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The Ethical Enabler:  Empowering Employees to Become Chief Ethics Officers

©  2005 Susan F. Alevas, Esq., President[1] and Alevas Consulting Group, Inc. (All Rights Reserved)

In this post-Enron, WorldCom, Martha Stewart world, it’s no longer enough to focus on the ethical standards of chief executive officers and their senior executive staff.  Clearly, regulatory reaction to the recent corporate scandals is an important first step.  However, there’s much more for governing boards and senior management to do beyond compliance with law if they are serious about zealously opposing fraud, corruption and unethical behavior and assuring a healthy ethical culture flourishes within their organizations.

What’s missing in the myriad of legal accountability requirements is the mechanism by which wholesale ethical compliance by all employees will be realized.  While the legislative branch can issue statutes and regulations, it cannot address the unique attributes of organizational culture that can be supported and thereby strengthen the overall ethical standard within each organization. 

Ethical misfires and the resulting negative impact on business operations are not solely within the domain of large-scale corporations and multi‑national enterprises.  For example, one suburban public school district in Roslyn, New York, was the recent focus of an audit by the New York State Comptroller’s Office.  This comprehensive audit revealed more than $11 million in public funds had been misappropriated over a relatively short multi-year period.[2]  Clearly, ethics, or the lack thereof, directly affects each and every organization, regardless of industry size, type and location.

Just how important is ethics in the workplace?  According to a recent Ethics Resource Center survey, one-third of all employees reported they had witnessed various forms of misconduct in the past year, which violated company policy or law.[3]  Surely, if such flagrant violations are made in front of the rank‑and‑file staff, one can only imagine the scope and breadth of unethical decisions that are made behind the proverbial closed doors!

When it comes to combating ethical complacency, governing board members, chief executive officers and senior management need to become “ethical enablers,” the folks who encourage, support and champion their employees to become “Chief Ethics Officers.”  Moreover, there’s nothing stopping organizations from also bestowing their vendors and customers with the “Chief Ethics Officer” role.  

So how would such a scenario work and what are its implications?  For one thing, this approach would signal a change in organizational accountability by shifting responsibility for ethical compliance from the exclusive domain of senior officials and governing boards to the all-encompassing responsibility of each and every employee.  Ultimately, of course, the legal responsibility for compliance will continue to rest with governing boards and the senior-management team as required by current law.  However, by empowering more and more people throughout the organizational structure to take personal responsibility for the organization’s ethical conduct, the overall compliance success will be hastened and strengthened.

The next question becomes how do would-be “ethical enablers” put such a plan into action?  The following seven‑point ethical blueprint offers a basic structure that can be tailored to fit the individual needs of any organization.  It is not meant to be an exhaustive system.  Instead, it is offered as the foundation for more in‑depth organizational dialogue about workplace ethics leading to a customized workplace ethics program.  Not surprisingly, for any ethical‑compliance program to succeed, the unwavering support of the governing board and senior management is key. The mission-critical function of promoting and maintaining an ethical culture will fail without commitment from the top and, therefore, its importance cannot be over emphasized. 

What follows is a series of questions posed to those who are serious about stemming the tide of ethical dysfunction in the workplace while embracing better ethical business practices.

1.                  What’s the Organizational Mission and Vision? 

Does the word “ethical” appear anywhere in the organization’s mission and vision statements?  If not, why not?   

If the purpose of the mission and vision statements are to focus, guide and drive organizational behavior, what message is sent when ethics is omitted from these statements?  Forward-thinking organizational leaders will assure that the importance of ethical conduct is incorporated into any mission and vision statement deemed to be worthy of achieving.  However, this is not enough.  Maintaining an ethical culture requires substance as well as style!  It’s not enough to just talk the talk; everyone also needs to walk the walk. 

2.                  Measure What Needs to Get Done! 

How does the organization currently mete out rewards and recognition for its employees?  On what factors are monetary bonuses and promotions based?  Is the organizational performance‑management system embracing ethical conduct as a critical factor for review?  Is there an ethical component inherent in all recognition and reward venues?  Are behavior-based questions focusing on ethical considerations and business conduct effectively used in the employment‑interview process?  Since human beings respond more favorably to positive reinforcement, is the organization reinforcing the desired ethical behavior through its policies, practices, decisions and actions?  If not, why not? 

If organizations wish to promote ethical conduct, they need to assure they are rewarding the decisions and conduct that support the organization’s ethical mission and vision.  Making sure there is an “ethical component” included in the organization’s recognition and reward program, including the all-important performance‑management system, will go a long way in promoting ongoing ethical conduct.  Ongoing and consistently fair employment‑performance appraisals and recognition for ethical behavior are the keys to promoting and maintaining an ethical workplace.  Remember, what gets measured, gets achieved! 

3.                  “Ethics Speak” 

How does the governing board “speak” to each other?  To its senior management?  To its employees?  To union leaders?  How does each of these groups communicate with the others?  Are ethical dilemmas the routine subject of discussion among decision makers, regardless of individual rank or job title?  If not, why not? 

Ethical organizations are those that willingly embrace the challenging ethical issues inherent in all critical decisions.  In such ethically‑healthy organizations, senior-level executives, managers and employees at all levels recognize, understand and are unafraid to discuss the ethical dilemmas present when facing critical organizational decisions.  When employees observe and participate in discussions involving ethics, they can better appreciate and support the decisional outcomes of the organization.  In such an ethical workplace, even when personal disagreement is present, if employees truly believe they and others are being treated fairly and objectively, they are more likely to support the organization’s action, provided, of course, it is ethically based. 

Another important caveat:  How do organizational leaders speak about others outside the organization including their vendors, customers and even their competition?  Organizational leaders must be careful not to send mixed messages to employees when it comes to creating and sustaining an ethical workplace.  Speaking poorly of others will, if left unchecked over time, chip away at the ethical code while the quality of workplace conditions, company services and corporate products deteriorates.   

Additionally, organizational leaders must be careful to balance assertive business goals with a healthy respect for the company’s ethical code of conduct.  It is far too costly a business mistake and a potential legal disaster to subordinate the company’s ethical code of conduct in favor of a “profit‑by‑any‑means” approach.  

Finally, what do employees think about the organization’s policies, services and products, as well as the methods by which the organization conducts its business activities?  Are they proud of where they work and the products or services being delivered to customers?  This is oftentimes an important, albeit overlooked, area when gauging the effectiveness of corporate ethics. 

4.                  “Walking the Talk” 

What steps does the organization take to let its employees know about the organization’s unyielding commitment to high ethical standards and conduct?  Do the CEO and governing board ever speak about this in company publications, at corporate functions and during staff meetings?  Does the business have a strong ethical code of conduct?  Is there an effective system for reporting ethical violations?  If not, why not? 

Having an ethical code of conduct and related policies are not merely attractive window dressing.  In order to achieve the desired ethical culture, the topic of ethics must be ever present on the minds of employees and senior-level decision makers alike. 

One necessity is to publicize in as many different forms as possible the organization’s ethical code of conduct.  For example, is it posted on the company’s Internet and Intranet?  Is it posted in each department and in all public areas within the organization’s building?  Can it easily be found in written materials given to new employees, to vendors, to customers and to the community‑at‑large?  Is it substantively discussed at new employee orientation and throughout the year at departmental and organizational‑wide gatherings and is it focused upon in the organizational annual report?   

Equally as important is the need to invest sufficiently in staff training at all levels.  Not only will this training enable employees to be “Chief Ethics Officers,” it will further reinforce the company’s commitment to providing an ethical workplace.  However, to be effective, the training must be user-friendly and accessible to all.  At the Adolph Coors Co., for example, $250,000 was invested in an interactive, Web‑based training module that guides employees through real‑world scenarios and underscores important ethical principles.  All new hires must complete this online course within 90 days as a condition of employment.[4]   This, among many other ethics initiatives, catapulted Coors to receive the 2005 Optimas Award for Ethical Practice. 

Another opportunity for ethical success is to have the CEO write an ethics column that is regularly published in the organizational newsletter.  In this column, the CEO could take the opportunity to recognize with appreciation the ethical achievements of particularly employees, departments, etc.  The CEO could also use this column to highlight the ethical activities of the organization within its industry and/or within the community in which it’s based.  

Some organizations support the community in the form of educational scholarships.  If this is done, what are the criteria for scholarship selection and is ethical conduct included?   

Evaluate all marketing materials to assure the messages are consistent with the organization’s ethical mission and vision statements.  Ensure that every reasonable opportunity is taken to promote the company’s ethical workplace culture. 

Employee retention is an area of serious financial concern to organizations as the staff‑replacement cost in terms of recruitment, temporary staffing, orientation and training can drain an organization’s bottom line when turnover is high.  This is a critical area where the ongoing communication of a company’s ethical achievements can mean the difference in making it an “employer of choice” among employment candidates.   

Along the same lines, litigation costs for employment-based controversies can be significant.  One way to cut into these costs over time is for organizations to provide their employees with a highly ethical workplace within which they may flourish, safe in the knowledge that principles of fairness and non‑discrimination are honored.  

5.                  Protecting the Ethical Warriors 

Are companies, through unambiguous and strongly worded corporate policy statements, protecting their employees from retaliation when they file good-faith reports about possible ethical violations?  Similarly, are employees adequately educated about their ethical-reporting obligations?  Are they knowledgeable about the anti‑retaliatory (“whistleblower”) protection the company makes available to them?  Does the company provide an easy-to-use ethical violation reporting system?  If not, why not?  

Let’s face one of the harsh workplace realities; it’s not always easy to do the right thing.  If more employees felt ethically empowered and committed to contributing to the organization’s ethical moral compass, the corporate and public-sector scandals we continue to read about in newspapers across America would likely diminish in frequency and scope because the perpetrators would not be protected by those who now all too often watch silently on the company sidelines.  Encouraging employees to come forward with reports about alleged ethical violations through the use of anonymous tip lines, highly visible corporate-compliance/ethics officers and accessible information and training about workplace ethics and compliance matters are key.  Equally as important is the need to protect the organization’s “ethical warriors” from retaliation.  This is not only morally correct, but also makes good business sense.  According to the 2004 National Fraud Survey, the most common detection method for fraud comes in the form of tips from employees, vendors, customers and anonymous whistleblowers. [5]  

When measuring the cost of organizational fraud, it was estimated to top $600 billion annually in the United States in 2003.[6]   To place this extraordinary figure into perspective, the cost of organizational fraud was nearly twice that budgeted for national defense, far more than was spent on education and 28 times what the U.S. paid to fight crime during the same period.  Given the extraordinary financial losses and resulting legal implications, it should come as no surprise that the number of corporate ethics officers has doubled in four years.[7] 

6.                  Ethics is an Ongoing Process 

Does the organization regularly evaluate its ethical policies, practices and results?  Does it objectively and honestly measure its “ethical effectiveness”?  If not, why not? 

Highly ethical companies do not rest on their laurels.  Rather, organizational leaders recognize that the health of its ethical culture resides, in part, in the ongoing and objective evaluation of ethical practices, policies and results.  A master gardener would never dream of abandoning the flowers’ care once they began to bloom, so why would an organization ever stop evaluating and nurturing its ethical culture? 

7.                  The ABC’s of Ethical Conduct 

In summary, successful companies will assure the expectation for everyone to demonstrate the requisite moral courage to act ethically is a cornerstone of their corporate philosophy.  When this is accomplished, employees’ conduct will support the following “ABC’s of Ethics” so that each and every company service and product may be autographed with ethical excellence: 

Assure Behavior Confirms a Dedication to Ethical Excellence. 

         As everyone – governing board members, senior management, employees, union leaders, vendors, customers and the community‑at‑large – begins to clearly understand what is expected, all will be “enabled” to help themselves and others to be ethically accountable.  In the end, when it comes to ethical and legal compliance, an organization cannot afford to have too many “Chief Ethics Officers.”


 

[1] Ms. Alevas is an experienced attorney, business executive and entrepreneur.  In 2004, she founded the Alevas Consulting Group, Inc., a management and training consulting practice dedicated to the high ethical standards exemplified by her late father.  An adjunct faculty member at Cornell University’s School of Industrial and Labor Relations and the State University of New York at Stony Brook, she teaches a variety of programs including municipal ethics; ethical considerations for human resources professionals; educational law; employee relations; effective interviewing and selection and staffing.  Ms. Alevas and her company are committed to several community-service and pro bono initiatives including the national, non‑partisan election protection organization advocating for voting rights and Long Island Works Coalition, which partners business executives with public school students to foster workforce and academic development.  Additionally, she serves on Molloy College’s Center for Business Ethics Advisory Committee and may be contacted via e‑mail at salevas@alevasconsulting.com or through her corporate web site at http://www.alevasconsulting.com. 

[2] Roslyn Union Free School District:  Anatomy of a Scandal, 2005, http://www.osc.state.ny.us/localgov/muni/audits/2005/schools/roslyn2.htm

[3] Make Employee Ethics Your Business, Flynn, Gillian, http://www.workforce.com/archive/feature/22/19/56/index

[4] Golden Values at Coors, Greengard, Samuel, Workforce Management, March 2005, pp. 52-53

[5] Wells, Joseph T., Corporate Fraud Handbook:  Prevention and Detection, p.43, © 2004, John Wiley & Sons, Inc.

[6] Ibid at p. 25

[7] Ethics Officers Double in Four Years, Darcy, Keith, Business Ethics, p. 9, Spring 2005, Vol. 19, No. 1

 

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Last modified: 02/08/12