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Ethics & Integrity at General Mills. John Brown University Corporate Governance & Ethics November 15, 2011 Chris Collin, Senior Ethics & Compliance Manager. Agenda. Introduction to General Mills Ethics & Compliance Program Fundamentals Our Brands, Your Legacy - Training at General Mills.
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Ethics & Integrity at General Mills John Brown University Corporate Governance & Ethics November 15, 2011 Chris Collin, Senior Ethics & Compliance Manager
Agenda • Introduction to General Mills • Ethics & Compliance Program Fundamentals • Our Brands, Your Legacy - Training at General Mills
Discussion What does ethics have to do with this?
General Mills $14.9 billion in FY11 net sales 35,000 employees – ½ outside of U.S. Marketed in more than 100 countries On average, U.S. shoppers place at least one General Mills product in their shopping cart each time they visit the grocery store.
Our Heritage, Our Culture • High integrity legacy a significant strength • It is who we are. • It is who we have always been. • Strong leadership from each of us reinforces ethical culture • Never compromise on high standards
A Great Place to Work • 100 Best Companies to Work For, Fortune magazine • 100 Best Corporate Citizens Corporate Responsibility Officer magazine • 50 “Most Admired” Companies, Fortune magazine • Top 20 Companies for Leadership, Bloomberg Businessweek.com • World’s Most Ethical Companies, The Ethisphere Institute • Top Companies for Executive Women, National Association for Female Executives
Ethics Starts with Strong Leadership We expect you to do the right thing. And we expect you to ask for help if you are in doubt as to the right course of action.
Case #1: Honey Glazed Edamame In 2002, a new product, “Honey Glazed Microwaveable Edamame” was launched. The product was truly innovative in a low-growth commodity category. The product was extensively tested with consumers through “Home-Use Tests” and was reviewed by the Product Safety Committee. The product passed all internal tests and hurdles for launch. The product was wildly successful. Consumers loved the warm, gooey goodness of honey-coated Edamame freshly made from their microwave. And, sales were helping the division meet exceed its financial targets. A few months after launch, we started learning of consumers burning themselves after not following the package directions – the hot glaze was spilling onto hands and clothing and burned them. This was surprising since the instructions on the package very clearly and prominently told consumers how to safely prepare the product. At the same time, we also heard from many consumers how much they loved the product as it was meeting a strong consumer need of hot, freshly-made sweet Edamame. Dilemma: You are the marketing manager responsible for the product. What do you do? (In this scenario, assume no laws were violated)
What Should We Do? • Do nothing. The packaging was clear on its face and confirmed by consumer testing showing it was clear. • Apologize to the consumers who were burned and instruct them on how to use the product going forward. • Change the package instructions to make them even more clear on how to use the product safely. • Recall the product – pull it from the shelves and discontinue sales.
What Guided Our Thinking? • Consider stakeholders’ interests • Consumers: safe products, meet needs of taste and convenience • Customers: safe products, successful new product launch, sales growth • Shareholders: safe products, profitable sustained business growth, behavior consistent with company values and reputation because this creates shareholder value • Employees: safe products, solid business performance, protecting and enhancing company reputation, successful business in marketplace through innovation • Legal considerations • Ethically speaking, what would be the right thing to do? • Values guide us
Ethics & Compliance Program • Ethics & Compliance Program supports our integrity commitment • Objective is to ensure a culture of ethics and compliance • In partnership with all employees • Board of Directors oversees program • Required by law • Employee misconduct (Code of Conduct violations) must be reported to Audit Committee
GENERAL MILLS ETHICS & COMPLIANCE FRAMEWORK Amended U.S. Federal Sentencing Guidelines, SOX & NYSE Audit Committee Compliance Committee Chief Compliance Officer Disclosure Committee Code of Conduct Corporate Policies Finance Policies Sales Policies International Policies HR Policies QRO Policies IS Policies Function Guidelines Online OE Curriculum FunctionTraining New Hire Orientation International Venues Ethics & Compliance Law Internal Audit EIMT SECURITY Annual Communications Plan Ethics & Compliance Website Legal Requirements Key Committees & Positions Standards & Expectations Training Venues Functions/Groups Involved Communications Tools Employee Certification Employee Feedback Business Conduct Letter Ethics Line Employee Survey Training Feedback
Developing An Effective Ethics & Compliance Program • Input from Audit Committee • Program development • Draw on members’ experiences and insights • Endorsement of strategy and objectives • Ongoing updates and dialog • Meet legal requirements • Amended Federal Sentencing Guidelines • SOX, NYSE (employee hotlines; Code of Conduct) • Reflect General Mills culture • Tailor program to enhance high integrity heritage • Embed rather than “stand alone” program
Sentencing Guidelines Requirements • Boardand senior management must: • Be knowledgeable of program • Exercise reasonable oversight • Emphasis on ethics and culture • Effective training programs for employees and board • Monitor effectiveness
E&C Program Strategy • Build on General Mills’ heritage • Senior management endorsement and leadership • Clarify what ethics means at General Mills • Make training and communications specific, relevant, tailored and engaging • Embed broadly and perpetuate program • Measure effectiveness
Keeping Integrity Alive • Ethics is everyone’s issue • Answers not always black and white • Perception matters • Beware of rationalizations • Use the transparency test – how would it look to others? • Candor is critical
Know What’s Expected, Speak Up Responsibilities • Know what’s expected • Corporate Policies • Code of Conduct • Speak up if • You need advice • You don’t know what to do • You believe someone • has violated the law or our policies • may have been involved in misconduct or has acted unethically • Take personal responsibility to act • Don’t rely on others to come forward • Our Pledge: we will not retaliate if report in good faith
Responsibilities Know What’s Expected Code of Conduct Code of Conduct Provides . . . Overview of Policies Decision-making tools Q&As and Examples Resource information
Before You Act, Ask Yourself… Responsibilities
Know Your Resources Responsibilities • People • Manager • HR • Law • Ethics & Compliance • Code of Conduct • Corporate policies • Ethics & Compliance website • Ethics Line
Ethics & Compliance Website • Translated • One-Stop Shop
Help is Available Responsibilities
Set an Example Responsibilities • Model integrity • Operate honestly and candidly • Ensure you and those you supervise understand what’s expected • Support employees who ask questions and raise concerns • Report noncompliance with law, our policies or our values to manager, HR, Law
What Happens when something Goes Wrong? • Things happen despite our best efforts • Ethics & Compliance, Law and Audit handle issues carefully • Reports and questions are handled centrally with local and function support and consistent with established approaches • At times, we retain outside services if we have a resource need • Process is confidential • All regions, functions, groups handled consistently
Case Study #2: We manufacture muffins for XYZ Company (maker of branded muffins sold in supermarkets). In producing muffins for XYZ Company, we discovered that topping pouches contained metal filings (not hazardous to health). We notified the pouch supplier and XYZ Company. In trying to resolve the issue, XYZ Company wanted to put 100% of the pouches through metal detectors at the plant, and for those that were not rejected, use them in the muffins we sell to XYZ. We wanted to reject the entire batch of pouches on the basis that some contained metal. We know that metal detectors do not catch 100% of product containing metal. However, the metal filings in the product did not present a health hazard. When we would not agree to the metal detector proposal, XYZ wanted us to send the pouches to them – we suspected that they intended to use the pouches at other manufacturing locations. Dilemma: The cost of disposing the product was significant to a business that could not afford to lose any money on a profit dilutive product. What should the business manager do?
What Should We Do? • Provide the pouches to XYZ Company. • Destroy the pouches and incur the cost. • Provide the pouches back to the pouch supplier. • Agree with the metal detector plan.
It’s in Our Hands “The word, ‘culture’ is a big word. You say ‘culture’ and you have a sense of this big thing. But the culture is actually in each of our hands . . . . And we build on it – or chip away at it – every single day, with everything we do. - Rick Palmore, EVP, General Counsel & Chief Compliance Officer The reputation of a thousand years may be determined by the conduct of one hour. —Japanese Proverb
Wrap Up Questions?