Major Corporate Governance Project

The Challenge:

Company C was a mission-critical government contractor operating during the core years of the Afghanistan campaign. At the peak, Company C was responsible for all subsistence for U.S. and U.K troops operating in Afghanistan (inbound and outbound distribution). Additionally, Company C held the fueling contracts for all U.S. and NATO operations throughout the country. If Company C failed, the mission would likely fail. Recently it had come to light that Company C had not been managing its’ major contract entirely in accordance with U.S. government contracting regulations (the “FAR”) and, within a short period of time, Company C was under formal investigation by both the Civil and Criminal divisions of the U.S. Department of Justice. On advice from its legal team based in Washington DC, Company C had sought to hire an ‘ethics and compliance manager’ to create an ethics program. As Company C’s reputation was already tainted, this proved challenging. Furthermore, Company C’s hiring team were not truly versed in what this manager would be expected to do and, the very few who did understand, suspected that no program would be able to address a very toxic internal culture that supported ‘cutting corners’ that many believed was sanctioned from the very top.

Action:

I saw the ‘green field’ opportunity to build on years of experience (notably across the Asia Pacific region and in Africa) and backed by generous resources to: (a) create a highly effective ethics and compliance function as recognized by external bodies looking hard at Company C; (b) truly effect a cultural transformation of an internally highly dysfunctional organization; and (c) demonstrate the impact and ROI of a changed culture on business performance. There was significant cynicism at first and, as expected, pockets of material hostility and resistance but we approached the program in 3 key initial milestones:

Year 1: Establish the basics: A Governance Committee of 3 key Board members was formed to provide support and back-up for all activity. Hiring key players and building a cohesive and extremely committed team as we started out, we created key policies (seeking buy in from stakeholders, a global education program that was conducted in person for every one of our 10,000+ employees with a report-out to that highlighted any individuals or teams who were failing to participate and launched our ethics and compliance hotline using the market-leading third-party provider. An investigations cell was established, and we were able to communicate some very ‘quick’ wins when, following internal reports that were investigated and proved ‘founded’, some high-profile senior managers/teams were termed for long-tolerated wrongdoing. We even pursued criminal sanctions in the local justice system in one case. Regular communications were also key to ensuring the executive team could already see the investment paying dividends. We used a simple ‘ROI’ calculator to try and demonstrate the impact to the bottom line of resolving issues and driving change. Year 1 was a long, tough road but by the December board meeting, we had strong support from most of the executive team.

Year 2: Hunker down and drive cultural change: To ensure the program was not just ‘lip service’, we knew we had to create a culture where wrongdoing of any kind was not tolerated. In this year, we established a cadence of constant communication to the workforce and continued to address leaders, functions and teams who were not supportive of a transparent, speak up culture. A key executive who led a significant business unit exited early in Year 2 and this was a pivot point as he was long believed to be untouchable. Following this (and my return from a 6-week period of maternity leave), we launched our first Ethics Awareness Week which was very well received across the business. Building on our monthly newsletter, this intense week of engaging our employees in an educational and fun manner started to build a brand of ‘Integrity Matters’. Company C started to attend industry and external events for ethics and compliance professionals and be genuinely able to share successes of its growing program while continuing to learn best practices from others which were quickly implemented (Integrity Ambassadors network being one of these).

Year 3: External verification: In year 3, Company C passed a successful external audit proving that it was not only building an effective ethics program but that the culture was being transformed. Following the audit, Company C was authorized to use the ‘Investing in Integrity’ charter mark issued by the Institute of Business Ethics in London. In respect of the ongoing legal investigations into Company C’s prior behavior, the Customer indicated that Company C taking steps to address its culture was vital to the outcome and a likely favorable administrative settlement once the civil/criminal DOJ matters were finally resolved. 

Outcome:

There were many positive outcomes including a significant reduction ‘year on year’ in misfeasance at the company, a healthier and happier working culture (as evidenced by employees who began to articulate higher engagement, reduced employee turnover and pride felt by many for the first time in working for Company C). Ultimately, Company C’s resolution of the legal issues was complicated by political, administrative and other legal matters. However, the work we did at Company C during these years was acknowledged by many as having made a difference.