Staying Above Board:

How to effectively take stock of your organisation’s ethical climate

Mixing Metaphors

• Venturing in the realm of poetry – metaphors & oxymorons

• Business Ethics = Oxymoron (lying promises, honest lawyer, friendly fire)

• Above Board – pirates/card sharks

• Stock taking –pilfering; cattle thieves closed for “stock taking”

• Taking Stock – important to know what you have or don’t have in the store room; how quickly can you replace the stock; how do you move what is not selling (discounting)

• Importance of staying above board – reputation-sales-staff motivation-human development-successful business

• Purpose – introduce a method of stock taking/stocking the organizational store room

• “Test” a draft questionnaire

Watering Stock• Daniel Drew – 1800s, US• Successful cattle-driving business –

• salt + H2O= lbs

• Erie Railroad Director – manipulated stock price• Watered stock – NY Financial District = company

shares whose price has been temporarily manipulated upward

• Captures an act of ethical misconduct that can prevent a company from staying above board

Risks of neglecting StockTaking

• Eron - poster child• Framed value statements in conference rooms

did not match employee behaviour on the trading floor

• Watering Stock at play and we don’t know it

Enron Values circa 2001

• Excellence, Respect, Communication

Integrity• We work with customers and prospects

openly, honestly and sincerely. When we say we will do something, we will do it; when we say we cannot or will not do something, then we won’t do it.

Ethical Climate

• “The shared perceptions of what is ethically correct behaviour and how ethical issues should be handled in the organization” (Victor and Cullen, 1987 in Peterson, 2002).

• Relationship exists between the ethical climate of an organization and the ethical behaviour of employees (Deshpande 1996 in Peterson)

• Supervisors capable of influencing the climate

• Beneficial to assess the current ethical climate• How? Some instrument? Ethical Climate

Questionnaire (Victor and Cullen 1988)• Checklist – Len Brooks’ Checklists for creating and

maintaining an ethical corporate culture (http://www.ethicscentre.ca)

• Process? “Stock Taking”• Ethics audit – health check to ensure that behaviours

espoused by the organization exist in practice and that forbidden behaviour does not occur

“Stock Taking”• Ethics “Audit” – beyond compliance (external

regulations); ethics – internal standards; compliant but unethical – price fixing in countries without anti-trust laws

• Set standards in place• Interviews with all stakeholders• Review of records and other information• Observation of processes and practice • Gifts, company info, conflict of interest,

discrimination• Cyclical; responsive; checklists

Ethical Dilemmas

• Internal auditing will not capture some of these dilemmas

• Customer wanted to by a drug from our pharmacy today. When he heard the price he said he couldn’t afford it. Should I tell him that he can get it cheaper at Pim’s Pharmacy? Or should I let him go without his meds until he can buy it from us?

Based on a case from managementhelp.org

What to do?

• Our top software engineer has stopped using our internal email system. He said that as a Christian he could not use a system built by a company whose CEO is homosexual. By not using email he has cut himself off from the team and this has created havoc in our engineering work. What should we do?

Based on a case from managementhelp.org

What to do?

• Our company prides itself in hiring people from all over. We offer financial services. One candidate from the inner city fits the job requirements for an open position. We are concerned that some of our customers wouldn’t understand her strong accent and where she lives may alarm them too. What should I do?

STOCKTaking

• Supervision - HR & Top Management Roles

• Training in Ethics – training important

• Outcomes assessment – outcomes driven to measure success; stakeholder impact

• Communicate values – COE, newsletters, buy-in, decision-making model

• Keep at it – reinforce, discipline, reward

Training

• Values & Mission• Top Management endorsement• Roles and Responsibility• Issues and Problems• COE content & review• Method of decision-making• Reporting

Supervision

• Management sets tone – speeches, letters, etc.

• Important ethical role model (CEO, HR, line manager) – watched like hawks

• Ethics framework may include ethics committee or Chief Ethics Officer

HR Role Crucial

• Gain support of top management• Shape corporate COE, policies and procedures• Identify and analyse specific ethical issues, problems

and opportunities for improvement• Recruit, select and train staff• Reward, punish• Design training • Select credible trainers – knowledgeable,

unconnected• Communicate and teach

Outcomes

• Employee attitude surveys• Customer and other stakeholder surveys• Comparison between actual behaviour and

guidance provided by CoE and procedures• Ethics Audit team – cross functional and led by

external expert (fox and hen house)• Look out for improvement opportunities,best

practices, centres of excellence

Communication

• Notification• Whistleblowing mechanism and protection• Rewards & Sanctions• Cases handled speedily and consistently

“Keep at It”• Follow up• Plan for improvement of controllable variables• Create priority listing• Accurate delineation of resources• Continue working with initiative that work well• Do not dampen motivation• Discipline according to policy• Use issues as “grist for the mill” in training• Frequency – 1/2years, spot checks; organizational

change

ETHICS ASSESSMENT SAMPLE QUESTIONNAIRE

• An ethical culture is supported by top management, has incorporated ethics at all levels of the organization, and has an established Ethics Programme.

• How is your organisation doing?• A draft assessment questionnaire

II. Ethics Awareness

• What are the core values of the company?• How do you know this?• - Is the importance of ethics communicated to

all employees on a regular basis via formats such as organization newsletter articles and posters?

• - Do the ethics articles cover topics that are interesting, engaging, and in pace with the times?

III. Support from the Top

• - Has management established an ethical “tone at the top” by setting a good example of ethical conduct, providing positive and open communication, and supporting ethical conduct? Explain.

• - Are resources adequate for the organization’s ethics programme?

• - Is the ethics programme reviewed at least annually by top management in light of changing business challenges?

• - Is there a designated ethics officer or ethics contact?

IV. Incorporation of ethics at all levels of the organization

• - Are supervisors trained as contact points for ethics related questions?

• - Is ethics a focus during the hiring process? Explain• - Is ethics a focus during new employee training? Explain• - Is ethics a focus during employee evaluations? Explain• - Is ethics a focus during supplier selection? Explain• - Is ethics a focus during customer contract acceptance?

Explain• - Is ethics a focus during internal audits? Explain

V. Components of an Ethics ProgrammeCode of Ethics

•Does the organization have a written ethics code?•- Does the ethics code cover key elements, such as conflicts of interest, financial irregularities, and compliance to laws?•- Do employees certify they have received and understand the ethics code?

V. Components of an Ethics Programme 2• Ethics Training

• - Do employees receive ethics training on a regular basis?

• - Do employees certify they have received and understand ethics training materials?

• - Does ethics training incorporate the company’s ethics code?

• - Does ethics training incorporate the company’s ethics hotline?

VI. Ethical Misconduct

• What are the most frequent types of ethical lapses in the various groups of employees?

• Have the reasons for these forms of ethical misconduct been ascertained?

• What are these? • What steps have the company taken to

address these?

• COMMENTS/QUESTIONS