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How Leaders at Eaton Own Ethics

Eaton’s philosophy that everyone has a role to play in building a culture of integrity has delivered big dividends for this diversified intelligent power management company. But the company is very clear about something: for there to be a truly ethical culture, it starts with the tone at the top. Here’s how they do it.

At Eaton, we are exceptionally proud of the fact that we have been named one of the World’s Most Ethical companies eleven times. But we also understand that evolving our program is not just important, it’s required.

Our philosophy is simple: We all own ethics. This means we believe everyone at our company plays a role in creating and sustaining an ethical culture, regardless of their role. We expect all employees to do the right thing every time, challenge the status quo and lead by example. In essence, we expect everyone to be a role model.

Explaining to employees why this matters is crucial—and data from Ethisphere helps build a case. It reveals that when we frequently discuss ethics and compliance, employees are:

  • Two times more likely to be comfortable approaching their manager with concerns or questions
  • 90% more likely to have faith in their manager’s commitment to non-retaliation
  • 24% more likely to believe they have a personal responsibility for making sure that their company does the right thing

We take this to heart. It is why we empower our leaders to openly and frequently engage in conversations with their employees on ethics and compliance topics. It is central to our we-all-own-ethics philosophy, and as you will see, we apply several strategies to ensure that ethics always remains a priority.

But first, let’s be clear about something: For ethics to be a priority throughout the enterprise, senior leaders must first set the tone at the top and, more importantly, act in ways that are consistent with that tone. For Eaton, this means demonstrating values-based leadership, following up on matters by taking clear and visible action, and cascading company values throughout the organization—every day. It is one thing to talk about ethics; it is another to model it. And it’s one of the reasons the leader of Ethics and Compliance, the role I currently hold, is a member of Eaton’s senior leadership team. It gives ethics a seat at the table, where we are visible and able to share important information directly with the company’s top leaders.

But let’s face it; “ethics” can mean different things to different people, and that makes it challenging to operationalize. It is by no means impossible, however. Here are a few of the ways we do it.

Provide Direction with an Ethics Roadmap
Eaton is a large, global company. We are capitalizing on global growth trends of electrification and digitalization, accelerating the planet’s transition to renewable energy, and helping to solve some of the world’s most urgent power management challenges. With more than 85,000 employees worldwide, we reported revenues of $19.6 billion in 2021 and today we serve customers in more than 170 countries.

To enhance how we do business, we leverage the Eaton Business System or EBS. Central to Eaton, EBS ensures the entire company is run in a common way. It is based on the belief that standard processes lead to superior performance and establishes common metrics we use to consistently achieve measurable outcomes. It also enables the transfer of best practices and learning which leads to continuous improvement.

Ethics and Compliance is a foundational element of EBS, which is why we created an Ethics and Compliance maturity roadmap. In 2021, we overhauled it to increase accountability and operationalize what many leaders across the company had already been doing—engaging in and normalizing ethics discussions with their teams. Our roadmap provides a clear sense of direction.

It calls on Eaton leaders to “own” ethics by focusing on three key dimensions: policies and governance, risk management, and legal and ethical behavior. We provide clear expectations in each area. For example, when discussing legal and ethical behavior, we added, among other expectations, that leaders are expected to:

  • Ensure ethics and compliance requirements, including Eaton’s Code of Ethics, remain a priority by regularly incorporating topics such as compliance data, trends and lessons learned as agenda items during regularly scheduled meetings
  • Consider input from the Ethics and Compliance team in their strategic planning process to ensure relevant policy and compliance-related issues are incorporated
  • Regularly reinforce Eaton’s policy of strictly prohibiting retaliation against employees who report ethics and compliance concerns
  • Ensure mitigation strategies for key risks are completed on time and assessed and enhanced throughout the year, as needed

As part of EBS, we periodically evaluate our businesses through internal assessment processes. These assessments have resulted in the sharing of opportunities for improvement, strengths, and transferable practices, with the intent of driving higher levels of maturity and performance.

In addition, ethics is one of six Eaton leadership attributes we assess during performance reviews. We ask each Eaton leader to 1) create an atmosphere that encourages employees to speak up about ethics concerns, 2) serve as a role model for honesty, integrity, and ethical decision-making in all circumstances, 3) hold themself and others accountable for demonstrating ethical behavior, and 4) establish and reinforce clear expectations for integrity.

Eaton SVP, Global Ethics and Compliance, Joe Rodgers sits down with President and COO, Electrical Sector, Heath Monesmith as part of Eaton’s discussion series on ethics and compliance

Maintain Transparency
It is difficult for leaders to own ethics, however, if they do not know what is happening across the enterprise or within their businesses regarding ethics-related issues, developments, and trends. That is why we developed a cadence of regularly creating and sharing customized dashboards for our leaders and their business teams. The information we provide can include the number and types of matters reported, substantiation rates, matters per 100 employees, anonymity rates, relevant investigation findings, lessons learned, and key ethics and compliance initiatives. We also get granular with the data, providing regional, site, and facility-level details that can identify trends and opportunities for improvement.

We likewise share key external developments, including regulatory updates (such as new guidance by enforcement agencies), emerging trends and industry developments involving ethics and compliance. For example, at a recent senior leadership team meeting, we discussed a Foreign Corrupt Practices Act settlement involving a company in our industry and what we could learn from it. We asked leaders to then share the lessons we discussed with their teams. And we even went a step further: We posted a message accessible to all managers at Eaton, which included a reminder about our values and our anticorruption policy.

Conversations such as these cannot happen once or twice a year. That simply won’t keep ethics top of mind. Our philosophy at Eaton is that Ethics and Compliance serves as a key business partner and strategist, meeting regularly (typically quarterly) with leaders and business teams to review their dashboards, provide updates and engage in ethics-focused discussions.

Eaton’s senior leaders are also strongly committed to fostering an environment where ethics is front of mind. How do they achieve this? One way is by incorporating ethics into meeting agendas. In fact, Eaton’s chief operating officers—Heath Monesmith and Paulo Ruiz—both include ethics as a top agenda item during their respective senior leadership team meetings. As Monesmith once shared, he puts ethics towards the top so that it never falls off the agenda. “If something falls off the agenda,” Monesmith says, “it’s not going to be ethics.”

Our CEO, Craig Arnold, has high standards when it comes to ethics and compliance and makes it a priority to include ethics topics during Eaton’s senior leadership meetings throughout the year. We have found that when senior leaders prioritize ethics, there is often a “snowball” effect. Their teams then include ethics as an agenda item as well. That is how powerful and influential the tone—and conduct at the top—can be.

We are also fortunate to have a Board of Directors that is active and passionate about ethics. The Governance Committee of the Board, which oversees Eaton’s Ethics and Compliance program, expects in-depth updates every quarter on all aspects of the Ethics and Compliance program, including initiatives to cascade the tone at the top.

Ethics can never be relegated to a check-the-box training exercise or merely online training. At Eaton, ethics is foundational, and we treat it as such by giving it the time and attention it deserves both at the highest levels and across the enterprise.

Engage in Powerful Conversations
In 2021, more of our leaders were given an opportunity to share their views on ethics. That year, we launched a new internal video series called Integrity in Action with a simple premise: To periodically sit down with leaders around the globe to hear how they demonstrate ethical leadership and how their commitment to integrity shaped their careers and way of operating at Eaton. The recorded conversations have been an engaging way for employees to see and hear the tone at the top. Because the conversations are largely unscripted, answers are often natural, off the cuff, and authentic.

At Eaton, leaders are expected to be transparent, saying what they think and sharing the good with the bad—which is exactly what has happened. During these enlightening 10-minute conversations on Integrity in Action, leaders have revealed personal moments, ethical dilemmas and explained how they overcame obstacles. They have also shared how they prioritize ethics, how it forms a great culture and the importance of speaking up. In fact, the Ethics and Compliance team received a tip from an employee who explained that an episode they watched even inspired them to speak up about an ethical issue they faced.

All too often, employees do not witness their leaders specifically addressing ethics. But Integrity in Action has helped change that, which was our objective. Every time an episode is produced, it is emailed globally to all managers of people and placed on our intranet for Eaton employees to see. The videos are also shared on a pre-hire onboarding site for new employees to access before their start date—making it some of the first messaging from leaders that our new hires hear. Shorter highlights are created for employees to use on social media.

Knowing this impact, Eaton leaders are very willing to participate in these discussions. And though they know the questions will change based on the dialogue, they also know to prepare for two questions that are posed every time: First, who was the person who most shaped your sense of integrity? Second, what advice would you give for leading with Eaton’s values? No two answers have been the same.

It is imperative that leaders openly serve as advocates for our values-base culture. Not only does this tool make them visible messengers, but it also offers an unfiltered way to set the right tone and personally emphasize what matters most to them. Video can train, inform, and certainly inspire. And it can be used again and again, referred back to at any time.

Share Your Story and the Learnings
There’s another strategy we’ve also been applying. Consistent with our emphasis on transparency and learning, we’ve published an annual, stand-alone internal Integrity Report (referred to earlier), which is usually published in February or March. We make it available to all Eaton employees worldwide. Our report includes messages from senior leaders, data (including region-specific data), top-reporting countries, compliance-related initiatives, and investigations by type. It also covers the evolution of the Ethics and Compliance program and provides tools for employees. In 2021, for example, we included an easy-to-follow ethics decision tree for working through questionable matters.

As we share summaries of real-life investigations, we also share lessons learned. In 2021, we discussed a situation where a contractor working for Eaton made inappropriate comments that violated our Harassment-Free Workplace Policy during a meeting. The concerns were then escalated to the Ethics and Compliance team and company leaders; the contractor involved was terminated.

We don’t share examples from the perspective that “this happened, and people got in trouble,” but rather, to focus on lessons learned and underscore how employees spoke up and made a difference. We also share the example of a customer’s employee who approached two Eaton employees and demanded money in exchange for continuing orders. Our employees immediately told their manager, who escalated the matter to Ethics and Compliance. The situation was investigated and promptly addressed, and the senior leader in the region reached out to the employees to personally thank them for doing the right thing.

If you want to gain the trust of your employees, show them that you are not a faceless function behind closed doors. Seek to advance a “we all own ethics” culture in which you listen and respond. Get leadership actively involved and drive transparency. You may just inspire future role models within your business too.

This article is from the Winter 2023 issue of Ethisphere Magazine. To download a PDF of the issue, click here.

About the Expert
Joe Rodgers is senior vice president, Ethics and Compliance at Eaton, a global intelligent power management company. In this role, Joe is responsible for leading Eaton’s ethics and compliance programs and strategies.

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