Yahoo Takes New 'Road' on Ethics Training

July 27, 2010

Until a couple years ago, Yahoo used an off-the-shelf online training package to infuse employees with the ethics and compliance knowledge that would keep the company out of trouble with the law—or the court of public opinion. But no more.

No single incident or issue led to the company’s decision to change how it trains on ethics matters, says David Farrell, who became chief compliance officer at the firm about two and a half years ago. But feedback over time from employees showed the training did not resonate with them.

The scenarios used to demonstrate different concepts did not resemble those that might arise at Yahoo. The production values on the videos seemed dated, and the settings and characters were too middle-American and middle-aged for a multinational company with a youthful workforce, Farrell says.

So in 2008, Yahoo contracted with an Atlanta-based company, The Network, to produce an animated package with scenarios set in company offices around the globe, based on more realistic storylines for the industry, Farrell says. The new package, “On the Road With the Code,” is available in eight languages.

“We wanted to use animation and interactive technologies to get the employees in, catch their attention and make it a fun experience,” Farrell says. “We gave it a Yahoo look and feel, introducing characters based upon, for example, our founders.”

“They wanted to show that Yahoo is a global company with a global culture,” says Luis Ramos, CEO of The Network. “You would think that in a down economy, these are the first things people would cut. We’ve seen the opposite.”

Nick Linn, a Dallas-based partner at law firm Littler Mendelson, says the boards of all companies are pushing both more training and more customization. (Littler represents Yahoo, although Linn does not do so personally.) Among the reasons are disclosure rules developed by the U.S. Securities and Exchange Commission last year that require boards to discuss their role in risk management in annual proxy statements. “The current financial crisis has forced boards to focus more,” he says. “They are going to pass that pressure down.”

The 45-minute training at Yahoo covers the company’s code of conduct and resources available to help employees understand it, touching on such issues as the Foreign Corrupt Practices Act and the Sarbanes-Oxley Act.

The company measures the effectiveness of the mandatory program through employee surveys and by tracking who takes it, which is much easier to do with online training than with in-person sessions, Farrell says.

Neither Yahoo nor The Network would disclose the cost of the program, but Farrell says it cost about double what the company paid annually to license its previous package. Ramos says packages can range from five figures for shorter, simpler modules to well into six figures. “A strong ethical culture yields a return on investment,” he says. “Sometimes it’s not easy to measure in direct dollars.”

Sometimes it is, Linn says. “Sooner or later, an employee’s going to do something they shouldn’t have,” he says. “If you have taken all the appropriate steps with code-of-conduct training, the penalty that will be imposed on that company will be dramatically reduced. That could be worth tens of millions of dollars.”

Beyond legal costs, says Lynn Lieber, founder of San Francisco-based Workplace Answers, there’s the court of public opinion. There, a company can acknowledge that while it had “some rogue employee who did something wrong,” it can also say, “We ... have done everything we could.”

Workforce Management, July 2010, p. 7 -- Subscribe Now!

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