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Performance and outlook

We have made further strides this year in helping employees understand what it means to do business with integrity, through new programmes, simplified policies and procedures and inspiring communications.

Key metrics

Compliance and ethics are difficult areas to measure, given that good performance is about what doesn’t happen – namely no breaches of our Code of Business Conduct. Nonetheless there are some things we can measure that indicate whether our programme is understood and embraced by employees, such as training, reporting, and people’s attitudes as measured by our Values Survey.

Progress against governance and ethics targets
Target by 2012 2012 performance Achievement
New operating model embedded with CC&E managers in all markets and business units CC&E managers in all markets and business units Achieved
Improvement versus last year in positive responses to Values Survey question: 'I would feel comfortable raising any concerns about compliance or ethics with my line manager, or through SpeakUp' 84% versus 83% in 2011 Achieved
Improvement versus last year in positive responses to Values Survey question: 'My manager helps me understand how the Diageo Code of Business Conduct applies to my role' 81% versus 79% in 2011 Achieved
100% of new joiners completing Code of Business Conduct training on induction 83% within first 30 days Not achieved
100% of middle managers and above complete the Annual Certification of Compliance 100% Achieved
1% of employees report breaches through SpeakUp (global benchmark) 242 (1% of employees) Achieved

Overall during the last year we continued to raise the bar for our performance in this area, including developing a set of indicators around our key themes, which we report on for the first time below. The work we’ve carried out has resulted in an increase from 79% to 89% of our internal audit reports being rated ‘satisfactory’, and we have remedial plans in place to mitigate any deficiencies. This trend is reflected in the increases seen in both of the ‘compliance’ measures in our annual Values Survey.

We have also had great feedback from employees across the business on the work done to reduce, revise and simplify our policies and Code of Business Conduct. These have been brought to life through regional workshops to engage employees and train them on exactly what acting with integrity and being proud of what we do means in Diageo.

Given the changes to Diageo’s operational structure, during the year we brought together the governance and controls, and compliance and ethics agendas so that there is now a single, dedicated controls, compliance and ethics (CC&E) manager for each of our 21 markets who reports to the general manager.

It’s also been a year of expansion, with our acquisitions of Mey Içki in Turkey, Meta Abo Brewery in Ethiopia and Halico in Vietnam. In all these we worked closely with the integration teams on due diligence to ensure the compliance and ethics programmes of these businesses align with our high standards.

Outlook

Doing business the right way comes down to each of us making the right decisions at the right moments. We help our employees make good choices for themselves, their colleagues, our customers and our business by giving them clear and simple guidance on our Code and policies which have a close connection with our values. Looking ahead, we want to reinforce this connection to make it even easier for employees to decide what is the right thing to do.

We will continue to find engaging ways to bring the words of our Code and policies to life through reward and recognition incentives, communications around breaches, and effective and tailored training.

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