Ethics in the News Bear Stearns Fortis Bank AIG Hypo Real Estate

1. Association of Compliance Officers in IrelandEthics, Compliance and Corporate CultureKeith T. Darcy, Executive DirectorEthics & Compliance Officer AssociationNovember 14, 2011

2. Ethics in the News Bear Stearns Fortis Bank AIG Hypo Real Estate Fannie Mae Bradford & Bingley Freddie Mac Glitner Bank Lehman Brothers RBS Merrill Lynch Lloyds Bank Washington Mutual

3. Ethics in the News Ponzi schemes Bernie Madoff ($65 billion) >250 prosecutions in U.S. and Europe Bribery and Corruption Siemens ($1.6 billion) BAE Systems ($400 million) Daimler ($185 million) Insider Trading Galleon Group ($100 million)

4. Ethics in the News “Goldman Sachs Charged with Fraud” Financial Times April 17, 2010 “The whole building is about to collapse anytime now…Only potential survivor, the fabulous Fab…standing in the middle of all these complex, highly-leveraged, exotic trades he created.” “Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the U.S. consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job; amazing how good I am at convincing myself.”

5. Ethics in the News “Goldman Blasted for Conflicts of Interest” cnbc April 14, 2011 “A case study of recklessness and greed”

6. Ethics in the News “U.S. Targets Insider Culture: Ex-Goldman Director Gupta Indicted” The Wall Street Journal 10/27/11

7. Ethics in the News “Secretive Culture Led Toyota Astray” The Wall Street Journal February 8, 2010 “The Toyota Way Was Lost on Road to Phenomenal Growth.” The Washington Post February 13, 2010

8. Ethics in the News “BP’s Tony Hayward and the Failure of Leadership Accountability” Harvard Business Review June 7, 2010 “Culture of Complacency at BP Set Stage for Oil Spill, Commission Says” The Washington Post November 9, 2010

9. Ethics in the News “Cables Show US Concern on Japan’s Disaster Readiness” The New York Time May 3, 2011 “Compartmentalization and risk aversion….”

10. Ethics in the News “News Corp. Lawyer Noted Hacking Culture in 2008” The Wall Street Journal 11/2/11

11. Ethics in the News “Closed Corporate Cultures Blown Open: Olympus Admits Fraud” The Wall Street Journal 11/7/11

12. Ethics in the News • “Four Sama Dubai Employees Are Held In Corruption Probe” • “Ex-Head of Bank of Italy to Go on Trial” • “Bahrain Kickback Investigation Widens” • “Siemens Excluded from World Bank Contracts for Two Years” • “Control Components Admits to Violating FCPA in 36 Countries” • “Ex-Sinopec Corporate Chairman Sentenced to Death for Bribery” • “China Executes 2 For Role in Tainted Milk Scandal” • “Chevron Offers Evidence of Bribery Scheme in Ecuador Lawsuit” • “Maybey & Johnson To Be Sentenced in Bribery Case” • “Postmaster General in India Held for Corruption” • “UN Cuts Back on Investigating Fraud” • “Rio Tinto Employees Admits to Taking Bribes in China” • “Nine British Companies in US Bribe Inquiry”

13. What is culture?

14. “Cult” (L. cultus = care, worship) A particular system of religious worship esp. with reference to rites and ceremonies; The instance of almost religious veneration for an object or person; A group having an exclusive sacred ideology and a series of rites centering around sacred symbols.

15. Corporate Culture What is corporate culture?

16. Corporate Culture “A system of shared values” “The underlying assumptions, beliefs, attitudes and expectations shared by an organization.” “It’s the way things really get done around here.”

17. The Central Concepts of Culture • They’re collective. • It’s what members agree about. • They’re emotionally charged • They’re historically based • They’re inherently symbolic • They’re dynamic • They’re vague, sometimes contradictory • They’re paradoxical

18. The Central Concepts of Culture Strong cultures have two primary characteristics: • High level of agreement on what’s valued. • High level of intensity about these values.

19. Corporate Culture Persons who do not endorse and practice prevailing beliefs, values and norms become marginalized, and may be punished or expelled.

20. Corporate Culture and Performance • Ikea • Starbucks • Dannon • Michelin • Fedex • Google

21. Leveraging Culture for Performance Tone At The Top • Leaders must establish core ideologies and principles that will be constant. • Identifying and modifying beliefs can be difficult, sometimes grafting onto historical beliefs. • Leaders behavior tells employees what counts, what’s rewarded and what’s punished. • Develop management succession.

22. Leveraging Culture for Performance Catalog the formal and informal culture • work settings • office furnishings • logos • stories • heroes, myths and legends • rites and celebrations • language • dress • systems of reward • appraisals • communication • who attends meetings; who sits next to whom

23. Leveraging Culture for Performance Developing recruiting and selecting methodologies • Screen for people to fit the firm’s values and culture • It begins with the recruiting process, intake channels • Everyone in the hiring process knows what they are looking for. • It extends to the employee exit.

24. Leveraging Culture for Performance Manage culture through socialization and training • Create seamless integration through orientation • Consider further socialization through mentoring

25. Leveraging Culture for Performance Managing culture though reward systems • You get what you measure • Recognition and rewards must be aligned with desired values and culture • Everyone’s performance must be reviewed not only for what they do, but how they do it.

26. Leveraging Culture for Performance “Built to Last” Jim Collins and Jerry Porras

27. Leveraging Culture for Performance “Built to Flip” Jim Collins

28. Issues Mergers • Create obvious conflicts • Avoid acquired employees feeling plundered, exploited or occupied • Cultural integration is essential a successful merger

29. Issues Rebels and Discontents • Must either be co-opted or ousted

30. Issues Communicate • There can never be enough communication about the desired behaviors • In an age of information, openness and transparency are key • Deal with problems openly (everyone knows anyway) • Nothing will undermine cultural efforts quicker than spin. • Remember – everyone knows what’s going on!

31. Issues Cross-Borders • The further away from HQ, the greater the likelihood something gets “Lost in Translation” • The further away, the greater the risks • Take time to understand and respect other cultures, and other people’s needs in their context • Neither moral imperialism, not moral relativism works. Co-create a new understanding.

32. Issues Institutionalization • Institutionalization is often the first step towards bureaucracy. • Keep your values and culture “fresh.”

33. Culture trumps compliance!

34. Strong cultures self-regulate

35. “The necessary transformation that has now begun will, I hope, result in making the values of equality, respect and participation in active citizenship the characteristics of the next seven years. The reconnection of society, economy and ethics is a project we cannot postpone.” Michael D. Higgins, President of Ireland, 10/20/11