Principled

S6E6 | How to prepare your board to navigate constant change

Abstract:

How are boards of directors of major companies coping in 2021 with the increasing expectations of so many stakeholders?  How can directors help companies manage their way through myriad changes in the competitive environment, advances in technology, and new mandates from government and regulators? And how are boards able to oversee critical non-financial issues like corporate culture, ethics, cybersecurity and ESG? In this episode of the Principled Podcast, David Greenberg—LRN’s former CEO and now special advisor—continues the conversation about board engagement with Jonathan Day, CEO of Tapestry Networks. Listen in as David and Jonathan discuss the current issues facing boards of directors and how they impact board oversight of corporate culture, ethics, and compliance.

 

Featured guest:

Jonathan Day is an advisor and coach to chairs, CEOs, and heads of major government agencies. He has worked extensively with groups of senior leaders (boards, top executive teams, etc.) tackling difficult and potentially divisive questions, developing a global reputation for expertise in organization and governance, strategic problem solving, and complex team interventions. He has deep academic experience, including collaborations with top research professors, and is an expert at translating leading-edge theory into practical action programs that build institutions. “I have been exposed to a lot of different academic disciplines: psychology (clinical and cognitive), sociology/anthropology, theology and philosophy, economics and finance, engineering. The broad range has given me an eclectic set of mental tools.”

Before Tapestry, Jonathan was a practice managing partner, EMEA, at Heidrick & Struggles, where he worked in leadership consulting and executive search in the CEO/Board and higher education practices. Prior to joining Heidrick & Struggles, he spent nearly two decades in leading management consulting firms, first as principal at McKinsey & Company from 1990 to 2004 and then as managing director at Monitor Group from 2004 to 2008. “I think the consulting process is much more like a therapeutic process than it is a science or engineering. It means someone is helping the clients, individuals, or groups confront the outside world.” 

Jonathan has a MA in divinity from the University of Chicago, a BA and MA in psychology from Johns Hopkins University, and did PhD studies in cognitive psychology from Stanford University.

Jonathan is married with three children. He speaks, reads, and writes French and enjoys chamber music, sailing, cookery, writing, and travel.

 

Featured Host: 

David Greenberg serves as Chair of the Governance and Risk Assessment Committee and a member of the Audit Committee of International Seaways (NYSE: INSW), one of the largest global crude oil and petroleum tanker companies.  Mr. Greenberg’s previous board experience (2006 to 2016) was as the independent director – and member of both the Audit and Compensation Committees --of APCO Worldwide, a private communications and government affairs consultancy and as a director (2013 to 2016) of Clean Tech Group, which creates opportunities for industrial companies to invest in innovative, clean technology.  He also served for 5 years as Chairman of the Board of Trustees of The Keystone Center, a Colorado non-profit that brings together oil, chemical and pharmaceutical companies with leading NGOs to find solutions to complex public policy challenges at the federal and state levels.

Greenberg is currently Managing Director of Cortina Partners LLC, a private equity firm that owns companies in the air medical, addiction treatment, bedding, textile and outdoor recreation industries and is CEO of Acqua Recovery, a residential drug and alcohol addiction center.  He also advises boards and executive teams on strategy, compliance, leadership and culture as a Special Advisor for LRN Corporation, and from 2008 through the end of 2016 was a member of LRN’s Executive Committee. For 20 years prior to 2008, Mr. Greenberg served in various senior positions overseeing government affairs, corporate affairs, communications and strategy at Altria Group, Inc. – then the parent company of Philip Morris USA, Philip Morris International, Kraft Foods and Miller Brewing – culminating in his role as Senior Vice President, Chief Compliance Officer and a member of the Executive Committee.  As one of five senior vice presidents of the corporation, he served on the Management Committee, which oversaw all strategy and company operations.  He was also a principal architect of the company’s very successful efforts to end the ‘tobacco wars’ which threatened the company’s very existence.  Earlier in his career, Mr. Greenberg was a partner in the Washington D.C. law firm of Arnold & Porter and also served as Legislative Director and General Counsel of the Consumer Federation of America.  He attended Williams College and has JD/MBA degrees from the University of Chicago. 

Greenberg has testified before the U.S. Congress, the European Union, the Israeli Knesset and other governmental bodies over two dozen times and has appeared on ABC Nightline, the CBS Morning News, BBC Morning, and the PBS News Hour, and has spoken at leading events for CEOs and boards.

 

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.

David Greenberg: How are boards of directors, of major companies coping with the increasing expectations of so many stakeholders? How can directors help companies manage their way through myriad changes in the competitive environment, advances in technology, and new mandates from government and regulators? And how are boards able to oversee critical non-financial issues like corporate culture, ethics, cybersecurity, and ESG? Hello, and welcome to another episode of LRN' Principled Podcast. I'm your host, David Greenberg, LRN's former CEO and now special advisor. And today I'm joined by Jonathan Day, CEO of Tapestry Networks, which is at the center of many important discussions on boards of directors and the issues confronting them. Jonathan and I have been working together on a major initiative related to board oversight of corporate culture, corporate ethics, and corporate compliance. So I'm really looking forward to digging in on the subject of boards. Jonathan is a real expert in this space based on his leadership of Tapestry and past work with McKinsey, Heidrick & Struggles, and Monitor. Jonathan, thanks so much for coming on the Principled Podcast.

Jonathan Day: Thanks, David. It's great to be here.

David Greenberg: So Jonathan, first, tell our listeners about the core of what Tapestry Networks is about.

Jonathan Day: Well, we're here to help the women and men who lead the world's most complex companies, do their work better and do their work with more confidence. And most of that involves working with non-executive directors whose roles have become really complex in the last few years. We do all of this through peer learning. So the leaders are learning from one another, rather than from professors, or consultants, or us. It's an unusual model, but it works. Now just to make this concrete, in 2020, we conducted about 130 meetings, most of them virtual, and we held around 500 very confidential director conversations individually, in small groups, in large groups. And these are directors of companies like JP Morgan, Walmart, Microsoft, BlackRock, GM, Apple, Facebook, Nestle, Zeeman's, SAP, large complex global companies. And all of this has given us a view of the anthropology of the modern boardroom.

David Greenberg: Terrific. In that regard, Jonathan Tapestry and LRN just wrapped up a major study and summit meeting on board oversight of ethics, culture, and compliance. What to you are the major takeaways from this effort?

Jonathan Day: Well, the study was a lot of fun. We talked to many directors, many chief ethics and compliance officers, and the companies involved had a combined capitalization of just under $5 trillion and they operate on six continents. What I think makes this study different is that you could say it offers the voice of the director. Even those chief ethics and compliance officers were also directors of other companies. So these are perspectives straight from the boardroom. And David, for me, there were three big findings. First, boards can see the critical importance of culture and they are taking responsibility for shaping it and for shaping compliance in their companies. This is not easy. Walmart, for example, has 2.3 million workers around the world. Their board has a total of 12 members, and yet their boards are taking on this challenge. Of course, they rely on the CEO and the top management to drive a lot of the work, but they themselves feel responsible and the world is holding them responsible when violations occur.

That's the first finding. The second is that many directors don't feel that they're in a very good position to sort of re-culture or to give management practical guidance and moving it in the right direction. They get lots and lots of data, but they often struggle to filter out that clear signal from noisy data. One director said culture is harder. You know it when you see it. You can use surveys, but they're not as helpful as actually knowing people. And another director said, we need a more direct pipeline to the workforce and decision makers in the field. As a director, you need to have your ear to the ground. Well, that sounds great, but let's go back to Walmart. Those 2.3 million workers are in 10,500 stores in 24 countries. That's a lot of ground for 24 ears of those 12 directors to cover.

Third, a big part of this comes down to trust. How can we get to a place where senior management feel very comfortable saying in a board meeting, we have a bad culture or an ethics problem in this part of the company. And here's what we're doing to fix it. There are a lot of incentives for that executive to say everything is just fine. One director in fact said that when she sees a drop in the number of speak up calls, she worries that there's a problem. And equally when management does bring problems forward, does the board say, okay, we're going to work with you to put this right, or is bad news really unwelcomed in the boardroom.

David Greenberg: Jonathan, let's step back a bit from that. You and colleagues at Tapestry are in dialogue almost every day with dozens and dozens of board members. What are some of the most pressing issues they want to talk about today?

Jonathan Day: Well, ethics and culture are very high on that list. For example, how to tie compensation to culture, ethics, and compliance. You can do this for safety, deaths on the job leading to bonus cuts or cancellations, but it's not so easy to financially reward executives for creating positive trust filled cultures. You could do this, but it's a subjective judgment and making that judgment requires not only wisdom, but immersion in the culture. A lot of time, maybe a lot of travel. Not so easy these days. Boards are also intensely worried about how they are overseeing cybersecurity, mostly because pretty much every company has become digital, maintaining privacy and security for the millions of customers that a large enterprise can have. This can be a multi-billion dollar task. As airplane controls become entirely digital, as cars become more and more autonomous, as power grids are digitally controlled, lives could be at stake.

And yet directors of some of the most digitally sophisticated companies in the world tell us, we may be doing a good job in our oversight of digital risk, but we may not. We have no easy way even to tell how well we're doing. Cybersecurity is also a function of culture and trust. Are employees comfortable coming forward to talk about a weakness that they've come across? Do employees trust company policies on cyber and not seek work arounds? So cybersecurity, a big concern for directors.

And finally, David, you mentioned ESG and this exploding call for companies to deliver financial profitability and great performance on the environmental, social, and governance agenda. Well, this has board members awake at night and working hard. Providing reliable data on financial performance isn't easy, but they know how to do that. They've been practicing it for decades. Providing reliable data on past environmental impact like carbon emissions, that's a lot harder and the standards for doing that are in flux all around the world. But providing trustworthy of how the company is going to transition to zero emissions over the next 20 to 30 years, that's really hard. And I'll just note that every one of these challenges that I mentioned, ethics, cybersecurity, and ESG requires a strong culture, requires trust. Culture is at the root of every one of these challenges.

David Greenberg: So Jonathan, you've outlined some of the things that are on the minds of board members. What do you think are some of the hardest parts of the job of being a director these days?

Jonathan Day: So one is this idea that the board can be, as they say, noses and fingers out. Well, if that was ever true, it's dead today. Boards have got to engage very intensely in some cases. And they've got to look for the areas where they're not engaging intensely, but should be. Sometimes you'll even see the word intrusive engagement or intrusive oversight. And yet if the board gets too intrusive, senior management is going to feel maybe correctly that the board doesn't trust them. And they'll start pushing every decision up to the board or they'll act out in some other way. And that's not good. Trust inside the board is also critical. Are board members having the tough conversations they need to have with one another. Second, trust is hard to maintain on the outside. Board members are under intense scrutiny these days. Rating agencies and proxy advisors maintain scorecards on every individual director recommending to institutional investors, whether to vote them in for another year or kick them out.

And institutional investors are very open that they're willing to vote out directors who are not working in the ways that they think they should. Once upon a time, a director's job was almost entirely private, not really subject to intense scrutiny, no longer. A compensation committee members said the Wall Street Journal knows the conclusion of our meetings even before we get a copy of the minutes. Society expects that transparency and society has ways of getting it and society reacts to what it learns. Consumers vote with their pocket books, talent moves to companies that have purposes beyond profit. And I would say a board member who isn't ready for that intense public exposure is going to have a rough time.

David Greenberg: Yeah. So that leads to the question from your point of view, is the modern board up to the task of these multiple challenges or maybe better said more positively, what capabilities and experiences are boards most in need of today?

Jonathan Day: Well, David, the women and men who serve on these boards have my intense admiration. They work very hard. I think in many cases they're not paid enough and they bare more and more risks almost by the week, but they are struggling to balance a massive set of responsibilities against the limits of a group of part-time directors who meet maybe six times a year. That's not much. What I'm about to say is a personal view, but I think we will see more examples of full-time or near full-time board service, non-executive service. The governance pundits in the US talk about the value of separating the chair's role from the CEOs. And they point to countries like the UK, where this is done. Well great, but some of those public company, non-executive chairs in the UK are paid well into seven figures and they work full time often with staff to support them.               

In the financial sector, especially there are audit chairs who are full-time, not even board chairs, but audit chairs are nearly full-time and paid accordingly. So time I think, is the first of the capabilities. I think another capability is a connection with younger employees and customers. In one of our networks, the average age of directors is well into the 70s. Now I've never met a collectively wiser group. They're truly amazing, but in many cases, their customers could be their great grandchildren.               

And so there's a point of connection there that's hard to forge. Boards are working very hard to increase their own diversity, but there's still a long way to go. And the digital universe that's driving many of these companies is evolving so quickly that it's tough for many directors to know even where to begin as they master it. I'm going to add one capability that is just over the horizon, but it's approaching fast. Most of us learned corporate finance based on concepts of the capital markets that took form starting roughly in 1960 and concepts based on assumptions, for example, that all equity shareholders have identical preferences, but most of those assumptions no longer hold. We're driving around a city based on a map that doesn't reflect most of the huge changes made in the last 50 years. And sometimes we're wondering why we're getting lost. And so I think boards need to catch up on these changes as well.

David Greenberg: I think it would be interesting, Jonathan, for you to talk a little bit about why you say all equity shareholders don't have identical preferences anymore. In other words, I think what you're saying is the theory was all equity shareholders care about the same thing, which is the growth and the value of their shares.

Jonathan Day: Well, I could drone on about this for much time than we have, but let me give just two examples. When is the time horizon? You have shareholders, if you want to call them shareholders that are really algorithms that are trading in and out of companies, not in hours or minutes, but in fractions of seconds. So they have very, very short term time horizons and traders that are seeking a short-term volatility in the companies.               

And then on the other hand, you have the big index funds and their managers sometimes describe themselves as almost shareholders in perpetuity. So the time horizons for shareholding are all over the map. The second is the simple assumption that what everybody wants is measurable economic value profits, but over and above the risk adjusted cost of capital. It just not the case any longer. You have very sophisticated investment managers that are saying we are prepared to trade some profitability for higher performance on climate, or social goals, or better governance. We talked about ESG. So the simple assumption that all investors have the same preferences are no longer a fact. Those are just two examples, but there are others that we could provide.

David Greenberg: So one of the consequences of what you're saying really reflects the mushrooming expectations on companies today. They seem to be growing by the day. How do you make sense of that? And what are you hearing about that from directors?

Jonathan Day :   Well, yeah, the expectations are definitely there and there's even this idea out there that governments have become incapable of taking action and making changes and that companies should do it all. And you get this idea both from the left and from the right that companies should solve all the problems of healthcare, and climate change, and inequality. And I would say that no company, no matter how clever, or large, or powerful can set social policy for the world. Jeff Bezos and Elon Musk may have spaceships, but I really don't think we want them to be controlling nuclear missiles or tanks.

So I think companies need to find ways to work more effectively with governments and with regulators so that each can play its part. The biggest companies really are playing multi-national roles and they have to think about issues like diplomacy and statecraft, and yet they can't step in and displace the governments that ultimately have responsibility for that. So all of this I think is going to require a lot more work on the part of boards. And a lot of that comes right back to culture, and ethics, and trust.

Can't get away from that. It keeps coming back into the conversation.

David Greenberg: Jonathan, clearly this is a conversation we could be having all day, but we're out of time for now. Jonathan Day of Tapestry Networks, thank you for joining me on this episode. My name is David Greenberg, 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 principal 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.

 

S6E5 | Can your code of conduct really change behavior?

Abstract:

Gone are the days of writing codes of conduct with pages of unreadable text, legalistic language, and corporate jargon. Today, codes are being designed visually and verbally to better develop ethical, values-based cultures. But how do you transform your code into a useful tool that helps people do the right thing? In this episode of LRN’s Principled Podcast, Senior E&C Advisor Jim Walton talks about how to create a code of conduct that inspires ethical behavior with Mary Fair-Matthews, Senior Corporate Counsel and experienced E&C expert at Kellogg Company. Listen in as the two discuss how Kellogg reinvented their code to further deepen their commitment to ethical conduct through a combination of reimagining code structure, developing a mobile app, and administering training.

https://www.kelloggcompany.com/en_US/about-ethics.html

 

Featured guest:

Mary Fair-Matthews has been with Kellogg’s Labor and Employment (“People”) team since June 2005.  She has served in several capacities including providing legal advice and counsel in HR related matters, managing employment litigation and EEO cases, and supporting the Ethics and Compliance function. 

In 2017, Mary began leading the global Ethics and Compliance function with the goal of continuing the legacy of driving a strategic vision for compliance.   Mary reviews, evaluates, communicates and manages compliance concerns and policies.  She also implements best practices in training and communication. Mary  manages the global investigation function which is made up of a team of investigators around the world who are dedicated to maintaining confidential reporting mechanisms and a consistent investigation process to  resolve employee concerns. 

Prior to joining Kellogg, Ms. Fair-Matthews was a senior associate in Dykema Gossett where she represented corporations in various labor and employment matters. She was a judicial law clerk in the United States District Court for the Eastern District of Michigan.  She also worked as an associate for Plunkett & Cooney.

 

Featured Host: 

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. 

 

S6E4 | ESG: A movement, not a moment

Abstract:

As our world continues to witness converging crises of health, economic stability, climate change, and inequality/injustice, ESG seems to be having a moment. However, forward-thinking organizations understand that ESG—and its business expectations—represents a movement. In this episode of the Principled Podcast, LRN Senior Advisor Emily Miner talks with Che Sidanius, Global Head of Financial Crime & Industry Affairs at Refinitiv, about environmental, social, and governance initiatives—also known as ESG—and where organizations currently stand when it comes to ESG commitments, activities, analysis, and measurement. Listen in as Emily and Che explore how different parts of the world execute on ESG, what factors are at play when implementing ESG strategies, and how “green crime” threatens the environment, business, and security.

 

Featured guest:

As the Global Head of Regulations & Industry Affairs at Refinitiv, Che Sidanius manages how regulatory changes around financial crime affect the company’s risk and supply chain business globally. His responsibilities include proposing courses of action to address regulatory changes and drive execution throughout the organization. Prior to joining Refinitiv, Che worked at Big 4 consultancies within Capital Markets Advisory. He also spent part of his career as a Senior Advisor at the Bank of England as well as a Senior Examiner at the Federal Reserve Bank of New York during the 2007-09 financial crisis.

 

Featured Host: 

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.

 

Show Notes:

[3:57] How has Covid accelerated the focus on ESG?

[5:58] What are the three pillars of ESG and how are they connected?

[8:30] How is ESG being addressed?

[10:15] Is there a spectrum in regards to where businesses stand on their prioritization of ESG?

[16:12] Who are the role models in Europe and the U.S. for their ESG prioritization?

[18:15] How will the new SEC Climate Task Force change the business landscape? 

[23:20] What are Refinitiv’s strategies for addressing ESG?

[26:40]  What is Che’s personal drive when it comes to ESG?

[28:56] What would Che tell a young child who wants to know how these systems of environmental damage can be repaired?

 

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: As our world continues to witness converging crises of health, economic stability, climate change, and inequality and injustice, ESG seems to be having a moment. However, forward thinking organizations understand that ESG and its business expectations represent a movement. Hello, and welcome to another episode of LRN's Principled podcast. I'm your host, Emily Miner, senior ethics and compliance advisor. And today I'm joined by Che Sidanius, the global head of financial crime and industry affairs at Refinitiv, a London stock exchange group business. We're going to be talking about environmental, social, and governance initiatives, also known as ESG, and where organizations currently stand when it comes to ESG commitments, activities, analysis, and measurement. We'll also explore how different parts of the world execute on ESG, and what factors are at play when implementing ESG strategies. Che, thanks for coming on the Principled podcast. Can you start by introducing yourself to our listeners? Your title is global head of financial crime and industry affairs, which might not scream ESG to many of our listeners. What's the connection?

 

Che Sidanius: Absolutely. So first of all, thank you so much for the invitation, and thank you Emily for hosting this webcast. I'm delighted to be joined with you. So broadly, let me take a step back. In terms of my role with Refinitiv, we are a big believer that in order to tackle many of the issues that we face today, including sustainability and ESG as a measurement of trying to address the issues around allocating or shifting the allocation of capital to industries and sectors and companies, we're trying to do the right thing and at the same time, engage with policymakers, and helping them to understand what some of those challenges are, including data standards and data taxonomies, in order for us to achieve that goal.

Why am I here? What's the connection between the financial crime? It's, there's a convergence between the financial crime activities that we're seeing, particularly related to environmental crime and what we call green crime, which is the intersection between illicit proceeds of illegal logging, illegal wildlife trafficking, illegal fishing, and many of the other aspects that influence and impact our environment and sustainability and the ESG agenda.

So I work as a function of that. I work very closely with our sustainable finance team, with our ESG team, and in fact, to allow our ability to combine our data sets that we both have, to enable both companies and sectors and policymakers to make more informed decisions, and not just looking at environmental crime or sustainability agenda as purely as an act of trying to meet the Green Deal and many of the aspects of the green deal that any organizations [inaudible 00:03:32], but actually to look at it more holistically. So just as the sustainability team and the ESG team are doing more to look at our financial crime data, we at the same time are looking at ESG data in a different way that we haven't done in the past. And I think that this acceleration of both of those issues are only going to gain momentum in the future.

 

Emily Miner: Thank you Che. When we were talking earlier, you mentioned that COVID is also accelerating the focus on ESG. Why is that?

 

Che Sidanius: Absolutely. We launched a campaign about a year and a half ago... more than a year and a half ago, almost two years ago, on a theme that we called green crime, which is that we were actually seeing the increased activity and potential impact of environmental crime issues that it has on sustainability, as I mentioned with fishing, illegal logging, et cetera. And this is before COVID. When COVID happened, that was a game changer in terms of awareness that in fact, our interaction with the wildlife and interaction with the wet markets and the trading of wildlife had an actual incredible impact in terms of spreading potential diseases.

The awareness of the economic consequences, the social consequences, the consequences to the health of our families, has now reached a point where maybe two years ago this would've been, "Oh that's a very interesting idea, but I don't see how that's relevant," when we all know now that these things are not just about climate change that's the happened in the future, but in fact they have a real impact on peace and security right now. And so that really is why COVID has been a real game changer in terms of raising awareness on this issue.

 

Emily Miner: Yeah. When you put it like that, I'm thinking about all the interconnected elements, and it's really actually quite mind-boggling to think about how COVID, and health, and markets, and countries, and people, and goods and services, and movement, ideas, how the movement of all of those things kind of are putting us where we are today. So maybe with that kind of big, sometimes overwhelming picture in mind, can I ask you to break down ESG into the E,, the S and the G, and talk about where we are right now with respect to our understanding of what that is, and kind of current activities and measurements related to the three pillars?

 

Che Sidanius: Yeah, absolutely. So historically up until today, the major focus has been on the E, or the environmental piece. The European Commission, the US, and many of the jurisdictions are really focused quite a bit on what should be reported, what are the data taxonomies around that, and making sure that there's some kind of consistency in terms of what companies and organizations should be required to report. And there's of course a healthy debate about what should be voluntary versus what should be mandatory. The G however has received some attention, but the S has received very little attention. In fact, no one actually knows what the S actually means.

And I mention the S, because it is connected to the E. The labor rights, and the human rights, and diversity and inclusion are very much connected to the environmental consequences, so that we see that in many parts of the world, including the middle east, including the US, we're even talking today what's happened in Louisiana. They have consequences in terms of human movement, and also criminal actors taking advantage of that. So we tend to think of the E and the S and the G as though they're separate pieces, when they're in fact very much connected. And we know that from, again, from a financial crime perspective, that criminals are interconnected, they're global, they're very sophisticated. Companies are interconnected, they're global, and it's really about causing real focus into these issues.

So I think a lot of great work is done on the E. We still have some work to do on the G, but the S I think is another piece that's going to receive increased focus. And we, very quickly, I'll very quickly draw attention to a paper in fact, that that was launched and published a few months ago. That was the leadership that was Thomson Reuters Foundation, to look at the S. To actually say that, you know what, while there's more for us to do, there's enough data there for organizations and institutional investors to look at, and there's an incredible weight and much more work for us to kind of really push in terms of policy reforms, to make sure that the E as much as received attention, that the S, that receives equal amounts of attention as well.

 

Emily Miner: Yeah. Actually to that point that you were making around how the S, the social aspect is connected to the E, the environmental aspect, I just read yesterday that the US Federal Health Department is creating a new office to address climate change as part of their broader health equity agenda. So again, that connection between the environment and how that's impacting society and inequality and justice.

 

Che Sidanius: If I could Emily, on that, there's no question that regulators, policymakers are paying more attention to this now than ever. We know that the SEC, the Securities Exchange Commission, has made some very particular statements on this. The European Central Bank has made some very particular statements on this. And so the time for the industry at large to translate its language regarding what they say from a marketing perspective to actual action is the disconnect that we need to close.

And we of course as a company are committed to this, and we can talk about that, but there's no question that this is the way of the future. As I've said before, companies and industries can either, [inaudible 00:09:42], lead, follow, or get out of the way. But there's no question that as the title rightly makes the point, that the ESG is not a moment. It is a movement. We're going to see the greatest wealth transfer happen between one generation to another. Wide estimates in terms of what that transfer is, but it's somewhere around $30 trillion, and that is quite an astounding number. So I think it's an important piece for organizations to get on top of.

 

Emily Miner: Yeah, absolutely. And you just mentioned the need for these efforts to be more than just marketing initiatives, and I want to kind of focus on that for a little bit, because we also have the stakeholder capitalism movement that intersects with ESG in a lot of ways. And there's a debate playing out right now in the pages of the Wall Street Journal about whether any of this talk is actually translating into action. We're two years out from the Business Roundtable's new declaration of the purpose of a corporation, and some say this is all hot air, whereas others are citing meaningful progress, albeit slow. Where do you fall down on this debate? The spectrum from nothing's happening at all, to yes, things are changing? So where do you come down on this debate in general, but then also in particular in relation to ESG, our topic today?

 

Che Sidanius: No, it's a great question, and there is a spectrum. There's a spectrum in terms of organizations who are still driven by short-term profit-making versus a longer, more sustainable economic model. There's also debate about publicly traded versus privately held organizations, where the publicly traded organizations are still driven and still much pressured by the investor community to focus on short-term profit. And there's a wide spectrum, and I guess my point is the following. There's no clash between short-term profit and long-term profit. There is a clash however between short-term opportunism and more of a longer-term sustainable agenda. And this has to do as much with, if you look at the diversity of boards, that have been shown to be more stable, incomes and profits have been more stable over time. There's a connection between organizations who are committed to a more sustainable business practice and a more stable and profitable sort of trajectory in terms of where they go.

And yes you can make the argument, yes CEOs, they're being pressured by shareholders to continue to deliver [inaudible 00:12:26] profit incentives. But there also needs to be a recognition that there's a longer play here. There's a play with the brand, there's a play about doing the right thing. And those things, as I said, the next generation, they will care. They will vote with their feet. They will vote with their asset allocation. And the institutional investor community is starting to respond to this. There's a piece here about educating the industry and also educating the policymakers. There is no clash between stakeholder capitalism piece and a shareholder capitalism piece, that the two are becoming much more intertwined in a way that you haven't seen before. And again, it gets into, do you want to lead on that discussion? Or do you want to pretend that nothing's going to change?

 

Emily Miner: Yeah, I've read a statistic recently that right now, 65% of the workforce in the United States is looking for another job. So again, kind of bringing back the connection to COVID in all of this. But that's a really staggering percentage. That's I think higher than it's ever been. And so when we're faced with a situation where we already have labor shortages and it's really a labor market, the companies that are leading with their values, leading with their purpose, treating employees equitably, paying living wages, doing the right thing publicly and behind closed doors, those are really the organizations that are going to come out ahead. And you cited some research, there's so much out there about how organizations that do the right thing also outperform on their bottom line. So it's, I feel like the question about whether there's an ROI there really should be laid to rest.

 

Che Sidanius: You're right. I mean, there's a point that we collectively, that we certainly as a company and many others, have to communicate that the UN social developmental goals and many other goals regarding a more sustainable sort of future economic model, it's not just the right thing to do but it actually pays off. It gets into the short-term-ism versus the longterm-ism.

And I'll just give a very brief example. So Refinitiv, so while the name is fairly new, we used to be part of Thomson Reuters. We're a fundamentally data and technology company, we always have been. Ended up, we got started in the 1830s, right? So how did we get started? We got started in the fact that we used carrier pigeons to carry stock prices between Aachen Germany and Brussels. Now, we've come a long way from carrier pigeons, right? But the fundamentals of what we do, data, providing data to organizations and companies and others who need it, is the same.

And it's the same thing with this. We will need to adapt. We need to adapt, and organizations will need to make a choice in terms of where they fit into that, because we have every intention to continue as we did in the 1830s, to continue that journey in the next 270 years as well. But look, sustainability and ESG are... I think it's fairly uncontroversial to say that these are some of the biggest challenges facing all of us, and it's not a company problem. It's not a policy problem. It's not a civics problem. It's all of our issue. And it's really about how we as a company and how the private industry plays a role in doing that. Because as I said, it's either you adapt or you don't.

 

Emily Miner: I didn't know that origin story of Refinitiv, that's really incredible. So you're based in the UK, Refinitiv is based in the UK, and the E within ESG is more regulated in Europe than it is in the US where I sit. As you look at kind of the landscape at a federal level, who are the role models out there?

 

Che Sidanius: Yeah, I think there's multiple role models. I think certainly within Europe from a federal perspective, to put it in US terms in terms of state versus federal, the European Commission and the finance ministers in Europe have put a great emphasis and priority in translating the Green Deal, their own version of the Green Deal into action, and part of those discussions as an advisor to that. But the US is also, in many aspects is also a leader. We have mayors of cities, and we have states in the US who are really taking action as well.

Now, unfortunately from my perspective, there might be a disconnect, historically might have been a disconnect between the federal action versus the state, if you will. And I think that these things will come into their own, and it's not just a question of protecting the status quo versus innovating. But we all know the impact and the role of climate change that it has, we all know that the impact of human trafficking as an example, and also the opportunities that it provides in terms of investing in technology.

And that will be the future, just like oil was the future in the beginning of the 19th century, data and technology is the new oil, if you will. And so that is the direction of travel. And I think it's only a matter of time before the US and many other jurisdictions and countries who are doing incredible work here can join forces to actually amplify, to force multiply all these actions in a way where maybe we haven't seen in the past.

 

Emily Miner: Yeah. And kind of following from that point, you mentioned the SEC earlier, the Securities and Exchange Commission. And they've recently announced that they're creating a task force, or have created a task force, on climate and ESG and are looking into climate disclosures. How do you think that is going to change the business landscape when it comes to advancing the ESG agenda? I'm thinking of other kind of international climate policy where the US has been a participant, but not a ratified member because of our political situation and it's more challenging to get consensus around that. But then we have from the business regulatory perspective some movement here that was recently announced. What do you think is going to come of that?

 

Che Sidanius: Yeah, so I think there's two parts to this. The first is, as you mentioned, the announcement by the SEC is certainly not isolated. There's been announcements by many regulators. The G20 and ECB, European Central Bank, and many others. New York Fed, a former employer. That's the direction of travel, and they will do more work in this space.

The issue that we need to resolve in a way is consistency in terms of definitely varied data and IT specific issues regarding standardized definitions as an example, right? So during the work we did with the Thomson Reuters Foundation, when we dig into the S as an example, as a company we have 140 different data points when it comes to the social part. But when we dig into it, there is a lack of definitional issues that ensures consistency in terms of what human rights actually means. There's a gulf and a gap in what diversity actually means, because it will be country specific, historically context specific, and there needs to be a discussion around, okay, if we're going to require organizations to report and then to manage, then we need to begin a discussion of what we're actually trying to capture, and making sure that there's consistency internationally on these issues.

So I think that that is where we need to go, and I know that in many jurisdictions there's an active debate in terms of data taxonomy. And just as in the financial crime space, going back to that with the interlinkages, 20 years ago, there was an active discussion in terms of many of the predicate offenses actually meant an evolution of financial crime like environmental crime, which is very much connected to ESG.

And the ESG, that discussion is just starting to develop in terms of making sure that there's some consistency, and also a public/private sector dialogue on key indicators. What should we focus on? And also not for just to be about carrying a stick in terms of punishing countries or companies, but also providing an incentive for companies to do the right thing. And then you can get into the capital regime from a financial sector perspective, in terms of allowing for banks to benefit of capital relief if they're actually deemed to be doing the right things on reporting and all the rest of it. So it's a complex answer to a complex issue, but again, there's no question that the train has left the station. Now it's really about how we can collaborate in a more effective way to get to the right place that we all want to be.

 

Emily Miner: Yeah. The examples that you shared were really helpful in just kind of explaining the complexity behind all of this. You're right. We can all agree on the goals or the outcomes that we're looking for, but then the how do you get there, and the nuances and language and definitions and historical context that you were mentioning... I know when, after George Floyd's murder, LRN kind of took the opportunity to reflect on how we are encouraging diversity, equity, and inclusion in our own four walls so to speak as well as what we're doing in the broader community. And we had a series of conversations with our colleagues around the globe, and diversity meant very, very different things depending on what country we were calling in from, because of the different historic, political, cultural differences that we were all bringing to the table. And it was really fascinating and productive to explore those differences and figure out, how do we normalize all of this so that we can make progress, and what are those metrics, and how are we measuring, et cetera. So yeah, thanks for sharing that.

We've been talking a lot about ESG from a kind of a global landscape, and I want to bring it down to Refinitiv. So this is a core part of your business, is to, as you've talked about, providing technology, data, expertise to your clients to help them make sustainable investment decisions, mitigate their risk, et cetera. How are applying this internally, taking your own medicine so to speak? What's Refinitiv's ESG strategy, and what's it look like?

 

Che Sidanius: Absolutely. So sustainability is a core part of our ethos. And really when you think of what Refinitiv is, we're a collection of businesses, but sustainability is a key part of it. A, what are we doing to apply our own medicine, we have we think fairly ambitious plans in terms of our own carbon footprint, meaning reduction of travel. We're committing to 65% of our suppliers to give us a science-based emission plan in terms of what they're doing to address some of these things, by 2025 by the way, so just in a few years' time. We're encouraging volunteering. We're committed to be one of the top three providers of sustainability, sustainability data for other companies and organizations and policymakers, which also means of course very engaged on the policy front. We are an advisor and a knowledge provider to the UN on its own sustainability task force, to the European Commission, the World Economic Forum, et cetera, et cetera.

So beyond the data piece, we're very engaged on the policy piece as well. But beyond that, beyond that, and you mentioned diversity and inclusion, we're incredibly committed to this as well. And while we focus a tremendous amount on gender and gender diversity, which is a critical issue, we're also committed to minority inclusion, all across all our businesses and all across where we have a presence. So we're 190 countries, we have a global presence, and we're deeply committed to these issues.

And you're right, George Floyd personally was a... how can I put it? It was a horrible event. I myself know that incident and watching that video brought my own history and my own memories that I had suppressed, in fact for a long time. And I could have been George. And so I personally committed to this issue as well, and working very much with the executive leadership team to make sure that we move beyond marketing statements into actual action, because A, I think it's the right thing to do, B, I think it only represents the community and the global community that we serve. And third, I wanted for us to be known as a place that fosters diversity, that propels diversity, promotes diversity. And at the end of the day, it just makes more business sense because of all the reasons that I mentioned that actually companies who are more diverse end up doing better, longer term. So, so hopefully that gives you a sense of our commitments on these spots.

Emily Miner: It does, and thank you for sharing them, and also for kind of the personal lens that you're bringing into your work at Refinitiv and being one of those agents for change. Staying on the personal topic for a bit, what's your drive when it comes to ESG, how did you fall into this? Or did you fall into this? Is this a more kind of intentional kind of life journey that has gotten you to where you are today with ESG being such a central thread to the different activities that you're involved in and leading at Refinitiv?

 

Che Sidanius: Yeah no, it's a good question. I think it's a combination of both. It's a combination of looking at the environments, and looking at where we can play a bigger role. And I know for a fact that our CEO and our executive leadership team is putting a great emphasis on these issues. I also see the connection as we talked about between the environmental crime agenda and what we call green crime in sustainability. They're in fact very much joined. Just because it's new and evolving doesn't mean it's actually new, really. It's been there all along. We just haven't paid attention to it. And I think that we can do more as a company in terms of what we can influence, the value that we think that we bring to the table.

And of course personally, how can I not as a citizen of the world look at what's happening and be... We all live under different jurisdictions, but we can see day-to-day the impact of climate change. And it's really about the question that you asked, that I asked myself. Well, what are you doing about it? Now I guess that's a... mission is a bit of a strong word, but it's certainly an intent, to leverage whatever I can bring, whatever effect that I can have as small as it may be, but it's, it's causing, making sure that you can look my son in the eye, certainly to show him, this is an issue that I know it's going to affect you more than it's going to affect us. My question is, what role do you have to play in that? And I think we all have a role to play in that.

 

Emily Miner: I have a fun as well, he's four, and he loves animals. He wants to be a marine biologist when he grows up so that he can save all the animals. And we read these National Geographic books about different animals, and they kind of always close with a description of the threats to those animals, they're endangered or at risk. And so often, it falls into what you talked about, is green crime. And he always asks me, what can we do about this? And I tend to respond with a kind of a four year old version of regulatory and economic incentives, and addressing those. What would you say to my four year old?

 

Che Sidanius: Well if I'm lucky enough to meet him, and that is a profound question that I'm not quite sure in do justice, but what I would say is a few things here. The first is the incentives piece. When need to have an incentivized culture built from the investment community to incentivize organizations to take action on these, and then for the allocation of capital to vote. We also need incentives from the regulatory community, and I think here specifically as an example of the supervisors in the banking community for example, who are an incredible, important piece, to allow regulators to really change the capital and how they're being allocated, what the expectation is. In both, there's a stick of course with increasing capital, for organizations who are not doing the right thing if you will. There's also a carrot in ensuring that you can lower their capital when they are doing the right thing.

And what does capital mean? Why is it so important? Capital is a direct influencer in terms of return on equity. It can be a direct influencer on return on investment, ROI. And the same thing for credit agencies, who have an incredible amount of influence in terms of rating companies, assets, securities, as a function of the environmental impact that those securities' assets may have. And so the green crime agenda or the green deal agenda should be incorporated with credit agencies. Why? Because they impact the cost of funding, they impact the cost of liquidity. So I think that once we have that type of a common approach with many of the actors that have a significant influence on behavior, and let's assume that humans are economically driven persons that respond to the incentives around them, then let's start there.

And then of course there's awareness raising, but the planet is raising our awareness by itself, so hopefully that's not a very controversial statement in terms of what we need to focus on. But I think that would be my long-winded answer Emily, and making sure that we pinpoint the nervous system of the financial system that has a significant influence on behavior.

 

Emily Miner: Yeah. Thank you. My four year old is about to turn five, so I think he's just about there to be able to internalize what you just said. Well Che, there's so much that we can unpack here, but we're running out of time for today. It's been really wonderful having you on the Principled podcast, and I've really enjoyed this discussion. To those of you that are listening, my name is Emily Miner, and thanks for tuning in. Thanks so much, Che.

 

Che Sidanius: Thank you, Emily.

 

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.

 

S6E3 | How to create E&C training that people will actually enjoy

Abstract:

Instructional design sits at a unique point within ethics and compliance programs, combining stakeholder expectations with the learner experience to create education that impacts how we think and act. In this episode of the Principled Podcast, LRN Senior Advisory Learning Solutions Manager Damien DeBarra talks with LRN Learning Director Alexis King about the role of the instructional designer as listener, facilitator, and change-maker. The two explore how instructional design can help organizations look inward to understand potential risks to their culture, and how learning can fill those gaps. Listen in as Damien and Alexis discuss building accountability into E&C programs and the voices needed to be part of that effort.  

Featured guest:

 Alexis King has built corporate ethics and compliance programs that ignite tangible culture change for more than 15 years. As a Learning Director at LRN, she collaborates with clients to create effective learning solutions for their unique needs and designs online, blended, and facilitated education experiences that emphasize learner engagement. Before joining LRN, Alexis spent more than 10 years as a Learning Manager at Interactive Services. Prior to that, she worked as a Senior Instructional Designer and Task Lead at C2 Technologies. Alexis holds an M.Ed. from the Peabody College of Education and Human & Development at Vanderbilt University. Her BS is also from Vanderbilt University. 

Featured Host:

Damien DeBarra brings more than 20 years’ experience to the instructional design and strategic workforce planning spaces.  As a Senior Advisory Learning Solutions Manager at LRN, he focuses on creating training solutions that ensure business buy-in and connect hiring practices to day-one learning roll-outs. In the last few years, Damien has helped organizations such as United Airlines, Sun Life Financial, SITEL, Astellas, MFS Investments, and SAP create 90-day action plans for their solutions and develop supporting communication strategies. He has worked with over 200 clients in areas ranging from retail to pharmaceuticals, call centers to nuclear plant manufacturing. Prior to LRN, Damien spent more than nine years as the Learning Solutions Director and Head of Instructional Design at Interactive Services. He has also worked as an instructional designer at NCALT, Electric Paper, and Epic. Damien received his BA from Maynooth University.

S6E2 | What is culture? How do board members think about it?

Abstract:

Evidence is mounting that corporate culture eats corporate strategy for breakfast. In this episode of the Principled Podcast, LRN Special Advisor David Greenberg, who is also on the board of International Seaways, is joined by Dr. Marsha Ershaghi Hames, Partner at Tapestry Networks, to talk about recent findings in their joint survey of board members from major corporations on ethics, culture, and compliance. While board members agree that activating culture and ethics from the boardroom is important, there is less clarity around how to make this happen. Listen in as Marsha and David discuss the genesis of the study and key themes that emerged from these candid conversations with corporate directors.

Featured guest:

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.

Featured Host:

David serves as Chair of the Governance and Risk Assessment Committee and a member of the Audit Committee of International Seaways (NYSE: INSW), one of the largest global crude oil and petroleum tanker companies. His previous board experience (2006 to 2016) was as the independent director – and member of both the Audit and Compensation Committees --of APCO Worldwide, a private communications and government affairs consultancy and as a director (2013 to 2016) of Clean Tech Group, which creates opportunities for industrial companies to invest in innovative, clean technology. He also served for 5 years as Chairman of the Board of Trustees of The Keystone Center, a Colorado non-profit that brings together oil, chemical and pharmaceutical companies with leading NGOs to find solutions to complex public policy challenges at the federal and state levels.

Mr. Greenberg is currently Managing Director of Cortina Partners LLC, a private equity firm that owns companies in the air medical, addiction treatment, bedding, textile and outdoor recreation industries and is CEO of Acqua Recovery, a residential drug and alcohol addiction center. He also advises boards and executive teams on strategy, compliance, leadership, and culture as a Special Advisor for LRN Corporation, and from 2008 through the end of 2016 was a member of LRN’s Executive Committee. For 20 years prior to 2008, Mr. Greenberg served in various senior positions overseeing government affairs, corporate affairs, communications, and strategy at Altria Group, Inc. – then the parent company of Philip Morris USA, Philip Morris International, Kraft Foods and Miller Brewing – culminating in his role as Senior Vice President, Chief Compliance Officer and a member of the Executive Committee.

S6E1 | Activating culture and ethics from the boardroom

“You’ve got to dive deep into the bedrock, and that starts with activating trust and zeroing in on culture, and it starts with the board.”

- Dr. Marsha Ershaghi Hames

Abstract:

Evidence is mounting that corporate culture eats corporate strategy for breakfast. In this episode of the Principled Podcast, LRN Special Advisor David Greenberg, who is also on the board of International Seaways, is joined by Dr. Marsha Ershaghi Hames, Partner at Tapestry Networks, to talk about recent findings in their joint survey of board members from major corporations on ethics, culture, and compliance. While board members agree that activating culture and ethics from the boardroom is important, there is less clarity around how to make this happen. Listen in as Marsha and David discuss the genesis of the study and key themes that emerged from these candid conversations with corporate directors.

What you'll learn in this episode:

• [2:03] Who is Tapestry Networks and how was this report made?

   

• [5:11] What is David’s perspective on this report and why is this report so timely?

• [7:26] Why is ethical culture a business imperative?

• [9:34] Apart from trust, what were the other big themes in this report?

• [14:46] Why do board members struggle to make a home in ethics and compliance?

• [17:12] Did the chief E&C officers’ views differ from others in the report?

• [21:22] How can this report be leveraged in the E&C community?

Featured guest:

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.

Featured Host:

David serves as Chair of the Governance and Risk Assessment Committee and a member of the Audit Committee of International Seaways (NYSE: INSW), one of the largest global crude oil and petroleum tanker companies. His previous board experience (2006 to 2016) was as the independent director – and member of both the Audit and Compensation Committees --of APCO Worldwide, a private communications and government affairs consultancy and as a director (2013 to 2016) of Clean Tech Group, which creates opportunities for industrial companies to invest in innovative, clean technology. He also served for 5 years as Chairman of the Board of Trustees of The Keystone Center, a Colorado non-profit that brings together oil, chemical and pharmaceutical companies with leading NGOs to find solutions to complex public policy challenges at the federal and state levels.

Mr. Greenberg is currently Managing Director of Cortina Partners LLC, a private equity firm that owns companies in the air medical, addiction treatment, bedding, textile and outdoor recreation industries and is CEO of Acqua Recovery, a residential drug and alcohol addiction center. He also advises boards and executive teams on strategy, compliance, leadership, and culture as a Special Advisor for LRN Corporation, and from 2008 through the end of 2016 was a member of LRN’s Executive Committee. For 20 years prior to 2008, Mr. Greenberg served in various senior positions overseeing government affairs, corporate affairs, communications, and strategy at Altria Group, Inc. – then the parent company of Philip Morris USA, Philip Morris International, Kraft Foods and Miller Brewing – culminating in his role as Senior Vice President, Chief Compliance Officer and a member of the Executive Committee. 

Transcript

Intro: Welcome to the Principal Podcast, brought to you by LRN. The Principal 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.

David Greenberg: Hello, and welcome to a special episode of the Principal Podcast by LRN. This is first in a series of conversations this season about the role of the board in shaping ethical corporate culture. And we're presenting all of this in association with Tapestry Networks. I'm your host today, David Greenberg, Special Advisor at LRN and a member of the Board of International Seaways, the second largest global oil tanker company. Today I'm joined by Dr. Marsha Ershaghi Hames, partner at the management consulting firm, Tapestry Networks. We're going to be asking each other about activating culture and ethics from the boardroom, a major study we co-authored that examines boardroom oversight of culture, ethics and compliance. Created from in-depth interviews with 40 directors, occupying 80 seats at global public companies, the study is a window into how directors think about, feel about and act on culture, ethics and compliance. Today we're going to be focusing on the big themes that emerged. In later podcasts, we'll be inviting participants in the study to join us to dig deeper into the findings and implications. Marsha, thanks so much for coming on the Principal Podcast today.

Marsha Ershaghi Hames: It's great to be here, David.

David Greenberg: Before we dive into the results, let's talk about how activating culture and ethics from the boardroom came to be. Can you tell us about who Tapestry Networks is and how this report was created?

Marsha Ershaghi Hames: Yes. Yeah. Thank you. And good afternoon, everyone. It's great to be here. And a little background, I think on Tapestry and then we'll kind of jump into the report. So Tapestry Networks' mission has been to help leaders of the most important institutions in the world do their work most effectively and with great confidence. And each year hundreds of independent directors and senior executives participate in our networks and our research initiatives, and they represent large, global organizations from North America and Europe. And our focus is to design networks, and these are across financial services, corporate governance and healthcare, to really kind of center conversations and candid dialogue from these top leaders on the pragmatic realities of leading these organizations and complex firms. And last year, while the pandemic challenged the resiliency of so many of these organizations, we were noticing that in a lot of the dialogue, it pushed leaders to surface and adopt kind of what is our broader view of risk and responsibility?

And so in collaboration with LRN, and specifically, David, you and I had a number of conversations as we sort of started to explore, is there something there that we need to really unpack? The ethics culture and compliance forum came together. And we brought together directors and executives to begin exploring what is the role of values? What is the role of corporate culture and ethical decision-making in helping organizations secure long-term sustainability and viability for business? And we had a series of meetings last year. So we kind of kicked off in July, kind of at a mid point, we're a year now, and concluded at the end of last year. And when we concluded these sessions, the input from all of the participants in the dialogue was that we all kind of collectively stepped away and said, we need to go out. We need to go out and assess these current realities of board oversight of corporate culture.

We need to understand from the director perspective, what is practical here? How is information being received? What is being measured? What do they need to investigate more? How do they need to build and bridge some of this dialogue? So when we kicked off 2021, our goal in collaboration with LRN was to conduct this study to glean the perspectives of sitting public company directors, and activating culture and ethics from the boardroom reveals these insights. These were confidential discussions, as David mentioned, with 40 directors representing 80 public company board seats. So fascinating, fascinating work, and looking forward to discussing it more.

So, David, maybe we can actually turn to you and get started. You've been in ethics and compliance for two decades and a board member at three companies since a decade and a half ago. So what is your perspective on this report and why do you think the work that we've done here together is so timely?

David Greenberg: Marsha, I think it's not only timely, it's overdue. The issue of where was the board has been an issue for the whole 20 years I've been associated with ethics and compliance. It's the first question people ask in the aftermath of a serious scandal or major corporate misconduct, where was the board of directors? And the truth is, that's a question that chief ethics and compliance officers and their teams can't always answer. [crosstalk 00:05:49] ... are obviously a huge force in the conduct and culture of a company. But what directors say, do and influence from the boardroom is often a bit of a black box to the ethics and compliance community, even within the same company. So boards are really fairly new at this. Even though ethics and compliance has been around for 20 years, it comes on top of so many other things that boards have to do.

And so many processes, and procedures and structures at the board level that are already well-ingrained, it's hard to add these new topics, even as important as this one is. And we know from the perspective of CECOs, how they feel about boards and board oversight, because we've been talking to them for 20 years. But also, LRN did a study of this a couple of years ago, talking to 25 chief ethics and compliance officers from global companies, again, off the record with no one being quoted. And the results were that CECOs are really disappointed in the amount of time, priority, resources, focus and strategy they get from the board. They're asking for more. And I think we're seeing in this study, that boards are also asking themselves for more. So Marsha, let me turn it back to you and ask, in the report we say ethical culture is a business imperative. Why do we say that?

Marsha Ershaghi Hames: Yeah. So there's no question, as you sort of point to, that boards play a significant role in shaping the conduct and the culture of a company. Every time there is a lapse or a scandal, as you mentioned, the number one headline or question is where was the board? However, I'd like to call out that an interesting kind of component that surfaced throughout our conversations was the importance of extending trust, and the currency of trust and where that plays in this notion of building business. So trust is hands down one of the most valuable assets a company can cultivate. Within an organization, trust can percolate into culture. And outside an organization, it translates into loyalty. And we've seen this play out with countless examples, even most acutely during the pandemic. And we've seen how the erosion of trust can impact business, and confidence and consumer loyalty, and how deep trust and consistency of trust can build communities and can help sustain business.

So a trust-based culture is an ethical culture, and this is the business imperative that was evident and it was coming through threads of conversations that board members really hallmark they care deeply about this. And it's not just that the directors care about this and that the executives care about this, but investors are demanding ethical cultures. They want to see businesses that are investing in trust-based ethical cultures. But it's important to get the foundation right. And I think this is where we're going to dig deeper too in this study, you've got to dive deep into the bedrock, and that starts with activating trust and zeroing in on culture, and it starts with the board.

David Greenberg: So Marsha, you talked a lot about trust, but I'd also like you to talk a little bit about the other big themes that came out of this study of the points of view of 40 directors of some of the biggest companies in the world. So what were some of those other themes?

Marsha Ershaghi Hames: Yeah. Yeah. So, first of all, I mean, a big kind of, I would say macro theme was the importance of embedding practices around ethics and compliance programs into all segments of the business. So culture change tends to be catalyzed by having a very clear and ethics and compliance strategy. And one big theme was that ethics and compliance doesn't have a home. And I think we're going to try to get into that a little bit later. But without sort of finding a home for it, where does it sit? Who oversees it? We're not really focusing on assessing, measuring, keeping a pulse on it. And that kind of reveals theme number one, which would be measurement. So measuring, what are we measuring? Are directors really positioned to even interpret the metrics and the data that is sort of emerging from what chief ethics compliance officers, and CHROs and other kinds of stakeholders are presenting to the board. Is the board's view sometimes refracted through this management filter?

So some of that we're going to unpack a little bit more over the course of actually our upcoming summit. A second big kind of theme was oversight. So lots of conversations around structures and processes, and this is a challenge. So one of the questions that emerged was how can boards really ensure there's adequate time and space being sort of devoted to focus on culture, ethics and compliance matters? Several directors had examples of committees, subcommittees that have been formed around which committees might or should have ownership. Is culture a committee issue or a full board matter? Several raised questions around how necessary it is to consider bringing in someone with a background with a chief ethics and compliance officer background or equivalent, with that kind of expertise onto that board, would that sort of change the dimensions of the types of questions being asked and the types of challenges being investigated?

Another big theme was accountability. So again, several directors discuss the importance of building better bridges with management and to engage more directly with management on matters of culture. There were several directors who've mentioned that there's a lot of reports on activities, so they're looking at all these different metrics, but one, I think very in particular highlighted the need for directors to be able to sit back and look for key signals. There's a lot of noise, a lot of activities, but what is the true narrative that we're seeing here? How do we sort of interpret that? And who and what function is really accountable? So I would sort of summarize the four themes as it all starts and ends with trust, however measurement continues to be a challenge, oversight, instructors, and processes and accountability.

So, when we were having these conversations, directors continue to sort of pound the table to reaffirm that the words of one that's a corporate culture eats corporate strategy for breakfast. And something that I found really compelling during these 40 interviews was how directors pounded the table to reaffirm that in the words of one, corporate culture eats corporate strategy for breakfast. And this really underscores LRN's long held view, that compliance is principally an outcome of values-based ethical cultures and not a driver of them. What did you think about this consensus from directors in the study?

David Greenberg: Marsha, to me that's the absolute bedrock foundation of everything that needs to happen now. It's really fantastic that the directors almost to a woman and man get the idea that if we're going to get the outcomes we want, we've got to get culture right. But as you said in discussing the themes about trust, and accountability and measurement, beyond the consensus of culture really matters, directors are still unclear on the path forward. And in fact, sometimes they even fail to make a connection between ethics, and compliance and culture. By that, I mean, we had a few comments from directors that culture's really hard, compliance is much more straightforward, but the truth is doing the right thing in a company or in any organization is really a complex set of interactions that is very hard to get right.

So I think it's why it's important that we continue this conversation and continue the exploration, because I think we learned that director's hearts are in the right place, but some of the mechanisms to take that feeling forward still need a lot of work. Marsha, we talked about the idea of board members struggling with ethics and compliance finding a home. What did you make out of that? You mentioned it before, but drill down a little bit

Marsha Ershaghi Hames: Yeah. Yeah. And I think that this theme came up in a number of different segments of conversations, and it really comes down to creating a focus. So creating a board focus gives ethics culture and compliance a true home. And without a home, there is no oversight, or responsibility, or regular pulse on that strategy. There's no regular check on what's the progress? Are we moving forward? Have we stalled? Who are the stakeholders we need to bring into the conversation? How do we assess and measure the data that's presented to us? So without a home, these conversations are not happening. And as you and I know, last couple decades, what gets measured gets done, what gets measured gets the attention. So without a true home, there's no way to have the accountability and the standing anchor for directors to sort of watch, and assess and to challenge management, ask the right questions.

How is the program being designed? Are we capturing the right metrics? Are we able to link these data points into the narrative that gives us a pulse on culture? Now, we had some mixed responses from directors in terms of where this should truly sit. And a few directors, as I mentioned earlier, mentioned that within their organizations, they've designed and developed some subcommittees. Now we know that there are some components sometimes, let's say compliance of risk may be under audit, or there may be a subcommittee to audit. Certainly as a number of directors pointed to some of the survey in HR and people workforce data being presented in comp committees. However, there were, I would say across the board, directors were saying that culture is a full board matter and it comes up at the full board, but it needs to have a more focused home.

And I think this is where a nice springboard to the types of conversations we're going to have over the next few weeks, where we sort of learn from each other and directors will share how they are approaching this, how they are thinking about this and the need to really find a true home for ethics and compliance.

David Greenberg: Thanks, Marsha. Another really interesting aspect of this study is that 10 out of those 40 board members either are or were chief ethics and compliance officers in their executive lives. Did their views differ from the others?

Marsha Ershaghi Hames: Yeah. Well, they essentially brought a stronger, more grounded view that carried greater emphasis. One of the CECOs said that essentially you bring a current credibility on the subject to the board. So it makes it very clear to the CEO and it makes it very clear to the board that I understand how these priorities live, unlock and reveal themselves. And they emphasized certain pragmatic steps in our conversation. So one of the areas of emphasis from CECOs that contributed to this study, CECOs that are former CECOs or current CECOs who sit on boards, is that it's important to link and incentivize culture. So finding strategies or examples that they had shared around linking ethical outcomes to compensation is important to at least put on the board and start to have a conversation around. Another area that they really emphasized was it was very critical for the board to have deliberate dialogue around culture that's grounded in metrics.

So start identifying what needs to be measured. How do we sort of find the examples and hallmarks of metrics and data that would be representative collectively of culture? Also, they emphasize thirdly, that organizations can't play culture, they need to do culture. So there needs to be a responsibility to stop talking about it, but to start creating and building a strategy. Going back to our conversation on, we need to find a home for this, we need to bring in the right stakeholders to challenge, and ask the questions and start to build a plan. And then lastly, this sort of resulted in the importance of giving a culture a home at the board. But I'm curious, you are a former chief ethics and compliance officer. You also have served on a number of boards. What do you think are the key stake aways from this report, both for chief ethics and compliance officers, and for the teams and staff that they're building within their organization?

David Greenberg: I think the report says a few things loud and clear, and I think I could sum it up by saying it is an endorsement of the view that ethics and compliance has to be strategic. It has to be values-based. It has to focus on creating cultures, not on creating rules, procedures and programs. Ethics and compliance has got to go deep into the drivers of both misconduct and the kind of behavior that we want to inset. Ethics and compliance and the CECOs who drive it have to help companies, and their boards and their teams find metrics that really allow for tracking and improving culture. Must focus on core issues, like trust, fear, organizational justice, willingness to speak out, willingness to listen and hear. So one way I've characterized this is, CECOs and their teams have to play big, not little.

It's time to have a clear strategy that encompasses how to build and maintain an ethical culture. It's time to move away from reporting on activities, to having a discussion with their boards about the culture drivers of misconduct, having a narrative about what's happening in the company, why and what needs to happen to change it, having a new set of metrics that measure what matters, like trust, fear, justice, and how to knock down the barriers to what we call a true speak-up culture. And it's time to find a way to strengthen their relationships with their boards inside and outside of board and committee meetings. That's what I'd say, if I were a CECO still, I'd be taking away from this, Marsha.

Marsha Ershaghi Hames: And then David, then how do you think our colleagues in the compliance and ethics industry could use or leverage this report in bridging and building conversations with their own peers, senior executives and their board members?

David Greenberg: Well, I mean, I think CECOs need to start a deeper conversation with management and with boards on issues like board training, board reporting, the board relationship with ethics and compliance. They've got to find a way to elevate. They have to find a way to kickstart a stronger relationship with members of boards and members of the key committees. They have to have a discussion with directors about, are we doing the right kind of training? Are we doing the right kind of reporting? Do we have the right metrics? What does good oversight look like? Do we have a real culture strategy as it applies to doing the right thing? Do we have the right structure? What's our relationship, both inside the boardroom and outside the boardroom, and how do we strengthen it? How do we find the themes, narratives and trends and talk about them and not talk about activities?

I can tell you as a board member, there's no other function, or no business unit, or no executive who simply stands up and talks about activities. And that's been the tradition of ethics and compliance. We've got to shift the focus to outcomes, not to activities.

Marsha Ershaghi Hames: I couldn't agree more. And I think this report really points to a lot of that. So fascinating, fascinating.

David Greenberg: Marsha, I think this is a conversation we could have all day and we will continue this conversation in future podcasts. But we're out of time here today. So my name is David Greenberg. My guest has been Dr. Marsha Ershaghi Hames from Tapestry Networks. And I want to thank you and everyone for joining us on the Principal Podcast by LRN.

Outro: We hope you enjoyed this episode. The Principal 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.

 

S5E10 | Edelman’s 2021 Trust Barometer: The past, present, and future of truth and trust within institutions

Trust has been a leading concern throughout institutions, globally. In this episode, Dr. David M. Bersoff, PhD, Head of Global Thought Leadership Research for Edelman Data & Intelligence joins us to talk about the overarching trends around trust, what institutions can do to gain back trust, how the trust barometer can help identify the differences in trust between nations, and how build and regain trust once it’s been lost.

“ 7-10 people fear the weaponization of misinformation, but what's changed in the last year or so is assumptions of who we think the weaponizers of fake news and misinformation largely are.”

- Dr. David M. Bersoff

David oversees Edelman’s 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 Intelligence, Dr. Bersoff spent 18 years as a consumer insights 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.

 

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.

Ben DiPietro: Hello everyone. And welcome to another episode of LRNs Principled Podcast. My name is Ben DiPietro. I'm the editor of LRNs E&C Pulse Newsletter. You can find that on our website lrn.com. Click the resources tab and click newsletter, please subscribe, we'd love to have you. With me today is Dr. David M. Bersoff. He's the Head of Global Thought Leadership Research at Edelman Data and Intelligence, and you would know them better as the people who put out the trust barometer for the last 20 years, and they have a new, a very interesting one out in 2021. And so we welcome David. And how are you, David? Thanks for taking time with us today.

Dr. David M. Bersoff: Pleasure to be here. Thank you for having me.

Ben DiPietro: In 2021 Edelman found business to be the most trusted institution globally. Why is that? And have the other institutions faltered leaving business standing alone, or has business simply outpaced media, NGOs, and government and building trust among people?

Dr. David Bersoff: All four institutions that you just mentioned actually are more trusted now than they were when we first started tracking trust among the general population back in 2012, but two things have conspired to put business in the number one position. The first is that it's actually experienced some good double digit growth in trust over the past 10 years or so, unlike media and NGOs, which have gone up but gone up relatively little and while the government has also gone up, which is surprising to some, started from the much lower position. So at the end of the day here, we find business is number one, and you can really understand what that looks like and why that is when you divide trust into its two constituent parts. So there is perceptions of ability or competence and there's perceptions of ethics or fairness. And what we see is that despite the fact that as I said, all the institutions have enjoyed some trust gains since 2012, government and media are generally seen as not terribly competent and not terribly ethical. NGOs are seen as ethical, but not terribly competent.

Business is the only institution that's really seen as both. And that's actually a bit of a change from last year. Last year business was seen as competent, but not terribly ethical, this year they're the only institution that's really seen as both. And so it's not as if the other institutions have fallen away, it's more that business has really come through more than the other institutions, particularly I think in the context of the pandemic. And if you look at the institutions across the last 10 years, you could see government has in many places, ground to a halt due to excessive partisanship, media has in many ways, turned into assess pool of ideological warfare. NGOs just haven't been seen as stepping up in these times of crisis. And so in many ways, business has been the most reliable agent of positive change in this country. And I think that's why it's rewarded with this trusted status.

Related article: People Place More Trust in Business

Ben DiPietro: You mentioned you've been tracking a lot of this since 2012. What have been the three biggest overarching trends report has found since then? And any thoughts on what you see coming ahead in the next three to five years that might bring with us and how will AI impact this whole notion of truth and trust?

Dr. David M. Bersoff: Yeah, let me pull that apart a little bit. Actually I want to cheat a little and call out four trends rather than three. Let me start with number one, the worsening trust gap between the more affluent top 15% of the population and everybody else. So the gap, the trust gap, in institutions between the more affluent and everybody else was 16 points this year, which is tied for the record. But what's even more telling is that back in 2012, there's 22 countries that we can track all the way back to 2012, back in 2012, only seven out of 22 countries had a double digit trust gap between the top 50% of the population and everybody else. In 2021, 21 out of our 22 countries had that double digit trust gap. And I think part of the reason why we're seeing that trust gap broadening across more markets is because of what's known as that case shape recovery.

So we're in the middle of this pandemic and what we're finding is that certain people are recovering more quickly than others. Some people at least, from a financial point of view are almost whole, if not even a little better off than they were while other parts of the population are stagnating or even doing worse than they were a year ago. And part of the problem or the issue of why this is important is that if you have two segments of the population and there are different trajectories, so one is looking towards a future that looks good. The other is looking towards the future that doesn't look so good, suddenly you have two big constituents in the population that are not equally invested either in change or in protecting the status quo. And that's destabilizing when you have a society that can't decide whether it needs to change this dichotomy, the sense in which I have more of a investment in keeping things the way they are, and you have more of an investment in changing. That's the wedge that pop opens the door on populism.

That's why we're seeing populism cropping up in countries around the world, because there is this disconnect where some people are differentially benefiting from what's happening from the status quo. Others are seeing themselves left out, left behind and are anxious for change. That's the first one. The second one is the change in flow of influence and information from a top down dynamic to a more horizontal pattern. So these days, and this wasn't always true, you're more likely to be convinced of something by your peers or by people you know than by experts and authority figures. And this, in my opinion, has actually been a debt negative for trust and stability and has hastened trend number three, which is one of the big themes this year in our study, which is the breakdown of the information ecosystem.

So we're in the midst of an infodemic, which has become so extreme. We describe the world as being in a state of information bankruptcy, basically our information ecosystem, it's structurally unsound, it's built on a flawed business model and it's unable to meet its obligations. Now, this idea that the information ecosystem has been compromised by bad actors isn't really new. We've had a question in the survey for several years now about, do you worry about fake news and false information being used as a weapon? And globally, we find that about seven to 10 people do fear the weaponization of misinformation, but what's changed in the last year or so is assumptions or who we think the weaponizers of fake news and misinformation largely are. I think two, three, four years ago, people were thinking about Eastern European troll farms or cyber terrorists or Asian bot shops.

And what's been made apparent by the pandemic, the fear around local issues such as the election in the US is that these days misinformation is largely a home grown phenomenon. And as a reflection of this, and this is one of these data points that really just have me shaking my head. More people today are worried that their own government leaders are purposely misleading them than they are, that other countries are contaminating our media with false news. So this whole questioning of the media inputs, of the information ecosystem, trust in media, trust in information and data, this is huge. And it's really come perse forth this year as a major problem. And then the fourth trend that I'll mention is this anointing of business. So we've been talking for years, that business needs to become engaged in social issues, they need to be citizens of society, they need to look beyond their bottom line. That's been talked about under the context of things like purpose or CSR, but what we're really seeing is the evolution of that into something much more extreme.

And what we're seeing this year and last year a little bit, is that people have placed business on a pedestal and conferred upon it the responsibility for our future, as well as all the hopes and expectations that responsibility entails. This is way more than being a business that does good, this is business being called upon in many ways to be our savior, to bail us out. As the only adult left in the room, we're looking to business to fill leadership void left by media and NGOs and government. And the fact remains that business just isn't designed for that and CEOs aren't trained for that task. So while opting out of being the people's hero is not really an option, success is also not a shirt. I think it's going to be a major existential crisis for business over the next several years of can they live up to these new hopes and expectations and aspirations that have been heaped upon them and heaped upon them because they are the only institution that's both trusted and competent.

So those are the four big trends that we've been tracking that have all in some ways come to us for this year.

Related Article: Culture and Trust are Keys to Confronting AI Challenges and Opportunities

Ben DiPietro: It's interesting you say that because your report also found that most of the respondents identified "my employer" as the institution that they trusted most, which again, refers to the two you're talking about. So what responsibilities do employers then have in virtue of that trusted status? You mentioned they're not necessarily equipped for this nor trained. Is that going to become a necessary part of this job to be a leader you're going to have to navigate this world. And so you better learn it to be qualified to get the positions?

 Dr. David M. Bersoff: So essentially at the level of business first, before I get down into the employer, the fundamental role of business is in the midst of being redefined to include expectations of contributing to society beyond supplying, products, jobs, and philanthropic dollars, what I was referring to. As I also said, these expectations are way beyond what can be accomplished with CSR as a bolt on corporate function. And so what we're seeing is that doing good and being values driven is basically becoming an intrinsic part of what it means to be a trusted company and good public standing. So as a result, values and purpose are going to have to become part of the corporate DNA of any enterprise that hopes, And we've got data to support all of this, that hopes to retain customers over the long-term, keep their best employees and attract investment money. All of those stakeholders are looking for business to do this. It's not a choice for business, it's not a choice for CEOs.

That said, within business, my employer holds a very privileged position of trust. We find that 76% of people trust their employer to do what is right. And that's a number that's been very stable over the past four years. So while we sometimes see some gyrations and trust associated with the other institutions, that trust in employer is high, consistent and rock solid. And I think it enjoys the special status for several reasons. First, the employer-employer relationship, it's a personal relationship. So you know your employer in general, they know you, it's a local relationship. It's a consistent presence in your daily life. And one of the things we're seeing these days is that trust has become more local. And third, you have leverage over your employer. So via collective action, employees do have the power to get their employers to change policies and get involved in issues. And these attributes all help to spawn and drive that trusting relationship.

But beyond that, what makes this relationship special and important is that employers have power, they have resources, they have exponentially greater wherewithal to get things done than I do as an individual. So this relationship between employer and employee is not just a close, trusting relationship, it's a personal relationship with a rich, connected and powerful other, and it's the only such relationship most people have in their lives. And so you can understand why there's so much emotional energy around the employer, and you can also understand why we are highlighting the importance of that relationship. Because this relationship is I've described it, it puts employers and I would argue a unique position to supply their employees with what they're currently seeking most ardently, which is trustworthy information, reassurance about their future and the opportunity to create positive change.

And these are becoming responsibilities of the employer to supply their employees with these things, which they can't get elsewhere. And in general, I think it's going to be difficult for untrusted institutions to rebuild trust in themselves in order to regrow trust needs a toehold. And from what I'm seeing, employers are that toehold and they really need to embrace that role. I think things are going to get better. The information problem is going to get addressed. Trust is going to be renewed, not so much from one grand gesture, but the actions of thousands of employers working with their employees and growing or regrowing that trust and faith in the system from the ground up.

Ben DiPietro: I'm wondering how you saw that last year obviously COVID has been here for a year now, we're recording in March. How has it affected people's trust in the societal institutions? And do you see it lasting or what's the lasting impact from that?

Dr. David M. Bersoff: Yeah, no, it's an interesting question. So we collect our trust data in October, November, and we really sit in January and of course, we released data in January of 2020, which of course, was prior to the pandemic, really becoming a reality, certainly in most of the Western countries. And then of course, it burst onto the scene and it had a huge impact on everything and every body. And so we went back out into the field to see what if anything the pandemic had done in terms of institutional trust. And what we found is that there was a trust search, trust in all the institutions actually went up and government in particular saw this big upward movement in trust. And it was actually at that point, the most trusted institution. Now, it's not unusual to see something like that in times like this it's that rallying around the flag idea or the circling the wagons that when you're in the midst of a crisis, people really rally around their institutions.

And for some, it's an act of faith, for some it's an act of hope, for some it's the product of psychological necessity because the prospect of living through a major crisis at the mercy of untrustworthy institutions is just a little too scary to contemplate. But the idea is you do tend to see trust surges around events like this. And then the question becomes, is that search a bubble or is that a real change in the status of that institute? So like I said, we went out mid year, we saw the surge. We asked ourselves, is that a bubble or not? We're back out in the field at the end of 2020, which was at that point, close to a year into the pandemic. And what we found is that faith or hope or psychological defense mechanism that had caused trust to go up had collapsed in the face of the realities of a pandemic that just wasn't being well-managed.

And as a result, the trust bubble burst and all of these institutions, which had this opportunity to burnish their image, they had this influx of faith and trust. Most of them squandered it, government squandered it more than any of the other institutions. But in general, that's been the story, that bubble has already burst to a large point. So the crisis itself increased trust, but how the institutions responded and reacted to that crisis has proven to not be up to the expectations of people. And that bubble has burst.

Ben DiPietro: I was struck mostly for, by the trust chasm you described. And I'm wondering, obviously, COVID, must've played into that some as well, what can be done to reduce that gap? And do you think it would ever be fully erased? Is there some way to get people together again on basic facts and at least understanding what the day of the week is or what time it is or anything?

Dr. David M. Bersoff: The trust gap, trust chasm, I don't think will ever be fully erased for the simple reason that that top 15%, the more educated, the more affluent, the more informed will always be in a better position to harvest the benefits of society or capitalize on the status quo. So there's always going to be a trust gap there, but what can and needs to be addressed is that the gap needs to be closed such that at least the top and the vast middle are not living in two separate trust realities. Because what we find in many markets is that the well-off are living in a world in which institutions are trustworthy and can be trusted while the mass population is living in a world where institutions are largely untrustworthy.

And that dual reality, again, feeds into two groups of people that aren't on the same page, that don't see the same needs, that don't see the same problems that need to be fixed, and you can't get anything done when you have that bifurcation difference of experience, different realities, societies, especially democracies tend to grind to a halt if there's too many people split between two different realities. In terms of how to address that, I think the first thing that needs to be done is a dismantling of the structural inequalities within society. So you don't get these K shape situations. You need to have a situation in which if there's prosperity, everybody is sharing in it. So maybe not to the same degree, the same level, but if the country's doing well, almost everybody in the country is doing well. If the country isn't doing well, then almost everybody in the country isn't doing well. And so it gets everyone on the same page, we're all in the same boat. When you've get that separation, that's a recipe for disaster. And that separation tends to be driven by structural inequalities.

And you see that around the issue of racism and structural inequalities around racism and how that basically pushes people off in two different trajectories. The society as a whole needs to address the issue of structural inequalities. And then the other thing that I think is important that societies aren't generally good at is change management. So we found in the 2020 barometer, actually, that 57% of respondents are worried that people like them are losing the respect and dignity that they once enjoyed in this country. And so, while I think part of the trust chasm is driven by economics, differential economics, structural inequalities, the other part of the trust chasm or another part of the trust chasm is driven by this sense among sizable number of people of being left behind, being left out, losing dignity, losing attention, not mattering anymore, not mattering anymore is huge.

People don't take that lying down, it's not something they can accept and feeling like you're being left out or left behind or not considered, that drives sense that the things aren't fair, that our institutions lack ethics, that I have to take all I can get now, without any concern for the future generations, it really moves people to extreme behavior. It moves them to selfishness. It moves them to scapegoating, immigrants, minorities. It really is a very pernicious element within society. And I would rank it second to the infodemic as an embedded attitude or perspective that's really making things unstable, unpleasant and leading into a lot of the polarization and polarity that we're seeing in society today.

Ben DiPietro: The barometer also breaks down findings by country and region, as it is worldwide. What are the biggest differences in trust between the US and China, the US and Europe, Latin America, and anything in these particular areas surprise you from the findings?

Dr. David M. Bersoff: Yeah, sure. Actually, can I just go back to, I wanted to finish my answer to the other question. So I detailed the aspect of social inequalities, and I explained the problem of people being left behind. And so the cure for people being left behind is really this idea of better change management. What our institutions need to do to increase their efficacy and foster a spirit of cooperation versus entrench against within society, they need to make change seem less threatening and more inclusive. And at the same time, they need to make the people who will inevitably be disrupted by change, feel as protected and respected as possible. Change is going to happen. Change has to happen. Change needs to happen. What we've traditionally been very bad at is managing that change, acknowledging that certain people aren't going to benefit from that change, that helping people see their place in this new future that we are creating and protecting those who will be hurt by the future.

Until we start doing that, you're going to continue to see that gap because change, progress, innovation is inevitable. We need to find a way of making that inevitable change less threatening big portions of the population in order to address that gap between the trustors and the non-trustors.

Ben DiPietro: It sounds like a big task for education, and we should committed that we make to it. They're all tied together that way. The barometer breaks down findings by country and region. So what are some of the biggest differences you see between trust in the US and trust in China and the US and Europe and Latin America?

Dr. David M. Bersoff: Sure. So we do look at trust by country and region, but that said, we don't really encourage looking at trust in one country versus trust in another country because there's different response tendencies at different parts of the world. And so you have a country like China, they tend to be more agreeable. They tend to agree with statements. They tend to use the higher ends of scales, et cetera. And so yes, there is a big trust difference between China and the US. China, when you look at the data, it looks to be a more trusting society and more trusting of its government. Now, part of that could be because China, they emerged more quickly from the pandemic, they had stronger economic growth, there's less governmental polarization preventing progress, but it's also likely partially due to the fact that as I said, the Chinese tend to be more positive than the Americans do.

But what I do find that's really interesting in terms of the US versus China, is that when you look at how the rest of the world perceives China and the US and the trustworthiness of the Chinese government and the US government, what you find is that neither of these most powerful countries in the world, the natural candidates for global leader in this time of crisis, neither one of them is trusted by the rest of the world. So here you have the two most logical countries to take a leadership position in the world. They have very different governments, very different political systems, very different histories, very different philosophies. And yet neither one has been able to win the confidence of the rest of the world. There is now this open position as the defacto global leader. And right now the two most logical suspects for occupying that position just are not from a position or from the point of view of trust, equipped to be in a leadership position.

Ben DiPietro: And the same for Europe and Latin America?

Dr. David M. Bersoff: One of the big dividing lines, it's not so much region as it is developing versus developed markets. So that's why you see some skews for North America and Western Europe versus Asia and other places we look at, it's not so much geography as developing versus developed. And what you find is that developed markets tend to be less trusting than developing markets and the people in those markets tend to be less positive. And I think part of the reason for that, we get people who are somewhat puzzled. It's like, well, life in America is so much better than life in India or life in China, how come our trust numbers aren't higher? And so I talk about the fact that when people are assessing how they're doing, they don't compare themselves, people in the US sitting around the dinner table, assessing how they're doing. They're not sitting there looking at their lives and saying, "Well, at least we're doing better than the Chinese." They're looking at their lives and they're saying, "Am I doing better than my parents? Are we doing better than we were doing five years ago?"

You compare yourself to other groups that are like you, or you at a previous point in time. And in some, in a country like the UK or France or the US, there's going to be more and more people saying, "You know what? My parents actually did better than I am, or you know what? I actually feel like I've lost ground over the last five or 10 years." That's going to lead you to distrust institutions, to lose faith in the system even if your benchmark day to day life is objectively higher or better than people in developing markets. But those people in developing markets, they're sitting around the dinner table and they're saying, "You know what? We have more freedoms than our parents and grandparents did. We're doing better than them. We're more educated or more advanced. We have more things. And you know what? We, as a family are doing better than we were five or 10 years ago." That does a lot to drive the sense that our institutions are trustworthy, the country's on the right track, things are okay, things are looking good.

And that results in some of these regional differences where the more developed countries just appear to be less trusting, less optimistic, less faith in the system, than some of these developing markets, even though the standard of living in those developing markets, isn't as high.

Ben DiPietro: It's a question of forward momentum, yeah. I guess if you're moving forward, you're feeling positive.

Dr. David M. Bersoff: Exactly. It really is about that momentum. It doesn't matter how well you're doing, if you see yourself going backwards, that's all you need. Then it's like, life sucks. And on the converse, if you see things moving up and getting better, you can absorb a lot of punishment, a lot of hardship when you're looking towards a future that's brighter than your present.

Ben DiPietro: I really enjoyed this. Let me get you out of here with one last question then, are you hopeful as you're speaking about hope for the future of truth and why or why not?

Dr. David M. Bersoff: So when I look towards the future in general, I keep in mind that this country survived McCarthyism and survived the Cold War, the Cuban Missile Crisis, unrest, lies and misinformation around the Vietnam War, the Civil Rights Movement and all the protests of the 60s. So the country has come through tough times and seemingly attractable differences in our values before, and so that, our history gives me hope. But to the point you were raising, I don't think that unless until we cure the infodemic and emerge from information bankruptcy, I don't see a way forward. And what that means at a foundational level, until the rewards in society. And those rewards could be money or power or influence until those rewards are greater for spreading truth than for spreading lies and are greater for facilitating cooperation rather than fomenting divisiveness, especially democracies, we're going to continue to founder and suffer and weaken our societies.

Certainly, I think business has a big role to play in fixing some of these problems, particularly around information, but ultimately, we also need government and media to start working again. And as bad as January 6th was as a watershed moment of distrust and misinformation, I still don't believe we hit rock bottom, even with that event yet. And I do worry that it might take an even bigger shock particularly to this country before we shake ourselves out of that, before there is a greater reward for truth over lies and for cooperation over polarization.

Related article: Three Ingredients for Fostering a Culture of Trust

Ben DiPietro: Certainly sobering as we go forward. And we joked before about agreeing on what day it is, but there are probably some people who would argue. It's scary.

Dr. David M. Bersoff: Absolutely.

Ben DiPietro: Hopefully, we'll figure this out as we go, but I want to thank you so much, David. This was really interesting and great. You guys do such a great job with this report and it's always a wealth of information. And I know our listeners are fascinated by it as well as I am. So thank you very much and stay safe. And we look forward to seeing you again in the future.

Dr. David M. Bersoff: You bet. Thank you.

Outro: We hope you enjoyed this episode. The Principal 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.

 

S5E9 | Growing Culture: Cheryl Curbeam Engineers an E&C Career at Corteva Agriscience

Cheryl Curbeam, chief risk and compliance officer at Corteva Agriscience, talks about her journey from engineer to compliance officer; how the pandemic has prompted changes to how her program operates; and how to find and grow a diverse group of talent for careers in the ethics and compliance profession.

“No longer can you just have a conversation with someone that sits next to you, or in the hallway. People have to be more intentional about it, so we have had to step up our messaging about the hotline.”

- Cheryl Curbeam

Cheryl Curbeam is the chief ethics and compliance officer for Corteva Agriscience, a global agriculture company that launched as a publicly traded company in June 2019. Cheryl leads a global team to implement a new ethics and compliance program that inclkudes the creation of its first Corteva Code of Conduct, an Ethics and Compliance Hotline, employee training and certification, compliance policies, and mobile app. Full disclosure: Corteva is an LRN partner, and we worked with Cheryl and her team in helping them create their code.

Prior to her career at Corteva, Cheryl had progressive leadership roles at DuPont including assignments in operations, sales and marketing, and compliance. She holds a master of science degree in mechanical engineering from Massachusetts Institute of Technology, and a Bachelor of Science in Mechanical Engineering from University of Tennessee. She is also a certified Corporate Compliance and Ethics Professional and Six Sigma Master Black Belt.

 

What You’ll Learn on This Episode:

[1:29] How has Curbeam’s career path led her to her current position at Corteva?

[3:23] How is Corteva’s E & C program structured and who does Curbeam report to?

[4:35] What are Corteva’s core values and how are they implemented in the structure of their E & C program?

[6:19] How has Covid changed the way that Corteva trains and communicates with their employees?

[9:28] What does Curbeam anticipate the lasting impact of Covid will be in the business world?

[10:37] How has Corteva conducted employee onboarding during the pandemic?

[11:34] What is Curbeam’s perspective on the call for racial justice during the summer of 2020?

[13:46] What can the E & C community do to promote more diversity?

 

Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.

 

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.

Ben DiPietro: Hello, everybody and welcome to another episode of season five of LRN's Principled Podcast. My name is Ben DiPietro. I'm the editor of LRN's E&C Pulse Newsletter. You can find that on our website, lrn.com, click the resources tab, and then click on the newsletter tab. And please sign up. We'd love to have you as a subscriber.

With me today is Cheryl Curbeam, the Chief Ethics and Compliance Officer for Corteva Agriscience, a global agriculture company that launched as a publicly traded company in June of 2019. Cheryl leads a global team to implement an ethics and compliance program that includes the creation of the company's first ever code of conduct, an ethics and compliance hotline, employee training and certifications, and a mobile app. Let's welcome, Cheryl. How are you today? And thank you for taking time.

Cheryl Curbeam: I am well. Thank you, Ben, for the opportunity to speak with you today.

Ben DiPietro: It's good to have you here. So tell us a bit about your journey in the world of ethics and compliance. How did you become interested in this? And tell us a little bit about the career path you've taken to get where you are now at Corteva.

Cheryl Curbeam: I would like to say that Corteva sells... People think we're an ad company, so that can mean a lot of different things, but I wanted to let you know that we sell seeds, we sell crop protection and digital solutions for farmers.

So how I started my journey is I'm a mechanical engineer by training, have both a bachelor's and master's in mechanical engineering. And so it's not likely that I would have ended up in ethics and compliance, but I spent the first third of my career in operations and aspirations and leadership assignments. The second third of my career was spent in sales and marketing, and I had some really fun jobs in sales and marketing. And one of those fun jobs was to provide and support the fibers and fabrics that go into firefighter clothing. It was one of the best jobs ever, but it required a lot of travel. And I was out of my home three out of the four weekends. I was gone 80% of the time. And around that time I got married and had children and it just became so challenging with the travel and managing my personal life.

And so I started to think about other career options for me. And then I looked for roles within the business because I love the sales and marketing side. So I started doing compliance for the business, which led to corporate compliance for the company that I was with. I was with Heritage Legacy Company [Ducon 00:02:56] at the time. And then I was asked to join Corteva in 2018, before we launched our company and I had the privilege of being promoted into the role for Chief ethics and Compliance Officer. And so I've added now data privacy to my responsibilities as well as enterprise risk management.

Ben DiPietro: And so tell us a little bit about the program then. You've basically clearly started everything. How is it structured and who do you report to?

Cheryl Curbeam: Our Ethics and Compliance Program is structured globally. So we have major commercial regions around the world. So we have an ethics and compliance officer in each of the major regions. So we have one for US and Canada. Another person covers Latin America. One covers Europe, one covers Africa, Middle East, and one covers Asia-Pacific. So, that's also the way that we're structured with data privacy. My role reports into the general counsel, who's also our board secretary. And then we also have a governance structure. So our executives sit on what we call our Ethics and Compliance Committee and we meet quarterly and they provide oversight for our program, for our policies and our initiatives. And then I also have regular updates with our board of directors. So, that's how we're structured.

Ben DiPietro: So tell us a bit about the company's core values and how those values are reflected in your culture and your code and the role that E&C plays then in disseminating those values and making sure everybody in the company knows of them and is working to adhere to them as much as they can.

Related article: Best Codes Drive and Reinforce Values, Ethics

Cheryl Curbeam: I really like that question because the purpose of our company, we think we're here to feed the world. And so the official purpose of our company is to enrich the lives of those who produce and those who consume and sharing progress for generations to come. And I love the part about our purpose being for not only for me, but for people that come behind me.

So everything we do kind of starts with our purpose, our code, which LRN helped us to develop. And our supplier code of conduct start with our purpose. And then we talk about our values. So we have six key values. One of the values is around be upstanding, which we have owned that in the ethics and compliance space, but the other ones are to enrich lives, to stand tall, to be curious, to build together, and to live safely. So our code is titled, We Are Upstanding. So, it's a flip on the value be upstanding. And everything that we do, all the courses that we launch through LRN start with We Are Upstanding. So that's one message that we keep core to us in ethics and compliance. And when we launch our annual training, we have a Be Upstanding month. And that month is, and we started this last year, dedicated to webinars and activities, and also just a fun and creative way to launch our annual training campaign.

Ben DiPietro: Obviously COVID is impacting you guys the way it's impacting everybody. How is it changing the way you try to maintain continuity in your messaging and training and support for employees?

Cheryl Curbeam: I think COVID has had an impact on everyone. And when you think about 2020, and some of the keywords and phrases, you think about pandemic, you think about Zoom, you think about racial reckoning, you think about the presidential election, all of those things in addition to COVID kind of have merged together and they will probably always be with us.

So it was a year for us and it still is a year of resilience. And so everything that we thought about for 2020 and 2021, everything has to be thought of in a virtual content. All of our training is now virtually delivered, but we've been very creative. We get to see the creativity of our employees, of how to not only title things, but make things interesting and interactive. And we've trained outside of our online training. Just in the webinar format, we've trained over 11,000 of our employees that way.

Another key shift for us and probably for all companies is how you conduct ethics investigations. Instead of flying to a location and conducting in-person interviews, we really had to shift the way that we interview and collect information so that it's in a virtual format. And we've had to even hire external investigations companies to help us and assist us with some of the more complex investigations.

And I think one of the key things that has changed is how we get employees to speak up and seek help and how we're able to detect issues in the workplace because no longer can you just have a conversation with someone that sits next to you or in the hallway, people have to be more intentional about it. And so we have had to step up our messaging around the use of the hotline, how it works, how it's managed by a third-party vendor. It's a great way to report things anonymously. Those are some of the key changes that we've had to really think about.

And the last thing I want to mention, I don't know if other companies had to deal with this, but we've had to really address the use of social media. And so with the monumental, I call it presidential election that we had in the US last year, people have felt free to share their opinions and ideas. And we certainly don't look at employee's personal social media accounts, but when issues are brought to us, we have to remind our employees that what they say and what they write, whether it's within the company, but also in social media has a reflection on who we are as a company. And so we've had to really think about sharing that message with our employees, that we are not actively looking at their social media, but what they say and what they write, reflect positively and negatively on our company.

Related article: Adapting to change: Training Your Global Virtual Workforce

Ben DiPietro: Beyond remote work then, what do you think would be the lasting legacy of this pandemic and the way it changes the role of ethics and compliance and the [inaudible 00:09:29]?

Cheryl Curbeam: My perspective is that let's face it, we're never going to be traveling at the same levels we were traveling before the pandemic. And so, we have to adjust. It's not just a temporary adjustment to a virtual and remote workforce. I think it's a permanent one. And we have to adjust and continue to communicate how the employees can speak up and seek help. So I don't think that's going to change either. And I think another lasting legacy which I spoke about is how we do investigations. So, that'll be a permanent change.

But I think the thing that I haven't really touched on is the hiring of talent, which I think is a real positive. I've had the pleasure of hiring three people on our team remotely. And I think what that does is you no longer have to restrict people to a geography to get great talent. And I think that's a great positive, that no longer will you have to require that people be in one of our three headquarter locations or be near one of our major global centers in order to be in ethics and compliance.

Ben DiPietro: How do you do the onboarding? It's sort of different now.

Cheryl Curbeam: That's another great question. So we do all of the talent scouting virtually. We do the interview panels virtually. People meet into a Zoom room. We also onboard them virtually. We have a phenomenal ethics and compliance team, but we also have phenomenal IT support. And so they shift them the computer, they set up a virtual onboarding session for their computer and phone. We set up mentoring appointments virtually. So everything that we do to onboard new employees is virtual.

Ben DiPietro: You mentioned a little bit before last year was a bit of a strange one, certainly politically. And also part of that was the cry for racial justice that led to worldwide protests following the killing of George Floyd by Minneapolis police, which no doubt effected you as a woman of color. Can you talk about since all that's happened, what are you thinking and are you hopeful that it will lead to some meaningful change?

Cheryl Curbeam: So for the audience, yes, I am a black woman. I'm the proud mom of two black teenage boys. I'm married to a black husband. So for me, the killing of Mr. Floyd was one of several horrible killings that we've had to witness, unfortunately, through social media or through the news channels. Because I deal with this probably every day, for many black families this is the reality that we have to deal with about personal safety. I am hopeful. I'm very hopeful. My faith gives me a lot of hope. It was deeply painful to actually witness Mr. Floyd being killed. I think one of the fortunate parts, if you can even say that was that other people got to witness it too. And what gave me hope was that the global community responded, they responded by using peaceful protests. And really companies responded as well by making hopefully meaningful change about the way we tend to look at people.

And so I've been doing a lot of reading and reflection on my own, but I have a great homework assignment for anyone that is listening and someone who wants to read a good book. So I've been digesting a book called Caste by Isabel Wilkerson, and it really parallels the US culture with Indian culture, with some very horrible things that happened during the Holocaust. And it just, it really provides a picture on structural or systemic racism just to give an understanding of how we got to where we were to see how big the problem is. And I am very hopeful that once you understand the problem, you can fix the problem.

Ben DiPietro: Yes, let's hope as we go forward here. Let me ask you one final question and I thank you again for taking time with us today. Really appreciate it. You mentioned businesses sort of have stepped up to a certain degree after this season of racial awareness. What can the E&C community do now to bring more diversity to its ranks?

Cheryl Curbeam: Yeah, so we means me. So what can I do? What can others do? Ethics and compliance unfortunately, isn't one of those careers that many people aspire to right out of the university setting. We typically don't hire current college graduates into these roles. I think there's a wonderful opportunity to either bring in new talent from the outside or develop talent from within the company. I'm a great example of someone who was promoted from within my company. I had a great leader who saw that I could potentially do compliance work for a business and then for the company and then for Corteva. So developing talent from within is a great way to bring diversity into the ranks of ethics and compliance.

Cheryl Curbeam: And another great way that I have also used is to hire external talent and to be very intentional about having a diverse set of candidates to draw from, to personally interview, to panel interview, and to also make sure that we have a diverse set of people looking at the candidates. I recently became aware of a few organizations that we have used to seek out new talent, the National Association of Black Compliance and Risk Management Professionals is one of them. There's several women in compliance organizations. And just really intentionally finding candidates that meet our criteria, I think is one way to really help, to find and broaden the pool of talent for ethics and compliance.

Ben DiPietro: That's great to hear that, they're actually creating those kind of associations and doing that networking to help bring their profiles up so people know they're there and to have people make sure that they're being interviewed and getting those opportunities. With that, I want to thank you so much for being with us. And I look forward to seeing you again when we're all allowed to be outside. Until then, stay safe, Cheryl.

Cheryl Curbeam: Thank you, Ben. Thanks for the opportunity.

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.

 

Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.

 

S5E8 | Leading by Example: Eric Flesch Fuels a Culture of Ethics and Compliance at Promigas

Eric Flesch, CEO of Colombia-based oil and gas company Promigas, talks with LRN’s Ben DiPietro about being an ethics and compliance leader in Latin America, and why it is so important he lead by example when it comes to asking employees to adopt and live the company’s seven core values.

 

“The seven values that we have in our company are respect, integrity, solidarity, responsibility, commitment, excellence, and entrepreneurship. So every person has to not only understand what each of those values means, but they also just accept them...and work on a day-by-day basis with those values.”

- Eric Flesch

 

Previous to becoming the President of Promigas, Eric Flesch held the position of president at the Argos Corporation in the US, a company that he was involved with for 39 years through various positions and in which, since 2005, he played a strategic role in the expansion and growth of the organization in the US. Flesch has a degree in civil engineering from Universidad del Norte, with an MBA in finance and marketing from West Coast University. He also has taken executive leadership courses from institutions such as Stanford, Harvard, Berkeley, and Northwestern, among others.

 

What You’ll Learn on This Episode:

[1:19] How has Flesch’s career path led him to his current position at Promigas?

[3:07] What are the values that form Promigas’ culture and how does Flesch instill these values in new employees?

[5:39] How important is it that the employees hear from Eric Flesch and other leadership about the importance of ethics and values?

[7:08] Why does Promigas place such a high importance on ethics while other companies in Latin America seem not to?

[10:06] How has Promigas changed as a result of the cultural assessments they have done with LRN?

[11:11] Has Flesch seen changes in the assessment process throughout the years?

[11:42] How has Covid impacted Flesch’s work and what are the long-term changes that he anticipates as a result of Covid-19?

 

Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.

 

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.

Ben DiPietro: Hello everyone and welcome to another episode of season five of LRN Principled Podcast. My name is Ben DiPietro. I'm the editor of LRN's E&C Pulse Newsletter. You can find that on our website, lrn.com. Click on the resources tab and click on newsletter. We hope you can sign up, we'd love to have you. With me today is Eric Flesch. He is the CEO of Promigas, a Colombia base oil and gas company. We are very glad to have him with us today. Welcome Eric, and thanks for taking some time to join us.

Eric Flesch: Hey Ben, how are you? Thank you for this invitation. I'm very pleased to join this podcast with you and all your team.

Ben DiPietro: Good. We're glad to have you here. Tell our listeners a little bit about Promigas, what it does, where it operates and how long you've been CEO and give us a brief rundown of your career path and how it's led you to where you are now.

Eric Flesch: Promigas is, I will say the largest public company, gas company in Colombia. It's listed in the stock market, was founded 45 years ago, and actually it has operations in Colombia and Peru. We are a cluster of 20 companies that, let's say, report to Promigas, are part of the Promigas group of companies. And basically we are in the transportation, the gas transportation and gas distribution business, also in the power distribution and gas services, engineering, of course, for gas projects. So we are, let's say, a company that leads the gas market in the transportation and gas distribution business in Colombia. Promigas is based in the main office in Barranquilla, which is on the Caribbean, on the north coast of Colombia. But we have other offices for our companies throughout the whole country. And of course, in Peru, in Lima and Trujillo also we have offices there. I joined Promigas almost three years ago. So my background, I'm still an engineer. I worked many, many years in other industries, in cement. Some of those years of experience were in the US and now I'm back in Colombia almost as I said before, three years ago, and leading this company.

Ben DiPietro: Interesting journey that you've taken then. Tell us a little bit about the values that form the foundation of Promigas' culture. How do you instill these values in employees, especially new employees as they come on board?

Eric Flesch: Promigas, one of the main focus of the company is to have a very strong corporate governance. And as part of it, we have our values which are very important for every employee. Not only to understand what those means, but also to take them, to take a lead at those. The seven values that we have in our company are integrity, solidarity, responsibility, commitment, excellence, and entrepreneurship. So every person has just, not only to understand what each of those values mean, but also just they accept them, they declare as part of the company that they work in the day-to-day basis with those values. And of course, we, in our, in the way we perform, in the way we think, in the way we make decisions, those values are part of it. It's not only a theory that is in a PowerPoint is something that is part of us, part of our DNA.

Related Article: 6 Steps To Using Integrity And Compliance To Create A Culture Of Ethics. - Interactive Services

So every person in the company, which in total, we are over 3000 people in the cluster of 20 companies, as part of Promigas, they take those values as part of each one of them. And in our decisions, in our day-to-day is a natural part of our work. So, we feel very pleased that this is the way we work. And we periodically twice a year, three times a year, we just train our people and we have some kind of, let's say training sessions or conversations where we refresh those values. So, I will say proudly that everybody, all our people over 3000, they take those values as part of them. And they take it for every decision and every performance we do in our company.

Ben DiPietro: So how important then is it, that the employees hear from yourself and the other senior leadership and the board about the importance of ethics and values and creating the culture of compliance, transparency, and diversity that you're aiming to do?

Eric Flesch: It is extremely important, leadership means that the leader of the company in this case, myself has to in some way be an example about how to perform in the company and I like to be very close to each one of our employees, we have a plan to have a corporate video conference every quarter, over 1000, sometimes over 2000 of our employees can join in our video conference where we share the results of our company. We share our projects, the way we think is we are going to in the future, et cetera, et cetera. And also as part of these conversations our values and we like to listen to our employees, they ask questions and we are very open and we encourage to have a very close relationship with each one of our employees. That's the kind of management we deploy in Promigas everyday.

Ben DiPietro: Why does the company then place such a high importance on ethics as not as many companies in Latin America seem to, and what types of investments do you make in your E&C program to ensure it has the capability and gravitas to enact the agenda that you're setting out. And how has this differentiation paid off for you on the business side of the operation?

Eric Flesch: I would say Latin America and especially Colombia, which is part of the Caribbean, Latinos. The Latino culture is more informal. And in some way, if you compare the culture with any other company in Europe or the US, the DNA of a person is definitely totally different. So, we respect that culture, the natural culture of every person, but we don't negotiate and we encourage all of our employees, every employee to take the corporate culture. So we tell them look, we respect the natural culture, we respect that you like to dance, or you like to sing or you like to be outspoken, you like to be Latino, be Caribbean, that's okay. But regarding our corporation, we have with corporate culture, and this is what we would like to be, and this is what we like just to work with you along the coming years.

And those values are something that we invite everybody to take them and we implement training sessions to make sure everybody understands, everybody agrees. If anyone has a question, we make sure through, let's say tests, very friendly tests on the computers to people to respond, case studies, et cetera, where we differentiate the way we should act, we should make decisions we should perform. And we are very, let's say jealous or we're very strict that anyone has the perfect understanding of our ethics in the company.

As part of our corporate governance, this is a key piece. We are listed in the stock market in Colombia, also we issue bonds internationally. Two years ago, we issued some bonds in the US very successfully. And as part of these results, as part of this culture, our company is very well valued and the pay-off is that, we can just go and launch some bonds or launch some kind of, let's say programs that the market takes, because our company right now enjoys a very high reputation, as part of the ethics, as part of the corporate governance, which is very strong and is an example for any company in Latin America and the region.

Related Article: Key Role For E&C In Promoting Environmental, Social, Governance

Ben DiPietro: To that end, Promigas has been a long-time partner with LRN and we've helped you conduct three cultural assessments over the past seven years. How has your company changed as a result of these assessments? What have you learned about your culture from these assessments that surprised you either in a good way or bad way?

Eric Flesch: You're right. In the last seven years, we have had those assessments and every time our results are better and better and better. That is very encouraging for us because we made sure that by having our people with a perfect understanding on ethics, perfect understanding on how to behave in the company and understanding the corporate culture, this is for Promigas very, very important to let us just think internationally. As I said before, to do things like bond issues and all those kinds of things. So we see that paid off. And of course, by measuring the way we are progressing, we just adjust our programs, just to keep that track of getting better and better results on those measures.

Ben DiPietro: Have you seen some changes in the questioning? Has it been the same assessment each time? How is that assessment part of it evolved if you have?

Eric Flesch: We have seen some adjustments and for good and this is a feedback, constant feedback on our programs. And of course, this led in Promigas to get better results on the program itself.

Ben DiPietro: Obviously COVID-19 is changing the way we all work, live and interact. How has it changed the way you're doing your job? And what do you think will be the lasting impacts that occur because of this pandemic, as it relates to working in offices and just doing business?

Eric Flesch: Well, this COVID pandemic is something that no one had it in mind before. It was some thinkable that these would have had happened, but happened. And of course, when we realized last March 2020 about the pandemic, we made several decisions. First, we wanted to just ensure that there were workers, our employees, to have a good health just to protect them and to protect their families. So, we decided to organize everybody to work from home office and Promigas was supplying and was supporting to have everybody in their homes, their computer, their chairs. The ergonomic chairs they use in the office, the modem, the internet, et cetera to have a very good communication. Second, our other target we have at the moment was to ensure that we were rendering a good public service, transmitting gas, to all the industry, the commerce, and the residents in Colombia and Peru. As of today, after almost a year of this pandemic, I can say proudly that our service has been excellent.

We haven't had any trouble, we haven't had any interruption at all. And that was a result of our plan just to have everybody working with a good communication as if we were in our office, like normally. So the mutual work, I would say, has been outstanding the way we have done that as of today. Last, we focused on the communities in Colombia, Peru. Colombia and Peru are countries where poverty is high. And there are communities where we take gas to some regions in Colombia with a huge needs. And we decided to give our support by donations. So we decided to donate around $7 million, 6 million of that to Colombia and around 1 million to Peru, basically for three things, one to the health, let's say, the employees to have all the PPEs, second to support hospitals to buy respirators, and third to buy and to support rural communities by giving them basic needs like food or clothes or whatever that they would need at home.

Related Article: Covid: Doing What’s Right Requires Trust, Connection

So we decided to do that and in both countries, Colombia and Peru and everybody, those communities were very, very grateful with Promigas. This is part of what Promigas work with communities in the past before. Not by giving those high donations but we are also part of those communities and we are just trying to give all of our support to them by offering [inaudible 00:14:59], by helping kids to learn by building schools, et cetera, et cetera. So those were the main three things we decided.

And since that moment, March of 2020, up to now, we have still about 65% of our employees working in home offices. And then the others who are coming to the office, we have all the plan to keep them protected, not to put them at risk of getting infected. So all of that value of safety by having all those guidance on health and all those checkups and everything, we just follow that in a very strict way. That's the new, let's say, work that we adjusted our company mutually and so far, I would say we have been very, very successful and we have to be hope that after, we have now the vaccine in the near future, gradually we could come back again to the office to work as it was the normal work before.

Ben DiPietro: Yeah. It's hard to believe it's been a year already. It's amazing. Yeah. It seems like so much longer in a lot of ways. That's a be nice to get back out and hopefully soon. I want to thank you again for taking time with us. I appreciate it. And I hope you stay well and safe until we can all get vaccinated and get back out into the world. So, thank you very much, Eric. We appreciate you.

Eric Flesch: Thank you for your invitation, Ben. It has been a pleasure just to be with you and anytime you're more than welcome.

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.

 

Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.

S5E7 | Pick Your Own Song: Tiffany Archer’s Mission to Advance DE&I at Panasonic Avionics

Compliance executive and board and executive advisor Tiffany Archer of Panasonic Avionics shares how her study of psychology underpins her approach to ethics and compliance; what the differences are between diversity, equity, and inclusion, and why those distinctions matter; and how a company needs to look “below the iceberg” to find its true culture.

 

“It’s critical that we take time to get to know and understand our employee base, to uncover their values and beliefs that underlie they behaviors. When you’re armed with that information, you’re able to stand up meaningful, relevant, and actionable plans to advance an organization’s diversity, equity, and inclusion initiatives.”

- Tiffany Archer

 

Tiffany Archer is a board and executive advisor, ethics and compliance officer, regulatory attorney, and D&I nonprofit advisory board/faculty member with 18+ years in Fortune 500 companies and AmLaw 100 law firms. Today, she is on the compliance leadership team for Panasonic Avionics Corporation, the global leader for in-flight entertainment and communications, providing solutions to 300+ airlines. At PAC, Tiffany, a strategic and practical business leader, is the lead ethics and compliance attorney for the Americas and Europe.

Tiffany has been a compliance lead for teams up to 500+ internal stakeholders (Audit, Finance, Trade Compliance, IT, and HR), outside counsel, and vendors. She has led the design of global compliance programs impacting 10+ countries, as well as cross-border internal investigations. Her focus includes the Foreign Corrupt Practices Act (FCPA), Anti-Money Laundering (AML), Bank Secrecy Act (BSA), U.K. Bribery Act, and Anti-Kickback Statutes. As part of her regulatory relations and enforcement actions work, she has developed legal strategies and navigated inquiries from DOJ, SEC, FDA, FINRA, OFAC, and others.

Tiffany is a co-chair of NYCBA’s General Corporate Ethics and Compliance Sub-Committee, and a member of NYCBA’s Compliance Committee. She was a 2020 Finalist in Compliance Week’s Excellence in Compliance Award for Anti-Corruption and featured in Modern Counsel. She is an active speaker and author, with 7+ events by Ethisphere: The Global Ethics Summit, CenterForce USA, LEC Experience LATAM (Brazil), and others, as well as 5+ articles in International Financial Law Review, New York Law Journal, and more. She has been a guest lecturer at 3 law schools.

Before law school, Tiffany served in world-class financial services and consulting institutions, where she worked at the intersection of data, risk management, and operations at the inception of Big Data and Artificial Intelligence (AI). She draws passion and excitement from analyzing the ever-evolving legal, ethics and compliance space through a behavioral science lens, in her efforts to combat financial crime and mitigate risk.

 

What You’ll Learn on This Episode:

[1:22] How has Archer’s career path led her to her current position at Panasonic Avionics?

[3:29] What does Panasonic Avionics do and what kind of work does the E & C program do to promote their culture?

[6:01] What is Archer’s perspective on diversity, equity and inclusion?

[9:58] What are some things that companies can do to improve their diversity, equity and inclusion programs?

[12:56] What role do company boards play in forwarding the discussion on diversity, equity and inclusion

[13:56] What are the next steps for advancing racial justice from a business perspective?

[17:33] How has Covid impacted Archer’s work and what is her focus moving forward?

[20:33] Who are the mentors in Archer’s career path and what advice would she give to someone wanting to get into the E & C field?

 

Find this episode of Principled on Apple Podcasts, Google Podcasts, Stitcher, Sound Cloud, Podyssey, or anywhere you listen to podcasts.

 

Transcription:

Speaker 1:

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.

Ben DiPietro:

Hello everybody, and welcome to another episode of season five of LRN's Principled Podcast. My name is Ben DiPietro. I'm the editor of LRN E&C Pulse newsletter. You can find that by going to lrn.com, clicking on the resources tab, and then clicking on the newsletters tab, if you can subscribe we'd love to have you.

With us today is Tiffany Archer. She's a board and executive advisor and ethics and compliance officer, a regulatory attorney, and a faculty member with more than 18 years experience in Fortune 500 companies, and AmLaw 100 law firms. Today, she's on the compliance leadership team at Panasonic Avionics Corporation, global leader for in-flight entertainment and communications. Welcome, Tiffany, glad to have you with us today.

Tiffany Archer: Thank you so much, Ben. I'm really excited to be here.

Ben DiPietro: So tell us a little bit about how you became interested in ethics and compliance. Then take us through your journey that's led you to your current role at Panasonic Avionics.

Tiffany Archer: First, I've always been a people person and incredibly fascinated by what it is that makes them tick. So while in college, I chose to major in psychology to learn more about human behaviors, motivations, mental states, decision-making processes. Later went on to law school and after graduating, I joined a major international law firm where I specialized in white collar crime and securities enforcement. So of course, my cases focused on corruption, bribery, money laundering, and other heavily regulated conduct. I was always interested in digging into the why, behind the decisions that these individuals or corporations made. And also to look a little more into what it is that really motivated the behaviors that led them down the path of wrongful conduct. So after nearly six years in private practice, I decided to switch gears and I moved in-house and have since held multiple compliance roles. The passion that I've always had for psychology and for connecting with, and understanding people is a key pillar of my personal compliance practice.

Interestingly, many people consider compliance officers as police officers of sorts. Frankly, it's not unusual for the compliance function to be referred to as the department of no. With that in mind, I prefer to take a people centric and empathetic approach to compliance. My priority is to connect with people, learn more about their values and their beliefs, and really use that information to guide their behaviors so that they can make ethical decisions, and do the right thing even when no one else is looking. So ultimately on my compliance journey, I landed at Panasonic Avionics, where I'm currently the regional ethics and compliance officer and corporate counsel for our Europe and Americas regions.

Ben DiPietro: Tell us a little bit about Panasonic Avionics and what it does? Then how your compliance team works to help create that culture you're talking about. Then how do you measure the success of your team in that particular area?

Related Article: 6 Ways Compliance Training Can Measure Employee Performance

Tiffany Archer: Sure. So Panasonic Avionics manufacturers in flight entertainment systems. Essentially those are the TV screens that you see on the seat backs of airplanes. We also provide connectivity services and then on the ground engineering support. Our focus is on innovation and most importantly, providing the best possible passenger experience. To bridge the chasm between compliance and culture within Panasonic, we partner very closely with our chief culture officer. One of the tools I would want to highlight here today is to measure the culture, we use anonymous pulse surveys, which are sent out quarterly. Essentially the purpose of those is to check the vitals on our employee population, find out how they feel about the culture of the company. Then we take those actionable data points from the surveys and use them to address concerns that intersect with the company culture. And we formulate ways to make improvements.

Our chief culture officer does an incredible job of keeping our employees informed. I think it's quite clever actually. After each survey she sends out what's called a "So what, now what?" message. Essentially, what she's communicating is through this survey you've identified, "So what are the issues or the problems that you'd like addressed?" And "Now what?" is how she plans to put into effect initiatives or procedures to address those concerns. Panasonic's Compliance Department's mantra is compliance is our foundation. So not only do we measure our success by the implementation of the data points from the surveys, but we also measure it through our stakeholder satisfaction with our responsiveness to their needs.

Ben DiPietro: That “So what, now what?” is really interesting because it shows the people that you're listening to them. That's so much more important to building that trust. That's going to get you to create the culture you're trying to achieve.

Tiffany Archer: It's really about keeping those lines of communication open. I think our chief culture officer's initiative with the “so what, now what?” really makes people not only see that she's listening and that we're listening, but that we're actively responding. So it's really important to keep that dialogue open and to continue to show forward progress.

Related Article: Building A Speak-Up Culture

Ben DiPietro: So I know you have a big interest in matters of diversity, equity, inclusion. We both last year we're part of an LRN Consero round table on that topic. At the time I asked you about the differences between the D, the E, and the I, in that equation. I thought your answer was really excellent, and I think our audience would love to hear what you have to say about that.

Tiffany Archer: Thank you, Ben, for highlighting this. Diversity equity and inclusion is such an important initiative and movement for me. Thank you for giving me the opportunity to talk a little bit more about what those letters mean to me, specifically. So not only are there differences in what the D diversity, E equity, and I inclusion pillars represent, each word also has a distinct impact on an organization's initiatives. Starting first with diversity, right? The focus is on creating an environment that's representative of the intersectionality between gender, race, sex, age, LGBTQIA, and many other identities. In my view, this pillar is particularly important because what many organizations I've seen do is have a one-dimensional perspective as it relates to that. For many of them, historically, everyone in the institution for the most part looks the same. They come from the same backgrounds, they belong potentially to the same country club. They went to the same schools I could go on but I think you get what I'm driving at.

The thing is it's not too late to attack this root cause. No doubt it will be challenging to make the shifts since people are so used to the status quo. What the leadership of these organizations should recognize is despite the rocky road ahead, having to pivot towards a more diverse culture should not be considered a penalty. In fact, it's an opportunity for growth and expansion, and new or different ideas and perspectives, which can ultimately lead to a transformative experience for the organization.

Now, under the equity pillar, the focus is more on fostering an environment where all employees have fair and equitable opportunities, right? They're looking for fairness when accessing resources, despite being amongst the majority who may not look like them. I thought it would be salient to use myself as an example here. I've spent much of my life competing with those who don't look like me, and for the listeners here today who may not know, I'm a Black woman of Jamaican descent, and I've always had to be the best and focus on not othering myself. There've been occasions where particular outcomes made me sit back and wonder, "Did I miss this opportunity or was I not selected? Or was I not appropriately rewarded because I don't look like the person that I was being compared against? I've definitely... I'll share a personal story here, walked into interviews where the interviewer was questioning whether I was in fact Tiffany Archer, because they didn't expect me to look-

Ben DiPietro: This is true.

Tiffany Archer: ... [crosstalk 00:08:52] but true. Sad, but true. But ultimately it shouldn't matter. You look like or what you sound like. The comparison should be on more substantive qualities and merit and what you bring to the table. Lastly, with the I. Inclusion, which is the practice of providing equal access to opportunities and resources for people who might otherwise be excluded or marginalized. The goal here is to create an environment where employees feel welcomed as a member of the organization. And that should be the priority. They want to be appreciated and recognized for who they are. And organizations, policies, and procedures should be carefully drafted to ensure that employees have that opportunity to feel that sense of belonging. One of my favorite quotes in this DEI realm is by Verna Myers, where she says diversity is being invited to the party and inclusion is being asked to dance. I like to add that equity would be allowing everyone the opportunity to actually pick the songs.

Ben DiPietro: So now that you've laid that out as the framework, what are two things companies can do to improve their D, E, and I programs? How does the company get started on this process?

Tiffany Archer: So first and foremost, leadership buy-in is paramount. Without a commitment from an involvement by leadership, employees will question how serious the organization is about undertaking this transformational process. Then secondly, companies have to commit to not applying a one-size-fits all approach or an off the shelf solution to address the myriad of D, E, and I issues that may exist. How does one get started? How does an organization tackle this? Frankly, we could probably have an entire podcast on this topic. But seriously Ben, many companies I'm seeing now they're forming task forces D, E, and I committees, retaining consultants all in an effort to kick off their transformational processes. I think these are helpful solutions, but only so long as that they're tailored for the company and its specific culture and values.

Related Article: Diversity, Equity, and Inclusion Cannot Be Just An Internal Intitiative

On the topic of culture, I want to highlight Edward Hall's culture, iceberg theory. I'm a huge proponent of his work. He was an anthropologist and a cross-cultural researcher who came up with this theory in 1976, on how you can address organizational culture. It's really quite simple, this theory. Basically, an organizational cultures like an iceberg, a very small portion of the culture, roughly 10% is exposed on the surface, right? Making these areas really easy to identify, and you can address in quick time any sorts of issues or problems you might see. But where the real work and the important cultural data points lie are below the surface. That's around 90%. These include things like cultural beliefs, people's ideas, thought patterns, their unconscious biases. So the real onus is on the D, E, and I team to engage their stakeholders in meaningful discussions, right? Gathering qualitative and quantitative data around behaviors, customs, core values, religious beliefs, and other characteristics.

An iceberg model shows that you can't judge a book by its cover or that 10% of the iceberg that's exposed. It's critical that we take the time to get to know and understand our employee base, to uncover their values and beliefs that underlie their behaviors. When you're armed with that information, you're able to stand up meaningful, relevant, and actionable plans to advance an organization's diversity equity and inclusion initiatives. So the big takeaway is digging deeper into the layers of the iceberg will allow the team to learn the challenges and pain points in the diversity equity inclusion program, and begin that longer journey of creating an action plan that specifically meets the needs of the employee population.

Ben DiPietro: That sounds like where maybe the board needs to get in. So what role does the board play in folding this discussion and getting deeper down into that iceberg?

 

Tiffany Archer: Well, again, as I said earlier board involvement and commitment and buy-in is key. We need board members to echo the same sentiment and messaging. We need the board to acknowledge that this process may be a long, arduous, challenging process, but we're committed to that process. I think also the board needs to echo the sentiment that it's going to take a lot of work, and despite the obstacles we're going to commit to moving forward. So I think, not only should leadership be doing that but the board should also have an active role in making sure that there's continuous forward progress in connection with these initiatives.

 

Ben DiPietro: Pushing forward all this D, E, and I discussion too has been the support for racial justice that poured out into the streets all over the world last year, after the killings of George Floyd and so many others. What are the next steps to advance this issue from a business perspective and how can organizations help do their part here?

Related Article: Diversity, Equity, and Inclusion Cannot Be Just An Internal Intitiative

Tiffany Archer: This is a sad topic. These tragic events have put a spotlight on the importance of addressing a long-standing crisis affecting people of color. You know, you raise George Floyd. We all know he died because we watched as an officer kneeled on his neck until he could no longer breathe. Breonna Taylor, another person of color was wrongfully shot dead while asleep inside of her home. Rayshard Brooks, another person of color was shot in the back as he was approaching his vehicle where his children were sitting. These are all circumstances where police officers prioritized power over judgment or procedure. These killings amplified the deaths of people of color at the hands of police and elevated the prominence of racial inequality and disparity in policing. Each of these were victims of racial profiling and they each suffered unjust and untimely deaths. With that, I think it's so very important that we don't allow the passing of these events and individuals to become the passing of an opportunity to proactively address and work towards a solution to this historical problem.

As far as how businesses can help, they can play a key part in this by keeping these issues alive in front and center, and at top of mind. Again, we don't want the passing of these events to be a passing of an opportunity. I think they can leverage this opportunity by standing up as ambassadors of change. I would say that the reliance on two key guideposts would be really helpful in this realm. So the first one would be acknowledgment, right? And going back to leadership. It's paramount that leaders, the board, et cetera, are vocal about their commitment to the fight for racial equality, and enterprise-wide messaging would be the first step. Then secondly, action. You have to walk the talk if you truly have any interest in moving the needle. Even if the movement are just small steps, that forward cadence is critical.

Related Article: Showing Up: LRN Launches New Anti-Racism Course

So I advocate that businesses need to reassure employees that by really doing the work, not just through activities, like issue specific training on unconscious bias or diversity or sensitivity, but also focusing on developing equitable opportunities for growth and advancement, and not penalizing marginalized employees when they speak out. Again, as I said earlier, these will be difficult conversations and change will not happen overnight. But I think the most important thing that organizations need to demonstrate is that they're committed to the cause. Not only from the perspective of what is happening in the streets, but also from the perspective of what's happening within the walls of their offices.

Ben DiPietro: Also, I believe they have a role to play in helping to reform police as well. We had an excellent podcast at the beginning of season four, with Florence Chung. [Listen to the episode] She's a member of the Hetty Group. Her job is to make a bridge between communities and police departments and try and rebuild some of that trust. She was talking about how business can be such a great mentor for departments that don't understand how to execute change management and all these things that businesses do very well. So there's a definite tie in and a role for them to play.

Tiffany Archer: Yeah, absolutely.

Ben DiPietro: The other topic dominating our world is COVID-19. It's obviously having a big impact on companies and their ENC programs and cultures. What have you learned about your program as a result of the pandemic, and what should the focus be on as you move forward?

Tiffany Archer: A key theme that has come from this pandemic is the level of resilience our program has demonstrated. I know I'm proud of it, and I'm sure my colleagues would say the same thing. The aviation industry sadly suffered a tremendous blow between the travel bands, reduced flight capacity and routes, people's fear of flying because of COVID protocols. It's really been a challenging time, but nevertheless, our program's commitment to compliance has been unwavering. As I said earlier, compliance is our foundation. We've adapted to this new normal, and we've remained connected to our stakeholders. We make connecting virtually and regularly an absolute priority, and continue to reassure them that we are here to help. We've really tried our best to turn a dark and dreary time into something lighter and more personable and relatable. So for example, we've created a number of communication initiatives. One of which includes vignettes, where we have compliance character avatars work through COVID related or other challenging scenarios that our staff may face during this time. And kind of walk them through how best to deal with the circumstances or challenging decisions that they're confronted with.

We've also focused on reminding employees that PAC's culture is rooted in honesty and integrity. There really should be no fear of speaking up if there are any questions, or concerns or something just doesn't feel right. For me personally, I found that the most success is in reminding my stakeholders that I'm a confidant and a business partner. I spoke earlier about not just being the department of no. I really do, do my best to be empathetic, and compassionate, and understanding, that everybody is going through a different circumstance, and one person's challenge might be very different from another's. But it's critical to continue to have these discussions and these dialogues to instill trust. When they trust me, I know that if the need arises, they'll come to talk to me to work things through.

My role isn't to be a bottleneck it's to assess the facts, determine how to facilitate the outcome that they're looking for, but in a way that comports with our policies and procedures. Finally, I've spent a lot of time encouraging my stakeholders to consider their mental health, and their self-care regime, and to try to keep their spirits and mental fortitude up. We are all in this together. We are embracing the worst of times. But the key to getting to the other side is going to be through persistence and resilience, and that's the message that I try to communicate regularly.

Ben DiPietro: That is such an important topic, and it's going to be with us for years to come I believe as the fallout from all this. Now let me ask you one last question. I want to thank you so much for your time today. This has been so much fun. Tell me about one or two of your mentors who have helped you work your way up in this profession? Then offer a piece of advice to young people, looking for a career in ENC.

Tiffany Archer: One key mentor in my life is Marcia Narine Weldon. She went to Columbia University and is also a Harvard Law School grad. She's an attorney and a University of Miami Law School professor. She was formerly a chief compliance officer and deputy general counsel. She's played an integral role in really guiding me towards overcoming imposter syndrome, encouraging me to push past my internal boundaries. To continue to learn, to strive, to grow towards things that maybe I didn't think I was capable of, but because of her push and her encouragement I kind of stepped out and tried to do more.

The second part of your question you asked me, one tip I could give younger people who are looking for a career in ethics and compliance? I would say that for those who are looking to foster a culture of compliance and have a successful career in compliance, they need to keep in mind that their emotional quotient trumps their intelligence quotient, or their IQ every time. So you may have gone to the best school, or you may be the smartest person in the room, or have the most experience in a particular industry but if your emotional potion is weak, or if you lack the ability to demonstrate empathy and emotional intelligence, and develop strong relationships, and diffusing conflict, and building trust with your teams, all of that may prove to be a very challenging feat. So I would say EQ trumps IQ every time.

Ben DiPietro: That's a great way to end. Thank you so much, Tiffany. This was wonderful. I had such a good time talking with you. I look forward to working with you again in the future. Best of luck until then stay safe. Hopefully, we'll see you when we can all come outside and play.

Tiffany Archer: Thanks so much, Ben, and same to you. Stay safe and I'll see you on the other side.

Speaker 1: 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. If you enjoyed this episode, subscribe to our podcasts on Apple Podcasts, Stitcher, Google Podcasts, or wherever you listen. Don't forget to leave us a review.