The Manufacturing Executive
The Manufacturing Executive

Episode · 4 months ago

It’s Time to Get Serious About Ethics & Compliance w/ Emily Miner

ABOUT THIS EPISODE

When it comes to improving your company's ethics and compliance…

Any changes you make will only be as good as the culture supporting them.

And today’s guest, Emily Miner, Senior Advisor in LRN ’s Ethics & Compliance Advisory Practice, joins the show to share the best ways to cultivate that culture.

We discuss:

  • The evolution of E&C
  • Why ethics and compliance and organizational culture are inextricably linked
  • The importance of understanding the differences in the experience of culture for various individuals across your company 

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But really all comes back down to, you know, how how can we, as ethics and finance professional, help to protect our organization by fostering a strong ethical culture and, you know, seeking to prevent and detect this conduct? Welcome to the manufacturing executive podcast, where we explore the strategies and experiences that are driving midsize manufacturers forward. Here you'll discover new insights from passionate manufacturing leaders who have compelling stories to share about their successes and struggles, and you'll learn from B tob sales and marketing experts about how to apply actionable business development strategies inside your business. Let's get into the show. Welcome to another episode of the Manufacturing Executive podcast. I'm Joe Sullivan, your host and a CO founder of the Industrial Marketing Agency guerrilla seventy six. Ethics and compliance. It's one of those topics that doesn't seem to be talked about as much as it should. For many organizations, this is about having some HR policies in place to check off boxes and maybe protect the company in case of a lawsuit somewhere along the way. But my guest today will tell you there's a heck of a lot more to this practice of ethics and compliance. Shall also tell you why those manufacturers who take it seriously not only have happier and emloyees and work cultures, but a serious competitive advantage. Let me introduce her. Emily Miner is a senior advisor in lrn's ethics and compliance advisory practice. She counsels executive leadership teams and how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, emily emphasizes co creative, bottom up and data driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, utilities, professional services and education industries, as well as education, nonprofit and inner government governmental agencies. Emily Co leads lrn's ongoing flagship research on EANC program effectiveness and is a thought leader in the areas of organizational culture, leadership and EANC program impact. Prior to joining Lrn, Emily applied her beave behavioral science expertise in the environmental sustainability sector. Working with nonprofits and several New England municipalities, facilitated Earth to science research in academia and contributed to drafting and advancing international climate policy goals. Emily has a master of public administration and Environmental Science and policy from Columbia University and graduated Summa cum laude from the University of Florida with a degree in anthrop aology. Emily, welcome to the show. Thanks for having me. You bet well, emily. Can you start by telling us what ethics and compliance, or EANC as we've called it here, is all about as a practice? Yeah, ethics and compliance, or EANC, as we said, as a corporate function, is essentially about protecting a company's reputation and brand, which it really does kind of in two ways, by fostering and ethical culture and seeking to prevent and detect violations of the law, so that the how of that, like the actual tools and leavers that that ethics and compliance professionals have at their disposal. It's really quite expansive and it's going to vary depending on the organization and your industry, your size, whether your public and private. But Lan, we often think about a fix and compliance as inspiring, guiding and enabling values spaceed behavior. So I think some compliance in terms of inspiring sidy space behavior. That's really through codifying and communicating...

...and organization's higher purpose, their values, their commitment to ethical behavior, responsible business practices, setting that tone from the top and, you know, in so doing, inspiring employees to live up to that purpose, to live up to that potential. From a guide and perspective, it's how. So we have our values, but how do we actually live them like? How does that breakdown and connect to me and what I do in my role? Why is that important to our business, to the community in which we operate, the customers that we serve, etcetera, and guiding employees around what's expected of them, how to identify risks that they might be exposed to and what to do if they are confronted by those risks. So this guidance element is typically achieved through education and training and communications and having policies and a code of conduct, those resources for employees. And then the final leg of the stool, or what have you, his around enabling value space behavior and ethics and compliance. Can do that by establishing the appropriate procedures and structures and controls, being a resource to the business, being a resource to employees if they need help, and creating mechanisms for people to speak up and voice their concern the pretty expensive remitt but really all comes back down to how can we, as ethics and compliance professionals, help to protect our organization by fostering a strong ethical culture and seeking to prevent and detect misconduct? What are your observations about how the practice of EGANC is evolved over, say, the past decade, and are there any examples you could provide to illustrate that? Yeah, I think the evolution of Ethixing compliants has been really fascinating. When you think about what your standard corporate functions finance charts that are ethics and compliance is actually one of the newer corporate functions and it's gone through quite an evolution back from when the discipline first came on the scene, which was going back more than a decade back to end run. But thinking about the past ten years or so, ethics and compliants have gotten much more sophisticated and thinking about its role within an organization. It used to be sort of more of a techlist approach maybe ten years ago so. To have a code of conduct check, do you have some form of training? Check, do you have a hotline? Check and that was enough was just to kind of go down and say, okay, I have all of these program elements now affixing compliants, professionals, organizations, regulators. They're really moving beyond that and seeking to understand whether or not all of those program elements are actually having an impact. Are they inspiring, guiding and enabling value spased behavior? Are they informing how people are behaving in making decisions on a day today basis, which, to put another way, is what is our culture? And there's there's a wreck cognition that you can have the best speak up program in the whole world, with the best hot line and all of that, but if you don't have the right culture underneath to support that, it's not going to be effective. No one will use it, and we we've actually seen this in a lot of the corporate scandals that make the headlines. So if you think about all stargo or Boeing, Goldman, stack, specific guests and Electar, I mean you can kind of go go down the list of the major corporate scandals. All of those companies that I mentioned, they had sophisticated ethics and compliance programs on paper and they actually had people that use the established channels to raise their concerns, but the culture,...

...how things really worked around there are the messages that were being sent or what was really important? That was the complete opposite, and so they got into those situation that they got into. So checklists are fine and it is important to have all of those components of a program but the emphasis nowadays is much more on whether those programs working practice. I think a good example is looking at organizational policies. So they used to be written by lawyers for lawyers. It was very much like a cya approach to protecting the company or saying well, this employees find the Scienti statement that they read the policy. So therefore we as an organization, we're in that we can't be held liable. That no longer really appropriate anymore. So the emphasis now is on our your policies simple or the easy to understand? What you know, grade level or they are they written that? Are they translated to reflect your global footprint, which, believe it or not, sort of seems like obvious that organizations should do that, but many of them don't, and so that's just an example of how a programmatic element has evolved over time and kind of another mark of the evolution that I find really fascinating is if you look at the titles of people that hold senior ethics and compliance positions. In the beginning it was that you were the chief compliance officer, and then it's chief compliance and ethics officer, then it's chief ethics and compliance officer. So what's putting ethics sort of above compliance or first? And then now we see a lot that are just chief ethics officers or chief integrity officers, and I think looking at how the titles of this role has changed over time is will also an indication of what companies are realizing is important. So it's not about it's not just about compliance with rules. Of course it is that, but beyond that it's about are we doing the ethical thing? Are we doing the right thing? Sounds like there's more authenticity kind of beginning to take a route behind these programs that maybe we're once just there because they had to be there to check the box. Uh, absolutely so. Emily, I know that you have led a massive study recently that was completed and published, the benchmark of ethical culture survey. Can you just talk about what this was about what you set out to learn with the study? Yeah, for the past ten years or so, Ella Ren has periodically sought to understand the state of organizational culture around the world, and its been a while since we had done this. But with events of the past few years, the rise of stakeholder capitalism, emphasis on social justice and equity, their climate crisis of course covid all of these everging forces, these these converging crises that are impacting and being impacted by business, it felt like the right time to ask this question again. So what is corporate culture? What does it mat up of? What does it look like? What does it do in organization and how does that vary around the world and across industries? And so we undertook a massive research effort, serving people in in companies around fourteen countries, multiple languages, seventeen industries, all organizational sizes, all role types, from your frontline contributor up to the CEO, and we got nearly ezero responses. That forms the basis of the research that we published in the report that you just mentioned. Building on that, what were, if you had to look at some of the key findings, and in particular those that were related to the manufacturing sector, what stood out to you? There's...

...a lot. I'll maybe narrow it down to the or all start with three, I think, as at a at a high level, something that was really exciting for us to see was this the degree to which culture impacts performance. And we looked at performance kind of into in two ways. We looked at ethical performance, so we're people behaving ethically or, quote unquote, doing the right thing, particularly when they were under pressure, which is when it's more difficult to do the right thing, and did people speak up about misconduct? So that was what we consider ethical performance. And then we also looked at business performance, and this is, your view, more traditional business metric, so financial results, customer satisfaction and ploy loyalty, innovation and that are and we did advanced statistical modeling to look at the various dimensions of Culture and how they interacted with each other and an influenced one another. And what we found was that a significant percentage of the variability in these two performance indicators, at the coal performance and business performance, a significant percentage of the variability in those indicators was attributed to the strength of your culture, where if you were an organization with a what we would consider a healthier ethical culture than that was correlated to much greater business results, much more indicies of employees speaking out about misconduct, making the right choice when under a touch situation, and just being able to see and quantify the impact of culture on these bottom line and risk mitigation metrics that are important to business leaders was really exciting. and to kind of go deeper into some of this, we wanted to focus in on what conditions, what elements of culture, are most important when it comes to employees behaving ethically when under pressure, and what we found was that trust and organizational justice, which are two dimensions of culture that we measured, they really had an outsize impact. and to focus in on how this plays out in the manufacturing industry, what we found was that this performance under pressure dimension was actually the lowest scoring for the manufacturing industry, and so it represents the biggest area of opportunity and our research and analysis suggest that if organizations want to move the needle on whether people are behaving as if they went under pressure, they're going to have the most impact by focusing on ensuring that there's a strong foundation of trust and that employees understand and have confidence in the organizational justice practices. And so I think that that's that's really compelling and we have a lot of examples and we share some case studies in the report about exactly how organizations have gone about doing that. But I just think it's helpful to kind of target like, if you have limited time and resources, which all of us do, what's going to have the most impact, and it's trust and organizational justice, and particularly so for the manufacturing industry. So it's my number to keep finding. And then the third is this the insight that organizational culture is experienced differently depending on who you are and where you are in an organization. So whether that's your level of seniority or the type of role you have. So again kind of bringing it down home to the manufacturing industry, are you an office employee or production employee? And there's a fairly well established phenomena called the leadership disconnect where the more senior you are and our organization, the more positive view or outlook you have on the culture of your company, and we saw that playing out in our data. But we also fall that being replicated by this...

...role Tipe of whether you were an office employee or whether you were production for employee, where office employees by and large had a much more favorable view of their organization's culture than production level employees. And when we think about how the pandemic, how Covid has reshaped our worlds and destructed our worlds and how important frontline people are, whether that's our frontline healthcare workers or teachers or the people that are packaging the things that we're buying online because we're not shopping inside stores or working in our utilities to keep the life on, or all of those those critical frontline type employees, and there's all of these public expressions of appreciation and support. We really didn't see that play out in the data in terms of what it's the experience of like for these employees on a day to day basis, and so I think that that's important for business leaders to recognize and take action against. So that that's my third main finding. So, knowing our audiences the manufacturing sector here, how would you say manufacturing stacked up against? I think you looked at what's seventeen sort of industry categories? Yeah, yeah, seventeen, and manufaction was actually right smacked out in the middle. So I mean I they think they were like literally the the the Middle Line of our full data set. So there are some, you know, areas where we're manufacturing really excelled things like what we call corporate ethics. There's your company as a whole, ethical purpose driven manufacturing. Sport is fairly high on that, emphasizing diversity, equity and inclusion. Manufacturing also scored fairly high on that. And then when in other areas it was, you know, trying more towards the bottom. So I already mentioned the performance under pressure. Willingness to speak out was rather low, and sort of a looking into two leaders and how leaders are will modeling, what are they role modeling? That was one of the other areas of opportunity for the manufacturing industry. But yeah, overall, kind of taking all these imagtions of ethical culture together right there in the middle. So some clear strengths to build on and some cleer areas of opportunity to invest in. What do you think are some of the things that a manufacturing leader that's listening right now could take away from the findings of your study? I think recognizing that how you, as a leader and organization, go about fostering an ethical culture, a healthy work environment, emphasizing our principles are values how you go about doing that needs to vary depending on the types of employees that you're engaging with. So kind of going back to that disconnect between office employees and production level employees and just recognizing that the kind of corporate environments in which those two groups of employees are experiencing is different, in appreciating that difference, acknowledging that difference and modulating your approaches based on those differences. So when we do this work with organizations, we find often that it's so hard to reach production employees that they're not in front of computers. So how do we engage with them? We don't want to take them off the line because them that's blows down our production capabilities. So we're not really prioritizing training them on xpoyc topic or whatnot. So it's more about recognizing how can you work within those confines to ensure that production employees are as equal and active participants in your organizational culture as your office employees. It really drives home the need to rely on your middle management, your line leaders or supervisors, to be those ethics champions, to be those values champions, and we've seen organizations be really successful at providing that mental management group with talking points or a short Vignett...

...or exercise or example that can be deployed at the beginning of a daily, you know, huddle or shift meeting, those little ethics moments. They don't have to be these big end up like let's step away and do a thirty minute training. It doesn't have to be that. That might be appropriate for your office workers, but just because it's appropriate for them doesn't mean that it's appropriate for your production workers or that you should even try to replicate that approach. So it requires more more thought, more flexibility and how you're shifting your approaches depending on who you're interacting with. But when done well, and we have seen many examples of when this is done well, the impact is really quite profound. And when you think about our current environment with the great resignation and it's really it's an employees market right now. People are leaving left, right and center to go to other companies where the pay is better or the culture is better, to respect for employees is greater. That's happening all over the place and we're seeing massive labor shortages and so anything that manufacturing leaders can do to recognize these differences and respond to those differences is going to help them be more resilient in the face of this great resignation and any other type of business destruction that we're continuing to face over and over again. Yeah, it's it's very real right now. Everybody I talked to is is facing the same problem right it's just it's hard enough to find labor and once you have the right people on board, you know be able to keep them and help them grow and be happy in their jobs. So I think everything you're talking about today is really more relevant than ever for so many reasons. Yeah, absolutely, Emily. If you're leading a company that's not ranking too well right now against bench markspeers like, what are some of the first things you should do to start improving your culture? Well, I think the first thing is to get really clear on what your culture is. So having measured your culture, for example, and there's a variety of ways that organizations can go about doing that, surveys focused group, you can look at exit interview trends, you can look at hotline and reporting statistics. I mean there's there's there's a variety of ways that organizations are probably already collecting data or or could collect that data to get a handle on what what is our culture? Because again, we talked about the leadership to connect. ME, as a leader, I might think that it's one thing, but that's not necessarily going to match the reality on the ground. So the first thing to do is to get really clear on what is your organizational culture and then you can figure out where you're going to focus. And there are some areas of culture, dimensions of culture, that do seem to have more of an impact than others in some of the positive, you know, indicators that leaders are looking at. So we talked about trust, we talked about organizational justice. It's probably a safe that to focus there. But kind of stepping back and thinking about how how culture is built in shape, it really starts with your foundation of who are we, what is our what's our purpose in the world asn't organization? What are the values that are going to guide us as we work to achieve that purpose? How are we communicating that and breaking that down for all of our employees and connecting that to their individual role rather than Morphas high level idea? How are our leaders we enforcing those messages? And that's that's really your foundation. Are Policies and programs in support of these, distart performance management, for example. Does that line up with the things that we say are important, like what are we actually measuring people against? And then from there thinking about the your...

...the work atmosphere in general. So levels of trust, organizational justice. Two people have confidence that standards are applied equally across the board, that that are top performers are held to account in the same way that those at the bottom of the corporate ladder. Our help to account, being able to really make that clear through examples, to being transparent, talking about it, engaging in dialog with with employees, encouraging speaking out and more important than that, is to actively listen listen up. We kind of we say speaking out and listening up. We see a lot in this work that we do with organizations that employees do speak out and then they feel that nothing happened or they weren't heard, and so that that really diminishes people's willingness to do so again. I mean, Darren Os is sort of in the headlines again right now because the trial is under way, and here's an example where employees did speak out and they were actively not listened to and actively retaliated against. And then now you have the dissolution of when organization and which leaders facing criminal trial. So focusing on on that work atmosphere of trust, organizational justice, speaking out, creating a place where people feel a sense of belonging, and then that is what translates into your performance metrics that I mentioned, the ethical performance, business performance. So there's kind of a sequencing effect to how culture is is built and developed in an organization. But it's really going to depend on your specific situation in where you are. You don't necessarily need to start at the beginning, so to speak, like you might already beat the part way there, and so that's why this, the culture measurement piece, is so important. That's going to be what's really going to give you the the actionable insights. Beyond that, just communication and transparency are so key and demon training to employees that you mean what you say, walking the walk, not just talking to talk. So when we talk about ethics and compliance, we often hear its appliance. Professionals say will we we did do the right thing and we held our top stales exact. He he or she broke a rule or policy and we held them accountable. And we discipline them in these ways, but nobody knows about it, and our responses will tell people about that and kind of the counters typically. Well, that exploses us to liability and there's confidentiality, and those are all true, but there's ways to share these stories and it's through sharing those stories that people believe us. How you build trust? So sanitize the story. Included in your included in your training. If you don't want to do that, rip from the headlines, there's a competitor that that's been in the news recently. Bring in that scenario and and talk about how could this play out here and what would we do? We see a lot of organizations. They publish just statistics, so no details, but just statistics of we had x number of reports of misconduct and we investigated ninety percent of them and seventy percent were substantiated. And these were the types of violations. Harassment, conflict of interest, safety, whatever it is. And then these are some of the discinary actions that that we took. We have one company that we highlight in a case study in our report that does that and breaks it down by level. So to really drive home the point that we hold everybody accountable leaders as well as individual contributors. So those are just some of the ways that companies can and should be sharing how these things are playing out in practice and it goes so far in building that trust among the employee population and that confidence in an organizational justice. We consistently see those as being ranked like the number one thing that had an impact on me as an employee in believing...

...in what my company says. So that's one tool that, regardless of where you are and what your situation is, that can be deployed with great effect and leaser anything you'd like to add to the conversation that I didn't ask you about when I think that a takeaway in all of this is recognizing that culture exists in an organization, whether you are intentional about it or not. So do you have some type of culture that you want culture is there a corporate control to be managed in shapes just like any other, and it requires investment and nurturing and clarity around what type of organization do you want to be? I think that people don't really debate that act that much anymore. We all kind of get the cultures a real thing. So where we are now, like the next step change is in that intentionality around shaping organizational culture, just as companies are intentional about shaping and tracking and measuring any other key business practice or desired outcome. And there's a lot of great examples of organizations that are during this really well out there and we should learn from them. I appreciate the perspective your bring into the manufacturing sector here and I imagine the work you put into that study was just an absolute beast. So thanks for doing it and for sharing some of the insights here today. Yeah, and thank you so much for having me. Can you tell our audience how they can get in touch with you and where they can learn more about lrn and where they can find this study? Yeah, ll rendcom, that's fell Amazon, Larry Robert ancy and the study the benchmarket bustical culture. It's like they're on a home page, so you can download it there and I'd love to continue the conversation. So I'm emily dot minor at ncom. Be Happy to talk with anyone who's listening. Emily, once again, thanks for doing this today and as for the rest of you, I hope to catch you on the next episode of the Manufacturing Executive you've been listening to the manufacturing executive podcast. To ensure that you never miss an episode, subscribe to the show in your favorite podcast player. If you'd like to learn more about industrial marketing and sales strategy, you'll find an ever expanding collection of articles, videos, guides and tools specifically for bdb manufacturers at Gorilla Seventy sixcom learn thank you so much for listening. Until next time,.

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