In accordance with governance requirements for publicly held companies, many organizations have established codes of conduct that are applicable to all employees. Yet in addition to the establishment of such codes, leaders are interested in the creation of an organizational culture that creates conditions for and promotes the highest standards of ethical behavior.

The Sarbanes-Oxley Act (SOX), signed into law in the United States in 2002, calls for SEC rules to implement regulations that emphasize the important role and responsibility of each individual employee in ensuring organizational compliance. These rules are further implemented through listing standards and Institutional Shareholders Services’ proprietary governance guidelines.

The following is a brief list of selected cooperate governance rulemaking by the SEC, NYSE and NASDAQ. Companies covered by these regulatory bodies are required to:

• Adopt a Code of Ethics applicable to specific officers
• Adopt a Code of Conduct applicable to all directors, officers and employees
• Create an environment that encourages employees to report violations
• Adopt procedures that allow employees a confidential and anonymous process for submitting concerns
• Adopt procedures that facilitate the effective operation of the code
• Protect individuals from retaliation who report violations of the code of conduct

Kenexa Compliance Suite

Code of Conduct Surveys: Ethics/Compliance Culture

Many companies are implementing code of conduct surveys as a part of compliance. For these surveys to be effective, they must accurately assess not only employee awareness of the policies and procedures, but also the culture that leaders have created. Code of Conduct surveys must also predict employee behavior, such as willingness to report, as well as assess the compliance culture, which includes employees’ awareness of behavioral standards, employee values and willingness to exhibit the appropriate behaviors.

Kenexa’s expertise in the behavioral and management sciences ensures the building of a compliance culture assessment that leaders have confidence in, and creating clear, actionable guidance for building and maintaining a culture of the highest level of ethical standards. Based on the existing body of knowledge from the behavioral sciences and corporate governance best practices, the following provides an effective framework for code of conduct surveys.

• Awareness
  Employees’ knowledge and understanding of the code of conduct and company policies, and how to detect warning signs of non-compliance
• Values
  Employees belief in the importance of the code of conduct and leadership support for the code and compliance
• Opportunity
  Clear procedures for asking questions and reporting non-compliance
• Willingness
  Individuals’ willingness, supported by the organization’s culture, to ask questions and report non-compliance

Kenexa has also created data collection and tracking sites that are simple and easy to use for large-scale custom SOX surveys. Our online systems are designed to automate all aspects of the process including communication, reminders and response rate tracking. Most global projects require the need to gather data using both web and paper media. We have the infrastructure to manage the most complex multi-medium, multi-lingual processes that may otherwise be operationally difficult.

Organizations vary in terms of the levels at which discussions of specific results are appropriate. Kenexa has a proprietary report generating system that is utilized for reporting called the Modular Reporting System (MRS). Kenexa’s MRS has several options for organizations to choose from when selecting a report format. The MRS can also be configured to create a specific report format for each company.

Sub-Certification
Security and Exchange Commission rules, under the Sarbanes-Oxley Act, require the Chief Executive Officer and the Chief Financial Officer of public companies to make certifications relating to the company’s system of internal controls. To assist the CEO and CFO in making these certifications, many companies are establishing internal certifications that all employees must sign and provide to the CEO and CFO. This process is known as sub-certification.

The sub-certification process requires employees to sign certificates indicating that they have complied with applicable laws and the company’s code of conduct related to work related behavior. While this process can be cumbersome, Kenexa has created an efficient approach that is highly reliable, and provides leaders with the information needed to have confidence in the certification process.

Kenexa’s technology-based sub-certification process enables employees to efficiently sign a company’s code of conduct and compliance certification. Kenexa offers an online form that employees with Internet access can use to submit electronic signatures verifying that they have read, understood and have complied with the company’s code of conduct. Kenexa also offers a paper solution that can be downloaded and then circulated to the appropriate personnel to obtain their signatures. This form can also be printed, packed and shipped to locations depending on specific organizational needs.

When completed, forms are sent to Kenexa, where they are uploaded into our tracking system. Using the tracking system, administrators can effectively track completion rates for the entire organization. This tool provides the end-user with the ability to maintain and view employee signatures indefinitely.

Board of Directors Assessment

Boards of Directors face unique challenges given the changing world of corporate governance. A new governance rule by the New York Stock Exchange (Rule 303A.9) requires that the board of directors of listed companies conduct self-evaluations at least annually to help them be more effective. Although NASDAQ Marketplace Rules are silent on board self-evaluations, such evaluations are rapidly becoming best practice for all publicly traded companies. In today’s increasingly complex climate, companies are not only interested in compliance with rules and governance, they are interested in the effectiveness of the Board of Directors.

The Kenexa-facilitated Board of Directors Assessment assists with establishing and maintaining an effective Board of Directors by focusing on long-term objectives and strategies, and providing useful information for the succession and nominating process.

The Board of Directors Assessment:

• Provides insight on both individual and overall board member effectiveness
• Identifies gaps in board expertise
• Establishes criteria for selection of new board members
• Is built into existing, scheduled board meetings
• Identifies critical success indicators used to create measurement tools
• Compiles results and turns them into personalized feedback reports used in feedback sessions facilitated by Kenexa
• Serves to improve overall board performance
• Serves as an assessment tool for evaluating prospective board members

To help organizations with Board Assessments, Kenexa offers:

Design Expertise
Our consultants are highly experienced in the construction of effective assessment instruments. This expertise will ensure that the content covers both the Board’s oversight role and the supporting, value-added role. The assessment is based on competencies relevant to optimum functioning of board members. While some competencies may apply across Boards, others are specific to the unique qualities of specific organizations and industries.

Dedicated Support Team
Kenexa establishes a project team to handle all aspects of administering the assessment, such as setting up a web-based survey and collecting appropriate email addresses and contact information. This team ensures smooth delivery and execution of the project from start to finish. Kenexa can create alternative procedures for board members who prefer working with a paper copy of the assessment.

Communication Support
Kenexa will assist with all aspects of communication, from introducing the concept to board members to sending invitations and follow-up reminders to participants. Kenexa also distributes results to all members upon assessment data completion.

Follow-up Processes
Upon completion of data collection, Kenexa will generate a feedback report for each individual prior to one-on-one coaching sessions. These coaching sessions are conducted by a Kenexa Senior Consultant who will meet with each board member to review his or her results. Kenexa conducts a consultation session with the Chairman to discuss individual and overall assessment results.

Aggregate Reports
An aggregate report, with overall group analyses, is provided to the Chairman and presented to the entire Board.  Additionally, the assessment is refined and used to create selection criteria for evaluation of potential Board Members.