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Published
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** A Word from the President: Ethics and Compliance - One World or Two? In some cases, ethics and compliance in a business organization may seem like two very different worlds, but they are inextricably linked. While in some organizations ethics and compliance are different divisions with separate personnel devoted to their functions, a fine line exists between the two. In fact, you can't ask why it's important to comply with law and regulation without entering into a discussion about ethics. Additionally, reports of misconduct to an ethics helpline very often involve violations of compliance standards. Finally, examples in company codes of "values in action" are usually descriptions of compliance with regulation. Drawing a line between ethical behavior and compliance, in reality, isn't all that easy to do. Without question, we are experiencing a great shift when it comes to the focus of organizational leaders on ethics and compliance. For years discussion among business ethics professionals has centered on the idea that company programs mature from a focus on compliance to an emphasis on ethics. But in light of Sarbanes-Oxley and other regulatory efforts, we are now observing more and more organizations merging their ethics and compliance functions. It's harder to say that one can exist wholly apart from the other. Our Ethics Today issue this month reports on the effort by a group of leading professionals and academicians to consider the role of ethics and compliance in business, among other ethics topics that confront organizations on a regular basis. Last week, the ERC Fellows, a unique forum of the nation's leading thinkers in corporate ethics, met in Washington, D.C., to discuss the complexity of ethics management in the context of the new business ethics legislation and practice. The members of the ERC Fellows Program include chief ethics and compliance executives from some of the largest manufacturing and services corporations, government and non-profit organizations, as well as business ethics professors from several of the nation's leading universities. Their twice-yearly meetings allow the members to participate in intensive off-the-record discussions that focus on the cutting edge ethics issues of critical concern to America's corporate leaders. This meeting focused on "Ethics in a Compliance World" and began with a panel discussion featuring participants from business, government and academia. Lewis H. Ferguson, General Counsel, Public Company Accounting Oversight Board; Paula Desio, Deputy General Counsel of the U.S. Sentencing Commission; and Michael Michael, an academic Invited Fellow from Harvard University, discussed compliance and the role of rules in corporate ethics. All agreed that, despite the new government regulation, morality cannot be legislated. As years of Fellows and ERC research have shown, prevention of fraud and corporate crime relies on creating a robust ethical culture and having leadership that communicates the importance of ethics. The Fellows engaged in discussions of how new regulations affect the ethics or values aspects of corporate ethics programs and what they need from regulators to advance the ethics/values dimension of these ethics programs. Additionally, they discussed how recent regulatory developments can be leveraged within businesses to improve the ethics/values aspects of corporate ethics programs. The insights and recommendations that come out of these twice yearly Fellows meetings are always enlightening as we get a chance to hear candidly from those in the trenches - individuals engaged daily with the issues of enforcing business ethics. Further, because the Fellows are actively engaged in finding practical solutions to daily and long-range ethics challenges - and produce product deliverables through their working groups that further the work of ethics officers nationwide - we at the ERC gain valuable knowledge and information that we can apply in pursuit of our mission. This latest meeting gave us a leg up on the discussions that will surely evolve as a result of recent revisions to the Federal Sentencing Guidelines for Organizations, which blur the distinction even further. The Guidelines have long required an effective compliance program, but the latest draft includes language about ethics for the first time, stating that organizations must "otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law." Traditionally, compliance has meant, "What you can't do" while ethics has been defined as "What you should do". The lesson learned by organizational experience, however, and one that is reflected in the new regulations, is that when ethics and compliance are effectively combined in a single program, they can result in a total benefit - to employees, organizations and society - that is far greater than the sum of the two parts. Patricia J. Harned, Ph.D. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** ERC Fellows Study "Ethics in a Compliance World" From July 14-16, the ERC Fellows gathered for their summer meeting to discuss "Ethics in a Compliance World." During the lead-off panel discussion, Lewis H. Ferguson of the Public Company Accounting Oversight Board; Paula Desio, of the U.S. Sentencing Commission; and Michael Michael, from Harvard University, discussed rules, compliance and corporate ethics. Individually, the speakers shared their thoughts on balancing ethics and compliance:
Following the panel, the Fellows engaged in discussions of how new regulations affect their corporate ethics programs and how the regulations might be used to improve the ethics/values components of those programs. During the remainder of the meeting, the Fellows heard presentations from a number of academic Invited Fellows on the topics of their current outside research. The group was also briefed on the progress of the Working Groups, which highlight some of the pressing issues in business ethics today. They include the following groups already underway:
At the July 2004 meeting, the Fellows proposed forming groups on the following topics:
Previous research by Fellows Working Groups has found its way into publications, some of which are available for free on the ERC website. Browse and download free Fellows publications
at: Read more about the ERC Fellows Program
at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Students Build Ethics Offices -- and Ethics Officers " I learned that ethics is
the way to success and productivity, not only at school but also
in all aspects of life." The first meeting of the Student Fellows Program successfully concluded on July 16, following a week in which 23 students discussed leadership styles, the role of ethics officers, methods and challenges in integrating a student ethics office into a school's culture, and strategic planning for student ethics officers. Some of the more memorable events of the five day meeting included participation in outdoor team-building exercises and "building an ethics officer", which involved tracing a student's body onto paper and then enhancing the outline with the characteristics they believed an ethics officer should have. (See the pictures in the slide show for visual evidence of their creativity.) The group also heard from Joseph C. Kale Jr., Director, Ethics and Business Conduct, Integrated Systems and Solutions, Lockheed Martin Corporation, on the topic "What is an Ethics Officer" and from ERC Fellow Linda Trevino, Ph.D., of Pennsylvania State University, who discussed her research on honor codes. Finally, the students worked in groups to develop a presentation on creating a student ethics office that they could make to their school administration and faculty. A number of ERC Fellows, attending their own meeting in the Washington DC area at the end of the week, stopped by to talk informally with the students, and some agreed to be mentors in the upcoming year. The meeting was held at the Center for Leadership Excellence at Lockheed Martin, who also donated meals for the participants. ERC Character Development Manager Katie Sutliff led the meeting with help from ERC Interns Katie Donohue, Rielle Miller and Jennifer Carleton. Ms. Sutliff shares her thoughts about
the "extraordinary, young people who are ready to transform
the heroism of a moment into a movement that will change the world"
at: Three students share the highlights
of their experience at the Student Fellows Program at: View a slide show about the Student
Fellows Program at: Learn more about the Student Ethics
Office (TM) Model at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ **A Message from the New Chairman of the Board: Stephen D. Potts As the new Chairman of the ERC's Board, I am fortunate to follow someone like Ken Frazier who has been such an able leader. During his tenure, it was clear that he believed in the mission of the ERC and that he "walked the talk" - as ERC's leader as well as in his "day job" as General Counsel and Senior Vice President at Merck. Ken not only brought to us his commitment to an ethical workplace, he worked to spread that way of operating throughout corporate America. The good news is that, although he has stepped down as Chair, Ken will still be a member of the Board and will be available as a colleague and mentor, and for that I am deeply appreciative. I share Ken's passion for the mission of the ERC and will work hard to do whatever I can to see that mission fulfilled. As immediate past Chairman of the Fellows Program, I have come to know the staff and know that the ERC has wonderful people at work on its various projects. I am particularly excited and encouraged at the opportunity to take advantage in a positive way of our National Business Ethics Survey (NBES) and the benchmarking opportunities it affords us. For companies that are driven to evaluate their ethics efforts, whether by the Federal Sentencing Guidelines or by internal analysis, it is the ideal tool. Finally, I feel good about stepping down as chair of the Fellows Program at a time when it is thriving, and especially fortunate to be able to turn the reins over to new Chair Carol Marshall and Vice Chair Jo Pease. I have long thought the Fellows Program was one of our crown jewels and at this last meeting felt that the devotion of the Fellows, their energy level and their vibrant intellectual discussions were at an all time high. With new projects, a thriving Fellows Program and a knowledgeable and hardworking staff, it is an exciting time at the ERC and I feel privileged to be a part of it. Stephen D. Potts [Stephen Potts recently stepped down as Chairman of the Fellows Program to become Chairman of the ERC Board, replacing Ken Frazier who agreed last year to extend his term until June 30, 2004. Carol Marshall replaces Mr. Potts as the new Fellows Chair.] ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ We get many more questions than we can answer in Ethics Today and are sometimes torn in choosing which one to print. In selecting questions, we look for those that fall within the scope of our work, have broad impact, are timely, and/or further the mission of the Ethics Resource Center. For obvious reasons, we do not answer questions that appear to be exam questions and/or questions posed as class assignments, nor can we render opinions on specific cases. To do either would be unfair to all parties concerned. For this final issue of Ethics Today's publishing year, however, we chose to answer a handful of worthy questions that have been passed over in previous months.
Submit a question or read previously
answered questions at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Seeking Support for the 2005 NBES For ten years, the ERC has offered the most rigorous longitudinal study of employee perceptions of ethics in the American workplace. The National Business Ethics Survey© (NBES) identifies trends in organizational ethics from the perspective of our nation's workforce, utilizing a statistically valid random sample of the US employed population. Through the findings of NBES, business leaders have gained insights that are now seminal to the business ethics industry. In addition to having a core question set, each version of the survey has evolved, expanding to include relevant questions pertaining to contemporary issues. This feature, along with the core questions included in every survey, allows the ERC to recognize trends and measure changes relevant to ethics in American business. For the 2005 iteration of NBES, we have already secured in kind support from the Practicing Law Institute (PLI) for production and distribution, and cash pledge from Guardsmark, LLC. We are currently seeking other sponsors to underwrite the remaining cost of producing, distributing and marketing this important study. For more information, please contact ERC Development Manager, Allison Pendell Jones at 202.872.4760 or allison@ethics.org. Read more about the NBES at: Order the 2003 NBES at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Business Ethics: A Manual for Managing a Responsible Business Enterprise in Emerging Market Economies In May 2004, the U.S. Department of Commerce published a manual for corporate responsibility programs that integrates corporate governance, organizational ethics, and social responsibility. "Business Ethics: A Manual for Managing a Responsible Business Enterprise in Emerging Market Economies" was co-authored by ERC Consultant Kenneth W. Johnson, Director of the Ethics and Policy Integration Centre (EPIC), and Igor Y. Abramov, Senior Advisor, Market Access and Compliance, International Trade Administration, Department of Commerce. According to the International Trade Administration's website, the book is designed as a training tool for enterprises operating in countries that have just recently transitioned to a market economy, and will also be useful to decision-makers in any organization that is seeking to design and implement a business ethics program that conforms to global standards. The book contains numerous practical examples, worksheets and checklists, a bibliography, a glossary, and-in its nine appendices-numerous examples of business ethics policies adopted by various countries and organizations. The document can be downloaded for
free at: The EPIC website regularly updates
the Manual and provides current resources that supplement the publication
at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Publications and Media Coverage -- "Monday at SHRM", Business
& Legal Reports, June 29 -- "Off-duty antics can bring
you on-the-job consequences," CTNow.com, July 26 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Amber Levanon Seligson, Ph.D., joined the ERC in July 2004 as a Senior Consultant in the Research and Publications area. Her primary activities will revolve around the design, execution, and analysis of business ethics surveys. Dr. Levanon Seligson has extensive survey research experience and training. Most recently, she was an assistant professor of political science at Indiana University, where she analyzed survey data about voting behavior from eight Latin American countries for a book manuscript that she is completing. Dr. Levanon Seligson has won numerous fellowships to support her research and has published in a number of political research and political studies journals. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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:
The ERC also thanks the following for their in kind contributions during the last fiscal year
We invite you to join our loyal contributors in lending your support. You can make a tax-deductible credit
card donation online at: To find out about other ways to contribute,
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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ PLEASE NOTE: Ethics Today will be published 11 times this year, with the July and August issues combined into one. ======================================================= ======================================================= Copyright (c) 2004 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 For questions about your subscription, please email ethicstodayonline@ethics.org The Ethics Resource Center, 1747 Pennsylvania
Ave., NW, Suite 400 ======================================================= =======================================================
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