Getting ethics and compliance right in a global company

Corporate Secretary recently spoke with Robyn Farmer, chief ethics and compliance officer at Newell Rubbermaid, about some of the challenges her team faces in implementing ethics and compliance (E&C) programs as the company continues to expand into new geographic regions. Differing cultural sensibilities regarding labor practices, supply chain management and other critical issues come up in the course of her work. Of Newell’s roughly 19,000 employees, 52 percent are stationed outside North America.

Farmer joined the Atlanta-based marketer of consumer and commercial products in 2010 as senior employment counsel and as a member of the E&C team, which reports directly to general counsel and corporate secretary John Stipancich. She has served in her dual role as chief labor and employment counsel and chief E&C officer since August 2013.

Would you share an example of an obstacle you’ve faced in trying to hold suppliers to Newell’s standards?

We’ve had our supplier ethical standards in place for several years. Many of them are above and beyond what’s required by local law in some countries. We’ve certainly had to work with our suppliers to help ensure compliance or help them move toward compliance, and that takes a lot of time and effort. A separate team at Newell is responsible for adherence to our supplier ethical standards and for auditing with respect to those standards. We’ve had to do a fair amount of education, provide support and certainly have some patience. Some of our suppliers have moved into full compliance with our program.

What is the approximate time frame for reaching full compliance?

Our E&C team supports that program, but I don’t have full visibility into the timing. When we rolled out the standards, we recognized that not everybody would be in full compliance because some of our standards are above and beyond what’s required legally in many of the countries where we operate or where we have suppliers. There have been concerted efforts over time to bring people into compliance. Certain areas of our supplier code of conduct are considered [inviolable], so we wouldn’t work with people who violate those standards. But for other standards we work with our suppliers [as they advance toward full compliance].

We perform regular audits. If during an audit you’re found not to be in full compliance, we create a corrective action plan that includes a timeline for how soon you can be in compliance. There’s some back and forth between us and the supplier to agree on that corrective action plan. At some point there would be a re-audit to see whether the supplier has moved into compliance, and the conversation goes from there. But there certainly is a process for exiting suppliers who remain non-compliant. We try to provide as much education and support as needed, to continue our relationships when they make sense.

How do you handle compliance training for employees in other countries whose cultural sensitivities may conflict with certain policies?

We have online training available to all our employees globally who have access to computers, and we’ve developed offline training materials based on that for our manufacturing population, which may not have access to computers. But we can also adapt the training to provide specific examples that are relevant to a particular region and allow local leaders to provide training directly to their employees. Right now we have training in Latin America conducted by our HR teams, management teams and some members of the E&C team traveling around to different locations. We realized that the in-person training was going to be more impactful and more meaningful than the online raining there.

How do you make sure your training is an interactive process?

We’ve partnered with The Network to provide our online training, which has some interactive components like games and knowledge-testing exercises. But training also includes standing in a room and just talking to people.

We have events throughout the year. In May we celebrated E&C Week at several locations globally, which included conflict of interest training presented like a movie premiere. Everyone who participated had opportunities to win raffle prizes; it was a good conversation starter. We always have our ears open for great ideas about how to engage employees around this topic. We have a set of emails called ‘What’s so funny about ethics and compliance?’ that use short video clips from different vendors, and we do messaging around specific topics. We try to be as engaging as you can be when you’re talking about something that’s as serious as your company’s ethical business standards.

We try to translate and localize our training emails as best as possible. When we’re buying third-party content, we ask people all over the world to help us evaluate it. When it came time to renew our contract with The Network, we had people all over the world look at its training materials – its short videos – and we asked, ‘How does this resonate with you? Do you see an issue?’ If it’s just an email from our team, we have communications people in other parts of the world and on our HR team or other [global] members of our E&C team do some of the translation and tell us what would be meaningful.

During E&C Week we did quizzes on ethics and compliance topics, and participants who completed them were eligible for a raffle. In our Shanghai office, several people scored 100 percent. One member of our E&C team in China said people are excited to get Newell products as raffle prizes, but what would be particularly meaningful is a letter from me, as chief ethics officer, congratulating them and noting how important it is that they understand the obligation. That was a really easy thing that was very meaningful to that particular culture. Our local E&C person put the letters together and sent them to the US for me to sign, and we sent them back to distribute.

Recent surveys show more whistleblowers reporting to supervisors than through hotlines. How does Newell train managers so that they know how to respond positively to whistleblower reports?

Our code of conduct training includes an entire section on how to report. That includes education for managers on what their responsibilities are if they hear of a report, coupled with strong messaging regarding anti-retaliation. We also use the relationships our HR teams have to help get the message out that
we want to hear about things, and we have avenues for anonymous reporting even if that’s not directly through our hotline.

With managers, we emphasize that they have an obligation to share potential violations of the code of conduct with us. As part of our code of conduct training, we actually have people certify that there’s nothing they have to report.

This was the first year we produced a report to all employees on our E&C programs for the past year. That provided visibility into how many reports we got, what types of things were reported, and some of the outcomes. We also provided a small case study based on some themes we had seen over the previous 12 months, reinforcing the message, ‘We want to hear from you; we absolutely prohibit retaliation and we’re doing everything we can to ensure that doesn’t happen’.

Does Newell publish updates on disciplinary action it has taken for retaliation?

The report I mentioned included some high-level reporting about the types of cases that had come in and the types of disciplinary action we had implemented over the previous 12 months. That was an internal communication to our employees, designed to be very transparent but balancing the need for privacy and confidentiality that we set on our investigations. It included types of consequences for certain kinds of misconduct. Sometimes the consequence may be that somebody needs more training, or changes to policies might be needed. Our report reflected that there were people who were terminated for violating our code of conduct. It wasn’t so granular as saying, ‘This person was terminated for retaliation’. But there have been communications historically from the E&C team that provided some scenarios to employees based on real-life conduct, saying, ‘This kind of incident occurred, and here’s what happened to the employee concerned’. Employees recognize that we take our code of conduct very seriously, and that we don’t tolerate behavior that’s inconsistent with our code.

When doing internal investigations into reported misconduct, what issues do you have to be particularly careful about?

Because of the level of the people involved, or the seriousness of the allegations, we may identify external [service] providers to help with the investigation, as opposed to using anyone internally, with the exception of a very limited group of people who are directing the investigation. In a less serious instance we might use somebody locally to do in-person interviews. In other situations, we may decide we need independence and send someone from a different business segment or from a different country, or someone more senior. It may mean making sure there are two or three interviewers in the room to adjust for language considerations, and ensuring we have interpreters so people feel comfortable. We may assign a native speaker who also has investigations training to do the interview. There are lots of situations we’ve come across where we say, ‘This is not just about calling the local HR person and asking him/ her questions’. We need to be very mindful of how we’re getting information, how we conduct these conversations, to ensure we’re not accusing people of anything if we need their help in finding something. We need a strategy at the outset. For more complex investigations, involving more senior people within the organization, there’s typically a lot more planning and forethought required before we ever talk to anybody and take the next steps.

Any practical tips about how to stay abreast of new developments?

I get a lot of newsletters, updates and alerts from law firms and different groups in the GRC realm. Most useful is participating in associations where all the content is driven by your peers. Some of the best suggestions, information and insight I’ve attained have been through some of those peer meetings. One is the Manufacturers Alliance for Productivity and Innovation’s Ethics and Compliance Council, which meets twice a year. It’s an opportunity for senior members in E&C teams at manufacturing companies to get together and talk about issues.

Presentations are given by peers who might say, ‘Two years ago I was faced with this problem and I wanted to implement a third-party due diligence system; here’s the process we went through, and here’s where we are now, and here’s what we learned’. That type of peer networking and peer sharing has been truly invaluable.