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Carroll School of Management

Thomas J. Falk

Chairman and Chief Executive Officer
Kimberly-Clark Corporation

Excerpt from remarks to Boston College’s Chief Executives’ Club of Boston

April 3, 2014

TAKEAWAY: Compliance

Compliance is a big deal. We’ve been around for 140 years and built on the quality, service, and fair dealing. And I’m an internal auditor so, I was wired for—I actually understood Sarbanes-Oxley when it first came out and all that kind of stuff. (laughter) I read the 10-K. But many CEOs do. We all have to certify that—and don’t misunderstand. 

But when you go into an individual market—so, for example, we were building a plant in Russia. It was very expensive and very time-consuming to get all the permits. 

So we had a capital budget. We had a project plan. And so I would have the usual project reviews and would say, you know, We’re going to be on time, under budget, right? And they would say yeah. And then I would say, And, we’re going to do it the right way, right? And they would say yeah. 

And I’d say, Just tell me again what’s going to happen if you’re going to miss the schedule or you’re going to go over budget. What are you going to do? And, you know, the answer is we’re not going to pay anybody off to go faster. 

And so you—but you have to be explicit, because sometimes, if you just say on time, under budget, they think you’re giving them permission to break the rules, because you didn’t say and, oh, by the way, you can’t break the rules. 

And so you have to continually talk a lot about ethics and compliance. Some of the stuff we’re doing around sustainability as well—we have the same wastewater treatment standard everywhere in the world, no matter what the law says, so we apply the strictest limit. 

We have the same workplace safety standard all over the world, measure accident rates in the exact same way, drive the same safety culture. So even if the law says something different, you know, we want to make sure that nobody goes home with an injury. 

And so you’re doing it in a lot of different ways around product quality, around workplace safety, around environmental issues, around all the financial reporting issues, and then in how we talk about the business and meet with the local teams. 

And, we—you still have issues. We had an issue in our Korean operation a couple of years ago, where they—somebody did something that was inappropriate. It wasn’t a Foreign Corrupt Practices Act kind of thing, but it was something that they shouldn’t have done. 

So, you know, we—part of the remediation plan was we had that team doing the investigation then lead the training for the rest of the region to talk about what they had learned, and what their experience had been, and what mistakes were made. And we used them as the kind of the learning example, and did it in a way that was culturally relevant but drove the point home that that’s not how we operate.

And so that is a big, big deal. And I tell our teams all the time it’s taken us 140 years to earn a reputation as an ethical company, and you can lose it like that if you slip up.