jones: I love, I chose this country. I wasn't running from anywhere. Canada's pretty cool, if you've ever been there.

Jen Üner: I got to ask you Montreal, do you speak French? Isn't it French based there?

Nadine Jones: It is. It is French based there and I'm considered what they all Anglophone. So my parentage and so forth, I'm not Francophone and language is heavily politicized in Quebec. And it felt very oppressive as an English person. What is the point of that story? It's you can politicize anything people, anything it's not just race and ethnicity, it could be language, it could be geography.

Jen Üner: I think you're absolutely right. You can politicize most anything.

Nadine Jones: Most anything. Yep.

Jen Üner: So you went to Howard. I think it's interesting you always knew you wanted to be a lawyer.

Nadine Jones: I did. I always knew. My mother thought that I should be a teacher. She still does. She's accepted that I'm a lawyer, but I think in her heart of hearts, she always wanted me to be a teacher, but somehow I just always felt it. I always knew that this was what I wanted to do. I just thought it was out of reach.

Jen Üner: Yeah. Well, I'm glad that Ama helped you see that wasn't necessarily the case and that you were able to apply to law school and get in. And of course now here we see you absolutely succeeding. A question for you about your E&C experience. That's your background now in law? Is that correct? I don't want to make an assumption.

Nadine Jones: It's the reason why I joined can KN, Kuehne + Nagel was to head up their corporate ethics and compliance program. And I still wear that hat, which is something we can talk about, you might change roles, but you still have insights that you carry with you from whatever experiences that you've had. And it's a plus, it's not a minus. So yes, I'm still involved to some degree, particularly in areas of where I have some background like antitrust, for example, I'm still heavily involved in that, but it is no longer my full-time role. I moved out of ethics and compliance in December of 2017 and moved fully into the general counsel's office of the same company but supported compliance, supported the new officer and still continue to this day. I'm still seen as the go-to person for certain ethics and corporate compliance matters, certainly for DEI as well as a woman of color, as a black woman in a still heavily male dominated space.

And I have a title to my name. I have a lot of visibility and a really good platform from which to speak. So I do speak as much as I'm invited to speak to help highlight certain issues for our women's International Women's Day. So it's a privilege. It's actually a great space and a comfortable space to be in. And I don't like to play the age card because I think it makes the younger folks feel uncomfortable, but it is so rewarding to see how they react act and how excited they are and just to hear their comments. And they'll come by my office, they don't know if they should come in, if they can't come in and just the enthusiasm that they have. So I consider it a privilege to be able to enter their space. They sometimes feel nervous to enter into my space, but I tell them my door is always open and I love it. I do love that part.

Jen Üner: I think that's always a case as you move up in your career. I think you do find that happens where there's that... Somebody in the C-suite, for example, you're never going to just, even if they're really welcoming and saying like, "Come on in." You're always a little bit hesitant, right? Because there's a bit of that hierarchy, right? You don't want to overstep, you don't want to do something wrong.

Nadine Jones: That's right. Yes.

Jen Üner: That's how I see it. So the fact that you've been very visible in the company on topics of ethics and compliance and you hold this visible role and people do seek you out for your expertise for example in DEI, is that something that you're going to continue to do in your new role?

Nadine Jones: Yes, it will be. If they will have me, it will be because one, I'm the only woman GC or only woman who will be holding that title in the next few weeks. I'm the only black person who was on the board ever. And the US company is about, I don't know, almost 70 years old. So it's a pretty big deal. And just by me being who I am, it has generated a strong reaction and it speaks to diversity and it speaks to equity and it speaks to inclusion. The fact that I'm homegrown in the sense that I joined, I'm in my 10th year at this company, and the fact that the company was able to develop me to the point where I would be even viable for this role speaks volumes to those who are here because it shows that the opportunities are in fact here.

We didn't have to outsource, we didn't have to find somebody from Europe to come in to fill this role. We were able to find a person here who had received enough development and mentorship to be able to handle this role. So I think just by the very nature of the body I occupy, the history of the organization, I think DEI is going to be something that I contribute to and happily do. So one of the things I like to do is show them my own evolution, my own biases, my own effort to be more inclusive. And I think it helps because as a black woman, the presumption is, oh, you know how to do this? You have no biases. You are automatically inclusive and welcome diversity. We all have our biases. We all have our blind spots is what I would call them. So when I'm invited to speak, I share and I share my own evolution and my own challenges in whatever area. It's so far, it seems to be well received.

Jen Üner: That's great. That's good to hear. And certainly we do all have our own blind spots. I think that's a great word. I have to say DEI is top of mind this month for us at LRN because we have big product news. We're releasing a new DEI program. It combines our customizable courses, which I'm not even sure if you're familiar with the coursework that we're producing now. We have a whole learn it work it prove it model. There are powerful videos included. And in fact, like the meaning maker video that we did for the initiative, we do similar kinds of assets for our DEI courses. But we're also now expanding that DEI program to include ready to go, out of the box, email templates, huddle guides, learning action plans. The idea is to create kind of a more meaningful multitouch program that sustains over time.

And so like all those courses and all of those things come together to keep the momentum going through the year. And I would say it's like how you would communicate about sort of any kind of corporate values. It's something that you do with repetition over time, across channels and moments. You don't just have like a one and done like, oh, now we're trained. So I'm curious how Kuehne + Nagel shapes DEI programs presently. And I mean, I know you're not necessarily directly working with them right now, but do you have any highlights or insights you could share about the programs there?

Nadine Jones: I want to say to give the company credit, KN credit, we started this, I can't give you the exact year, but I want to say 2018, 2019, the company invested, I believe millions of dollars in what it calls its Care Initiative. And from the highest to the lowest and everyone in between, we were in encouraged, strongly encouraged to participate in this program. And so we hired leadership to spearhead it, the head of DEI and so forth. And so we've been pounding this drum for years before, the upheaval in 2020 and the racial equity discussions that have since spawned or spurred from that. So I want to say 2018, we went full out into the Care Initiative, which is about inclusion, about hearing other voices. Internally, the focus was to start on internally with how we treat each other internally with an understanding that would spill over in terms of how we treat our customers.

We're still a profit for profit corporation, we care about our customers, but we wanted to create an environment where we had the touches. So I love what you said about you can't do one and done. You can't pass a policy that we shall now all care about each other, right?

Jen Üner: Right.

Nadine Jones: You need to create the infrastructure where you have the touches and I'll share a quick a story. We still do our care, it was maintained even through the pandemic periods when we were not physically in the office. So it started out with like physically in the office group, team meetings from different pockets within the company so that we get to see and meet and develop relationships with folks outside of our departments, outside of our wheelhouse. And then during the pandemic, of course, like everyone else, mostly everyone else, we moved to conference calls, Zoom, and other platforms. And I wasn't always the best, I'll be honest. I wasn't always the best about joining, which is something that I've decided to stop doing, especially now with my new position I think it's more important that I make the effort to make those calls.

But within my sub care team, I have one Ukrainian national and we were talking weeks ago, this was before the actual invasion. And these are my words. I know that other people might have different views, but that's how I'm seeing what happened. And she mentioned that her family was in Ukraine and I said, "Oh there's still there. They didn't leave." She said, "No, they didn't leave." And I said, "Okay, but you are seeing the buildup that's happening." She's like, "I see it. And they see it." But I said, "Well, look, we pray for the best and that everything will be okay." And a few weeks after that, we all know what happened. Putin invaded Ukraine. I woke up that morning, maybe it was a Friday morning. Anyway, at some point I woke up and saw what had happened. My first thought was to my care group and I logged on and I Zoom chatted her. And I said, "I'm just seeing what happened. And I want you to know that your family is in my prayers and I'm praying for their safety."

Now, would that have been my first thought had I not had a relationship within my care group? I would've sympathized with Ukraine. I don't know if I would've had that level of empathy had I not known this person over the course of however many years, I've been in her care group four years, that human element where her family, I could almost transpose my family onto her family. And that's when you move from sympathy to empathy, I think for me anyway. So that's an example of the importance of continuous touches in seeing each other and being able to empathize with each other. If you're just in your silo or if it's just an academic exercise or if it's just a mandate from your CEO saying, thou shall care with nothing else behind it and no infrastructure to have those human interactions, then you just have what we all know in the E&C world. You just have a program on paper. You don't have it in reality.

Jen Üner: Check the box.

Nadine Jones: It's a check the box, right.

Jen Üner: Yeah. I think that's a really interesting example and certainly a really poignant one with everything that's going on right now. And I think it does really speak to the company that you work for and the care that they take around care. And I think you're absolutely right, you might not have thought of that first, if you hadn't been involved in that program, which then it makes me think of something that I overheard the other day from one of my colleagues, she was talking to a VP of diversity and inclusion, who's like maybe 90 days into the job. And this person was saying that the real value of DEI programs is that most people aren't really going out there to read books or even know who Brené Brown is, for example. It's not something like you don't put it necessarily on your agenda, just like you wouldn't have necessarily put on your agenda connecting with this person from the Ukraine.

It's because the company took the initiative to increase awareness and understanding and building a culture of respect in the organization that you guys were exposed to this, exposed to each other on a regular basis. So that became the first thing that you thought about. So in a way it's kind of the whole idea of this is really... Because if you don't find it outside the company, it really is kind of a tone from the top sort of thing, the company prioritizes it. And then there you are, it's actually shifted your perspective and your behavior, what you thought first. So that's a lot of words to just say, you're going to be at the top, right? You're going to be part of the group that is forming priorities going forward for the company as part of the leadership team. Are there any items that you're going to want to surface in your new role?

Nadine Jones: I'll be the new kid on the block. So I will just be... I know most of them from my role in E&C ethics and corporate compliance, which is a great role actually, to expose you to people from all walks of the organization. It's a very high, should be anyway, a platform where you do have exposure to the board from the receptionist to the CEO, to the global CEO. And no one has told me this, but I can't help but think that exposure helped to launch me into this general council role because you make relationships and you keep them wherever you go. But that's a bit of an aside. I'm going to, they will now be my peers. And I will be the second woman on the board, first person of color. I don't know what their expectations are. I think they're watching me and I'm learning them in this new role. But here's the thing, I don't have to go in with an agenda in particular.

I just see the world differently than they do, and I feel empowered enough to voice that. So for instance, even before being appointed the next GC, I sit on the investment committee. I was invited last year to sit on the investment committee, which is the fiduciary committee, right, from obligation for 401(k)s, and make sure that we are investing soundly and that things are in compliance with applicable law and so forth. First woman and one of the questions I had almost maybe the second meeting, like how are the women doing? Do we know if there is any gaps in terms of investment or use of the company's offerings between genders? And the response was we never really thought about it. And that's a great idea. That's an example of inclusion. It was quickly, quickly supported by the men. And I was just curious, I just wanted to see if there were any gaps, so I don't have a clear agenda. I'm just bringing my whole self into this role.

Jen Üner: Yeah. I, that's a great way to put it. I had a boss once that would say, "You don't know what you don't know." And I think that's kind of a great example, right. You're in this group and they had never considered something. You're just there with you yourself in the room and realizing, hey, what about this? And no one had even considered that before. I think that really does speak to the extreme value of inclusivity and diversity in the workplace. So, I mean, clearly you're pioneering a bit, you're breaking barriers. You're the, I think you said the second woman on the board and the first black woman. This notion of breaking barriers, do you think that's a big deal, a small deal? Does it not really matter? Because it's the right thing to be happening anyway. I'm just curious your perspective on that.

Nadine Jones: It matters, it's intimidating, but I'll separate the answer. It absolutely matters, right. Remember I told you it was Ama and my ability to relate to her and see myself in her that gave me the courage I needed to step out of my comfort zone and try law school. It absolutely matters. We have to see someone that is relatable break the barrier to know that it's possible for ourselves. So it does matter. It is encouraging, it brings hope, it's validating. When the announcement was made public, there were women, especially women of color, Latinx women who can see themselves in me that they were overjoyed, but also really emotional, really emotional. And that first day when the announcement went out, it was overwhelming for me to see the reaction of mostly the women, not just women of color, just women in general.

And it confirms the importance of representation, of seeing what's possible even if it's through somebody else who was like you. It's intimidating in the sense that I feel, I'll speak for myself, I feel the magnitude this appointment, I feel the magnitude of being on the board, of looking like me and being a board member, the magnitude of it. That said my CEO, and I feel supported. So if I were in an environment where I had to claw my way to the top against people who were less than supportive, maybe even antagonistic, but doing it because it's the new social norm, maybe that's how they might look at it. It's the new trend and there's no real support, can you imagine what that must feel like? Actually, I can't imagine what that must feel like. But because I feel supported internally, even though it's a new role, a big role, it's a historic role, as one woman told me, this is a historical moment in our organization, I don't feel like I'm set up to fail.

I feel like I'm set up to succeed because I know the board member or my CEO in particular, who I won't prefer to put words in his mouth, but at least how I perceive him, my interactions with him, so supportive, even the global parent who's light years away from the United States, incredibly supportive and encouraging. So it is important, you can't just plop a woman on the board or black person for the first time and say good luck and expect them to thrive. You need to support us. That is an element of inclusion. That is part of equity. That is part of diversity, if you really want it to work. And I do feel supported, I do.

Jen Üner: That's so good to hear. And it is so important. And I think in any kind of environment where collaboration is going to be really key, you need to have that, you need to have that respect and appreciation for each other and what they bring to the table. And the skills, knowledge, experience, perspective, everything, those are all valuable inputs into whatever problem the team needs to solve.

Nadine Jones: Absolutely, absolutely. Yeah.

Jen Üner: Taking a whole turn, I would love to talk about the initiative. We worked together that on the initiative last year, it's continuing this year, I can't wait to catch up on what's been happening. But before we dive into that, can you share with us a little bit of the Genesis story of the initiative?

Nadine Jones: Yes. So the initiative was launched in July of 2020, actually it was June of 2020, and it was birthed out of trauma, I guess is the right word. If we all recall, and some of us don't even want to look back to 2020, it's the year that she'll never be mentioned again, I get it, but let's look back a little bit of what was happening and there was incredible up rest or...

Jen Üner: Unrest.

Nadine Jones: ... Unrest.

Jen Üner: Unrest, and uprising.

Nadine Jones: Yeah. Unrest and uprising in the area of policing, police interactions with black and brown bodies. And being the mother of a black son myself, it was at the point where we really could not just sit back and do nothing, myself and the other two co-founders, black women, Howard alumni as well, mothers of black sons and daughters, I'm the only one which is a son. And we decided that we were going to use our corporate knowledge and experience in terms of building sustainable, scalable solutions, along with our Howard civil rights training, and we were going to enter this space. It was kind of a bit of woman arrogance, if you want it done right, just going to have to do it ourselves.

And we were thinking about it in terms of the measures that we have taken generationally to protect our children, which is having the talk, what to do if encountered by the police, you're black, you can't do what your white friends do. You be respectful, make sure they see your hands, all of those things that we do, which basically just kind of steals and takes their innocence way too young. We decided it's not working and that we need something that's more sustainable. And we entered this space with the purpose of building something that lasts, and in order to do that, reconciling those two groups, the blue community, the black community in particular, but to do that, we knew we had to work collaboratively. And that's our corporate upbringing that's telling us that, you can't do anything in a silo and expect it to work and be sustainable, it's not. It's not going to work and it's not going to be sustainable.

And you touched on this Jen earlier, just simply having something on paper and saying, go forth and prosper, so to speak, is not going to be enough. You need to have some touches there, you have to create some infrastructure to bridge divides, to create positive relationships. So that's why we got into the space. It was not just because of what we all witnessed with the George Floyd video, it was not just what we've witnessed with the Ahmaud Arbery being gunned down by civilian, but a former police officer and the handling of that murder, what we can now say is murder by that police department was shocking. And it wasn't the slew of others that we have seen, it was simply a point of decision that we're entering into the space and we're going to do it collaboratively. But we are emerging from this space with the fervent hope and belief to make everybody safer, the blue community, because now you've got members of the civilian community that have humanized them how the blue community views us, and the us is no longer just black folks.

Jen Üner: One of the things that you started with, with the initiative was I think there were some dashboards for assessment of municipalities, and then of course, the courses that we are developing with you, the first one being on mindfulness, which are courses that police are offered to take. How is that going? What kind of adoptions have you been getting for the platform and the programs that you're doing? And what's next? I know that you were already working on ideas for the next courses that we can help you bring to the initiative.

Nadine Jones: Well, the mindfulness training that LRN developed for us is just remarkable. And we didn't ex we didn't do it for the purpose of it serving as an icebreaker, but it turned out that when officers saw that we were concerned about their wellbeing, as well as our own, it opened a door. I don't know how to explain it. LRN did it for free, that was their contribution to the space. It's phenomenal, it's world class, it's incredible quality, and we shared it with police communities for free, and there was no judgment in it. It was, this is brain science. We called it operation brain strategies because we were told by police, if you call it mindfulness, no self-respective officer is going to take a mindfulness training.

So we called it operation brain strategies, there was no judgment. It was, this is just the human species, this is just how we function. So it was a great way, it was like an offering, here we care about you. And we developed that first after we got through the pain and the horror of what we saw, and crying, we were sobbing all the time. It was just a mess in the summer of 2020. But the more we spoke with officers, we saw them more, we said, "Hey, this is tough. We're going to come out with something that shows that we see what they're doing and that it's not easy." And there's nothing defective about an officer who has a moment, it's a tough, heartbreaking job. So that was a great way to come out.

And the next one slated is to talk about, to show in the same similar image or format, how to actually engage with members of the community. And you're right, we did build two tools, one's called central, which is police agency facing, and the other is called central plus, which is community facing. And one assesses the police agency's readiness to engage in a collaborative, proactive type of policing with civilians, not all agencies are equipped to do that. They are equipped to be warriors, but they're not equipped to be collaborators. And so we help the agency self assess their readiness and maybe opportunities where they can make some changes to become a police agency that can engage in that caliber or that type of policing.

And then we develop central plus, which is community facing, which is basically an intake, just success your community. And we do it across policing, certainly public safety and policing, but other areas like education, access to resources, health, these are all areas that if broken will intersect with the police industry, and policing is not response for some of these breakdowns. So it's a way for the police leadership in a particular precinct area, we did it at a zip code level, can see what the concerns are and the top concerns and challenges within his or her precinct area. Thank you for asking about that. We're very proud of those tools, by the way.

Jen Üner: I continue to be impressed by it. And I know that we're all excited here to collaborate with you on building the next set of e-learning tools for this program. One of the things that I hear you say again and again, is about relationships, is about collaboration, is about empathy, kind of a last question for you here, I know we're like at time, past time, advice for those that are coming up behind you in the world, in the legal world, in the world of ethics and compliance, what advice do you have for the next generation on how to do those things?

Nadine Jones: Gosh, there's so much, and I don't want to push you over time. But relationships are key and don't be transactional with your relationships. You don't know where somebody is going to be tomorrow, and that shouldn't be your only basis for wanting to develop a relationship. So don't be transactional about it, spend the time, invest the time. I know not every day you feel like asking, how was your weekend on the Monday, some Mondays are tougher than others. It doesn't really take a lot though to be interested or for the other person to perceive that you do have an interest in them. It could be less than five minutes and you are like, "Oh, I got to call. I got to go," and you may not see them again for another two weeks or so forth.

But take the time, invest the time we are tied as a society. We are as you're basically creating an environment that's going to ultimately be better for you within the corporation, and I would add this, outside of the corporation. We are privileged to work for corporations that have invested in this space, take it with you into your spheres of influence outside of the corporation where others may not be privileged to have access to LRN teachings and resources and the like, and have some humility about it. Not everyone is exposed to this type of learning.

So that's my advice, just invest, take time, care about people, doesn't have to be anything major, and take that with you in all of your environments. Don't compartmentalize it and use it only in the corporate world. It is your obligation, I think, as a human being in this world to take that with you. If you know better do better, that's what I said on the women's meeting speech on the eighth here, Jen, if you know better, do better.

Jen Üner: If you know better, do better. That is a great note to end on Nadine. Thank you so much for joining me on this episode of The Principled Podcast. My name is Jen Üner, and I want to thank all of you listening for staying with us. We will be back next week with another LRN host and expert talking about ethics, culture, and compliance.

Nadine Jones: Thank you, Jen.

Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations, by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple podcasts, Stitcher, Google podcasts, or wherever you listen. And don't forget to leave us a review.

S7E6 | How to ensure your DEI efforts are meaningful

What you'll learn in this podcast episode

DEI impacts nearly every aspect of a business. It touches hiring and training efforts, policies and procedures, and even influences company culture and performance. LRN’s 2022 Ethics & Compliance Program Effectiveness Report found that 76% of high-impact E&C programs will be prioritizing DEI initiatives in the coming year. So, how can organizations ensure that their efforts are effective and meaningful? In this episode of the Principled Podcast, Dr. Arieana Thompson hosts a conversation about DEI with Dr. Laura Heron, a chartered occupational psychologist and advocate for inclusion in the workplace. Listen in as the two discuss how businesses can develop an organizational perspective on DEI, and what creating a culture of acceptance and fairness looks like in today’s world of on-site, hybrid, and remote work.

 

Additional resources:

LRN’s new DEI Program provides companies with a multi-faceted training solution—a ready-to-deploy learning campaign with curriculums, asset packs, and customizable courses, plus the option to add bespoke content, learner experiences, and communications campaigns developed in association with LRN’s E&C experts. You can preview some of our most popular course content (just one piece of this program!) by clicking here. 

 

Principled Podcast shownotes

• [2:28] - Dr. Laura Heron defines the term DEI.
• [3:49] - Why should businesses invest in DEI?
• [5:00] - Laura’s own research with FIU Embrace.
• [7:48] - Practical steps businesses can take to ensure their culture is inclusive.
• [10:30] - Advice for companies getting started and sustaining positive change regarding DEI.
• [14:59] - How to get the entire company on board with DEI efforts.
• [19:26] - Persistent challenge Laura has observed in the DEI space.  

 

Featured guest: Laura Heron, Ph.D.

Dr. Laura Heron advocates for inclusivity in the workplace. She believes that every person, no matter their background, age, gender, ability, or any other characteristic or identity, deserves to have opportunities for meaningful employment.

Laura is a BPS Chartered Occupational Psychologist, who graduated with her Ph.D. in Industrial and Organizational Psychology from Florida International University. Laura currently works on an employment initiative for FIU Embrace, which is a university-wide initiative at Florida International University that promotes the wellbeing and employment of young adults with developmental disabilities (DD). She researches and consults on improving the employment experiences for individuals with DD and supports companies in creating the infrastructure needed to cultivate inclusivity. She is passionate about conducting research and implementing evidence-based approaches to improve the lives of young adults with DD.

Laura’s research has been published in leading academic journals in Industrial-Organizational Psychology and disability-related fields. As a disability-employment expert, Laura engages in professional speaking and presents research at national conferences. Laura’s work in the area of disability-employment has been recognized by the Society for Industrial/Organizational Psychology and the American Public Health Association.

 

Featured Host: Arieana Thompson, Ph.D.

Dr. Arieana Thompson believes in transforming the modern-day workplace through thought-provoking, evidence-based insights.

Arieana is a subject matter expert in executive leadership, succession management, ethics and compliance (E&C), wellness cultures, and employee development. Arieana has experience advising in external and internal capacities and professional speaking. Arieana offers professional and wellness coaching, helping leaders and individuals to harness natural strengths and reduce stress.

As a scientist-practitioner, Arieana actively researches and publishes employee well-being, organizational culture, and leadership thought-pieces in both industry and peer-reviewed academic journals (see links in the "Featured" section below). These publications enable executives to create and sustain values-led, profitable, and creative companies.

 

Transcription:

Intro: Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace changemakers.

Dr. Arieana Thompson: DEI has become one of the most important acronyms for organizations today. Standing for diversity, equity, and inclusion, DEI impacts nearly every aspect of a business. It touches hiring and training efforts, policies and procedures, and even influences company culture and performance. LRN's 2022 Ethics and Compliance Program Effectiveness Report found that 76% of high-impact E&C programs will be prioritizing DEI initiatives in the coming year. So how can organizations ensure that their efforts are effective and meaningful?

Hello, and welcome to another episode of LRN's Principled Podcast. I'm your host, Dr. Arieana Thompson, E&C advisor at LRN. Today I'm joined by Dr. Laura Heron, a chartered occupational psychologist and advocate for inclusion in the workplace. We're going to be talking about how businesses can develop an organizational perspective on DEI. We will also examine what creating a culture of acceptance and fairness looks like in today's world of onsite hybrid and remote work. Laura is an expert in this space, consulting on improving the employment experiences of individuals with developmental disabilities, also referred to as DD, and conducting ongoing research. She supports companies in creating the infrastructure needed to cultivate inclusivity and is passionate about conducting research and implementing evidence-based approaches to improve the lives of young adults with DD. Her work in the area of disability employment has been recognized by the Society for Industrial Organizational Psychology and the American Public Health Association. Laura, thanks for coming on the Principled Podcast.

Dr. Laura Heron: Thank you so much for having me on this podcast. I always jump at the opportunity to talk about DEI as it is so important and something that I am very passionate about. So I'm excited to jump right in.

Dr. Arieana Thompson: Laura, we're excited to have you. Let's start right there. Do you mind defining DEI for us today?

Dr. Laura Heron: Sure. Essentially DEI refers the organizational policies and practices that promote the representation and participation of different groups of employees. For example, this can include people of different race, ethnicity, nationality, sexual orientation, gender, religion, socioeconomic status, age, and physical and mental ability or disability among many others. If you take a second to think about what these words mean individually, diversity is defined as the range of human differences. Equity refers to freedom from bias or favoritism. And inclusion is the state of being included or a part of something. So when you take DEI altogether as a whole, it really involves understanding, acknowledging, accepting, valuing, and even celebrating all differences.

I do want to mention here that you can't just commit to one area and not the other two. It's not enough to diversify your workforce as many organizations are recognizing you need to do. You must also create the infrastructure that promotes and reinforces equitable practices and an inclusive culture to really invest in DEI and make sustainable change. So that's really a snapshot definition of DEI as it applies to the workplace.

Dr. Arieana Thompson: That was wonderful. Can you tell us more about why businesses should care about DEI and what might be some of the benefits of investing in this area?

Dr. Laura Heron: Sure. I get asked this question a lot and I always just want to say that it is simply the right thing to do. I think morally as human beings, we should want every person to have opportunities for meaningful employment. And not only that they have access to employment, but they get to experience a workplace where every person feels that they belong, that they feel comfortable and that they feel valued. But I do recognize that in a world that is often driven by tangible gains, the business case is important to touch on. So briefly we know from a lot of research that DEI initiatives can boost innovation, collaboration, they can expand your customer base, they can reduce employee turnover, and they can also help you to attract talent. And become of all of that, committing to DEI can increase profits. So if the human element isn't enough of a driver, then there's the research evidence telling us that DEI gives you a competitive edge in the labor market.

Dr. Arieana Thompson: It certainly sounds like investing in DEI is a win-win. Can you tell us more about your own experiences working in DEI and your area of research?

Dr. Laura Heron: Sure. For four years now, I've been working for a program at Florida International University called FIU Embrace. And we are an initiative that promotes the wellbeing and employment of young adult with developmental disabilities. I'll give a quick definition. Developmental disability, it's really a broad umbrella term that describes a group of conditions that occur due to impairment in physical, learning, language or behavior areas. Examples include intellectual disability, autism, ADHD, and Down syndrome to name just a few.

I am currently working on an employment initiative to help our students graduate from the college program with a meaningful job. And this is so important because people with developmental disabilities have really devastatingly low employment rates. Prior to the pandemic, only about 19% of individuals with developmental disabilities were employed. And that's compared to about 70% of people without disabilities. So this really just shows us how wide that gap is. And the pandemic unfortunately has severely impacted industries commonly occupied by people with developmental disabilities, such as food and service industries. So this gap unfortunately will likely be worse now.

But I've done a lot of disability employment research in the past few years with FIU Embrace and with FIU's Healthy Work Lab led by Dr. Valentina Bruk-Lee, which is where I completed my PhD in IO psychology. And as part of the college program, our Embrace students get internships both on and off campus to help them develop basic job skills to ready them for life after college. A lot of our work and research involves helping organizations create the infrastructure to support them, for example, by understanding supervisor skill and knowledge gaps and developing training for supervisors. And we're also working on other aspects of the employment pathway, for example, how do we assess organizational readiness, or how do we match students to jobs?

So there is a lot of work to do in this space, but it's something that is growing. In the past few years, we've seen a lot more research or attention on this population, particularly as it applies to work. So that is really exciting. But I will say the main takeaway from my work that I would like to share is that while people with developmental disabilities may face unique stresses in the work environment, with the right supports, they can thrive and be an asset to any company just like any other employee. And what we found is that the types of supports that are needed are often free and will actually benefit all the employees on a work team, not just people with developmental disabilities. I could really talk about this all day, but I know we have some great questions to get to. So I'll hand it back to you, Arieana.

Dr. Arieana Thompson: Absolutely. No, I actually love what you're saying right there about a few more steps that organizations can take in order to support individuals with developmental disabilities. So based on your professional experience and background, what in your opinion are a few practical steps that businesses can take to ensure that their culture is inclusive and supportive of employees with developmental disabilities?

Dr. Laura Heron: Sure. That's a great question. I think the first step to being inclusive of this population is to gain an understanding of what developmental disabilities are. Within the umbrella of DD, there are different support needs, work preferences, communication styles, or language preferences. So it's important to be aware of those so that you can best support them.

It's also important to know that there are a few different pathways to employment for people with developmental disabilities. For example, a lot of our students at Embrace have intellectual disabilities as well as other types of developmental disabilities. So they'll typically go through a college program like Embrace to get employed, or they go through what we call supported employment, which are state run or independent providers who help people with disabilities find work. In light of that, to be inclusive, you may need to diversify your recruitment strategies or build partnerships with supported employment agencies. I often say that organizations shouldn't just rely on automated resume screening, for example, as this can end up modernizing a lot of people with disabilities.

Another way to be inclusive of people with developmental disabilities is to offer DEI training that includes information about developmental disabilities. So it's unfortunate, but this really happens. And often these trainings leave out mention of disability at all, let alone, particularly invisible disabilities like many types of developmental disabilities. I guess, in line with that, training managers is important. Some people with developmental disabilities can have those unique stresses in the work environment. So it's important that supervisors are equipped with the skills and knowledge to support them.

I think a last point is that we are seeing more companies, particularly in the US, but abroad as well, that are creating disability inclusion programs, particularly for employees with developmental disabilities. So I'd encourage anyone to learn from these companies who are leaders in this space. Some examples include: Walgreens, Sephora, Microsoft, or even SAP to name a few. At the end of the day, you're already going to have people in your organization who have a developmental disability, whether it's disclosed or undisclosed. So every organization has that responsibility to ensure that each employee is supported and that they can come to work in a happy and healthy environment. Recent data tells us that one in seven children in the US are being diagnosed with the developmental disability. So it's really time for organizations to step up and be inclusive so that they can grow up and find a meaningful job.

Dr. Arieana Thompson: Excellent point, Laura, that is so true. Something you've said to me in the past is that you've learned through your work in inclusion related to developmental disabilities, that this can also create an environment of inclusivity for other often marginalized groups in the workplace that we care about and focus on when we consider DEI initiatives. Can you talk a little bit more about that and just maybe a little bit broader, what advice you have for companies getting started. And then I know I'm throwing a lot at you, but also how do you sustain positive change once you do get started?

Dr. Laura Heron: Sure. I think a good place for any company to start is by doing an assessment of key systems, including their culture, their recruitment strategy, selection strategy, onboarding, socialization, training, performance management, and even career development. For example, when you think about your organizational culture, ask yourself, is DEI visible part of the culture? How does DEI tie into organizational values and norms for behavior? Do leaders display behaviors that promote inclusion? And what about employees? Do they know what's expected of them? Is the organization authentic in its communication about DEI? How does culture manifest at the team level? In big organizations, team climates can be very different. So this is also something to think about. I think part of this assessment of those key systems can include a survey or focus groups to gather input from your employees. Listening to their perspectives and opinions can help you to understand A, where change is needed, but also it can help you to assess their appetite for change.

And finally, I would suggest learning from others who are doing it right. I wish there was more collaboration and openness between organizations. You don't always have to necessarily reinvent the wheel. There's a lot of organizations doing really good work in the DEI space. So I think we can learn from them.

And then I think the second half of that question was how do we sustain positive change when it comes to DEI? I think to create sustainability, it requires a continual reassessment of those key systems I just mentioned. And this is important because work is constantly changing. For example, what we know now about language preferences, when it comes to disability, for example, and other areas of identity has drastically changed compared to a few years ago, even.

I think another important part of making DEI sustainable is accountability. Are there evaluation and accountability mechanisms in place throughout the organization that are specific to DEI? For example, do leaders have DEI goals as part of their performance evaluations? Or is there a DEI advocate or champion who can oversee DEI efforts? Is data on inclusion made available to all employees because transparency is important? And I say this, because I actually read recently that one of the main reasons DEI initiatives don't work is because of a lack of metrics in place to track progress. So this accountability piece is really critical.

I mean, I could go on for hours about this, but something else that can help with sustainability is keeping DEI in mind when making decisions. We know that organizational change is inevitable and is even important for growth, but bear in mind that any change both big or small can impact your employees. So when decisions are being made, being aware of DEI and how these decisions impact all employees is needed.

And lastly, I'm actually currently participating in a training program on universal design for learning. It's a really cool concept that I did want to share with you all. You may have heard about UDL applied to education. It involves making courses and campuses usable for everyone, but it's a concept that's actually recently being applied to the workplace. So I did want to touch on it briefly in case anyone's interested in learning more and I'd really encourage you to check it out, but essentially it involves the design of products and environments to be usable by all or people without the need for adaptation or specialized design. So it can be applied to the work environment, for example, by having wider hallways, it can be applied to someone's work station, tools and technology, and also policies and practices. But basically it means approaching work in a way that is inclusive of all differences, which I'm all about. And I mention it now because if we can design workplaces with UDL in mind, then I think that will greatly help with the sustainability of DEI efforts.

Dr. Arieana Thompson: Absolutely. Thank you for that comprehensive answer, Laura. I love what you talk about around getting started with a real awareness of where you're at, but then how you tie it back together with sustaining it through those metrics of accountability. That's excellent.

For those organizations that have gotten started and are perhaps having a few different people within the organization running these efforts, can you talk a little bit more about how we could get the entire company on board with DEI efforts and really spread it throughout the entire organization?

Dr. Laura Heron: Yeah, I think it'll come as no surprise, but that top-down support is critical. I did mention earlier, but there does need to be a champion of DEI who is trusted and respected and who cares. And this can sometimes be the CEO or a top-level manager or someone else, but having that authentic support for DEI efforts from leadership will help to get everyone on board.

I think another important thing to talk about is visibility. Incorporate DEI into your values and your organizational strategy, be transparent in how you're going to make your organization more diverse, equitable, and inclusive, and also follow through on those commitments. I think this is an important point. A lot of organizations might brand that they have DEI efforts and they care about DEI, but practice and policies aren't necessarily in place that support that mission. DEI is now something a lot of applicants will look for, but they're going to know to look deeper than just a page on a website, for example. They're going to want to see an ongoing commitment with those initiatives in place.

I think another way to get everyone on board is to develop DEI training that is in-depth and frequent. There are a lot of trainings out there, so it's really important to carefully consider what topics are covered in those trainings. You can ask yourself, is that training representative of different groups? I mentioned earlier that invisible disabilities such as developmental disabilities, a lot of those are often not included in diversity trainings. But another question to ask yourself is, does the training encourage thought-provoking discussion? A lot of times they're offered online as sort of a legal check in the box and do not actually get people learning and engaged in the content. And I really think just being aware of these concepts isn't enough. Part of learning involves hearing stories, communicating with others from different backgrounds, and applying that knowledge and practice. So I would really encourage anyone to try and incorporate that into those diversity and inclusion trainings.

Finally, does the training clearly lay out behaviors that are considered inclusive? DEI training really needs to be tailored to your organization. Are employees left with a set of behaviors or communication techniques that you expect them to use in your workplace? This is something that's so important, and that personal tie from the training back to the company, the day-to-day company is often missing in those trainings. So I definitely wanted to touch on that.

But I think beyond getting people to communicate in trainings, you can create opportunities for collaboration between different groups. I have an example from MasterCard, actually. They offered reverse mentoring where younger employees who were more social media savvy, mentored older employees, so that they could become more familiar with the platform MasterCard users. And I just think this is such a great example of how to get different groups of people together over a shared purpose. And you can also encourage the development of employee networks or resource groups, which are typically voluntary employee-led groups where people with shared characteristics or life experiences get together. A couple of well-known examples include AT&T and Estee Lauder. There are companies that have strong DEI employee networks, and what's really cool about these groups is that they actively work with management in those companies on a number of initiatives aimed at increasing inclusion.

I just love how these groups give employees a voice within an organization, but I think last two things that can help to bring company on board include making your commitment to DEI known at the outset of employment. Ask questions about DEI in an interview, for example, or put information about your DEI efforts into employee onboarding procedures. And then lastly, reward inclusive behaviors. This is a really good way of appreciating people who are upholding DEI values that also serve to motivate others to do the same. So I know there was a lot there, but there really are so many different things you can do to get an entire company on board in your DEI efforts

Dr. Arieana Thompson: There was a lot there, but some very powerful examples of real companies, Laura. So thank you for that. It really puts into context some of the things that we're talking about and how you can make some of the things that we may talk about in the abstract, very actionable. So kind of turning a little bit to what are some of the most persistent challenges that we see in the DEI space?

Dr. Laura Heron: Sure. I think it's an interesting question because inherently DEI does challenge the status quo. And for a number of reasons, some people can find that threatening or some people just don't like change. Unfortunately leaders can always expect some pushback when it comes to DEI efforts. So they just need to be able to be prepared to manage those situations. And this isn't necessarily a challenge, but leaders of DEI efforts also have to expect to be held accountable. A lot of times they're going to be the face of change. And so their actions, attitudes, and words must be aligned with the mission. And they also have to be willing to put time, energy and money in to really make it work. So that can definitely be a challenge for some.

We also want to make sure that we avoid tokenism, which is when we make a symbolic effort to show diversity, but it's not truly embedded in the organization. I mentioned this earlier, but visibility of DEI efforts is really important. It needs to be authentic though. I think part of this involves striking a balance between making your initiatives visible, but also respecting personal boundaries of underrepresented groups. And the best way to do this is by listening and including people who want to be involved in these efforts. Giving them a voice and being compassionate to others is really important throughout this process.

I think a final challenge that most people will realize is that DEI efforts take time. Depending on how mature your DEI initiative is, whether you're at the beginning or whether it's well established, it involves constant reassessment and change. So it's important to be patient and persistent and to just keep going.

Dr. Arieana Thompson: Absolutely. Great point, Laura. Another topic I want to talk about is a lot of us have transitioned to a more remote work life and people might wonder, what does DEI look like in a remote world? How do we create open channels for people to collaborate and connect as the nature of work may be shifting?

Dr. Laura Heron: I think that's such a great question, and I think we're going to be seeing a lot more research in this area in the coming few years. But I think with remote work becoming more mainstream, DEI efforts can sometimes lose momentum or perhaps not get the coverage they would if everybody was in person. So I think one of the biggest issues is that employees who are working remotely can feel out of the loop. In line of that, it's important to keep those channels of communication open by allowing people to collaborate and connect. For example, you can hold virtual coffee chats or social hours, or have scheduled check-ins with employees. You can use project management tools to make sure all employers get equal access to opportunities.

I think another thing that's really important in this remote world is to maintain a focus on health and wellbeing through workplace balanced policies and initiatives, and really just think about the different ways that you can support employees from their homes as opposed to the office or the workspace.

But I think another challenge to mention with the switch to remote work is that organizations can sometimes fall into the trap of taking a one-size-fits-all approach, for example, by offering a generic online diversity training once a year. But researchers tells us that this doesn't work and can even be counterproductive in some situations. I mentioned this earlier, but a customized approach is key. A DEI initiative should really take into account unique factors of your organization. For example, if your organization has global offices, a DEI training program should account for those unique factors across all your locations, not just one, so that people can collaborate with each other. This is so relevant now that people are working from home from anywhere in the world. Yeah, I guess that kind of sums up, but I think we're going to be seeing a lot more work in this space in the years to come. So we're going to need to keep updated with that.

Dr. Arieana Thompson: Definitely. I'm in agreement and Laura, I'm sure we'll turn to you again for updated research as this space evolves, but I'm excited to see where we go in this direction.

Laura, I really appreciate you sharing these insights. As we wrap up this episode, I cannot stress enough how valuable your research will be to our listeners as they move forward with their own DEI initiatives. Thank you again for coming on the Principled Podcast.

Dr. Laura Heron: Thank you for having me, Arieana. DEI is so important and I really hope that this podcast provides anyone out there with some ideas to start or continue their DEI efforts. Or even if you're not necessarily in a leadership position, then I hope that you can also become an advocate for positive change in regard to DEI in the workplace. So thank you for giving me this opportunity to share my insights into this really important topic.

Dr. Arieana Thompson: Yes. Thank you all for listening. I'm Dr. Arieana Thompson and we'll see you next week on LRN's Principled Podcast.

Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.

 

S7E5 | Trust is at stake, and other insights from Edelman’s 2022 Trust Barometer

Abstract:

Trust is foundational to business and society, so much so that the global public relations firm Edelman releases an extensive annual survey covering whom and what the public trusts. However, their 2022 Edelman Trust Barometer reveals a concerning insight: people are increasingly more inclined to distrust than trust. In this episode of the Principled Podcast, host Emily Miner explores key findings from the 2022 report, “A Cycle of Distrust,” with David M. Bersoff, Head of Global Thought Leadership Research at Edelman Data and Intelligence. Listen in as the two discuss what drives trust, why public trust in certain institutions is eroding, and how businesses can help rebuild trust moving forward.

 

What You’ll Learn on This Episode:

• [1:59] - David explains the Edelman Trust Barometer.
• [3:35] - Why business was voted the most trusted institution for the second year in a row compared to government, media and NGOs.
• [11:41] - The increased engagement of businesses on important global issues.
• [14:35] - What should business leaders be doing or thinking about now that the spotlight is on them to a greater degree than in years prior?
• [25:20] - The expansion of responsibilities being taken on by businesses.
• [29:07] - Advice for business leaders to rise to the increasing expectations without further adding to the trust deficit.
• [33:32] Upholding the values and integrity you claim and leading with them. 

 

Additional resources:

Get a copy of the 2022 Edelman Trust Barometer.

Read our blog post on takeaways from this year’s report.

 

Featured guest: David M. Bersoff, Ph.D.

David oversees Edelman Data & Intelligence’s (DxI) global Thought Leadership research including the annual Trust Barometer and Brand Trust studies. In this capacity, he is responsible for questionnaire development, leading all data analysis and insight gleaning activities, and developing new frameworks for understanding trust, credibility, and consumer-brand relationships.

Prior to joining Edelman DxI, Dr. Bersoff spent 18 years as a consumer insight and marketing strategy consultant at The Futures Company. In his last 5 years with the organization, he served as its Chief Insights Officer and was a member of its global board of directors.

Prior to entering the consulting world, David spent 12 years engaged in social science research at various Ivy League institutions, including 4 years as an assistant professor of social psychology and research methodology at the University of Pennsylvania.

 

Featured Host: Emily Miner

Emily Miner is a Senior Advisor in LRN’s Ethics & Compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact. Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.

 

Transcription:

Intro:  Welcome to the Principled Podcast, brought to you by LRN. The Principled Podcast brings together the collective wisdom on ethics, business and compliance, transformative stories of leadership and inspiring workplace culture. Listen in to discover valuable strategies from our community of business leaders and workplace change-makers.

Emily Miner: Trust is foundational to every relationship in life, personal and professional, so much so that the global public relations firm, Edelman, releases an extensive annual survey covering whom and what the public trusts. It's a survey that I personally look forward to every single year and have been reading for a long time. However, this year's report reveals a concerning insight. People are increasingly more inclined to distrust than to trust. And in fact, this year's report is titled A Cycle of Distrust. How can companies take these sentiments and adapt their own practices to better address public concerns?

Hello and welcome to another episode of LRN's Principled Podcast. I'm your host, Emily Miner, senior ethics and compliance advisor at LRN. Today, I'm joined by David M. Bersoff, head of Global Thought Leadership Research at Edelman Data and Intelligence. We're going to be talking about the key findings from this year's report and unpack what this means for organizations. How can business help rebuild trust in our society? David is a real expert in this space, having spent the last two decades leading research, data analysis, and insights initiatives for Edelman and the future company's global insights group. David, thanks so much for joining me on the Principled Podcast. I'm really excited to be having this conversation with you.

David M. Bersoff: Me too. And I appreciate you asking me back.

Emily Miner: David, to get started, I've been reading the trust barometer for years, but for our audience members, for whom this might be new, tell us a little bit about the Edelman Trust Barometer. What is it and how long has Edelman been doing this research?

David M. Bersoff: Sure. So the trust barometer started way back in 2001 with a smaller group of countries than we look at today, but we do have sort of a 22-year history of looking at trust in four major societal institutions: business, NGOs, government, and media. I'll be talking about the 2022 results that just came out, as a matter of fact, at the end of January. This year, we were in 28 different markets. We talked to about 1,150 gen pop respondents in each of those markets. So overall, this global data is among 36,000 or more respondents. We do have some good global coverage. We're in North America, South America, Europe, Asia. It's an online study. And so the sample we get is going to be a bit more representative of the total population or the general population in those countries that have a high internet penetration. And countries that have lower internet penetration, say, like India, the sample is going to be more of an urban educated skew than a traditional gen pop.

Emily Miner: And when you say 28 markets, country markets?

David M. Bersoff: Yes, 28 different countries.

Emily Miner: Great. So you talked about how this reporter, this research looks at trust in four societal institutions: business, government, nonprofit, and media. This year's findings were that, business is the most trusted institution out of those four, and in fact, is the only trusted institution out of those four. This is for the second year in a row. There's so much to unpack in that statistic. So let's start with, why? What is it about business that makes it trustworthy? Or conversely, what is it about NGOs, media, the government that makes those institutions untrustworthy?

David M. Bersoff: Yeah. And there's a little bit of both in the situation we find ourselves today. So business are doing some things right or better than the other institutions, and some of the other institutions are essentially doing things wrong. There's a lot of self-inflicted wounds that's reflected in this year's trust data. But in terms of why business is more trusted globally than the other three institutions, I kind of look at five different areas to discuss. The first one is that when we look at trust, we sort of divide it into two dimensions. There's a competence dimension and there's an ethics dimension. So if I trust an organization or a person or an institution, I can trust them to sort of do what they promise to do. They deliver on what they say the product will do, the product is good, they get it done. So think in terms of, a competent airline is one that gets you safely from point A to point B.

The other dimension is ethics. And that is sort of, what's the level of integrity that the organization has? What are their motivations? Are they trying to make the world a better place? Are they honest? Do they treat people well, their employees, supply chain, or what have you? So that's a somewhat of a separate mention. I can trust an airline to get me from point A to point B safely, but I may not trust them to sort of treat people fairly or to do what they should be doing to protect the environment. And so when you look at the institutions in that way, across those two dimensions, what you find is that business is considered both competent and ethical.

Now, NGOs, in the last year, did squeak into that sort of upper quadrant of ethical and competent. But what we see is that, business is considered more competent than NGOs, while NGOs are considered more ethical than business. And the interesting thing here is that, for some reason, and I think I understand why, these days, people are giving competence a little bit more priority than ethics. And I think that comes down to the fact that people are just frustrated that things aren't getting done, problems aren't getting solved, government seems to be politicized or polarized or paralyzed. And as a result, we're not seeing a lot of leadership coming from government when it comes to solving major problems. This is leading to a general frustration, things aren't getting done.

In the context in which people look around them and see things not getting done, they're giving a little bit more priority, they're giving a little bit more emphasis on doing rather than necessarily having pristine motivations. I talk about the fact that business isn't really the hero of this year's story. They're more of the anti-hero. They are somebody who can get things done even if their history or their morals or ethics are a little bit more questioned versus say, NGOs, which are perhaps seen as being better or more angelic, but relatively less competent. That's sort of reason one.

Reason two that I think business is trusted, goes back to a really interesting finding from this year's study. It's a new question we ask. For each of the institutions, we ask, is this institution a dividing force in society or a unifying force in society? And, of course, you could give a mid point saying that they were sort of neither one. But what we found is that, when you do a net score, so the people who think that, say, government is a dividing force minus the people who think that it is a unifying force, what you find is, in general, government and media are both seen as dividing forces in society. So not only are they not effective at getting things done or doing their job, they're actually seen as making things worse. They're dividing us rather than unifying us.

In contrast, business and NGOs are more often considered to be unifying forces. And so I think that maybe the number one reason why government and media are not trusted is because, at some level, they don't want to be trusted. What's going on here is that, I think politicians and media channels have found success in casting doubt on their institutions by convincing people, not in the trustworthiness of the institution as a whole, but only of that part of the institution that they control. Right? It's not like you can trust government. You can only trust that part of government that we, our party, control. It's not that you can trust media in general, you can only trust the voices coming from us, our channel, our platform, what have you.

In contrast, I don't think a business can succeed by sowing doubt in the institution of business, even as it tries to burnish its own image. And similarly, NGOs are not going to increase volunteerism and donations by undermining people's faith in other NGOs, or in the institution itself. The American Heart Association doesn't fundraise by trying to convince you that the American Lung Association is running a pedophile ring out of the basement of a pizza parlor. The way things are, business and NGOs don't feed on themselves, which is why they're more likely to be trusted and more likely to be seen as unifiers. And I think those two perceptions are strongly related.

Emily Miner: My reaction to that point that you just made about the institutions being dividing versus unifying forces is that, unfortunately, all four of the institutions have found success in their model. So government and media have found success in playing to kind of the wings and to emphasizing the clicks or the campaign slogans. They found success in that and so there's this reinforcing cycle. Whereas, of course, as you said, business wouldn't be successful if they doubt about the concept of business as an institution and nonprofits as well. So although they're sort of polar strategies, each institution has found success in that strategy. And it just, I don't know, it doesn't make me encouraged about breaking the cycle of division that you were describing in the government and media.

David M. Bersoff: It really is an issue of the payoff matrix. The reward matrix for media and government has become contaminated. It's become flipped on its head. It wasn't always that way, but somehow we find ourselves in a situation where you do find the clicks and the money and the votes associated with stirring up people's emotions, stirring up outrage, playing to your base, playing to the extremes because that's where the audience is, that's where the engagement is. And until that reward matrix is changed or forced to change, you're right, I don't see government and media changing on their own because they're not being rewarded or reinforced for changing their behavior.

The number three reason is that I think business has been increasing its engagement on important issues. So if you look at sort of what business is doing out in the world now, compared to what it was doing 10, 15 years ago, they are more engaged in things like climate change and economic equality, access to healthcare, addressing issues around injustice. They are weighing in more, they are becoming engaged. And I think that is certainly helping their ethics score go up, which, as I discussed, is a key aspect of trust.

So the fourth one is that, people feel like they have leverage over business. So we talk about this idea of belief-driven consumers and belief-driven employees and belief-driven investors, and we're finding a majority of people globally really do decide what brands to buy or where to work or where to put their money based on whether or not that business, that corporation, that entity has a set of values and belief that matches their own. And I think, in general, people believe that they have more power to create positive change in society through the marketplace, through working with and through business than they do dealing with government or trying to achieve change through votes. And so this idea that business has power, it has resources, and on top of that, I feel like I can actually have influence on it, that real really puts business in a much stronger position to be trusted, to be my go-to institution for making things better.

And then sort of associated with that, the fifth element here, is that business, especially business as employer, and to some extent, certain brands, they have a local feel about them. And that's in keeping with the idea that these days, people's trust circles have shrunk. They're getting smaller and smaller. It's getting more and more local, but even within the context of that shrinking trust circle, that place I go to every day or the people I interact with every day and have a personal relationship, my employer, they're still in that circle. There's some brands that have been part of my family or part of my household or part of my life, literally for decades. Again, they make it within that circle. So even within this idea of a shrinking circle of trust, business, especially as employers, especially through their brands, continue to reside within my circle of trust.

Emily Miner: That's so fascinating. And so much of what you've described resonates with me on a personal level as I just think about myself and my own behavior as a citizen, as a consumer, as somebody interested in politics, et cetera. So thank you for breaking down those results. Given that that's where we are today and the reasons why we're there today, what does this mean for business leaders? What should they be doing or thinking about, now that the spotlight is on them to a greater degree than in years prior? So what should they be doing when it comes to their own leadership within their organizations internally, as well as externally, their leadership within society.

David M. Bersoff: I think that business and business leaders, they sort of have two to-do lists. One is, how do they increase trust in their institution, business writ large, as well as the organization that they lead? And then, what do they need to be doing to sort of restore faith in the system as a whole? So the first thing you need to do is give people a sense of progress and optimism. Yes, at the societal level, but also more importantly, giving them personal optimism. We saw some data that I think is really telling in this regard, certainly in countries that we consider to be sort of developed Western democracies. There was no country in which most people felt that they would be better off financially five years from now than they are today.

And even more telling, we found that more than half of people were worried about losing the respect and dignity that they once enjoyed in their country. So there's real sense of this one-two punch. I don't see a future in which I'm doing better. As a matter of fact, I see a future in which who I am, what I've done is no longer considered important. I'm being marginalized. I don't matter anymore. Ceasing to matter is not something that people take easily. It causes them to rail against change. It causes them to scapegoat. It causes them to see unfairness all around them. So it's really important that business and certainly business quo employer give people some sense of optimism and progress. That's more internal. But externally, you also need to help people create positive change with and through you.

When people choose their employer based on a matching of values and beliefs, it's not just because they want to be surrounded by like-minded people. It's because they want to work for an institution that has power and resources. And that, in the context of my job, will allow me to further what's important to me, allow me to affect positive change, to be my partner in change. I don't want to just sit on the sidelines and applaud while my employer does good things. I want to be part of that. And so it's not only giving me personal optimism, a personal sense that things are going for me in the right direction, but it's also allowing me to have a positive impact in society.

The second thing is, manage the change you want to see. So meeting our current existential challenges are going to require major change and transformation, not only in the economy, in certain sectors, but also in people's lives. And right now, kind of going to that point I was talking about, people are feeling left behind. They're feeling like they don't matter anymore. They're feeling like they're not included in people's views of the future. And, to me, it comes down to sort of this idea of basic change management. Within an organization, change management is usually important. If you don't manage change well, your employees lose confidence and trust and morale. They may actually become barriers to the change you want to see. There's all kinds of negatives associated with bad change management within an organization.

Well, I would argue that a lot of what we're seeing at a societal level is the result of bad change management at that societal level. There's too many people seeing a lot of change and feeling left behind or not understanding it or not seeing what's in it for them. So as a positive change agent, and I think business needs to be, you can't just push for change, you have to manage that change. Also, you need to stay authentic to your values as a corporation. There's a lot of CEOs who hear our story about needing to get more involved and more engaged in social issues. They feel uncomfortable about that. They may even feel like they're already doing too much, but the data we have this year shows that more than likely, they're not seeing as doing enough, that there's this push, there's this pressure for businesses to do more.

But you have to keep in mind that the expectation isn't that you engage on every single issue. It's not like if there's any controversy out there, you need to weigh in on it. In the context of weighing in, becoming engage, doing more, you still need to let your sector, your employees, your customers, the communities in which you operate, and your legacy values define where and how you engage. You can't engage willy-nilly. You have to do it in an authentic manner. And then you also need to form meaningful partnerships. And these are not just partnerships in name only. They're not transactional partnerships with other organizations. These are sort of intel inside partnerships. They have to be intimate. They have to be hand in glove and so I think of partnerships with NGOs to gain expertise in some of these social problems, social issues you're being asked to engage on; and partnering with government in order to get the reach and power that only government has.

Also, keep in mind that the aim here isn't that business needs to replace government and media, even though those two institutions are failing. The idea is to fill the current leadership void while working to renew people's faith in all institutions. And that sort of brings us to the other list, which is how do businesses work or act to restore faith in the system as a whole. And I think the first thing they need to do is act as an agent of stability. They need to fill that leadership void that we've been talking about, the fact that government and media aren't working, they're in that very poor, lower left-hand corner, where they're not seen as terribly ethical or terribly competent. That needs to be done.

But more importantly, business also needs to redefine and defend the center. The center is not holding. The center needs a voice. The center needs to be redefined and defended. And part of this is cutting funds and support to agents of divisiveness and extremism, kind of going back to that point where I was making before, that the reward matrix for government and media is out of whack. It's not giving us the kind of behavior we need. And until the rewards in society, be it money or power or influence, are greater for spreading truth than for spreading lies and information and for facilitating cooperation, rather than fomenting divisiveness, we're going to continue to flounder and suffer and weaken our societies.

The second thing that businesses need to do on sort of a bigger level is battle the infodemic. Good information hygiene, we've found to be intimately linked to trust. People who are better consumers of information are more trusting. And I think it's because good information hygiene mediate extremism. It makes people more open-minded and it also makes people more open to ideas that come from outside. And so business needs to not only be a source of good information, but they also need to teach and nurture and facilitate information hygiene among both its employees, as well as people in general. So until we have good information, until we can agree on what the facts are, it's going to be hard to move forward as a society. I think business has a role there.

Third thing is, help close trust gaps by reducing systemic unfairness. If business has any Achilles heel in all of the data that I've seen this year, it's that there's a little bit of a tendency to see businesses more likely to be serving the interest of the few, rather than the interest of sort of everybody equally and fairly. That's where business is at risk of losing its trust and trust advantage. So they have to be very scrupulous about as they engage in these issues as they offer solutions and policies that they're seeing as fair.

And then finally, what business needs to do is help redefine and reinforce the social fabric that's traditionally served as sort of a binding force, a touchstone for compromise and shared interest, particularly in democracies. One of the most disheartening data points I found in the survey this year is, 62% of people saying, the social fabric that once held this country together has grown too weak to serve as a foundation for unity and common purpose. And I do think that this is, in part, a result of the fact that government and media are seen as divisive forces, but to the extent that we don't have this social fabric. We don't have this shared sense of purpose and values. It's going to be hard to overcome the tribalism, the divisiveness that we're seeing in the country today. We need an entity to help remind us that there's more that unites us than divides us.

Emily Miner: On that last point that you just made, does that statistic reflect your global results or is that specific to the United States? I'm just trying to get us sense of how pervasive this idea is.

David M. Bersoff: So globally, it's 62%. In the US, it's 64%. So it's a generally held opinion. I mean, in my mind, democracy is more fragile than I've seen it in a long time and really is in a position where it could fail. And if we don't learn how to have constructive civil debates, if we don't learn how to respect people who may have different opinions, if we don't see ourselves as sort of being in this together, if we don't have a common sense of purpose, some values that can serve as a touch point or a unifying point for everybody, it's going to be really hard to strengthen our democracies to get through this situation, particularly if media and government keep throwing fuel on the fire.

Emily Miner: One of the points that you raised about what does this mean for business leaders was the idea of business as change management experts in all the change that we are going through and need to continue going through as a society, including in business, but also external to business, and this idea of business being a teacher almost. I'm connecting that to some trends that we've observed at LRN within our own business. And so one of the core ways that we support companies around the world is by developing training and education.

We've certainly seen a rise in the number of companies that are requesting support in, how do I teach? How do I help my people have respectful conversations in the workplace? How do I help my people to understand that our differences make us better, make us more successful, make us more innovative? And to celebrate those differences in our diversity rather than to challenge it or feel threatened by it, how do I help my people understand in the United States the legacy of systemic racism and how that shows up at the workplace? And what can we do to try to break down that legacy in service of a more equitable workplace and a more equitable world?

We're seeing a number of businesses kind of take on that challenge, of supporting these types of conversations and mindset shifts in the workplace, outside of what several decades ago would be focused more on. How do I train you to do your job and your specific skillset that's needed? How do I train you on the rules and the regulations and the dos and the don'ts? Those elements are of course still important, but we're seeing this expansion of the responsibility that business is taking on. I see that as encouraging, having a greater willingness to take up the mantle that's really been placed upon them due to this leadership void that you were talking about.

David M. Bersoff: It's an interesting parallel, the one you draw about. In the old days, because of, say, failures in the education system, it fell upon employers to teach their employees how to do their job. And that may have included some remedial education and mathematics or English, or what have you. But these days, fast forward, now we're looking at businesses and the need for businesses to teach people how to consume information in the new information aid, how to get along with others. It's another form of remedial work. It's almost like the country, the world has had a collective stroke and it needs to relearn how to do these basic things, like keep themselves informed, like how to have civil discussion.

And it's really, I think, incumbent on businesses, especially businesses as employers because that employer-employee relationship is trusting. It's strong. And I think it's vital to rebuilding trust. But using that frivolous position that business has to help people relearn these things, that's really going to be an important foundational step towards rehabilitating the trust environment and strengthening our fragile democracies. And it heartens me, I didn't realize, that you were receiving increased requests for training in these areas because I think it's absolutely vital.

Emily Miner: One of the key takeaways from the report that I found really interesting and also challenging is that CEOs themselves are expected to be the face of change and to inform policy, although not to inform politics. So making that distinction there. And you found that globally, a healthy majority of respondents believe that CEOs, or expect CEOs to shape the conversation and to shape policy around issues like jobs in the economy, wage, inequality, technology and automation, climate change. These are some threads that we've been talking about throughout the course of this discussion, people feeling like they're being left behind and not optimistic about the future. And I think all of these jobs, economy, inequality, technology, automation, climate change, those all are a tangled web that work together to influence that.

So this idea, it's a tough needle to thread for CEOs, I would imagine, particularly when so many, if we want to call these, societal issues are politicized in the US, I mean, speaking from where I'm located. So what advice do you have for business leaders on how they can rise to these expectations of influencing positive change in these societal issues without kind of further adding to the trust deficit with people thinking that their action is actually polarizing? What advice do you have for business leaders?

David M. Bersoff: Sure. And actually the situation is more fraught than even you just painted it because not only do the CEOs and business leaders need to worry about their own actions and how they communicate, but there's going to be outside forces attempting to politicize the organization, the company. They're going to try to sort of paint you with that woke brush. In the US, we look at political affiliation, Democrat versus Republican. This is the first year we've been tracking that, where business is actually distrusted among Republicans, traditionally, the party of business. And I think this is a direct result of sort of this conservative rhetoric around companies that are weighing in on issues being considered woke. Right? That becomes kind of an insult or a damning characterization. So, it's not just that CEOs and businesses need to be mindful of what they're doing, they are going to be buffeted about by outside political forces, attempting to co-op them or attempting to sort of paint them as being political. So it's a really tough, tough problem.

In terms of what I would recommend, the first step in avoiding being politicized is don't be political. So don't be a Republican company or a Democratic company. There's no way, no shape, no form in which we are recommending that the way forward, the way for companies to become more engaged in society, is to affiliate politically with one party or another. You don't want to adhere or don't want to be seen as adhering to political ideology. What you want to be seen is being values-driven. So be a company that champions equality or protecting wellbeing or improving education or any other value that's authentic to your organization, and then work to translate your values into policy. And remember, policy is about fostering positive outcomes against the criteria of fairness and efficacy. If we ask people to do this, if we set up a law or a rule that they have to do this, is it fair? And will we get a positive outcome?

That stands in contrast to politics, which is really about gaining power. Good politics is evaluated in terms of, did we win? Did we get an advantage? And so while any one issue can be politicized, and that's completely out of your control as a business, it's going to be hard to politicize you as a company if your actions can be traced to a consistent set of values that manifest and support for policies that either bridge political divide, so this idea of redefining the middle, or at least policies that are not consistently associated with the same party. So if you're out there leading with your values, your values are authentic to who you are, and it results in you supporting policies that are either in the middle or not consistently aligned with one side or the other, that's about as good as you're going to be able to do in this day and age.

Emily Miner: I think what you said is so powerful that I want to just say it again. We talked earlier about authenticity and how businesses don't need to jump into every single issue, but what is relevant for your business, for your consumers, for the communities in which you operate, for your employees, taking that multi-stakeholder view to help navigate where you're stepping in and where you're not. But leading with your values as a way of responding and behaving authentic to who you are, that's such a powerful statement. And I think it's reinforced by so much other research and storytelling about the role of values in how businesses operate.

Values are something that employees can understand and connect back to the context, the why are we making this decision? If you have a clear framework of values as an organization, and if you talk about what that means for us, if you translate that into how we operate, how we behave as individuals, as a business, there's a sense of logic there that I think helps people to make sense of why we're doing what we're doing, even if it might not be something that I like or agree with. But I can connect it back to the values and so I understand. So I just appreciate that you raised that.

David M. Bersoff: So let me just build on that point because I think you're absolutely right. Especially, if you have values that predate the policy or predate you weighing in, you're right, there's a certain consistency there. There's a certain logic to what you're doing. There's a certain integrity to it. And by the same token in this day and age of belief-driven employees where people choose where they're going to work, to some extent, based on the values and the beliefs and the type of engagement that that organization manifests, there's a tacit agreement that when you go and then work for that company, that part of the reason why you're there is because they champion these values. And so later on, when they're actually out there championing those values, you're already sort of bought in. You may not love the particular manifestation of those values around a particular policy, but there's a logic to it. There's a consistency to it. And there's at least this understanding that yes, I at least appreciate the value even if I don't love the way you're sort of operationalizing that value or manifesting that value in policy.

Emily Miner: So the point that you made about people increasingly choosing where to work and also who to support with their dollars, being aligned with values, one of the ways that we've helped companies kind of increase that broad buy-in to the values is to actually engage the employee population, maybe it's defining values because they didn't previously exist in the organization, or maybe it's, "We have a set of core values that we've used for however many years, but we want to kind of take it a step further to really clarify what does this mean behaviorally." And so creating spaces and communication channels for employees to weigh in on that, what does this value mean for me? What does this mean for my role? How do I see this play out in action? What does it mean to live this value? And having that be a participatory process, really also helps to cement the values being a tangible thing that are really taken off the wall and are operationalized and increase that buy-in of the employee population.

David M. Bersoff: Absolutely. We looked a few years ago at what we considered the emerging or the new employer-employee compact. And what we found is that there's sort of three areas that people use to evaluate an employer. The first one is sort of the basics, which is, are you offering me a good job at a fair wage where I can sort of grow? The career basics. This has been an important certain aspect of deciding on jobs and where to work since the beginning. You need to know that your financial future is in safe, fair hands. It doesn't mean you have to guarantee me a job for life, but it does mean that if something happens, you're going to treat me humanely and fairly.

The next level up from that is this idea of empowerment, sort of what you were alluding to. People want to have a voice. They want to feel heard. They want to be able to participate in decisions. They want to have input. They don't want to just be a cog, but they want to be a vital part of what's going on. And then above that is this notion of coaction, that I can work with and through my employer to create positive change in the world. So you see all these things playing together.

The first thing you need to do is sort of bring my blood pressure down, make me feel safe and secure in my living and in my finances, then make me feel empowered. Give me power, give me a voice. And not only give me power and voice in the context of company operations or business decisions, but also in the context of what that business is doing in terms of engaging on some of these larger issues. That point I was making before about, I don't want to just sit on the sidelines while my company does good. I want to be part of the good that my company does. I want to use my empowerment to work with the company to affect positive change.

And part of what this means, going back to your point about values is, that mission statement, that values statement, what we stand for, can't be something that you spend time developing, and then it goes up on a shelf and gathers dust, and doesn't really have an impact or an influence. The big difference between values, as I think about them today, and maybe values as they've been traditionally been treated or thought about, is that now those values that you develop, the mission statement, what's important to you as a company, what is your goal in society overall beyond, say, making money or returning value to your investor, those values need to be part of your DNA as an organization. It needs to show up everywhere. Your values need to show up in your marketing, in your supply chain, in your hiring, in your policies, everywhere, consistently. And if you do that, then this idea that we've been talking about, which is lead with your values and you'll be as okay as you can because what you do will be seen consistent and make sense and organic and authentic, that's how it all works.

Emily Miner: In some research that we conducted at the end of last year, we saw that organizations that kind of led with their values or use their values to help them navigate COVID and the disruption and confusion that has resulted and continues to resolve from COVID, those organizations actually were more successful on a number of metrics. I think that that's a really important point as we're facing increasing cadence of global crises, that there's a resiliency in leaning on your values to help navigate how we're going through the world. And there's a morality to that. A rule kind of tells you what you can and can't do, but there isn't a rule for every occasion and we need guideposts that help us figure out what we should and shouldn't do. And I think that's where values come in.

Well, David, it's been such a pleasure having you on this episode. And I know that we could spend hours talking about this and unpacking the trust barometer but unfortunately, we are getting to the top of the hour. Thank you so much for joining me and for sharing these insights.

David M. Bersoff: It was a pleasure. I love to talk about trust and I particularly love to talk about trust with someone who's obviously been thinking about these issues and are sort of familiar with our data so we can dig a little deeper. This has been a lot of fun.

Emily Miner: Yeah, it has. Well, my name is Emily Miner, and I want to thank all of you for the listening to the Principled Podcast by LRN.

Outro: We hope you enjoyed this episode. The Principled Podcast is brought to you by LRN. At LRN, our mission is to inspire principled performance in global organizations by helping them foster winning ethical cultures rooted in sustainable values. Please visit us at lrn.com to learn more. And if you enjoyed this episode, subscribe to our podcast on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. And don't forget to leave us a review.