Upgrading Ethics

An expert offers suggestions on ways companies can transform an ethics program into an ethical culture.

Saturday, May 16, 2009
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I travel about half of the year, talking with people -- in HR, in legal, in compliance, in internal audit -- to identify initiatives that will inspire an organization's stakeholders to do the right thing on the job. While on-site with a prospective client, I often ask various employees, "Do you have a copy of your company's code of conduct?"

It's a personal experiment I conduct whenever I'm on a client visit. The responses I get vary, but each one says a lot about the organization before I ever meet with my point of contact. If he or she knows what I'm asking for and can readily produce a copy, I know going in that their code is likely a real resource for employees, something that's valued, a living document.

Sometimes they'll call HR to ask for one, sometimes they'll tell me it's proprietary but if the person says, "I don't think we have one," or worse, "What's a code of conduct?" that's a red flag.

Of course a code of conduct doesn't automatically spell an ethical culture, but it's a pretty good barometer.

In a recent Ernst & Young study, A Survey into Fraud Risk Mitigation in European Countries, researchers asked employees of multinational companies in 13 European countries if all big companies should have a code of conduct, and 88 percent of respondents said they should.

Interestingly, of these respondents, only 62 percent said their companies actually had one. The researchers point out that employees prefer to work in a place that has a code of conduct, where there's clarity about what constitutes right and wrong.

Of course, there's a difference between having a code and having an effective ethics code -- that's one element that distinguishes companies with an ethical culture. And there are others.

Here is a list of the top five elements:

1. Transform your code of conduct from good to great.

Maybe your organization is one of the 62 percent in E&Y's survey that already has a code. But if it's filled with policy-speak or doesn't address the kinds of issues your employees face on a day-to-day basis, it's probably underperforming.

A code should represent the centerpiece of an ethical culture, serve as a ready resource for employees and be accessible via print and/or electronic formats. It should also reflect the look, tone and voice of the company.

And, although crafters of the code should work hand-in-hand with the legal department, the end product should reflect an easy-to-read style that not only reinforces the company's core values, but acts as a guide for ethical decision-making.

2. Cascade the message.

Managers who are passionate about an ethical workplace breed subordinates who are passionate about doing the right thing, and yet, in spreading the message about ethics, they are often overlooked. In its 2008-2009 Integrity Survey, KPMG Forensics asked employees who they would feel most comfortable approaching with a report of misconduct. "Supervisor" was the most often cited (78 percent of respondents).

When top executives specifically enlist the support of the management team early and often, and provide the tools and the training managers need to effectively triage employee concerns, they define behavioral expectations and create corporate citizens who are anxious to do their part to help the company succeed.

3. Give stakeholders a way to report misconduct.

Employees and other stakeholders should have a variety of options available for reporting misconduct when they see or suspect it. An accessible manager with an open door is important, but a means for sharing concerns anonymously is also critical.

Individuals with a concern should be able to speak up about misconduct in their preferred language, any time of day or night, and be assured that the company will investigate their concern and take appropriate action. They should also be told about what happens after a report is filed and advised regarding the organization's non-retaliation policy -- those who understand the process are more likely to come forward.

4. Make ethics training relevant -- maybe even fun.

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If the people depicted in your ethics training don't look like your employees or face the kinds of ethical situations your employees face, it's likely the message won't resonate with them.

Ethics doesn't have to be boring. In fact, a dynamic mix of traditional communication vehicles and more interactive components can help better disperse and reinforce the message. Consider supplementing print media (for example, posters, brochures, table tents, newsletters) with events, monthly meetings, games, quizzes and other interactive media to keep the ethics message fresh.

High-tech options such as customized Flash modules can offer a unique hands-on experience that can fully immerse employees in promoting an ethical culture. Certification tracking through a computerized learning management system can offer an added layer of due diligence, allowing you to analyze your course data and verify that employees understand key concepts.

5. Remember, the goal is an ethical culture, not a "program."

The word "program" suggests a starting and a stopping point. Successful companies know that an ethical culture is the result of a continuous, dynamic process that engages every employee; keeping the ethics message top of mind through a variety of media helps to keep ethical behavior at the forefront.

And evaluating results on a regular basis can help determine if and where changes need to be made to renew commitment and participation. 

Remember, while it's typically the unethical culture that steals the headlines, research shows that companies that hire ethical leaders and embrace ethical practices can realize significant dividends, not only in terms of a more unified workforce, but also in terms of real dollars.

Research by Ethisphere magazine found that the average stock growth percentile of public companies that were included in their 2008 list of the World's Most Ethical Companies have consistently outperformed the S&P 500 index over the past five years. Now, more than ever, it pays to be ethical.

Clark Bosley is vice president of The Network Inc., a company that helps organizations build an ethical culture through ethics and compliance hotlines, e-Learning solutions and communications to help address fraud, employee dishonesty and other misconduct in the workplace.

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