Corporate Eye

...compare, compete, excel

Corporate governance

Corporate Reputation: Speaking Up

whistleblowing

“The only thing necessary for the triumph of evil is for good men to do nothing”
Thomas Burke

Nobody plans to become a whistleblower.

But sometimes someone finds out that something unethical, immoral, illegal or inappropriate is happening in their workplace or industry sector, and feels that they must report it.

This is a difficult and stressful activity particularly if they need to report something being done by a colleague or employer. Whistleblowers risk losing their job—and, depending on their work, they may find it difficult to find another job in the same sector.

Or if they don’t lose their job, their lives in and out of work can be made very difficult because of hostility felt towards them by employers and/or fellow staff.

And their families may be put under enormous stress—not helped if the case gets media attention.

Yet these are people with courage and integrity, who are doing the right thing. And companies who care for their corporate reputation try to encourage this behaviour.

Big companies try to make blowing the whistle as easy as they can, often signing up for an external service, so that employees (or others: suppliers, contractors, customers or business partners) can report something—in theory—without fear of retaliation.

This isn’t entirely altruistic: misconduct by employees damages a company’s reputation, and a good whistleblowing service —usually a phone line—can alert the company to a problem early, giving them a chance to deal with it before reputation damage occurs. And a reputation for a strong ethical culture never hurts…

So creating a quality system to enable whistleblowing is important, and a good system will support the employee as well as the company.

Make it easy

  • It is important to ensure that the information about the phone line is readily available and well known across the company.
  • Both the promotional material and the act of reporting should be available in multiple languages if a company is multi-national.
  • And it must be clearly available—well-signposted and highly visible—on the corporate website. Those who wish to report a problem may be outsiders without access to internal promotional material or services.

Make it expected

People aren’t comfortable with whistleblowing.

  • Asking people to ‘raise their voice’, to ‘speak up’, to ‘be heard’ or to ‘play the red card’ will create a culture where reporting issues becomes the norm. Look at those companies—such as BG Group—where the safety culture is strong, and endeavour to reproduce that kind of culture for ethical behaviour
  • Promote the need to report problems at every level of the organisation, and locally as well as globally.
  • Provide training in what to do in difficult situations, to try and avoid the problems in the first place – and consider the Institute of Business Ethics Say No Toolkit, which helps advise people on avoiding problems, or with reporting a problem they have come across.
  • And be careful when identifying KPIs to measure success; proclaiming that your target is a low number of reports will create the wrong culture.

Make it safe

People will feel uneasy at reporting such incidents, so they need to feel safe.

  • Choose an external reporting service that offers anonymity—for example, use of pseudonyms, and willingness to ensure no personal information is requested.
  • Offering advice about anonymity online can help reassure: for example, explain that using a public PC (e.g. at a library or café) can improve anonymity.
  • When a report is made, it should be taken seriously—with strong procedures to avoid retaliation. Make it clear what the process will be, and what steps will be made to maintain anonymity.

Reports of ethical problems are hard to hear, but just as customer feedback serves to improve products or services, so this kind of feedback can serve to improve the organisation—and support the corporate reputation.

***

This post is part of Blog Action Day; the theme this year is ‘raise your voice’.

Previous contributions to Blog Action Day have been:

2014: Recruitment and Equality: Diversity and Inclusion
2013: Communicating Human Rights
2012: One Plus One Can Be Greater Than Two
2011: Lessons From Food Security: Telling Us What Matters
2010: Mixing Oil and Water
2009: Climate change and the corporate site
2008: Celebrating the FTSE 100: action on the breadline
2007: Enticing the green investor

Innovation Governance Requires Technology Smarts

bridge-the-gapTwo key components of innovation governance are:

  • the technology that drives innovation
  • and Boards and C-levels who are responsible for strategy and governing the decisions regarding innovation and technology.

Technology is always changing. The problem is a Board technology knowledge gap and this leads to ineffective technology strategy.  

Heller Search Associates say:

 According to the Kellogg School, 75% of executives aren’t confident in the value of their technology investments, 70% of IT projects deliver disappointing results and 35% of projects fail outright. These numbers are staggering and make it clear to me that boards are missing the mark when it comes to providing technology oversight.

In a past post I reviewed the importance of the Board and C-Levels to effective innovation governance. But, how is the Board and senior managers to lead innovation governance if they don’t have technology skills? Simply put, they will not be able to do it well. They don’t need to be geeks but there is a need for some awareness of technology trends and how these might influence the performance of the enterprise.

Deloitte Consultants in their Tech-Intelligent Board (PDF) report say:

Few Boards devote attention to IT (Information Technology). Many would like to do more. The question is how?

There are company Boards that have answers to this question. I will list a brief summary (from a variety of sources such as McKinsey and Deloitte consultants, Harvard Business Review, CIO magazine and others) and will expand on these in future posts.
IGtechskills

  • Annual technology reviews, good but need to be more frequent
  • Hire new Board members with technology backgrounds
  • Set up a Technology Advisory group
  • Set up a Board Technology Portal that is easy to use and sends reminders to revisit
  • Have the CIO brief the Board at least once every three months
  • Use reverse mentoring to have new technology savvy employees to brief Clevel executives (my favorite)

More to follow.

 

Innovation Governance and Reverse Mentoring

reverse-mentoringMy last post reviewed techniques some companies use to improve the technology knowledge of Board and C-Level executives. Executives need this knowledge to make effective Innovation Governance decisions. 

To be sure, not every innovation fully involves some type of technological influence,  however as McKinsey consultants indicate most do:

The technology lens assesses feasibility and often provides benefits that can create and sustain competitive advantage. Technology, broadly defined, is the enabler of almost all innovative products, services, processes, and business models. It can be a molecule, a service platform, or software. Too many companies define technology narrowly as an ingredient or component of a new product. Deep knowledge of the benefits of emerging technologies provides an important window into what is possible.

Younger workers grew up in years during which many innovations affected their lives. They are early adopters of new things and are full of knowledge about about how best to use them. Some enlightened companies are learning how to tap this knowledge base through a method called reverse mentoring (on my last post’s list of techniques).

Reverse mentoring involves employing lower level, tech-savvy managers to mentor top level executives on technology topics. Reverse mentoring’s history dates back to the Jack Welch reign at GE.

Welsh encouraged executives to learn more about the Internet. Perhaps Fast Company magazine co-founder best captures the meaning of Reverse Mentoring:

“Its a situation where the old fogies in an organization realize that by the time you’re in your forties and fifties, you’re not in touch with the future the same way the young twenty-something’s. They come with fresh eyes, open minds, and instant links to the technology of our future”. Source: Survey

Reverse mentoring can be a powerful approach to help mitigate the continuing lack of technology skills in too many Corporate Boards. For example, a report Digital Dynamics in the c-suite, published by UK based Sunguard Availability Services, indicates:

Without doubt, information and communication technology (ICT) is the biggest disruptive force confronting organisations and their leadership teams today. And it is not just large organisations, but organisations of all sizes, including the public sector, that are being affected by the inexorable advances in technology. …whilst acknowledging the opportunities digitisation can bring, most Chief Executive Officers (CEOs) and their boards don’t quite know how to respond. And, because many see digitisation as a technology issue they, perhaps understandably, abdicate responsibility to their CIO. this is a fatal mistake.

No equivocation here and this is where Reverse Mentoring enters. It is not yet in wide use by corporations but a few trailblazers include companies such as Cox Communications, Cisco, Time-Warner, MasterCard and Hartford Financial Services Group. Future posts will look at the workings and features of some of these corporate approaches.

Some companies are realizing unexpected benefits. C-suite mentees are getting unvarnished messages, via the young mentors, about what is happening in the depths of their companies that they seldom see. Seems the mentees have not yet learned about ad hoc “the way we communicate here” (what the culture says you can and can not say) and informally give their mentees an honest assessment of what they daily observe.

Here is an example of information that mentees gain from the young mentors. Lance Perry, vice president, IT customer strategy and success at Cisco Systems says:

Working with his millennial mentors has also given Perry a deeper understanding of what millennials like and don’t like in a work environment, which is very different from his priorities when he was first starting out. “These guys come in and ask about flexibility, what the company gives back, what Cisco’s position is in the community,” he says. “I never asked those questions when I was interviewing for a job. For me, it was about money. For them, it’s more about the experience than the ladder they’re climbing.”

There is more to share on this issue.

Enterprise Mobility And Innovation Governance

mobile-worker
Every company is digital and every employee is a mobile worker.

Driving this trend is enterprise mobility one of the most disrupting changes facing business. While many interpretations exist, enterprise mobility refers not only to mobile workers and mobile devices, but also to the transfer of corporate data via messaging, conferencing, files and storage. Workers now are able to transact business with anyone, anytime, anywhere, anyplace with any device.

Enterprise mobility promotes sharing of knowledge across the company. The result–improved customer relations, faster decisions and enhanced innovation.

“Mobile collaboration means working together wherever you are. It doesn’t matter where your location is,” says Ted Schadler, a vice president and principal analyst at Forrester Research. “You’re able to get the communication and the resources you need to work together.”

Among the trends driving mobile collaboration is the fact that consumers are, by nature, social and collaborative. As they become accustomed to using those technologies in their personal lives, they want to use the business equivalents on their mobile devices.

“Increasingly, people are wanting to use their mobile devices—smartphones, touch phones, tablets—to do all the same things they can do on their computers” says Schadler”

Crystal Bedell, ebizQ

Business news is hyping enterprise mobility:

In this case, the hype appears justified. Markets and Markets expects the telecom IT services market to grow by 70 billion US$ by 2019.

Enterprise mobility drivers  include:

  • information is central to every organization’s workflow
  • the proliferation of mobile devices and apps due to rapid advances in mobile technology
  • employees increasingly use   “bring your own devices” (BYOD) and apps to use at work
  • companies need to manage how employees are using their devices and apps in the workplace
  • 865 million to 1.3 billion information workers are forecasted by 2016 according to Forester Research and IDC

Another significant driver are the returns from implementing Enterprise mobility. According to a a study by Enterprise Mobility Exchange the results are compelling:

  • 33.9% – competitive advantages
  • 33.9% – efficiencies on task in the enterprise
  • 30.4% – efficiencies on task for field services
  • 28.6% – customer loyalty and retention
  • 23.2% – improved sales performance
  • 14.3% – cost reductions across lines of business
  • 14.3% – cost reductions across with overheads
  • 14.3% – accurate, faster and higher quality field data capture

While enterprise mobility offers significant returns and advantages there are risks and this is the nexus with innovation governance. In an earlier post, I reviewed overall Innovation Governance Risks.

The list also applies to enterprise mobility and appended are more specific risks:

  • workers use third party apps that may contain malware
  • lack of effective passcode/pin compliance
  • lost devices
  • toll fraud
  • legacy devices used
  • use of unsecured wifi networks

Managing risks is an essential issue for C-Levels and is the primary cause of  delay in enterprise mobility adoption. A closer look at the innovation governance issues linked to enterprise mobility will be the subject of forthcoming posts.

Read more on this topic.

What is Innovation Governance?

Previous posts explained the growing importance of innovation governance and that it is not getting enough attention by Boards and C-Suite executives. Now let’s take a closer look at just what it is.

I think a good start is perhaps the world expert on the subject, Emeritus Professor Jean-Philippe Deschamps at the IMD Business School. He states:

Innovation governance provides a frame that defines the mission, focus and implementation of innovation in the company. It starts with establishing a set of policies regarding the scope of innovation and addressing a number of questions dealing with both ‘content’ (i.e. projects) and ‘process’ (i.e. approaches and responsibilities).

Seems similar to corporate governance? Yes it is. Some describe innovation governance as a subset of corporate governance. Perhaps, but I believe that since innovation transcends all corporate departments and directly impacts risk and performance, it should be embedded within corporate governance. In my eBook Everything You Need to Know About Business Creativity and Innovation, I outline a typical corporate innovation process and now indicate which components have corporate governance implications–

Innovation Process ComponentsCorporate Governance Implications
To create a safe space for innovation, CEOs must invest in creating an environment that allows innovation to thrive while encouraging employees to feel comfortable taking calculated risksYES
Teach senior management and project team members the mind-sets and behaviors that foster disruptive growthYES
Provide employees with a process manual, a step-by-step guide to creating ideas and innovation. The manual includes overarching principles as well as detailed procedures and templates to help teams describe opportunities, identify requirements for success, monitor progress, make go/no go decisions, and work with integrityYES
Offer employee creativity training
Create an innovation strategy: innovation activities should be focused around achieving corporate goals and that identifies how innovation will build on current success to achieve corporate goalsYES
Stimulate ideas: innovation opportunities are everywhere, sometimes hiding just below the surface
Create programs to trigger employees, customers and partners to contribute innovation ideas that align with the innovation strategy goals
Identify the best opportunities: the benefits of innovation are increased by focusing on the best opportunities. Develop criteria to evaluate innovation opportunities and create an open selection process to decide which to implement. Ensure that the few projects selected are properly resourced and implemented in a timely fashion with results communicated to stakeholdersYES
Implement with speed: innovations only provide value when they are implemented. Failure to implement good ideas promptly is one of the biggest barriers to building an innovation culture
Provide incentives and rewards: show employees that their contribution is valued, both for good ideas and successful implementation. Make sure that failures are seen as learning opportunities, not causes for punishment. Recognizing innovators sends other employees a powerful signal that innovation is something that the company greatly valuesYES
C-level managers must walk the talk: a corporate push to innovate loses its momentum quickly if the inspirational words are not backed up with action
Measure the performance of the innovation process itself and look for opportunities to refine and improve itYES

This indicates that innovation should be an important component of corporate governance.

Back to Professor Deschamps who recommends the following responsibility elements for innovation governance:

  • Defining roles and ways of working around the innovation process
  • Defining decision power lines and commitments on innovation
  • Defining key responsibilities of the main players
  • Establishing the set of values underpinning all innovation efforts
  • Making decisions that define expectations
  • Defining how to measure innovation
  • Making decisions on innovation budgets
  • Orchestrating, balancing and prioritizing innovation activities across divisions
  • Establishing management routines regarding communications and decisions.

Next we will look at the vital leadership role of the Board and the C-Suite in advancing innovation governance in the enterprise.

Board of Directors Roles–Corporate Culture

My last post reviewed the major stakeholder groups who have an interest in good corporate governance. The focus of this post is that corporate governance starts with the Board of Directors.

Simply put, the Board reports to the company’s owners (stockholders) and its essential responsibilities include the duty to:

  • Provide the “tone at the top” on values and the corporate culture
  • Establish corporate strategy
  • Hire and compensate the senior staff, the C-Suite
  • Satisfy stockholder financial expectations
  • Ensure full compliance with legal and regulatory requirements.

A new responsibility for Boards in the US and UK is balancing stockholder interest with those of other stakeholder groups. This will be the subject of a future post.

Since my post Good Governance Needs an Ethical Culture (July 21, 2008), the world was in the early stages of the Economic Crisis of 2007/2008. Seems it’s time to look at how the Board influences corporate culture.

A corporate culture is the written and unwritten rules of how things get done within an organization. The written aspect is a document or the published statements of the Board or C-Level managers. For example, on Lockheed Martin’s website Culture page is this statement:

“Shaping a corporate culture is anything but passive. It’s a hands-on endeavor that requires the active participation of everyone who touches it, and everyone who is touched by it. Lockheed Martin is proud to support a culture in which all employees are respected and empowered to do the right thing. Every day, in every situation.”

This is reinforced by “tone from the top” provided by the company’s Chairman of the Board and C-Level Managers.  

Informal corporate cultures are determined by the grapevine, water cooler and hallway discussions, and result in unfocused, changing and ad-hoc behavior all focused on the short term. This short-termism preceded the bankruptcies of the Enron Era and the Financial crisis of 2007/2008. The paper, “Short-Termism, the Financial Crisis, and Corporate Governance” indicates:

To the extent that a firm’s culture is focused on employee self-interest, a greater likelihood exists that when employee self-interest and the long-term health of the firm diverge, the long-term health of the firm will be sacrificed to save employee self-interest.

Boards and C-Levels need to set the “tone at the top” regarding the longer term interests of the company and to continually reinforce this in all employee communications opportunities.  

In addition to this important action, the Board should insist on implementation of the following actions:

  • TAKE ACTION

    Publish corporate culture guides for employees and leaders

  • TRAINING

    Provide short online courses

  • CONTINUING COMMUNICATIONS

    Throughout the year distribute to all locations communication materials in multiple languages that deal with culture matters. These materials help maintain an awareness of current issues, familiarize employees with business conduct expectations, and promote understanding of business values and philosophy.

  • MEASUREMENT

    As Lord Kelvin said, “To measure is to know.” At a minimum, the company should issue an annual employee culture survey and have results reviewed by the Board.

Companies whose Boards champion an effective corporate culture are awarded with superior financial performance. Just look at the continuing research of  GreatPlaceToWork consultants who give strong attention to culture assessments in their awarding Top Company honors.. The top companies outperform major stock market indices.