1. Principle #4 – Ethical Staff Behavior This presentation is made possible by the Smart Campaign www.smartcampaign.org

2. 2 1. The Client Protection Principles 2. Principle #4 in Practice 3. How Management Promotes Ethical Staff Behavior 4. Participant Feedback & Lessons from Practitioners 5. Good Practice Guidelines and Examples 6. Next Steps for Your Institution Today’s Agenda

3. 3 1. Avoidance of over-indebtedness 2. Transparent and responsible pricing 3. Appropriate collections practices 4. Ethical staff behavior 5. Mechanisms for redress of grievances 6. Privacy of client data Client Protection Principles

4. 4 Ethical Staff Behavior: The Principle in Practice A financial institution measures up to this principle by creating a corporate culture that values high ethical standards among staff and ensuring safeguards are in place to prevent, detect, and correct corruption or customer mistreatment.

5. 5 Management Encourages Ethical Staff Behavior by: Creating a Code of Ethics for the institution Establishing an Ethics Committee that rewards ethics and sanctions violations Communicating the importance of ethics to staff on a regular basis Training staff to respond to ethical dilemmas tailored for their position Empowering managers to follow up on ethical complaints

6. 6 Feedback from Participants Have you received training at your institution that highlights ethical staff behavior? How do institutions monitor and enforce ethical staff behavior? Can you describe an ethical lapse or ethical success at their institution or elsewhere? Does your institution have a Code of Ethics?

7. 7 Lessons from Practitioners Write your points for the presentation here. Points

8. 8 The organization's corporate culture values and rewards high standards of ethical behavior and customer service. Ethical Corporate Culture A written code of business ethics spells out organizational values and the standards of professional conduct expected of all staff. Written Code of Ethics The code of ethics has been reviewed and approved by the Board and is included in staff rule books or administrative policies. Leadership Promotes Code of Ethics Ethical Staff Behavior: Indicators of Good Practice

9. 9 Staff rules include specific provisions on what is considered acceptable and unacceptable behavior. Provisions describe reprimands and actions that can result in termination of employment. Clearly Defined Acceptable and Unacceptable Behavior HR procedures pay attention to ethics, such as assessing new employees for compatibility with organizational values. Ethics Matters for HR Staff receives orientation and refresher courses on the practicalities of following codes of conduct. Staff Training on Ethics Ethical Staff Behavior: Indicators of Good Practice

10. 10 Managers and supervisors review ethical behavior, professional conduct, and the quality of interaction with customers as part of staff performance evaluations. Ethics Component of Performance Evaluations The organization has a robust internal audit and fraud control system that detects customer mistreatment, such as soliciting kickbacks and favors or using coercion. Internal Audit and Controls Ethical Staff Behavior: Indicators of Good Practice

11. 11 The Code at the Center Code of Ethics Manage- ment Internal Audit Human Resources

12. 12 Compartamos Banco outlines its values for all employees, clients, and other stakeholders to see. The bank’s mission sets its goals, the values provide the “how” for implementation. Example: Good Practice from Mexico Source: Compartamos Banco The values include: keeping the person at the center, service, responsibility, passion, financial sustainability, and teamwork.

13. 13 Example: What a Code of Ethics Includes Source: Adapted from Compartamos Banco Institutional Philosophy Mission & Values Ethical Expectations Norms of Conduct Enforcement Methods Updating the Code Norms of Conduct Conflict of Interest Privileged Information Client/Staff Relationships Corruption Harassment Use of Company Property Safeguarding the Company Reputation Respecting the Work Environment

14. 14 Example: Keeping a ‘Code’ Alive Annual Review of Code New employees must sign Tested on Code after 90 days Annual recertification test Refresher campaign each year Ethics workshops Internal polices incorporate the Code of Ethics Training includes examples of real situations Source: Compartamos Banco

15. 15 Example: Enforcing a Code of Ethics Receive and analyze report of a violation Document the case Present the case to the Ethics Commission Commission decides on next steps Follow-up to ensure steps are taken Present the results of follow-up to the Commission Close the case Source: Compartamos Banco

16. 16 One MFI designed an integrated training program on ethical behavior that includes specific ethical dilemmas for different job functions. The training modules are based on experiences that employees have faced in their work. One MFI includes “ethical behavior” in its annual performance reviews in order to give employees feedback on their behavior and find out how successful the organization has been in building an ethical culture. Good Practices from Around the World

17. 17 What next steps can your institution take to create a corporate culture that values high ethical standards among staff? Next steps for your institution

18. 18 Thank you! Join the Campaign & Endorse the Principles of Client Protection Have questions? Contact the Smart Campaign www.smartcampaign.org www.smartcampaign.org