As part of our occasional series of conversations with compliance executives and others influential in the corporate governance world, we caught up with Kelly Noll, chief ethics and compliance officer at insurance company Allstate. In this one-on-one, Noll shares how Allstate has worked to foster a best-in-class culture of ethics, built on integrity, honesty, and accountability.
First, tell us a little about Allstate, generally.
Based in Northbrook, Illinois, we are the largest publicly held personal lines property and casualty insurer in America, serving more than 16 million households across the country. With more than 40,000 employees, we serve distinct customer segments with differentiated offerings in the United States and Canada by conducting business through Allstate Insurance Company and other subsidiaries such as Esurance and Answer Financial. Most recently, we have added to the Allstate Family of Companies, by acquiring SquareTrade, which provides consumer product plans.
Tell us a little about your role and responsibilities as chief ethics and compliance officer.
My role is to lead the Office of the Enterprise Business Conduct, which is responsible for the day-to-day operations of the company’s ethics and compliance programs. The office has a formal charter, which is reviewed and approved by the audit committee of the board of directors that outlines the Office’s responsibilities. I report to the general counsel with a dotted line reporting relationship to the audit committee.
How are ethics and compliance departments structured at Allstate?
Although I realize a lot of people tend to view ethics and compliance as a single field, I always try to regard ethics and compliance as two separate entities that integrate in many ways. My ethics team is comprised of nine employees that are focused on corporate ethics on a full-time basis. My team and I are responsible for maintaining the ethical culture of the corporation which includes education, communication, and overseeing the reporting mechanisms we have in place. We work closely with other areas of the company, primarily human resources, as well as our corporate relations team regarding enterprise-wide communication integration efforts. Our goal is to present ethics in a way that is understandable and relatable for our employees.
Although I have a compliance team comprised of five employees that report to me, the regulatory compliance organization set up in a decentralized manner. I have overall governance across the enterprise, but the business units actually own the individual compliance issues. We have a centralized tool in which all of our compliance issues have to be entered. It allows my team to monitor and track.
How do you ensure business leaders are accountable for handling compliance issues?
On a quarterly basis, every senior vice president in the company must provide me with a signed affirmation that they have met with the compliance members within their organization, they know what is going on, and that they’re creating the right type of environment around compliance. It helps drive accountability at a level where people who are closest to the issues know what the issue are and know how to fix them.
I monitor compliance at a higher level and keep track of where the issues are occurring. I only become involved if we’re having issues around resourcing or timing as it concerns the handling of a compliance issue. The regulatory compliance program is a mature system, and this approach has served us well.
In what ways does Allstate educate and communicate ethics initiatives?
We use a variety of methods, but we start when someone first joins the company. Within 60 days of an employee joining Allstate, they must complete a code of ethics online course, information security, and privacy course and attest that they have read and understand the code of ethics and our policies and procedures. This is also a required process we do annually for all employees. The education curriculum is a part of employee onboarding and is a condition of employment.
On a quarterly basis, we offer a contest through our social media platform, in which employees are presented with an ethical dilemma and encouraged to tell us how to resolve it. We randomly select the winner and reward them with a small monetary award.
Overall, we utilize many different avenues to communicate our ethics & compliance resources and offerings to promote and share our messages with the business units across the company.
Something we’ve started in the last year that’s been really successful are panel discussions. The panel is typically comprised of myself or a member of my team, an employment lawyer, a HR representative, and often the director of investigative services. The panel meets with various groups of employees. For example, I was with about 160 claim leaders last week. During those panel discussions, we’ll talk about different case studies and have an open discussion about what the issues are and how they would handle them. That draws a lot of good conversations.
Overall, we utilize many different avenues to communicate our ethics & compliance resources and offerings to promote and share our messages with the business units across the company. Some of these avenues are: growing our presence on our social media platform where we blog about ethical dilemmas on the news, using a video series called “Live & Learn” to present the spirit of an ethical principle using humor and drama, and hosting an ethics event featuring an external speaker which is open to all employees to name just a few.
What sort of training do managers at Allstate undergo regarding their responsibilities for ethics and compliance?
We hold all employees to the highest ethical standards. For managers, we do offer additional ethics training. For example, we have a leadership development program called IMPACT aimed at further developing high potential leaders for the next level. Ethics is a part of development for these leaders. Four ethical dilemmas, tailored to the leaders’ levels, are presented to them and they are then asked to come up with resolutions. These hands-on experiences help these leaders understand and see the breadth of potential issues that can arise as they climb higher in the organization.
Our managers have special responsibilities of exemplifying the behaviors we expect of everyone at Allstate and promoting the ethical culture we want to sustain. We recently refreshed our Ethical Leadership Toolkit—with our policies and procedures, resources, and shareable materials—accessible in a centralized location for managers to use to carry our great culture forward.
Our officers participate in a two-hour, officer ethics session, in which we show a video case study about a fictitious company. The video follows a company that’s undergoing a number of business strategy changes, with ethical implications to the decisions they’re making. We found the video to be a powerful training tool, because people to look at the ethical implications of the decisions they’re making, and ask themselves if they can identify them.
The expectation is that every officer will turn around and facilitate at least one similar session with their teams.
How does Allstate measure the effectiveness of its training?
It’s tough to measure effectiveness, because you can’t really measure the ethics or compliance issues that were avoided.
So, I look at it in a couple of ways: I look at the number of new cases we have on a quarterly basis and how the cases are trending. I’m happy to have what looks like high numbers, because it tells me people are raising issues and concerns.
Secondly, we do an annual “integrity index” survey. This is the eighth year we’ve done it. The main purpose of the survey is to measure the employees’ perception of our ethical culture. It gives us great feedback. It’s a random sampling of employees. We reach out to about 30 percent of our employees globally to take the survey.
Because it’s anonymous and confidential, I think that helps us get really good participation. We receive standard reports from CEB, but then we dissect them, so I’m able to break the reports out by some of our bigger business units. I can tell, for instance, what claims employees are saying about our culture across the board. It helps drive conversations with the leadership groups about: (1) what employees are telling us; (2) what things we might want to do in the ethics space; and (3) what are some areas that were raised in the surveys on which we ought to do some work?
ABOUT KELLY NOLL
Kelly Noll is senior vice president, chief ethics and compliance officer, and chief privacy officer at insurance provider Allstate.
Noll joined Allstate in 1988 as a human resources manager. In 1997, he became human resources director and was appointed to vice president of human resources in 2004. He also served as senior vice president of human resources before being appointed to his current role in 2012.
Employee feedback through the survey is a great measurement that helps me understand what is working for us and where areas of opportunity exist.
Periodically, my team also conducts employee focus groups across the country to engage employees on how we can improve their understanding and awareness of how and when to speak up about ethical concerns. This also helps us gauge how we can further cultivate, promote and influence a culture of care and integrity that resonates with our employees.
How does Allstate foster a speak-up culture?
For 86 years, ethics has been part of our culture, but we also have a formal speak-up process. We publicize that throughout the year through a number of vehicles. We talk to leaders about their accountability and making sure employees understand the kind of culture we want to have.
We want to create a culture where employees are comfortable coming to leaders with issues or concerns. We tell leaders that although they may not always know the answer, the idea is that if an employee can come to you with non-complex issues, they are much more likely to come to you with more complex or grey issues. Similarly, we tell employees that if they are uncomfortable approaching their leader for some reason, there are other options to bring concerns or issues to the company’s attention, whether it be by reporting the issue to another leader in the office, or through the whistleblower line, known as our iReport line.
You were in a human resources role prior to becoming chief ethics and compliance officer. How does the dynamic between HR and ethics work at Allstate?
It’s a fine line. There has to be clarity about the difference between what Human Resources is accountable for, and what I’m accountable for.
My approach is to make sure we know what we’re trying to accomplish here. There are always going to be a few, minor turf wars, because the roles do sometimes intersect. I may have to remind folks that I’m not trying to judge their jobs, but at the end of the day, I have accountability to report to the organization what issues and trends are out there, and we need to work together to understand them.
How does Allstate work to continuously improve its ethics and compliance initiatives?
Part of it is networking and benchmarking to see what companies are doing that might apply to us. In most cases, folks on the ethics and compliance teams will attend one conference or seminar each year. We’re constantly looking out for who has better ideas. Who has done something a little bit differently or little more creatively than we have that may also work for our business?
Any additional advice for other ethics and compliance professionals on how to foster a corporate culture of ethics and integrity?
Always look for ways to integrate ethics into other processes that are already in place. For example, one thing we’ve done during the hiring stage at the officer level is that we’ve introduced an ethical behavior interview question into an already established process. It sends a message to the job candidates that Allstate thinks pretty highly of ethics to include a discussion of ethics in the interview process. It also lets potential candidates know that they are walking into an ethical culture.
When promoting someone to a leadership role, in addition to making sure the person knows what their business accountabilities are, we also have certain expectations for that leader about leading an ethical culture. My goal is to try and make this part of our game plan, as part of the normal conversations we have.
I’m a firm believer that employees learn about our culture from their fellow employees, but most importantly from their leaders. So, we try to put tools in leaders’ hands throughout the year to make it easy for them—in the course of a staff meeting, for example—to talk about ethics and to remind employees about how they can report issues and concerns. We have found that if employees at least hear their leaders talking about ethics and compliance on an occasional basis, they have a much stronger perception about the culture of the company.