How VF Corporation crunches the numbers on compliance

Jan 23, 2020
VF Corporation recently won the 2019 Corporate Governance Award for best compliance and ethics program (large cap)

VF Corporation is in the creative business of clothing, with a portfolio of brands including Vans, The North Face and Timberland, and its approach to compliance and ethics is imaginative. For example, the team has been working with VF’s data analytics people to create models that use historical data and demographics to enable the company to concentrate its resources on high-risk areas and create bespoke training and compliance efforts.

Global operations manager for ethics and compliance Justin Jones says Kellye Gordon, vice president for ethics and compliance, saw behavioral science as a means to leverage the data VF holds. The team has so far released a model that takes in information in areas such as the helpline and employee travel to see whether there are areas or groups that generate a greater number of corroborated complaints. For example, it might spot a correlation between employees who don’t complete compliance training on time and a higher incidence of violations, Jones explains, adding that two models have now been developed.

The team has also invested in the company’s ethics helpline. Jones says firms need to have a culture that promotes the use of such facilities and makes clear that there will be no retaliation against those who raise concerns; he notes a decrease in the proportion of anonymous calls from employees. Not only is this ‘a sign of trust in the organization to do the right thing’, but it also provides better material for data analytics and tends to lead to better and more accurate reports, he adds.

From July 1, 2018 through June 30, 2019, the ethics helpline received 869 reports, with 60 of these requesting guidance. The team has trained more than 100 employees on investigating colleagues’ concerns and the company states that, through investigator training, the average number of days needed to close an inquiry has decreased from 32 in 2016 to 25 in 2018.

In terms of educating the VF workforce, the team has issued more than 29,000 ethics and compliance training assignments during 2018/2019 to company associates on topics including ethical leadership, intellectual property, the company code of conduct, anti-corruption, antitrust and trade compliance – and all with a 98 percent completion rate. Internationally, the training program is administered with help from a compliance and ethics team employee in the Asia-Pacific region, a member of the HR team in Europe and the Middle East, and colleagues in the legal department elsewhere.

The team has updated VF’s code of business conduct twice over the course of 2018 and 2019. The first time, the changes were intended to make the code more engaging to employees by adding context and color. The second refresh was designed to reflect the spin-off of VF’s jeans-wear organization as Kontoor Brands. In each case, the team added new items including real-life scenarios, links to company policies and resources and employee statements on what VF describes as ‘living with integrity.’ The code is available in 24 languages.

Among other recent initiatives, the team has created a process that requires employees to report potential conflicts. By mid-2019 this had led to the identification and resolution of more than 50 potential issues, according to the company. The team launched the Principled Podcast in 2018, featuring employees who have dealt with real-life ethical dilemmas in areas such as preventing counterfeiting and declining a bribe. It also presents an ‘Integrity in action’ award that recognizes employees or teams that show integrity through their actions and words.

This article originally appeared in the latest Corporate Secretary special report.

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