Слайд 1The truth about “Tone from the Top”
Слайд 2Are your executives telling the truth when they say
“ethics matter”?
Слайд 3FIFA protects the integrity of football and is fighting corruption in
football.
-FIFA Football Governance “The guardians of the game” 20 November 2014
Слайд 4We stand for respectable, honest actions in everyday business that are
in accordance with rules...
- The Volkswagen Group Code of Conduct
Source: http://www.volkswagenag.com/content/vwcorp/content/en/the_group/compliance.html
Слайд 5The “Tone from the Top” at FIFA and Volkswagen share a
common element
What is it?
Слайд 8Management or the CEO is involved in 53% of bribery cases;
Senior executives know about 86% of corporate fraud cases
Слайд 9If you wanted to design an incubator for generating misconduct, it
would look a lot like the C-Suite
Слайд 10What makes the C-Suite so susceptible to corruption?
Слайд 11Management readily sees cause and effect between bribery and sales
Слайд 12Companies that bribe have greater sales growth compared to control firms
for 3 years before and 3 years after winning a major contract through bribery
Слайд 14But there are negative side effects of corruption
Слайд 15Companies that bribe have poorer net profit margin (net income divided
by sales revenue) for the same 6 year period
Слайд 16Companies that bribe have poorer cumulative abnormal returns (difference between the
sum of the monthly returns for bribing firms versus control firms) for the same 6 year period
Слайд 17Companies that bribe perform poorer on nearly every corporate metric used
to measure success
Слайд 18If you endorse corruption to achieve a goal, you endorse corruption
(full stop)
Слайд 19If you lie, your employees will lie
Слайд 20If you cheat, your employees will cheat
Слайд 21If you give bribes, your employees will take bribes
Слайд 22Tone from the top is not what you say, it’s what
you do
Слайд 2381% of all frauds are perpetrated by at least one insider
Слайд 245% of all revenues are lost due to occupational frauds
Слайд 25Companies are more often victims of corruption than beneficiaries
Слайд 26How can you change a culture of corruption?
Слайд 27Start changing traditional ethics training
Слайд 28When the big people get in trouble, the little people get
ethics training.
Слайд 29Target the “big people” about how corruption causes internal fraud
Слайд 30CEOs are prone to viewing the company’s success as indistinguishable from
their own.
Слайд 31When bribery hurts shareholder value it hurts the CEO
Слайд 32Use targeted motivators in your ethics training
Слайд 33Motivation: Shareholder Value & Exec. Mgmt; Career Opportunity & Middle Mgmt;
Job Security & General Employee Base
Слайд 35Whistleblowers are effective at discovering external fraud, and even more effective
at discovering internal fraud
Слайд 38Reduction in Median Losses with Effective Internal Controls
Слайд 39Whistleblowers are one of many internal controls that support an ethical
culture that reduces internal corruption
Слайд 40An ethical culture that reduces internal corruption sustains a profitable culture
Слайд 41Sustained profits make your CEO a superhero
Слайд 42So your executives can tell the truth when they say “ethics
matter”
Слайд 44About the Author
Background
Eric Pesik is currently the Associate General Counsel and
Compliance Officer for Seagate Singapore International Headquarters Pte Ltd.
He also serves as an Adjunct Assistant Professor with the University at Buffalo, State University of New York, in the School of Management.
He has been a lawyer since 1997 and is a member of the State Bar of California, USA. He is also admitted to the US Court of International Trade in New York and the US Supreme Court in Washington, DC.
Many of Mr. Pesik’s presentations are available on SlideShare at:
http://www.slideshare.net/ericpesik
Disclaimer
This work represents the opinions of the author alone, and is not the opinion his employer.
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