ethics for front line managers
DESCRIPTION
If you’re a publicly traded company, corporate ethics training is a requirement of employment thanks to the Sarbanes-Oxley Act (SOX) of 2002, and this template will help you walk your front-line managers through the law’s key tenets. The presentation addresses the origin of SOX and the corporate ethics statement (AKA “code of conduct”), the importance disclosing potential conflicts of interest, Equal Employment Opportunity and workplace discrimination/harassment, and the policy of non-retaliation. Slides are also dedicated to Health, Safety and the Environment, the Use of Company Time, Property, and Supplies, how to report violations, and how investigations and disciplinary actions are generally managed. (33 slides) Presentation developed by author Paul Falcone - www.paulfalconehr.com.TRANSCRIPT
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www.PaulFalconeHR.com [email protected]
OverviewSarbanes-Oxley Act = reforms in corporate
governance. The goal = transparency to investors.
Congress passed SOX on July 30, 2002 in response to well-publicized financial fraud, including:
Arthur Anderson (Houston): shredding documents and destroying evidence
Martha Stewart: insider trading WorldCom, Enron, Global Crossing, and Adelphia declared bankruptcy
as massive accounting regularities were revealed
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OverviewEthics . . . a definition
Creating an ethical environment
SOX and conflicts of interest
Ethical issues in your day-to-day work
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Sarbanes-Oxley Act (SOX)Corporations failed to report shortcomings in public reports
filed with Wall Street just as the stock market bubble was bursting.
Wall Street failed to accurately disclose corporate shortcomings for fear of losing clients (because brokerage houses had their own in-house research teams that touted particular stocks that were being sold by the firms themselves).
Investors kept investing in good faith, reasoning that any short-term downturns in stock performance were temporary.
The stock market bust of April 2000 resulted, and from 2000 – 2003, $7 - $9 trillion was lost in the equities market.
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SOX (cont.)Result: The major stock markets, including the
NYSE and NASDAQ, changed their standards governing listed companies. The latticework of reforms resulted in a new corporate governance regime, no longer market-driven but now highly rule-driven.
The Act changed corporate governance, including the responsibilities of directors and officers, the regulation of accounting firms that audit public companies, and financial reporting and enforcement.
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SOX (cont.)Publicly traded companies now have to
certify that their companies’ annual and quarterly financial reports are accurate and not misleading and that they have met their responsibility for evaluating internal controls.
Penalties for “defective certification” include fines up to $1MM and/or imprisonment up to ten years. Penalties for willful noncompliance (fraud) include fines up to $5MM and/or imprisonment up to 20 years.
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SOX (cont.)Sarbanes-Oxley compliance now includes:
Corporate governance standardsPublished codes of conduct (ethics
statements)Employee whistle-blower protection Audit committee rules and regulations in
terms of policies, procedures, systems, and controls
Management certification requirements 7www.PaulFalconeHR.com
HR’s Role in SOX Compliance
Our company strives to maintain a work environment that upholds the highest standards of business ethics and workplace behavior throughout all of our operations
Our Business Conduct Statement addresses a wide variety of business situations and should serve as a guide to both the letter and the spirit of our policies
Consult your supervisor, human resources representative, or a compliance officer for detailed interpretations, questions, or concerns
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Our Policy is based on:
Laws affecting our workplace, and
Our view of management practices necessary to comply with the law and to maintain an ethical and productive workplace
Laws > policies > practices
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This Statement is Not Exhaustive
The company has other policies and rules which are also important
These rules are the current standard and supersede earlier inconsistent rules
If more detailed rules exist, they apply
If you become aware of any violation or would like further clarification, consult your supervisor, HR representative, or a compliance officer
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Your Responsibility to the Company: Avoid Conflicts of Interest
You have a primary business responsibility to our Company -- both your division, if applicable, and to our corporate parent
A conflict of interest exists when your outside business or personal interests adversely affect or have the appearance of or the potential to adversely affect your judgment or performance at work
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Disclose Potential Conflicts of Interest
Disclosure is essential
Disclose to your Company's General Counsel via your reporting chain any personal or business interest that may interfere with your undivided loyalty to your Company or may have the appearance of doing so
Our policy is one of disclosure and review: together we will reach a solution
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Conflicts of Interest: Prohibited Activities
Absent specific, prior approval, you may not:
Accept a personal benefit which obligates you in any way
Accept a benefit from or provide a benefit to a customer, supplier or competitor, other than nominal, reasonable and appropriate entertainment (Our company’s threshold = $200)
Accept or offer cash (in any amount) under any circumstances
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Conflicts of Interest (cont.)
Have a financial interest in a customer, supplier or competitor, other than less than 1% of a publicly held company
Take a business opportunity from the Company
Do personal business with a customer, supplier, or competitor or the Company itself, except as a regular consumer
Have an undisclosed family relationship with an employee, customer, supplier or competitor of the Company
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Equal Employment Opportunity (EEO)
We place a high value on providing equal employment opportunity and maintaining a diverse workplace, free of discrimination
We strive to make our work force reflect the rich diversity of our society and our customers
Our firm recruits and hires without regard to race, color, sex, religion, national origin, ethnicity, age, marital status, sexual orientation, disability, veteran status or any other basis prohibited by law
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EEO (cont.)
We strive to administer all personnel actions such as hiring, compensation, promotions, benefits, transfers, layoffs, company-sponsored training, education tuition assistance, terminations, social and recreational programs in a consistent manner
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Harassment-Free Workplace
Supervisors are expected to make a personal commitment to our Equal Employment Opportunity Policy
Be sensitive to the warning signsEveryone must work together to maintain a workplace
committed to diversity and free of discrimination
Be mindful of how your conduct affects othersWatch out for harassment based on any protected
characteristic: race, color, sex, religion, national origin, ethnicity, age, marital status, sexual orientation, disability, veteran status, etc.
Harassment can take place on duty or off, in the office or on the road.
Treat co-workers with respect and dignity Supervisor/supervisee personal relationships must be disclosed
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Harassment-Free Workplace (cont.)
Conduct which may constitute sexual harassment (quid pro quo):
Offering employment benefits in exchange for sexual favors
Unwanted sexual advances or propositions, including leering, gesturing, displaying suggestive objects or pictures, cartoons, and requiring the other person to participate
Threatening reprisals if rebuffed
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Harassment-Free Workplace (cont.)
Conduct which may constitute sexual harassment (hostile environment):
Physical contact: unwanted touching, impeding or blocking movements
Verbal abuse of a sexual or graphic nature or comments about an individual’s body
Nonverbal conduct: leering, gesturing, etc.Sexual letters, notes, posters, voicemail, or emailDirty jokes, screen savers, off color comments which
can be overheard
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Harassment-Free Workplace (cont.)
Any incidents of discrimination or harassment must be reported to any one of:
Your SupervisorYour Department HeadYour Human Resources RepresentativeOur company’s Compliance Officers
Reporting is required.
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Reporting Harassment
What will happen if I make a report?
Prompt investigation by knowledgeable staff
Appropriate action to enforce the policy
No adverse consequences for good faith reports
A false report is a violation in itself
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Harassment-Free Workplace (cont.)
NO RETALIATION
Our company prohibits retaliation for lodging complaints under the harassment-free workplace policy
Retaliation would be a separate violation of the policy and could subject an employee to immediate termination, even for a first offense
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Health, Safety and the Environment
Our policy is to comply with all applicable health, safety and environmental laws and regulations
Failure to do so can have serious consequences for you, our company, and the safety of others
Our firm and its employees may be liable not only for the costs of clean-up, but also for civil or criminal penalties for violations of environmental laws
Everyone is responsible for preventing incidents and for responding and reporting promptly should they occur
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Use of the Company Time, Property and Supplies
The Company’s systems are for company business(Any personal use should be limited and reasonable)
Your email and voicemail are company property Do not use the Company’s Internet connection for
inappropriate activitiesRespect the copyright laws: do not download
unauthorized software, music, or other intellectual property
When in doubt, ask your supervisor
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Implementation of this Statement
Compliance Officers’ responsibilities:
1. Ensure the Statement gets to you2. Review operations for compliance3. Review the Statement to keep it current4. Direct investigations of reported or
suspected violations5. Determine action for violations
Compliance officers report to the Audit Committee of the Board of Directors
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Reporting Violations
Reporting violations is requiredEarly reporting is most effective.All reports will be treated as confidential
to the extent appropriateAbuse of the system is a violationFailure to detect violations could be a
violation (Standard: “know or should have known”)
You are obligated to be aware
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How Do You Report?
In person or in writing
Report to any one of the following:
Your SupervisorDepartment HeadHuman Resources Representativea Company Lawyer, or a Company Compliance Officer
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How do You Report? (cont.)
You are not restricted to your reporting chain
Anonymous reports are better than none, but they make the appropriate resolution more difficult
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Investigations
All reports will be investigated:
At the direction of the Compliance Officers with the help of HR, Legal, and Labor Relations
Cooperation with an investigation is a requirement of employment
Relevant documents or data may not be destroyed
You may not conduct your own investigation
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Disciplinary Actions
Actions up to and including termination may be taken for:
Actual violationsWithholding or destroying informationFailure to supervise violatorsRetaliation against a whistle blowerFailing to report a violation
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Behavior We Expect From All Employees….
Maintain a work environment that upholds the highest standards of business ethics and workplace behavior throughout all of our operations
Respect the law and look to the Company Business Conduct Statement for guidance on a wide variety of business situations. Honor both the letter and the spirit of our policies.
Consult your supervisor, human resources representative, or a compliance officer for detailed interpretations, questions or concerns
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Additional NotesAdditional Business Conduct Training may
include:
Financial Accounting / Prohibited Conduct Insider Information and Confidentiality Anti-Trust and Competition Political & Charitable Contributions International Business
Foreign Corrupt Practices ActAnti-Boycott Laws and Embargoes
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