may 8th 3 45 pm maximizing integrity at key career moments

Why Career Moments Matter...And What You Can Do About Them

CEB Compliance and Ethics Leadership Council

2

© 2013 The Corporate Executive Board Company. All Rights Reserved. CELC5704813SYN

ACCELERATION OF CORPORATE CHANGEMacroeconomic, market, and business uncertainty drive frequent changes to corporate strategy, financing, and operating processes.

■ In the past two years, 84% of companies experienced a significant company-wide change.

n = 63.

Key Trends Driving Corporate Change

Companies Experiencing Change in the Past Two YearsCommunications Executive Council Member Survey, 2012

Single Company-Wide Change

0%

35%

70%

0%6%

10%

19%

65%

No Change

Minor Change

Isolated Change in BU

Multiple Company-Wide Change

Macroeconomic Changes

■ Slow, volatile economic growth

■ Uncertain interest rates

■ High unemployment rates

Market Changes

■ Increase in global regulations and uncertainty in enforcement

■ Advance in technology

■ Shift in consumer demand

Production Changes

■ Increase in supply chain risks

■ Shift in employee demographics, geography, and expectations

3


EMPLOYEES FEEL THE PAIN

Percentage of Employees Experiencing Given Career Moment in the Past YearSelect Employee Moments , CELC Survey Data 2012

Corporate changes manifest as career moments for employees.

■ Eighty-three percent of employees have experienced career moments in the past year.

■ On average, employees experience 2.2 career moments per year.

n = 3,311.

Degree of Change Fatigue Company Reported, CEC Member Survey 2011

n = 63.

0%

25%

50%

2% 3%10%

24%

44%

14%

3%

Not at All Very Low Low Moderate High Very High Severe

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DERF 11-3580

Catalog # CEC1086311SYN

Title

Increasing StressSixty-two percent of corporate employees agree that workplace stress has increased in the past two years.

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DERF 12-4536

Catalog #

Title

4


A SCIENTIFIC APPROACH

CELC’s Workforce Change Survey, 2012

The CELC launched a new-to-world survey to understand the impact of career moments on employee behaviors, perceptions, and receptivity to training and communications.

■ The CELC explored the relationship between specific career moments and the related corporate and compliance response.

What Impact Do Career Moments Have on Employee

Behavior?

Which Career Moments Do Employees Experience?

How Can Compliance and Ethics Maximize Integrity During Times of Change?

Impact ■ Observations of Misconduct ■ Misconduct Reporting Rate ■ Perceptions of Integrity ■ Employee Engagement and Discretionary Effort

Career Moments ■ Corporate Change 1 ■ Compensation/Benefit Change 2

■ Role and Team Change 3 ■ Promotions 4

Intervention ■ Timing of Intervention ■ Channel of Intervention ■ Content of Intervention

Employee Demographics ■ 3,311 responses from full-time employees of large organizations (500+ employees)

■ 25+ countries represented ■ Respondents represent full range of industries and corporate positions

■ Average respondent age of 37.4

1 Corporate Change: Layoffs of team members, significant organizational restructuring, merger/acquisition, and/or substantial change in senior leadership.

2 Compensation/Benefit Changes: Wage freeze or salary cap, reduction in benefits, reduction or elimination in variable pay, mandatory unpaid leave/furlough, hiring freeze, and/or early retirement offer.

3 Role and Team Change: Significant change in job responsibilities, significant change in skills you use, change in your direct manager, and/or transfer to new team.

4 Promotions: Promotion to manager and general promotion.

DERF 12-4536

Catalog #

Title

5


Impact of Career Moments1 on Observations of MisconductBy Number of Career Moments in the Past Year (Excluding Promotions)

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One Moment

Benchmark Average = 27.9%

n = 3,311.

INTRODUCING CHANGE RISKCareer moments have a significant impact on observations of misconduct, reporting rates, and perceptions of integrity.

■ Employees experiencing two or more career moments in a given year observe twice as much misconduct as other employees.

Impact of Career Moments on Employee Perceptions of IntegrityBy Number of Career Moments in the Past Year (Excluding Promotions)

n = 3,311.

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Three Moments

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-12%

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A 4% decline is equivalent to moving from middle to bottom-quartile scores in perceptions of integrity.

Career Moments and Reporting

■ Employees more frequently report misconduct as they experience additional career moments.

■ Reporting rates increase most significantly during role or team changes.

1 Career moments excluding promotions.

DERF 12-4536

Catalog #

Title

6


Impact of PromotionsNot surprisingly, promotions—particularly promotions to manager—decrease levels of observed misconduct.

IDENTIFYING TOP CHANGE RISKS

Compliance Risk1 of Specific Career Moments

Considering the likelihood and impact of each career moment illustrates the magnitude of change risk.

■ Career moments increase risk by:

– Causing employee stress,

– Creating control gaps,

– Exposing employees to new rules and operating procedures before receiving appropriate training, and

– Changing perceptions of company integrity and willingness to rationalize behavior.

Corporate Changes

Compensation/Benefit Changes

Role and Team Changes

Top Four Risks 2

1. Layoffs2. Organizational

Restructuring3. Change in Senior

Leadership4. Change in Job

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1 The CELC attempted to isolate the compliance risk of specific moments. While some moments do happen in tandem, factor analysis reveals a relatively low and random relationships between specific moments.

2 Risk Ranking is defined as the frequency of moments multiplied by the percent change in observed misconduct. This score represents the gross compliance risk of a moment.

DERF 12-4536

Catalog #

Title

0%

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30%

0% 15% 30%

Layoffs

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Change in Job Responsibilities

Change in Senior Leadership

Change in Direct Manager

Transfer to New Team

No Moments

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Reduction/Elimination in Variable Pay

Mandatory Unpaid Leave/

Furlough

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THE MAGNITUDE OF CHANGE RISKKey career moments trigger significant increases in specific types of misconduct.

■ Employees experiencing corporate layoffs observe 1.7x as much inappropriate giving, 3x as much bribery, 3.5x as much fraud, and 4x as much insider trading as unaffected employees.

What the Numbers MeanDuring layoffs, for every 10,000 employees, an additional 500 employees would observe fraud.

Observations of Inappropriate GivingPercentage of Employees Observing During Select Moment

Observations of BriberyPercentage of Employees Observing During Select Moment

Observations of FraudPercentage of Employees Observing During Select Moment

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Observations of Insider TradingPercentage of Employees Observing During Select Moment

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REPORTING THROUGH CHANGE

Employee Reporting Rates1

By Career Moments

Employee reporting rates increase during most career moments.

■ Employees may feel more willing to speak- up before they become invested in workplace practices and with new colleagues.

■ Compliance and ethics officers should mine these “amnesty” periods where employees can critically review workplace practices and accepted norms.

Role and team changes significantly increase reporting and represent a valuable opportunity to solicit information about workplace practices and culture.

Role and Team Changes

Corporate Changes

Compensation/Benefit Changes

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Employee Reporting Rate At No Moments

= 45%

Reduction or elimination in variable pay (and compensation changes generally) may suppress reporting.

n = Varies by moment.

1 Reporting Rate—Percent of employees that report observed misconduct to an internal party (manager, compliance, helpline, etc.).

9


Two-thirds of employees do not receive the appropriate amount of information during a career moment.

■ To relieve employee stress—and improve positive outcomes—the CELC identified the attributes that impact employee behavior during career moments.

■ The proper timing, channel, and content of compliance interventions explains 40% of changes in employee perceptions of integrity during key career moments.

NOT YET MEETING THE CHALLENGE

Employees Receiving Right Amount of Information1

Percentage of Employees at Career Moment

34% Received

Appropriate Amount of

Information

46% Neutral

n = 2,218.

1 Employees were classified as having “Received Appropriate Amount of Information” if they had scores of 5.0 or higher on a 7-point agreement scale. Scores below three were classified as “Not Receiving Appropriate Amount of Information.”

2 Regression analyses were conducted to determine the aspects of outreach most indicative of higher perceptions of integrity and lower rates of observed misconduct. While a wide range of demographic and independent variables were included in the model, the three variables above provided the highest level of explanatory power.

20% Did Not Receive Appropriate Amount of Information

Timing of Communication

Channel of Communication

Content of Communication

1

2

3

Attributes of Effective Compliance and Ethics Interventions2

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CREATING EFFECTIVE INTERVENTIONS

Attributes of Effective Compliance and Ethics Interventions

CELC identified the attributes of timing, channel, and message with the greatest impact on employee perceptions, misconduct, and engagement.

■ This research helps companies target the right employees with the right message at the most critical times.

1 Timing—Employees were asked if they received compliance and ethics messages before, during, and/or after career moments.2 Channel—Employees were asked who they received communications from senior leaders, corporate functions (HR, Legal, Corporate Communications),

managers (formally), managers (informally), peers, media, social media, and unions.3 Message—Employees were asked if they received six key messages surrounding the moment(s).

Intervention Timing1

Key AttributeCommunicate before (as soon as practical) a career moment.

Intervention Impact ■ Reduces observation of misconduct by 20%.

■ Increases employee reporting rate by 5%.

■ Increases perceptions in integrity by 21%.

Intervention Channel2

Key AttributeUse direct managers to communicate through a career moment.



■ Increase perceptions of integrity by 26%.

Intervention Message3

Key AttributeCommunicate the importance of integrity through a career moment.



■ Increases perceptions of integrity by 40%.

Key Teaching

Reaching out to employees before a career moment can mitigate the increase in misconduct and decline in integrity almost entirely.

Key Teaching

Effective manager involvement at key career moments reduces misconduct and significantly increases employee reporting.

Key Teaching

Employees seek different messages at different moments, but require a foundation that empowers ethical decision making.

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PUTTING IT ALL TOGETHERIdeal Intervention AttributesCouncil Analysis

Potential Impact on Employee Perceptions of IntegrityPercentage Change in Perceptions of Integrity by Intervention

Potential Impact on Employee Observations of MisconductPercentage Change in Observations of Misconduct by Intervention

Delivering the most effective interventions improves employee perceptions of integrity by 40% and reduces observed misconduct by almost two-thirds.

■ Effective interventions actually improve employee perceptions above pre-moment levels.

■ Change is not just an under appreciated risk, but a significant compliance opportunity.

Before a career moment

From direct managers+ Importance

of integrity+

Ideal Intervention 1

Least Effective Intervention 2

∆ = 73%

1 Ideal intervention is made up of communication before the event, through a direct manager, and messages about the importance of ethical integrity. Least effective intervention is made up of communication after the event, through a formal channel, about the organization’s response to misconduct.

2 Ideal and least effective interventions were calculated by comparing the integrity scores for the various combinations of interventions. An intervention had to have at least 10 individuals experience it in order for it to be included.

An ideal intervention increases perceptions above the level of employees who experience no moments.

Timing Channel Content

Ideal Intervention 1

Least Effective Intervention 2

Beyond Compliance: Business Case Ideal interventions increase:

■ Employee engagement by 23%

■ Discretionary employee efforts by 8%

(23%)

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OVERVIEW OF SOLUTIONSToday’s session will focus on leading strategies for building a moments-responsive program that maximizes integrity at key career moments.

1Integrate Compliance

at Key Career Moments

2Equip Managers to

Lead through Moments

3Create Moment-

Relevant Messages

Establishing Tone at the Start Fostering Early Ethical Leadership

Creating Moments-Responsive Message

Shaping Acquired Employee Perceptions

Aligning Company Values to Managerial Decisions

Measuring Organizational Health

Identifying Role-Specific Learning Needs

Embedding Compliance in Senior Manager Priorities

Simulating Consequences of Future Decisions

CELC Tools and Resources

Moment-Specific Toolkits Ethical Leadership Portal ■ Workforce Change Survey ■ Communications Message Generator

13


OVERVIEW

Bayer delivers compliance and ethics outreach to new hires multiple times throughout their first year at the organization, shaping perceptions of company values and compliance expectations early on. Additionally, delivering messages in a variety of formats reinforces desired behaviors during this key time in the employee life cycle.

SOLUTION HIGHLIGHTS

Send Messages Before Candidates CommitDeliver compliance and ethics outreach to potential new hires when they receive their offer letter to communicate the company’s commitment to integrity even before they accept the job.

Reinforce Messages Across the First YearSend program outreach multiple times throughout the beginning of employees’ tenures to reinforce company values and compliance expectations when employees are most open to these messages.

Vary Delivery ChannelUse multiple delivery formats to appeal to employees with a variety of learning styles and preferences.

COMPANY SNAPSHOT

Bayer CorporationIndustry: Life Sciences Bayer Corporation, headquartered in Pittsburgh, is a subsidiary of Bayer AG,

an international health care, nutrition and high-tech materials group based in Leverkusen, Germany. Bayer, which created aspirin in 1897, manufacturers and sells pharmaceuticals, OTC drugs, medical devices and animal health care products through its Bayer HealthCare subgroup; plastics and high-performance specialty materials through Bayer MaterialScience; and crop protection and home garden care items through Bayer CropScience. Aside from Bayer® Aspirin, the company’s best-known consumer brands include Aleve®, Alka-Seltzer™ and One A Day ® vitamins. Bayer AG has some 300 operating subsidiaries worldwide.

2011 Sales: US$10.5 B 1

Employees: 15,800

ESTABLISHING TONE AT THE START

1 Exchange rate as of 6 July 2012: US$1 = €0.8139.

14


EXTENDING COMPLIANCE AND ETHICS ONBOARDING

Bayer’s Compliance and Ethics Onboarding TimelineIllustrative

Recognizing the first months at the company as a formative period for employee perceptions, Bayer concentrates outreach during this critical time.

■ Bayer managers onboard new hires using a checklist, which includes specific compliance tasks to complete in the first month.

Month Three

Month SixDay One

Dear Colleague, On behalf of the Corporate Compliance community, we would like to officially welcome you to Bayer!

Attached is a copy of Bayer’s Corporate Compliance Policy. The Corporate Compliance Policy is essentially Bayer’s code of conduct. It applies to everyone, at every level, and in every country where the company operates. Please read and internalize the obligations of this Policy as you will be expected to apply it to your daily work.

As you will soon learn, Bayer’s core values are Leadership, Integrity, Flexibility and Efficiency. Together, they stand for “LIFE,” an acronym which can be easily remembered as it fits squarely with our motto: “Bayer: Science for a Better Life.” Although each value is equally important, we would like to take this opportunity to emphasize the “I” or “Integrity.” Bayer is a company that takes great pride in its commitment to conducting business in accordance with all applicable laws, rules and regulations, as well as the highest standards of ethical conduct. Acting with integrity, at all times, is at the heart of our operations, is critical for maintaining our brand and reputation, and for achieving sustainable success.

Should you ever have any questions about the Corporate Compliance Policy, or wish to report a concern, please do not hesitate to contact a member of your management chain, your Compliance Officer, Law Department, Human Resources (for employment matters), Corporate Auditing, or for confidential inquires, by calling the Bayer IntegrityLine at +1 888-765-3846 or online at BayerNA.alertline.com.

Hire Date

Recruitment Year One

One-on-one conversation held with manager

In-person training led by local compliance officer

Risk-specific and other business unit compliance training continues (as needed)

Compliance officer letter

included with electronic offer of employment

8642

Code of conduct showcased on recruitment website

Paper code of conduct distributed, accompanied by letter from compliance officer

Code of conduct online training deployed

Risk-specific online training begins (e.g., anticorruption, antitrust)

Annual ethics course, including code of conduct training and recertification, launches

97531

“Communicating early and often during onboarding hardwires

compliance and ethics into employees’ way of operating when they are especially receptive to adopting the organization’s values and integrating into its culture.”Keith AbramsVice President, Associate General

Counsel and Assistant SecretaryBayer Corporation

15


■ Age ■ Company nowledge ■ Computer access ■ Learning style ■ Local culture ■ Role ■ Seniority ■ Time limitations

Individual Characteristics

Outreach Recipient,

by Channel Preference

■ Hard Copy

■ LIVE TRAINING

■ E-learning

■ Hard Copy

■ Live Training

■ E-LEARNING

■ HARD COPY

■ Live Training

■ E-learning

Delivery Channels, Excerpted

Hard Copy ■ Code of conduct ■ Pocket guide (e.g., antitrust,

corporate compliance)

E-Learning ■ Code of conduct module ■ Trade compliance module ■ Workplace safety

presentation

Live Training ■ In-person training with local

compliance officer ■ CEO Townhall ■ Monthly “Compliance Chat”

and “Lunch and Learns”

DEPLOYING ONBOARDING OUTREACH THROUGH A VARIETY OF CHANNELS

Compliance and Ethics Outreach DeliveryIllustrative

Bayer delivers its compliance and ethics outreach in a variety of formats to ensure key messages are absorbed by all employees.

■ Multiple delivery channels allow Bayer to scale its onboarding outreach while appealing to individuals’ preferences.

By the end of their first year at the company, all new Bayer employees receive compliance and ethics outreach through each delivery channel, helping to ensure at least one message format resonates with every individual.

16


OVERVIEW

Centene organizes interactive training sessions with new and acquired employees to address compliance knowledge gaps as early as possible, and to understand employee perceptions about Centene’s ethical culture and commitment to integrity.

SOLUTION HIGHLIGHTS

Address Compliance Knowledge Gaps in the MomentAdapt live training for new employees based on the results of in-the-moment tests, allowing training facilitators to tailor and focus training time on the compliance risk areas that require additional reinforcement.

Shape Perceptions of IntegrityConduct focus group sessions with new employee populations to understand and influence their perceptions of company integrity during their first months at the organization, a critical period of increased employee receptivity.

COMPANY SNAPSHOT

Centene CorporationIndustry: Health Care Centene Corporation provides managed care and related services in more

than a dozen states under names such as Managed Health Services, Superior HealthPlan, and Buckeye Community Health Plan. Centene provides services to some 2.39 M low-income, elderly, and disabled people receiving Medicaid, Supplemental Security Income, and state Children’s Health Insurance Program (CHIP) benefits. Centene also offers specialty services in areas such as behavioral health, vision benefits, and pharmacy benefits management.

2011 Revenue: US$8.2 BEmployees: 6,800

SHAPING ACQUIRED EMPLOYEE PERCEPTIONS OF COMPLIANCE AND ETHICS

17


INTEGRATING ACQUIRED EMPLOYEES

Centene’s Acquisition ProcessSelect Compliance and Ethics Activities

Deliver early outreach to newly acquired employees to understand and address their compliance and ethics needs.

■ Centene uses a live polling technology to promote active discussions on compliance risks and integrity concerns with new employees.

Due Diligence and Planning

Implementation of Integration Plan

ClosingPost-Implementation

Planning and Monitoring

I. Risk-Specific Compliance Training II. Cultural Focus Group Discussion

■ Typically, 30 to 60 days after closing

■ Identifies baseline compliance knowledge and need for follow-up training.

■ 60–90 days after closing

■ Informs Compliance about local perceptions of company integrity.

Pre-Training Session Quiz

Code of ConductEnd-of-Training Quiz

Code of Conduct ■ If an employee witnesses a compliance violation, what should he or she do?

The False Claims Act ■ Under the False Claims Act an organization can be fined up to $33,000 per false claim submitted. True or False?

Privacy and Security ■ Large breaches of health information must be reported to the media. True or False?

Anti-Kickback Statute ■ Case managers are allowed to accept finders’ fees for referring members to a provider. True or False?

Local Compliance

Officer

Question 1

Yes No

18


I. ADDRESSING EMPLOYEE KNOWLEDGE GAPS IN THE MOMENT

Centene’s Risk-Specific Implementation Training Illustrative

To mitigate acquired employees’ knowledge gaps about specific regulatory risks, Centene dynamically tailors live training based on in-session quiz results.

■ Responses to live polling allow Centene to instantly measure employee understanding of key compliance risks.

Quiz Questions

Code of Conduct

■ Employees can accept vendor gifts and there is no dollar limit to what they can accept. True or False?

The False Claims Act

■ Under the False Claims Act an organization can be fined up to $33,000 per false claim submitted. True or False?

Privacy and Security

■ Large breaches of health information must be reported to the media. True or False?

Anti-Kickback Statute

■ Case managers are allowed to accept finders’ fees for referring members to a provider. True or False?

Keeping Quizzes Short: Centene limits its quizzes to no more than 10 questions to allow more time for group discussion.

Implementation Training Agenda

Objective: Compliance-risk awareness discussion

Facilitator: Local Compliance Officer or VP of Ethics and Compliance

Audience: Groups of around 10 new or acquired employees with similar job functions so that discussions can be based around job-specific risks.

Length: 2+ hours

Topics Covered ■ Code of Conduct ■ The False Claims Act ■ Privacy and Security ■ Anti-Kickback Statute

Three Quizzes1. Pre-training quiz: Sets the tone for an initial discussion on

key compliance risks.2. Post-training topic quizzes (2–3 questions per topic): Tests

employee knowledge following individual compliance risk discussions to gauge the need for further discussion during presentation.

3. End-of-training quiz: Re-tests employee knowledge following training discussions.

Post-Training Follow-Up: Local Compliance rolls out further training to groups of employees who have scored particularly low on training quizzes.

19


II. (RE)SHAPING PERCEPTIONS OF INTEGRITY

Centene’s Cultural Focus GroupIllustrative

Centene conducts live focus group sessions with new and acquired employees to set and reinforce the company’s commitment to operating with integrity.

■ Centene uses live polling to surface employee perceptions and frame the discussion in the moment based on employee responses.

Focus Group Agenda

Objective: Integrity discussion

Facilitator: Local Compliance Officer or VP of Ethics and Compliance

Audience: A sampling of the newly acquired employee population in groups of 10–15

Length: Typically two hours

Post-Session Activities

■ Share Employee Feedback with Local Leadership: Centene provides local leadership with a summary of the feedback collected in each session.

■ Communicate with Staff: Leaders use this information to address employee concerns. Typical next steps include all-employee meetings, CEO-staff lunch and learns , and communications campaigns.

Pre-Session Messaging

■ Outreach to Employees: Selected employees receive an invitation e-mail introducing the session as a platform for employees to express their compliance- and ethics-related concerns.

■ Outreach to Local Leaders: To establish management buy-in and support for the session, Centene meets with local leaders to explain the purpose of the session.

Discussion Questions, Excerpt:

1. Have you observed misconduct? ■ Follow-up question: What kind of misconduct did you observe?

2. Are you comfortable speaking up? ■ Follow-up question: What prevents you from speaking up?

3. Are you comfortable raising concerns with your manager? ■ Follow-up question: Why are you uncomfortable raising concerns with your manager?

Local Compliance

Officer

Yes No

Question 1

20


CAPITALIZING ON NEW BEGINNINGSDiscussion-based sessions for new employees allow Centene to communicate when employees are most receptive to receiving key messages.

“We’ve had very positive employee feedback. Polling the audience in real time makes training more interactive and engaging for them, and hugely informative and actionable for us. I’m so convinced about the value of these sessions that I’ve budgeted to purchase additional polling equipment this year and use this training format with existing Centene employees.”

Robert MiromontiVP, Ethics and ComplianceCentene

Lessons Learned

1. Keep Groups SmallCentene learned that larger groups of employees are less likely to speak up during sessions, and now keeps group sizes to about 10 employees.

2. Allow for Longer Risk DiscussionsAfter finding that employees were eager to engage in discussions during the risk training, Centene now allocates an additional thirty minutes to these sessions.

3. Offer “Closed-Door” MeetingsCompliance staff is also available outside of the formal session times for “closed-door” meetings with employees who feel uncomfortable speaking during focus groups.

4. Provide an Adjustment PeriodCentene initially rolled out focus group sessions immediately following the acquisition closing. Now it waits two to three months to host sessions, which lets employees gain knowledge and perspective about new company management before participating in a focus group.

Key Benefits

Reduced Compliance FailuresDelivering training early during implementation clarifies important risk information, ensuring employees are prepared to meet compliance obligations before they conduct business on behalf of Centene.

Improved Perceptions of IntegrityResponding to concerns during focus group sessions improves employee perceptions of integrity and establishes an important relationship of trust between employees and the new company.

CEB Compliance and Ethics Leadership Council

To learn more about CEB Compliance and Ethics, please visit www.ceburl.com/compliance-ethics