The search for the Holy Grail

Jan 01, 2010
<p><b>Best overall governance, compliance and ethics programme (large cap)<br /></b>Cisco</p>

In awarding Cisco the honor of best overall governance, compliance and ethics program in the large-cap category, judges noted the company’s achievement of the Holy Grail in elevating compliance and governance beyond a mandatory regulatory consideration and making it a true function of the overall business. Cisco’s ethics manager, Jeremy Wilson, says the process begins with training even before an employee’s start date and continues with coaching as each employee grows in his or her role.

New hires get a kind of electronic ethics dashboard, custom-made for them. It’s from there that they tap into the firm’s code of conduct and rules on conflicts of interest, along with a wide range of programming designed to keep them fluent in these topics. There are also numerous channels in which employees can raise issues, and ethics and compliance professionals often tap these for cues to refine and advance their programs. One example is Cisco’s online ethics discussion forum, which in the last 12 months has drawn 6,000 users.

Cisco also tries to ensure its message is clear and accessible. After deciding its business conduct code was afflicted by a legalistic tone and ‘static’, Cisco rewrote it, unveiling a new, plain-English version in 2008. What’s more, the code is presented not as a PDF but as a web portal, so employees can dive into particular subject matter. ‘We’ve tried to personalize it and make it really relevant to employees’ positions,’ Wilson says.

Another project with crowd appeal was Ethics Idol, a short video series modeled on the Pop Idol and American Idol television shows. Cisco’s version features employees singing about ethical conundrums and three judges picking apart the situation. Employees then vote on which judge they agree with, see how other employees voted and see how Cisco, the corporation, would respond. The episodes were shown every Monday for a month, but they are still eagerly sought by managers for ongoing training.

Keeping it real

Cisco is soon to roll out a new video series aimed at managers, whom Wilson calls ‘the first line of defense on ethics questions and concerns’. The new series is done in a cinéma vérité style with a shaky camera, again presenting dramatizations of some of the dilemmas employees could face. The storytelling strength of video is appealing, but for Cisco it’s also an issue of scalability. ‘We have three individuals on the ethics team,’ Wilson explains. ‘We also have a very capable group of 15 investigators around the world, but that’s a pretty small number to deal with 70,000 employees, not including contractors.’

Cisco is in the vanguard when it comes to its dealings with stakeholders, too. For example, the company has a compensation recoupment policy that applies to executive officers, a provision increasingly sought by shareholders and governance activists. In the event of a restatement of financial results, a committee of the board reviews all cash incentive awards under Cisco’s bonus plan during the relevant time period. Where a bonus would have been lower if calculated under restated results, Cisco claws back those earnings.

‘We want to make sure we are rewarding ethical behavior and don’t want to reward short-term gains,’ Wilson says. ‘We’re in this for the shareholders, employees, partners and everyone in the realm of Cisco. It’s a small cog in the greater compliance picture, but it’s a reflection of where we stand.’

In considering Cisco’s governance, ethics and compliance program, judges noted that the company also ‘works to advance overall standards within its sector and the wider business community’. Wilson says this is true, but also says he finds the collaborative spirit typifies his interactions with ethics peers. ‘In this field, there’s such a free-flow exchange of information,’ he notes.

Cisco gets many benchmark requests and also benchmarks itself with other companies. ‘At the Corporate Secretary Magazine Awards, I interacted with another company and we plan to sit down in January to discuss aspects of our programs and learn from each other,’ Wilson says.

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