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Ethics
Today Online This newsletter
is published by the Ethics Resource Center.
** A Word from the President
On May 21, 2003, the Ethics Resource Center released the National Business Ethics Survey 2003, a national landmark survey that examines employee ethics in the workplace. The ERC conducted similar studies in 2000 and 1994. ** A Word from the President In my first research class in graduate school the instructor began by stating, "The best research confirms what you already know." I thought it was a dumb remark then, and it doesn't seem any more insightful today, especially in light of the results of the National Business Ethics Survey 2003, which contradicted many of my preconceptions. In an environment that includes Enron and WorldCom -- names that have become almost shorthand for corporate corruption -- my expectations were that we would see highly negative results compared to our studies in 1994 and 2000. Instead, the ERC found that employees generally have a more positive perception about ethics in their workplace than in previous years. Part of this could be a result of what I have characterized as the "Enron Effect" - that corporations have reacted positively to these scandals by making ethics a focal point for the short-run. Yet additional data suggests that we are not looking at simply a short-term effect, but the constructive results of more than a decade of effort. I had feared that two decades after the creation of the first corporate ethics office, and ten years since the issuance of the corporate sentencing guidelines, organizational ethics programs might have become stale, too compliance driven and less effective. The data deny this. We are seeing some of the first empirically demonstrable evidence of the impact of corporate ethics offices. Corporations with strong ethics programs have employees who are less reticent to report misconduct and who believe that the organization "does something" when misconduct occurs. These are two critical elements in building an ethical culture. The NBES is not a "Pollyanna" study. Significant problems remain in the organizational ethics world. Twenty percent of all employees reported seeing misconduct during the past year. Younger and newer employees feel greater pressure to commit misconduct and are more reticent to report the misconduct they see. Employees in organizations undergoing transitions -- mergers, acquisitions, reorganizations -- feel more pressure to commit misconduct. The bright side of these results is that all of the issues mentioned can be dealt with through effective organizational and managerial strategies. At the end of the day, the NBES 2003 re-affirmed my gut instinct about why we do research. It is too easy to become self-complacent, to believe things are the way we want them to be as compared to the way they are. Research is critical to understanding our ethical environment. The legitimate evaluation and assessment of an ethics program should focus on the perceptions of an organization's employees, but not in a vacuum. It is too tempting to be self-satisfied with the way we think we look, without holding up a mirror and seeing the truth. For organizations interested in evaluating their own programs, NBES 2003 can be the other part of that reality test, effectively benchmarking the perceptions of their employees against a valid national sample. Such evaluations are just the beginning, however, and the ERC is committed to applying research in ways that help us understand how to make ethics programs better and how to create the ethical environment in which we all would like to work. Stuart C. Gilman, ERC President ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Focus on the National Business Ethics Survey 2003 -- Executive Summary The National Business Ethics Survey 2003 (NBES 2003) asked employees in the United States to share their views on ethics and compliance within their organizations. The broad concept of business ethics may defy easy summary, but the survey questions in this third NBES report are specific and focused. They combine to yield answers on matters relating to how employees distinguish right from wrong behavior in their work, the availability of resources to aid in making appropriate decisions, and the general practice of values like honesty and respect in the workplace. More specifically, the survey of 1500 participants, focused on a number of key areas including:
Context is critical in any survey. To make better sense of survey findings and trends in business ethics, we look first to the larger business environment. The years between the 2000 and 2003 Surveys have brought the end of the dot.com boom, a sizable downturn in the economy and, beginning with Enron, a series of well-publicized scandals among major corporations and nonprofit organizations. New and emerging legislation and regulations, including the Sarbanes-Oxley Act of 2002, SEC Regulations and New York Stock Exchange rules are placing additional emphasis on executive conduct and organizational standards and practices. These events are, of course, related and together form a backdrop for the findings we present. Given these developments, we might expect employees in 2003 to be more aware of business ethics than in previous survey years. We might also expect business leaders to focus more attention on issues and concerns relating to ethics. But to what effect? Are negative events in business simply mirrored in how employees view the conduct of their leaders and assess their organizations? Or can corporate scandals in particular have the opposite effect -- providing both the impetus for change and making employees' own organizations look better by comparison? The answers from the Survey are clear and compelling. Recent negative events have not resulted in employees' viewing business ethics in their own organizations more negatively. Though major vulnerabilities and challenges remain, findings from the NBES 2003 are surprisingly hopeful. Read the rest of the NBES 2003 Executive
Summary, including key findings, at: ----------------------------------------------------------------------------------------------------------- - Major Survey of America's Workers Finds Substantial Improvements in Ethics American workers are seeing significant improvements in ethical conduct and practices within their own organizations, according to a major survey released May 21 by the Ethics Resource Center. Based on telephone interviews with 1,500 American workers across the nation, the 2003 Survey report compares key ethics indicators, such as workplace misconduct, reporting and the actions of company executives, with results from previous ERC studies in 2000 and 1994. The central findings include the first overall drop in observed misconduct seen in a decade: from 31% in 1994 and 2000 to 22% in 2003. Employee reporting of misconduct increased to 65% in 2003, continuing an upward trend from 2000 (57%) and 1994 (48%). In addition, perceptions that top management "keeps promises and commitments" went from 77% in 2000 to 82% in 2003. Read the press release at: ----------------------------------------------------------------------------------------------------------- - Press Conference Statements and Questions The NBES 2003 was released at a press conference held on May 21, 2003, at the National Press Club in Washington, DC. Speakers included Kenneth C. Frazier, Chairman of the ERC Board of Directors and Senior Vice President & General Counsel, Merck & Co., Inc.; Norman R. Augustine, Former Chairman, ERC Fellows Program and Retired Chairman, Lockheed Martin Corporation; Joshua Joseph, Senior Researcher, ERC; and Stuart Gilman, President, ERC. Read the statements of the speakers
at the NBES 2003 press conference at:
Read the answers to questions asked
at the NBES 2003 press conference at:
----------------------------------------------------------------------------------------------------------- - Understanding the NBES Methodology: An Interview with the President of O'Neil Associates For those not regularly immersed in survey research, the meaning of methodological descriptions may not be entirely clear. We asked Dr. Michael J. O'Neil, President of O'Neil Associates, Inc. -- the company that managed and conducted the data collection for the 2000 and 2003 NBES -- to clarify some frequently asked questions for our readers. Read the interview with Dr. O'Neil
at:
----------------------------------------------------------------------------------------------------------- - Getting the Most from Your Business Ethics Survey In May, Joshua Joseph, ERC Senior Researcher and author of the NBES 2003, presented the survey findings at the Conference Board's Business Ethics Conference and at the Defense Industry Initiative's Best Practices Forum. His presentations also offered advice on how an organization can get the most out of its own business ethics survey, including tips on starting the survey process, survey content and questions, benchmarking, data gathering, improving response rate and cross-cultural surveys. Read the outline of "Getting the Most
from Your Business Ethics Survey" at: ----------------------------------------------------------------------------------------------------------- - Acknowledgment The Ethics Resource Center would like to acknowledge the support of Guardsmark, LLC in underwriting the National Business Ethics Survey 2003 (NBES). Under the leadership of its Founder and Chairman Ira A. Lipman, Guardsmark has been committed to fostering a unique culture of ethics and excellence in its workforce since 1963. The company and Mr. Lipman have also been recognized by numerous organizations for promoting business ethics and a comprehensive code of conduct among employees. The Committee for Economic Development (CED) honored the organization and its founder with the 2002 Corporate Citizenship Award. Also in 2002, Mr. Lipman himself received the Stanley C. Pace Award for Leadership in Ethics from the Ethics Resource Center Fellows. In 1996, Guardsmark received the national American Business Ethics Award as the private company recipient. The Ethics Resource Center appreciates the support of Guardsmark, which helped make possible this important contribution to the field of business ethics. ----------------------------------------------------------------------------------------------------------- - Ordering Information The National Business Ethics Survey 2003 sells for $29.95, plus $4.50 in shipping and handling. Bulk rates are available for orders of 50 copies or more. In addition, while supplies last, the ERC is making the 2000 National Business Ethics Survey available to purchasers of the NBES 2003 for only the shipping and handling fee of $1.25. Order the NBES 2003 at: ----------------------------------------------------------------------------------------------------------- - Media Coverage of the NBES 2003 The release of the NBES 2003 received media attention in a number of publications nationwide, including:
In addition, ERC President Stuart Gilman
was interviewed about the National Business Ethics Survey 2003 on
the May 21, 2003, Marketplace Morning Report. Listen to the broadcast
at: As more stories are published, the
ERC will continue to update the NBES media coverage segment of our
website. See the list of published articles about NBES 2003 at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ In May, ERC officers participated in two international conferences that were held back-to-back in Seoul, Korea -- the International Anti-Corruption Conference (IACC), May 25-28, and the Global Forum on Fighting Corruption and Safeguarding Integrity (GFIII), May 29-31. International Anti-Corruption Conference: "Different Cultures, Common Values" ERC President Stuart C. Gilman made two presentations at the 11th International Anti-Corruption Conference (IACC), which assembled more than 900 people from the governments, civil societies and private sectors of 108 countries under the theme, "Different Cultures, Common Values". -- In "Using Ethics Centers to Foster Development and a Free Market", Stuart stated the ways in which the private sector can positively affect change -- through good business practices, effective (value-based) ethics programs within the cultural context, involvement of the entire business community (local and multinational), and support for the rule of law. He discussed the components of the international ethics programs developed by the ERC, which include organizational ethics assessments, code development and implementation, ethics training and communication, advice and feedback structures and evaluation and monitoring. Establishing such programs, he said, can result in market reform, civil society empowerment, rule of law and democracy building, decreased risk for investment, a level playing field for all stakeholders and the development of islands of integrity. Stuart also discussed how research can be used to understand the ethics climate and, more importantly, what works and what doesn't. Surveys such as the National Business Ethics Survey, and derivative multinational surveys including the Turkish Business Ethics Survey, can help define existing ethical attitudes, opinions for how to improve ethics, and challenges for all cultures. -- For a workshop on "Depoliticizing the Civil Service," Stuart described the use of the merit system in the United States government, and its applicability to developing countries today. Excessive politicization of the civil service is a common phenomenon among developing and middle-income countries with serious consequences for integrity and performance of the public sector. In "The Merit Based System: Just One Part of An Anticorruption Initiative", he noted that merit systems are considered a critical element in anti-corruption initiatives because of their ability to control patronage and corruption. The United States government is often cited as an example of a working merit-based system, he explained, although its usefulness as a model depends on knowing how the U.S. system actually works, and being familiar with its successes and failures. After explaining the history and development of merit-based systems in the United States, he cautioned that the US system is not an ideal model -- the practice is applied unevenly in the Federal government, is difficult to emulate, and varies widely in the states. It can, however, be an effective example for developing countries if one remembers that merit systems alone are not sufficient to prevent corruption, but that institutions and an ethical infrastructure are essential. Government offices and agencies tasked to promote ethics, disclosure requirements, detailed rules governing conduct, effective accountability and control mechanisms, and legislation initiatives, are all part of this infrastructure and are a necessary part of the U.S. system. Research for this presentation was supported by the World Bank. The IACC was established in 1983, in recognition of the need to combat an increasing rate of corruption, and to promote information exchange among institutions specializing in different strategies for counteraction. The conference was hosted by the Government of the Republic of Korea and organized by the Korean Ministry of Justice in cooperation with the IACC Council, Transparency International and Transparency International-Korea. Read more about the IACC at: Read the provisional findings from
the Seoul conference at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ -- Global Forum III: "Ongoing Challenges, Shared Responsibilities" More than 1200 government Ministers, parliamentarians, and officials from 123 countries, representatives of intergovernmental organizations, and experts gathered May 29-31 at the Global Forum III on Fighting Corruption and Safeguarding Integrity (GFIII), under the theme of "Ongoing Challenges, Shared Responsibilities". They discussed the challenges of corruption and the best ways to effectively prevent and combat corruption, including its root causes, and to safeguard integrity. At a workshop on "Government Action with Respect to Private-to-Private Corruption," ERC Fellows Chairman Stephen Potts presented "A Case Study of Private-to-Private Corruption." Since the private sector often times is larger than the public sector, he noted, the importance of good business practices in the private realm can be especially important to the economic, political and social health of a country or region. Because of the increasingly globalized character of national economies, corruption occurring in one region can no longer be confined within the nation's borders, making any instance of corruption a global problem. Steve discussed his personal experience with the United States Olympic Committee (USOC) Ethics Oversight Committee, from which he resigned after losing confidence in the USOC's commitment to ethics. "What we learned from that situation," he said, "is that despite the diligent efforts of the ethics office, the leadership failed to instill a fundamental set of values throughout the organization." To be truly effective, he continued, ethics must be an integral part of the organizational culture. Steve also cited the Enron case as a prime example of the pitfalls of having an ethics program on paper but not giving it leadership support. Enron's key values were touted as the foundation of the company's economic success and prosperity, he noted, but flimsy adherence to these values -- turned into blatant disregard by Enron's leaders and board -- caused the company's self-destruction. Just as countries must demonstrate trustworthiness in order to fully share in the benefits of international development and trade, so must companies, he concluded. This is especially true as businesses wield increased economic power and assume functions traditionally handled by government. Strong values-based corporate ethics standards ensure the responsible management of this power and can work to the benefit of developing countries and ultimately the economic health of the world. Read Steve's speech on private-to-private
corruption at: The Global Forum on Fighting Corruption and Safeguarding Integrity was launched in February 1999, in Washington, DC, under the auspices of the United States government, as a conference of government ministers playing a prominent role in fighting corruption. The primary objective of the conference is "to promote and facilitate the exchange of effective methodologies and best practices in the fight against corruption." The Global Forum draws up plans of action to combat corruption and provides the opportunity to monitor and review the progress of various national, regional, and international initiatives to fight corruption. Each Global Forum results in a Final Declaration, which describes the current status and issues and a plan of action. Read the Final Declaration for Global
Forum III at: Read more about the Global Forum III,
including the workshop reports and the vision statement, at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Ask the Expert: Which Organizations Perform Best In Having Good Ethics? Do All Companies Have To Have An Ethics Policy? A student writes with two questions: "Do you have any sort of a list of organizations that have performed highly in following good ethics in their place of business? Also, I have worked for different companies in the past and none of them have ever even mentioned a word about ethics. After reading up a little about ethics, I thought all companies were supposed to carry some sort of policy on ethics. Is this true? Or is it up to the individual company's discretion?" ERC Programs Manager Jerry Brown responds to each question individually. For the question about rating the ethical performance of organizations, he provides links to websites that rate companies by their ethics, as well as tips for finding other such lists online. In response to the second question, he explains that, while there is no uniform requirement for all businesses to have codes of ethics, there are practical reasons why they should consider having them. He also takes a look at the variety of requirements that do exist and to whom they apply. Read "Ask the Expert" -- -- On finding a list of businesses
that follow good ethics, at:
-- On whether businesses are required
to have ethics policies, at:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Opinion Poll: Have You Observed Misconduct? During the past year, have you personally observed conduct that you thought violated the law or your organization's standards of ethical business conduct and, if so, did you report it?
[Please note that all responses are anonymous. We use an online script to tally the votes and do not take any actions or make any attempt to identify the specific respondents.] Take our June poll at: Last Month's Poll: In May, we asked, "How much do you think corporate executives should be paid?"
See the results of last month's poll
at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Creating a Workable Company Code of Conduct Revised, Revised In April 2003, the ERC announced the imminent publication of the Second Edition of "Creating a Workable Company Code of Conduct". As the writers reviewed the final draft, however, they conceived of something different -- an improvement on the improvement, in fact. They envisioned a publication that would do more than update the material in the first edition, but would serve as a practical guide for organizations as they write their own company codes of ethics. The book underwent extensive revision -- expanding to include new chapters and eight appendices filled with guidelines, forms, and checklists. Unfortunately, the distribution date also expanded. Finally, however, the Second Edition of Workable Code has made it to the printer, and will begin shipping at the end of this week. We apologize to those who ordered the book in April and May, and hope that these additional improvements will make it worth your wait. Read more about "Creating a Workable
Company Code of Conduct" at: Order "Creating a Workable Company
Code of Conduct" at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ News from the ERC -- ERC President Stuart Gilman teamed with Jacqueline Brevard, Chief Ethics Officer at Merck & Co., Inc., for a May 30 presentation on "The Appearance of Impropriety and Conflict of Interest" at the Conference Board's 2003 Business Ethics Conference. Beginning the presentation with a discussion of the case of Don Carty and the American Airlines Board of Directors, they considered how something that is not illegal by external or internal standards could still be an example of poor business ethics. Understanding the appearance of impropriety, they explained, is recognizing that in some situations, it is the public perception of the act that counts. The pair explored two other case studies: the solicitation of funds by the American Red Cross following the September 11 attacks, and the collision of Police Chief Charles Moose's desire to write a book on the sniper attacks with the ethics regulations for public officials in Montgomery County, Maryland. Conflicts of interest are both legal and ethical issues and can cause damage to the individual and the organization. In some cases, the appearance can be worse than the actual conflict. Good ethics programs must account for both. "The purpose of private sector ethics programs should be to maintain the confidence of stakeholders, stockholders, and employees in the integrity of the corporation," they said. Concrete actions available to individuals are divestiture, waiver, or recusal, whereas actions recommended for organizations include the development and implementation of codes of conduct, values based programs, and help lines.
He encouraged the attendees to "seize the responsibility for ethical leadership" by:
Read Steve's compelling speech to the
BGCA leaders at:
SHRM members can listen to the webcast
at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Publications and Media Coverage -- "Staying Out of the Headlines: Ensuring an Ethical Organization" "The last few organizations to make the top headlines across the nation have done so in a bad way. Organizational misconduct, whether by an individual CEO or the organization itself, attacks and undermines the fundamental agreement between the organization and society; it violates a trust." So begins an article by ERC Principal Consultant Frank Navran in the June 2003 GWSAE Executive Update, in which he discusses how two strategies - ensuring ethical leadership and establishing ethical support systems - can help associations reassure nervous stakeholders that they are living up to society's higher standard of ethics for nonprofit organizations. Read the rest of this article at:
"If angels were to govern men, neither external nor internal controls on Government would be necessary," said James Madison in the Federalist Papers. Using this as his context, ERC President Stuart Gilman discussed the development of government ethics in the United States in an article appearing in the Spring 2003 Phi Kappa Phi Forum. After a brief review of Federal and state government systems, he points out areas of vulnerability in Congress, state legislatures, the judiciary and the executive branches. He notes that the United States has typically shied away from a values-based system for ethical behavior in government, which leaves many public servants asking whether an action violates the law, rather than if it is the behavior that the American people expect from their public servants. The research of the ERC, as well as international models provided by Canada, Australia, New Zealand and England, suggest that the American public would be better served by a values-based system, he concludes. The Spring 2003 issue of the Phi Kappa Phi Forum includes the following stories on the theme of professional ethics:
Individual back Issues of Phi Kappa
Phi Forum may be purchased for $6.25 from: In "Trust and Ethics: Essential Ingredients," published in the May 2003 Infection Control Today, the author discusses what it means to be trustworthy and how to make choices in the gray areas. For an explanation of how to conduct oneself in order to gain trust from coworkers, managers and others, he reprints a list written by ERC Principal Consultant Frank Navran as part of his response to a previous "Ask the Expert" question on how an organization can gain a reputation for being trustworthy. Read "Trust and Ethics: Essential Ingredients"
at: Read the original "Ask the Expert"
question at:
The article also interviews other ethics experts and concludes with ideas for avoiding conflict, which include devising, following and discussing a code of conduct; setting up a whistle-blower hotline; putting an employee in charge of collecting money for group gifts; avoiding selling personal property for profit to subordinates; and creating an office wide sign-up sheet for charitable fundraisers when more than one person is selling and a manager is among the bunch, with sales to be divided evenly. Read this article at: [Many online newspapers maintain articles on the open portions of their websites for only a week or two. The following articles are no longer available for free on the websites of their publishing newspapers, but may be available for a fee from newspaper's online archives.] -- The Wall Street Journal ran a story on May 15 about the new ways in which technology is being used to give the impression that an employee is working hard even when he or she is actually "slacking off", from programs that can control a workstation remotely to applications that can be programmed to send e-mail messages at a later time to make it look like the employee is burning the midnight oil. ERC President Stuart Gilman was quoted saying "If you're out playing golf, and you look like you've spent four hours in the office... If everybody does that, the company goes bankrupt." The article was also picked up by the Myrtle Beach Sun News. -- The May 2003 issue of Corporate Legal Times reported that Hewlett-Packard paid a key complainant in a case against the company $27.5 million as a consultant after the individual had reported alleged flaws in HP-manufactured floppy disks to the California Attorney General's office. In "Ethics Becomes Focus of Suit", ERC President Stuart Gilman, speaking in general, says that he would have "a real ethical issue first with the consultant himself. An engineer has an obligation to fairness and professionalism." He also discusses the potential PR fall-out, saying, "At the end of the day, your reputation relies not only on legal compliance but on the values that your actions express in day-to-day business." -- In "About That Job-Hunting Advice", published May 18 in the Charlotte Observer, columnist Glenn Burkins responded to readers offended by publication of a wire service article that suggested ways "to effectively fib their way past electronic gatekeepers when posting their resumes online." He admitted that the paper did not think long enough before running the story and that it should never be in the position of advocating trickery. ERC Fellows Chairman Stephen Potts told the paper "There is a sort of line somewhere where all of us tend to think about gaming the system" but he warned that when that reaches the point of outright lies, the effects can be professionally devastating. "If I found out someone had lied to me in the process (of getting a job), it would be pretty much disqualifying in my mind," he continued. "You do that at your own peril." -- "Forging a Moral Code", published May 22 in the Orlando Sentinel, notes the recent resurgence in traditional company efforts to prevent unethical behavior. They find that many experts feel these official policies are less important than the informal messages employees receive from their leaders. The article quotes ERC Senior Researcher Joshua Joseph saying that having a corporate ethics code has no effect on employee behavior, but that organizations must communicate what's in the code, provide training on what it means, and put systems in place, such as employee hotlines, that allow workers to ask questions and report possible misconduct without fear or reprisal. "What your supervisor communicates to you in everyday interactions, what your co-workers communicate in terms of 'what we do around here'" are ultimately more important than the formal structures, he says -- In addition, the 2003 ERC/SHRM study of ethics in the HR field, which was published in April 2003 and reported in Ethics Today last month, continues to receive press placement, including articles in the Washington Business Journal, St. Louis Post Dispatch, Chicago Tribune, Cleveland Plain Dealer, Tucson Citizen and Sacramento Business Journal. Read more about the ERC/SHRM survey
at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Offering Our Thanks As a non-profit organization, the Ethics Resource Center depends on contributions from many generous donors. Without their dedication and trust, many of the programs and projects highlighted in this newsletter would not be possible. The ERC thanks the following for their contributions of general support:
We invite you
to join our loyal contributors in lending your support. To find
out how to contribute or to donate online, go to: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ The Ethics Resource Center (ERC) is a non-profit, non-partisan educational organization exempt from taxation under the Section 501(c)(3) of the Internal Revenue Code. All gifts are tax-deductible to the fullest extent of the law.
Copyright (c)
2002 Ethics Resource Center. All rights reserved. Please contact ethics@ethics.org for information about reproducing any of the information contained within this newsletter or on our web site. Back issues of Ethics Today are available online at: /today/et_archives.html The Ethics Resource
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