Key ChallengeCorruption
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The program is designed, implemented, and enforced so that it will be effective in preventing and detecting conduct not conducive to our Values. We have taken the following steps to implement this requirement:
- The program includes globally published workplace standards and behavior expectations, comprehensively explained in Alcoa's Guide to Business Conduct. The guide has been written at a comprehensible language level and translated into the native language of each significant Alcoa location (21 languages at the end of 2007). All employees are required to participate in a training session at their location that explains the business conduct standards and their applicability to the employee's job responsibilities. This training and the guide are part of the on-boarding process for all new employees and contractors. (View key points of the guide.)
- To keep our ethics and compliance efforts effective, we produced two condensed versions to address the needs of focused groups of stakeholders. The Guide to Business Conduct in a Manufacturing Environment, made available to all Alcoa businesses, contains a subset of items discussed in the corporate guide but with a focus on business conduct issues most likely to exist in a production or manufacturing environment. We also published a guide for key customers and suppliers. As with the manufacturing guide, this document is a subset of our main guide but is intended for customers and suppliers who may benefit from knowing how Alcoa employees and agents are expected to conduct themselves in a business relationship.
- We have deployed mandatory, job-specific, web-based ethics and compliance training for corporate officers, business unit leaders, and employees who negotiate with customers and suppliers, can contractually commit the company, or have access to confidential information. We have also deployed mandatory, real-time, job-specific ethics and compliance training to all of our global locations for presentation to all shop floor and clerical office employees.
- We distribute quarterly ethics and compliance communication materials, which deal with business ethics and proper conduct, to all Alcoa locations to maintain and further develop overall employee awareness of current ethics and compliance topics.
- We conduct an annual Business Conduct and Conflict of Interest Survey. More than 11,600 employees received the survey in 2007, and we accounted for 100% of all surveys issued. Any issues or requests for clarification raised in these surveys are completely reviewed. Results are reviewed by the ethics and compliance officer and the general counsel where required or requested. In 2007, the survey process earned a 5 (excellent) in an internal audit.
The Compliance Advisory Council—made up of the chief executive officer, chief financial officer, general counsel, director of global compliance, and director of ethics and compliance—meets on a regular basis to review program effectiveness, assess strategic direction, and provide tactical support for this process.
2007 Updates
In an effort to continuously improve the effectiveness of our Ethics and Compliance Program, we implemented several new initiatives in 2007 that support and enhance our current processes.
The first initiative was to develop and publish a Leaders’ Guide for all global employees who are in a position to supervise others in the organization. While approximately 156,000 copies of the guide were distributed in 19 languages to all global leaders, its real focus was directed toward mid-level managers, supervisors, superintendents, and employee team leaders. The intent was to reach both hourly and salary employees with this effort. While there is no question that “tone at the top” is essential to the effectiveness of ethics and compliance programs, it has been well established that many program failures happen in the middle with mid-level management. We believe attention must be paid to both.
Our belief is that Alcoa is only as strong as the business conduct of our employees. While it is understood that legal compliance is a must, we also believe that only doing what we must do under the law does not and cannot address the day-to-day questions of managers and employees. We recognize that it is impossible to have written rules covering every situation that might arise in our work environment. Managers and employees require the skills for ethical decision-making. Sound ethical management relies on commonly held values and principles and is a form of self-regulation.
Our Leaders’ Guide was developed to provide meaningful guidance to our mid-level managers by assisting them when they are faced with ethics issues raised by their employees. We believe line management must “own” ethics and compliance for it to be effective. The Leaders’ Guide provides insights on how to encourage issues and deal with bad news; emphasizes and reinforces our non-retaliation policy; and generally suggests ideas to build a culture that encourages employees to raise issues when they see conduct that does not support our policies and/or the law.
The second ethics and compliance initiative undertaken in 2007 was the development and implementation of an exit interview process that incorporates several ethics and compliance-related questions. The impetus behind this initiative is the belief that the ethical climate of Alcoa, as well as any specific code of conduct infractions, can be gauged to some degree through the exit interview process. We believe some employees have a hard time talking about compliance violations unless they are specifically asked. This exit interview process, conducted by an unbiased third-party vendor, provides exiting employees an opportunity to disclose potentially unethical or non-compliant practices, giving us a significant opportunity to investigate these issues and, if validated, allowing us to take corrective action.
Another significant step in the maturation of our ethics and compliance process was the development of effectiveness metrics that help provide an objective assessment of the impact of our ethics and compliance program on our organization. Historically, we have maintained activity metrics. These metrics only measure the degree to which we have deployed our ethics and compliance tools and the extent to which they are utilized. What they do not measure, and what is even more important, is the change that is brought about within Alcoa as a result of the implementation of these processes.
The Ethics & Compliance Line program illustrates the difference between the two types of measures. While we measure activity (i.e., call volumes, types of calls, regional activity, accuracy of the service provided, etc.), these metrics alone do not indicate the value the line is providing to both Alcoa and our employees. To gauge effectiveness, calls into the line are analyzed on multiple effectiveness metrics, including the percentage of calls that are anonymous and the ratio of inquiries versus allegations of wrongdoing.
In our web-based ethics and compliance training, we monitor activity (i.e., number of courses deployed, course completion rates, etc.). To gauge the effectiveness of the training, we have also implemented a survey to determine employee perception of the value of this training, i.e., how effectively is the training creating an awareness of Alcoa’s business conduct policies and what is the influence of these policies on employee behavior.
Each quarter, we issue a survey to 200 random participants from the 13,000 employees enrolled in the training and assure that no one is ever asked to participate in the survey a second time in a subsequent quarter. Since its implementation, we have experienced a more than 90% response rate every quarter, and the positive responses to the survey questions has averaged between 90-95% consistently, quarter to quarter.
Finally, to help reinforce the perception that Alcoa takes disciplinary action seriously, we issue regular updates via quarterly ethics and compliance articles. These articles broadly outline the reports of misconduct or frequently asked questions we are experiencing and our responses to them, while maintaining confidentiality. These quarterly updates, which are published in the employee newsletter at each global operating location, eventually become not only a codification of ethics-related developments at the company, but they also become a manifestation of management’s dedication to an ethical culture and its measurement.
Ethics and Compliance Line
Our global Ethics and Compliance Line provides employees and other concerned parties an anonymous channel for expressing concerns and raising issues about workplace activities and business practices. Employees are also encouraged to use the line to obtain an interpretation of laws or regulations, seek clarification of Alcoa policies or procedures, or simply ask for advice on proper actions.
The compliance line is available to Alcoa employees worldwide, with the local toll-free compliance lines answered in the caller's native language. We also offer an ethics and compliance e-mail address (anonymous, if desired) and a postal mail address for submission of written inquiries. Every concern or request for advice is addressed and responded to without reprisal, and we currently have a target response date of 18 calendar days contingent upon the seriousness and number of issues raised. Our goal is to resolve 90% of cases within 12 working days by 2009.
When an employee calls or sends written notice, the issue is reviewed immediately. Those that are felt to pose an immediate threat to the personal safety of employees, Alcoa property, or the community are sent to pre-determined emergency contacts, who begin an immediate investigation and institute corrective action when necessary. Non-emergency issues are sent to a regional liaison for review and forwarding to the appropriate location or business unit for investigation.
Once an issue is resolved, a written response on the investigation and any corrective actions is submitted to the Ethics and Compliance Line vendor. The caller, who previously was given an identification number, can then call back on the line in 18 days to obtain the relevant information from the investigative results.
Business Ethics and Corporate Responsibility
A symbiotic relationship between business ethics and corporate responsibility within Alcoa is rooted in the company's values-driven approach to business and indicative of how companies today must look beyond financial performance to meet the needs of an increasingly diverse and sophisticated stakeholder base.
As a values-driven, ethical company, we endorse and have implemented sustainability principles. Our application of these sustainability concepts is predicated on our strong foundation of ethical principles. The two are intrinsically intertwined, and we have clear, unequivocal approaches to both that are integrated into our culture and monitored continuously to fulfill our financial, environmental, and social responsibilities.
In Alcoa, business ethics is about the application of ethical values and how they underpin the way our employees conduct everyday business.
Our focus on corporate responsibility incorporates those values within our core business strategies and establishes a set of commitments to our stakeholders. Corporate responsibility helps define what an organization is responsible for and to whom it is responsible (and why)—underpinned by the company's ethical values and policies and programs that make the values operational. Business ethics and corporate responsibility can be characterized in various ways, but most often the primary goal of business ethics is to prevent harm, while the objective of corporate responsibility initiatives is to do good.
The interrelationship of business ethics and corporate responsibility plays an increasingly important role in business today. Companies can no longer operate without considering the impact they have on a global society that expects certain standards of behavior from them. As the public becomes more demanding, these standards could become an important factor in determining from whom consumers will purchase products or services. The Institute of Business Ethics has the labeled the approval of society to allow a company to continue doing business "a license to operate." In other words, society increasingly expects companies to treat their employees fairly, tell their customers the truth, and address their environmental impacts.
At Alcoa, the strong relationship between business ethics and corporate responsibility initiatives helps us define our approach to what we are responsible for, to whom we are responsible and why, and what initiatives and actions will be necessary to achieve our longer-term goals.
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Global Ethics and Compliance Line Numbers and Documents
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