Ethics Program for Small Businesses

June 4, 2014

Jamal AhmedVice President, Internal AuditDay & Zimmermann, Inc.

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Day & Zimmermann: At a Glance

• Annual revenue: $2.4 billion• Privately held conglomerate• Founded in 1901• 23,000 employees in 150 locations globally• Headquartered in Philadelphia• Core Services:

• Engineering, Construction & Maintenance • Government Services• Munitions• Workforce Solutions

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Core Service Areas

Engineering, Construction & Maintenance

Government Services

Engineering, Construction & Maintenance

Munitions Workforce Solutions

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Transparency International

Engineering, Construction & Maintenance

Day & Zimmermann Earns Highest Ranking in Study of Defense Companies

• Day & Zimmermann has earned an ‘A’ ranking for its ethics initiatives and compliance policies from Transparency International (TI), the UK based global compliance research organization.

• TI’s Defense Companies Anti-Corruption Index (CI) ranked 129 of the world’s leading defense companies from 31 countries around the world.  We were one of 16 companies to receive an ‘A’ ranking.

• TI also listed us as a Good Practice example for Ethics and Compliance training.

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Ethics Program

The foundation of Day & Zimmermann's Ethics Program is our Code of Ethics and Standards of Business Conduct for all employees. 

Our Program, made up of eight components, is focused on helping employees choose to do the right thing.

Help Lines

Program Guide

Orientation

TrainingEthics Audits

Ethics Officers

EthicsCommittee

Code ofEthics

Program Office

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Code of Ethics

The Code of Ethics and Standards of Business Conduct states the Company's Vision, Mission, Values and Culture, and provides a guide for doing the right thing for all regular full- and part-time employees. It assists in carrying out daily activities in accordance with appropriate ethical standards. These standards apply to our relationships with each other, with customers, and with subcontractors, independent contractors, vendors and consultants. Thus, it is a critical component of our overall Ethics Program.

The standards address five basic aspects of the workplace:• Workplace environment • Information recording and reporting • Protecting resources • Conflicts of interest • Community relations

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Program Office

The Program Office, is composed of:

• The Executive Sponsor of the Ethics Program - Bill Hamm, Senior Vice President and General Counsel

• Chief Ethics Officer - Jamal Ahmed, Vice President, Internal Audit. He is responsible for the structure, content and administration for the Ethics Program and for keeping it aligned with industry best practice. He makes an annual presentation to the company’s Leadership Council summarizing the activities for the year including the status of Help Line calls.

• The Ethics and Compliance Programs Administrator – Jeanette Malone

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Orientation

• All regular full- and part-time employees receive a copy of the Code of Ethics and Standards of Business Conduct and an initial orientation to it. 

• Employees also receive an annual Refresher to the Code.

• The purpose of the Refresher is to reiterate the values we promote through our Code of Ethics.

• The Refresher is presented in a game show format to keep it interesting for employees

• We require 100% compliance for both the Orientation and Refresher training.

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Ethics Refresher

 

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Ethics Refresher

 

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Ethics Refresher

 

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Ethics and Compliance Training

We train employees to do the right thing in accordance with the Company’s Code of Ethics and in accordance with applicable laws and regulations.  We deliver this training as follows:

Online

Online training is mandatory for all exempt and certain non-exempt employees.  Selected courses have been organized for the following four groups of employees, based on broad job responsibilities: 

• Senior Managers and Executives – 6 courses per year

• Team Leaders, Supervisors and Managers – 4 courses per year

• All other exempt employees – 3 courses per year• All non-exempt employees – 1 course per year

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Ethics and Compliance Training

Offline

Offline training is for all regular full- and part-time employees who are not enrolled in online training.  These are generally non-exempt employees. We select a new course each year. Course will be delivered by one of the following three methods:• By Work Station to employees who have Company access to a

computer or can otherwise connect to the Internet.

• By Facilitator to employees who do not have

computer and Internet access.

• By Self-Study Booklet to employees who do

not have computer and Internet access and who

cannot be trained in a group setting.

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Important Elements of Our Training Program• Every employee receives individual e-mail from the Executive

Sponsor inviting them to start taking their courses.

•A reminder is sent for each course they are supposed to take.

• We receive monthly reports from our vendor showing course completion status by employee which we share with their manager.

• Starting mid-November, we start calling employees who are delinquent.

• In the beginning of December, the CEO sends out a letter to the Business Unit Presidents reminding them of their responsibility to achieve a 100% compliance with Ethics courses within their Business Unit.

• For three years in a row, we had 100% compliance in all fully-owned D&Z Business Units.

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Program Guide to the Ethics Program

The Guide sets forth detailed instructions and procedures in the following broad areas:

• Providing initial orientations to the Code of Ethics and Standards of Business Conduct, including how to use the orientation materials, how do deal with questions, and recordkeeping

• Providing annual refreshers • Handling questions or concerns about The Right Thing To Do, whether

received directly or via the Help Line • Reporting on Program activities• Auditing

The Guide also contains supporting materials for use in Program administration, such as documents to guide investigations, and documents to conduct audits (a sample audit report).

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Ethics Officers

We currently have twenty-five Ethics Officers who are their Business and/or Staff Unit’s contact person when an employee wants to speak with someone about the right thing to do or to report a concern.

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Ethics Officers

Ethics Officers are appointed for locations where there are 100 or more employees. Business Unit, Staff Unit and Group heads will work together to define adequate representation across all areas of the Company, wherever employees may be located.

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Ethics Officers

• Ethics Officers are the visible leaders of the Company’s Ethics Program and must encourage and stimulate a culture of ethical sensitivity and compliant behavior.

• Employees should see the Ethics Officer as a third party, above office politics and without favoritism, who serves as a safe haven for information, advice and the resolution of issues.

• Ethics Officers must be, and be perceived to be, trustworthy, compassionate, passionate about integrity, courageous in standing up for what is right, good communicators and good coaches.

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Responsibilities Of Ethics Officers• Seeing to it that initial orientations to and annual refreshers

regarding the Code of Ethics and Standards of Business Conduct are given to all employees in their purview.

• Following up on any concern or complaint received via telephone, Help Line, web site, letter, e-mail or in person.

• Assuring that an investigation of any allegation is conducted confidentially and the matter is resolved by the application of appropriate resources.

• Preparing monthly reports of program activities and sending them to the Ethics and Compliance Program Administrator.

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Responsibilities Of Ethics Officers

• Providing advice to managers and employees regarding provisions of the Code of Conduct.

• Auditing for compliance with the requirements of the Ethics Program at unaffiliated sites once a year, when requested by the Chief Ethics Officer

• Cooperating and supporting the annual audit of the Ethics Program at location(s) in purview

• Maintaining appropriate documentation of audited activities

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Ethics Audits• The purpose of our audits is to ensure that our Ethics

Program is functioning as intended and our business units and staff functions are complying with its requirements.

• We audit about 20 of our 150 locations annually.

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Ethics Audits

How Do We Select the Locations to Audit?• We select all manufacturing locations that produce

munitions items for the U.S. Department of Defense.• We also select a sample of other locations with more

than 150 employees.

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Ethics AuditsWe examine:• Acknowledgements of the Code of Ethics and Orientation Training• Compliance with other Ethics training requirements• Help Line complaints resolutions • Ethics-related internal audits• Letters to suppliers regarding our Ethics Program• Awareness about Ethics Officers, Ethics posters, Help Line

number, and Ethics web site• Conflict of Interest Survey forms from employees• Job Descriptions to ensure that Ethics Program

responsibilities are clearly mentioned

We also interview selected members of the senior management team to assess their awareness of the Ethics Program and commitment to it.

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Ethics Audits 

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Ethics Audits

Code of Ethics

For each location we audit, we obtain a list of their employees and request that their Ethics Officers provide signed acknowledgement cards from all employees, which document that the employee has received the Code of Ethics and an orientation to its content and agree to abide by it.

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Ethics Audits

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Ethics AuditsCode of Ethics – Cont’d• We randomly select about 15 employees at each location

and interview them to assess their understanding of the major areas of our Code of Ethics.

• We also interview 1-2 senior most managers at the location to assess their commitment to the Code of Ethics.

• There is a standard questionnaire that is provided to each Ethics Auditor to be used in these interviews. The results of the interviews are summarized on a standard form.

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Help Lines

• Calls to the Ethics Help Line are answered by external communications specialists who document caller concerns and/or questions and get them to the Chief Ethics Officer and Ethics and Compliance Administrator.  The 800 number is toll-free and has capability for the hearing-impaired and translation services, if needed. 

• In addition, we have a website https:dayzim.alertline.com for employees to report their concerns.

• The reports to this website are handled in a manner similar to that for the calls received through the toll free number.

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Help LinesProtocol for Handling Help Line Complaints

The complaints involving the following issues will be transferred to the appropriate HR function. • All types of harassment at work due to gender, race, religion, age,

national origin or any other reason• Discrimination due to race, gender, color, religion, citizenship,

national origin, age, marital status, sexual orientation, military service or any other protected class

• Use of illegal drugs• Timesheet abuse• Disrespectful behavior• Insubordinate behavior• Disruptive behavior• Payroll discrepancy• Concerns about benefits

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Help Lines• Violation of company policies• Internet abuse• Attendance concerns/complaints• Workplace violence, threats or any other workplace environment

concerns• Falsification of employment records• Falsification of training records• Any other HR/Payroll related issues

The following will be transferred to the Law Department:• Non-compliance with laws and regulations• Non-compliance with contracts

The following will be transferred to Internal Audit:• Fraud• Conflicts of Interest

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Help Lines

Help Line Complaints Resolution

• All calls are categorized into A, B and C based on pre-determined

priorities. The calls have to be resolved in accordance with the following

guidelines:• A – 48 hours• B – 30 days• C – 45 days

• We continuously monitor the status of each complaint received through

our Help Line. The investigation and the resolution is documented on a

standard form.

• We review all investigation reports to ensure that the complaints

are resolved in accordance with the pre-established

protocol and with the application of appropriate

resources (e.g., Law, HR, Audit) and corrective actions are

taken, if needed, to prevent similar situations in the future.

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Help Line Complaint Investigation Form

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Help Line Complaint Investigation Form

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Help Line Complaint Investigation Form

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Ethics Committee

The Day & Zimmermann Ethics Committee meets quarterly to review and analyze the latest questions, complaints and/or comments from the Help Line or Ethics Officers, and to propose appropriate responses to issues raised.  This could include recommending a particular business or staff unit for audit or recommending additional training in a new area of risk. 

General Counsel chairs the Ethics Committee and reports to the Leadership Council periodically about the operations of the Ethics Program.

Ethics Committee members include:• Senior Vice President and General Counsel (Executive

Sponsor of the Ethics Program and Chairman) • Senior Vice President, Finance and CFO • Senior Vice President, Human Resources • Vice President, Internal Audit (Secretary)

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Thank You