With Great Presence Comes Great Accountability

Hitachi’s DAVID KARAS describes how the company’s culture assessment work draws on many strengths from across the organization—especially robust support from executive management and the board.

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^{With Great Presence Comes Great Accountability}

Interview by Bill Coffin

Hitachi’s Chief Compliance Officer, Head of Global Compliance Office, David Karas, describes how the company’s culture assessment work draws on many strengths from across the organization—especially robust support from executive management and the board.

Can you walk us through Hitachi’s most recent culture assessment?

We are a large, global organization headquartered in Japan with more than 250,000 employees around the world.

When I worked with Ethisphere’s Culture team on it, it was one of the largest deployments across Hitachi, with the largest number of responses. The sheer magnitude of the project itself was something else. We could not have done it just from Compliance. It really was a team effort. We engaged heavily with our Human Resources organization to implement and disseminate the culture survey and to get responses.

It was all driven from the board level. When we implemented our first culture survey last year, our response rate wasn’t reflective of the total organization. Our response rates were off the charts in Japan and India, which contributed to our healthy response rate overall. But our board challenged us to get more data from a wider representation of the organization, which is what drove our teaming up with HR.

What we are trying to do is ambitious. We are still learning how to deliver a survey like this and deliver its results a little more elegantly. We are beholden to our HR database. There is no one Hitachi email address; within our organization, there are hundreds of different companies among multiple verticals, so there is no one repository for information. That is our challenge.

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Many organizations make the mistake of viewing compliance as a purely legal matter. And of course, the new U.S. Department of Justice update emphasizes that. But this is a cultural exercise, not a legal one. This is not about establishing the policies, regulations, and protocols of the organization. It is really about deciding who you want to be as an organization. Do we want to do to do the legal minimum? Or do we aspire to something greater than that?

The Ethisphere team went above and beyond, in terms of providing us with what we needed, since we have so many different organizations in so many different geographies with so many employees.

They provided us with data cuts that drilled down through some 160,000 employees in a manner that provides us with information by geography, function, and business without violating privacy laws, or employee anonymity. We didn’t want to be able to identify individual people, but we did want to be able to identify if a particular issue raised by the survey was a Finance issue or a Sales issue, whether it was an issue in India vs. Brazil, or if it was an issue in Transportation or Energy. The Ethisphere team was really great about providing us with all of those data cuts.

Was your support from the Board reflective of your ongoing relationship with them, or did you have to reach out to them specifically for this particular initiative?

At Hitachi, we have a great deal of focus on compliance, generally. I have a seat at the Board’s Internal Audit Committee, where I can get information firsthand, make recommendations, and report on a regular basis. And when I report, we dig into lots of issues, from joint ventures to discipline. They are very focused. We are called on quite a lot, in a friendly way, and we can have real-time conversations about compliance. I don't have to wait for it to filter down through many levels of management or through different areas of the organization. So that direct relationship is huge. But it is also a double-edged sword, because with great presence comes great accountability, to paraphrase Spider-Man (laughs).

The other important role the board played in this is a demand for accuracy and transparency. They want every employee to know where we are as a company. They want to make sure that we are driving the business from a cultural engagement standpoint. The cultural assessment survey is a direct correlation between managers communicating with their employees on a more frequent basis, and the scores that you receive.

Employees whose managers communicate with them more often typically feel less pressure to behave in a manner that doesn't align with the Code of Conduct. They don't feel fear around reporting instances of unethical behavior. And that all means you have a much more effective compliance program and a much more ethical company.

But because of that demand for accountability from Hitachi’s Board and executive management, it gives us the backing to go into parts of the organization with remediation steps for addressing areas in the survey that didn’t score well.

When you present the culture assessment findings to your board, what do you focus on?

The first thing is defining our objective of meeting the expectations of the board and senior management. They want to know clearly what the scores are, business by business, vertical by vertical, so they can stack-rank the companies. They want to know the risks by geography and how we are addressing them.

So I need to deliver that level of detail, rather than just going through the results on a basic level. So before the survey, I asked about what we wanted our outputs to be. Do we want to be able to cross-reference organization by organization? By geography, function, or years of experience?

There were some things, like comparing Gen Z to Boomers, that were not necessarily important to the board. We also did not include some questions because of data privacy. So, we left those things out and focused on the data we really wanted to collect.

What were some of your biggest takeaways from this culture assessment?

The data this survey provides can move mountains. When you have real, measurable data like this that you can increase incrementally over time, it gives you the opportunity to say, “Here is where we are starting, and let’s see what levers we can use to improve certain scores.” For example, if we want to improve trust in the system, how do we start reporting on all of our whistleblower cases and talking about the allegations we receive? The data enables us to think at that level.

The other takeaway was that policies don’t drive culture. You can have a non-retaliation policy, and an anti-bribery policy, and do all of that policy work and still fail in your ultimate assignment, which is capturing the hearts and minds of the people of the company. If the only tool in your toolbox is a hammer, then everything looks like a nail. But everything isn’t a nail. You can’t just tighten up your anti-bribery policy or do more training on your gifts & entertainment spending if you want to affect change. If you’re not listening to the people, then you’re not creating a culture where those things are important. You won’t create a safe environment where people can speak up freely without fear of retaliation or pressure from their manager. All of that is cultural. And there isn’t a single policy that’s going to get you there.

I have been in this role for about four years. I was Hitachi’s first Chief Compliance Officer, and prior to that, the various companies within the organization had different types of programs, so it was very difficult to report on a consistent basis. Because of that, I initially thought we should wait until we got all of that in place before we conducted a culture survey. And that is a chicken-and-egg situation, because where do you really start? Do you build the program and then measure it, or do you measure your culture and then build it from there? You just have to start this work very early. The sooner you start it, and get that stake in the ground, the sooner you can come back the next year and get more data points and create a trend. Then, you can see which way you're going and what you’re going to focus on next year. Otherwise, you’re just going to bang around in the dark.

The Ethisphere team went above and beyond, in terms of providing us with what we needed, since we have so many different organizations, in so many different geographies, with so many employees.

What aspect of Hitachi’s culture do you wish more people knew about, outside of the organization?

Our company is more than 100 years old, and we have always had a culture of ethics and compliance. It is very much baked into our way of doing things. We are global players, and continue to grow in the global market. Our stakeholders want us to have an ethical culture. The institutional investors want it. And we’ve been able to improve our ratings in this area because now we can articulate what it is we are doing as a organization, rather than saying it differently to sustain analytics rating in the area, because now we can articulate what it is that we're doing rather than driving conversations with all of our different companies. Being able to present our ethics and compliance program, and being able to present our culture in a unified fashion has been really helpful.

Also, our peer-to-peer culture is very good and trending upwards. Our people have such a high level of respect for everyone's work and everyone's job that there is a very high degree of trust. There is a mutual understanding that it takes everyone to make it work. There is not a lot of superstar culture here.

Our spirit of collaborative collaboration is a big part of what helps drive our culture. ■

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DAVID KARAS is Chief Compliance Officer,
Head of Global Compliance Office, Hitachi