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================================================= Ethics Today Online Published
by the Ethics Resource Center =======================================================
Reminder! Demos and ERC to Host Special Forum on Cheating on February 18 We invite you to join us in a conversation about America's crisis of integrity, Feb. 18th at the Kiplinger Building, 1729 H Street, NW, Washington, DC. More information about the forum is available at: /events.html ****************************************************************************
**************************************************************************** ** A Word from the President: Ethical Modeling and Ethical Storytelling Sometimes, even the most practical advice can seem abstract if it is not grounded in experience. Because most people see ethics as so intangible, research in ethics needs to be solidly tied to real life in organizations. At the Ethics Resource Center and through our Fellows program, we endeavor to focus our research and publications on real life experiences, from "Creating a Workable Company Code of Conduct" to "The National Business Ethics Survey" to publications such as Linda Trevino's recent study of ethical leadership, which was based on research supported by the ERC Fellows program. One of the major themes woven throughout that research is the importance of ethical leadership. It was especially gratifying, therefore, to hear a recently retired leader of one of America's largest corporations reflect on the importance of ethics in effective corporate leadership. I was privileged to attend the Stanley Pace Award reception, through which the ERC's Fellows program recognizes an organization or individual for outstanding ethical leadership. The 2003 Pace award was given to the retired Chairman and Chief Executive Officer of Procter & Gamble, John Pepper. Mr. Pepper's presentation was an inspiration to all of us. He began by stressing the important role ethical leadership had in molding him as a young employee. As an example, he told a story from his early employment. Excited about his idea to sell more of a product by creating a larger product size, he explained to the senior vice president in charge of the product why it would sell more merchandise, make the product more profitable and gain market share. The vice president looked at him and asked, "But is it good for the customer?" He emphasized that this was the culture of P&G when he worked there and that the continuation of high ethical standards was one of the legacies he felt it was important to leave behind. He gave several other examples of how supervisors shaped his ethical attitudes and how, sometimes in very indirect ways, he shaped the ethics of others at P&G. As one can imagine, during his long career Mr. Pepper had multiple experiences with ethical challenges. Unless they are communicated to others, he emphasized, those experiences are worthless. During his employment, he accumulated "ethics stories" and made them the bedrock of his presentations within the company and externally. "Storytelling is one of the most powerful ways that a CEO can influence behavior in their companies," he said. I wish I could relate the full scope
and richness of his presentation in this column. Instead, I can
only applaud how individuals like John Pepper live and validate
the importance of ethical leadership, acting not only as Chief Executive
Officers but also as Chief Ethics Officers. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Retired Chairman and Chief Executive of Procter & Gamble Receives Ethics Award The ERC is pleased to announce that John E. Pepper is the recipient of the 2003 Stanley C. Pace Leadership in Ethics Award. The Award was presented in conjunction with the ERC Fellows meeting opening reception on January 28, 2004, in recognition of Mr. Pepper's career-long commitment to ethics at Procter & Gamble. The Award, now in its fourth year, is bestowed annually upon an organization, individual or group of individuals displaying excellence in the ethics field. Accepting the award, Mr. Pepper said, "I am honored to win this award. I believe good things come from doing good. It's the difference between speechifying and leading by action. A company that operates ethically, no matter where or with whom it's doing business, will have an edge, ultimately, over companies that don't operate ethically." Read the press release at:
Read the nomination form, including
the highlights from the speech, at:
Read the introductory remarks by Fellows
Chairman Stephen Potts at:
Read Mr. Augustine's presentation at:
"In choosing this year's award recipient, perhaps no consideration was more important for many of the Fellows than the formidable personal leadership that Mr. Pepper has displayed, " said Fellows Co-chair Carol Marshall. "An area of intense discussion and research within the Fellows Program has been the determination of what constitutes a genuine ethical or moral leader in business today and the Fellows are careful to choose award recipients who exemplify true moral leadership. "This year the Pace Award goes to Mr. John Pepper for his personal performance as a genuinely ethical leader and for the model that he has set at Procter & Gamble that all corporations should strive to emulate. John Pepper stands out as an outstanding role model for business leaders across the nation. "Mr. Pepper wins this award for his excellence in the field of ethics and his outstanding contributions to ethical business management. He has played a lead role in shaping the ethical culture of Procter & Gamble by bringing his personal integrity and strong sense of ethics to the workplace."
Read more about the Stanley E. Pace
Leadership in Ethics Award at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Ethics Leaders Confront the Challenges of Managing Ethics During Mergers and Acquisitions In late January, the nation's leading thinkers in corporate ethics met in Washington, D.C. for the ERC Fellows Program winter meeting to discuss the complexity of ethics management in the context of corporate mergers and acquisitions. Findings by the Ethics Resource Center in its landmark 2003 National Business Ethics Survey revealed that workplace ethics were especially vulnerable at times when a corporation was in transition, such as when a merger is taking place. The Fellows broadly agreed that implementing ethics due diligence to integrate companies that have just merged is an art, rather than a science. There is no one size fits all approach. There is no clear checklist that can make life easy for those responsible for corporate ethics management in the newly merged enterprise. Read the press release at:
Paul Fiorelli of Xavier University and Paula Desio, Deputy General Counsel of the U.S. Sentencing Commission, led the Friday morning session. They presented the proposed new revisions to the Federal Sentencing Guidelines and invited comment from the Fellows group. The meeting ended with a summary session to identify new projects and working groups. Read more about the ERC Fellows Program
at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** A Qualitative Investigation of Perceived Executive Ethical Leadership: Perceptions From Inside and Outside the Executive Suite In January 2003, ERC Senior Fellow Linda Klebe Treviño coauthored, with Laura Hartman and Michael Brown, an article in Human Relations journal reporting on research into leadership ethics funded by the ERC Fellows Program. According to the abstract, "Senior executives are thought to provide the organization's ethical 'tone at the top'. We conducted an inductive interview-based study aimed at defining the perceived content domain of executive ethical leadership. We interviewed two types of key informants - corporate ethics officers and senior executives - about executive ethical leadership and then a contrasting category we labeled 'ethically neutral' leadership. Systematic analysis of the data identified multiple dimensions of ethical and ethically neutral leadership. The findings suggest that ethical leadership is more than traits such as integrity and more than values-based inspirational leadership. It includes an overlooked transactional component that involves using communication and the reward system to guide ethical behavior. Similarities and differences between ethics officers' and senior executives' perceptions also led to insights about the importance of vantage point and social salience in perceptions of executive ethical leadership. In order to be perceived as an ethical leader by those outside the executive suite, the executive must engage in socially salient behaviors that make the executive stand out as an ethical figure against an ethically neutral ground." Human Relations and Sage Publications
have made full text of the article available online at:
Read more about this article at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Ethics Effectiveness Quick Test: Excerpt on Leadership Ultimately, the ethical effectiveness of an organization rests on the decisions and actions of those in a leadership role. Leader behavior becomes the model for what the organization requires and expects from the total employee body. In this excerpt from the Ethics Effectiveness Quick Test, we include the eight questions from the QuickTest that help one to assess the leadership ethics in an organization. The Ethics QuickTest was designed by ERC Principal Consultant Frank Navran to assess an organization's ethical effectiveness. Responses to questions in twelve ethics management areas help identify what is working well within an organization and where improvement might be required. QuickTest the ethical leadership of
your organization, then read the potential impacts and recommended
actions, at: Take the full Ethics Effectiveness
Quick Test online, or download a PDF copy, at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** The Role of Leadership in Organizational Integrity and Five Modes of Ethical Leadership "Ethical leadership begins with the way leaders perceive and conceptualize the world around them," says ERC Senior Consultant Kenneth Johnson. "Ethical leadership, organizational ethics, and social responsibility are inseparable concepts. They are developing concepts, to be sure, but inseparable. How ethical leaders relate to and come to understand the world around them involves judgment and action. These can be developed. In sum, the leader's role is to guide the human potential of the organization's stakeholders to achieve organizational aspirations in ways that liberate rather constrain their imaginations and judgment. " The article goes on to discuss the components and modes of ethical leadership, and the integration of the two. Mr. Johnson also includes a chart showing six styles of ethical leadership and discusses when they might be used based upon the ethical context of the organization, its organizational culture, and the situation it finds itself in at any point in its organizational life. Read the rest of this article at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** The Max Files: Courage and Leadership Martin Luther King modeled courageous leadership and service to others. In a recent lesson from the ERC's MAXIMize the Moment subscription character resource, students learn the importance of standing up to people who are doing the wrong thing. Using Dr. King's quote, "Our lives begin to end the day we become silent about things that matter," the program encourages students and families to discuss the character traits of courage, fortitude, leadership, respect and justice. MAXIMize the Moment (MTM) combines current events and everyday issues with the time-honored wisdom of maxims. MAXIMize Your Family Time is a companion program that can be used by families independently or in conjunction with the in-school program. MAXFam subscribers get tips for communicating effectively with their children and an additional question set that explores the issues on a more profound level and encourages dialogue within families. Like MTM, MAXFam is designed to be flexible--so families can adapt the lessons to meet their individual needs. The ERC is making available free copies of this lesson on courage and leadership from MAXIMize Your Family Time (for middle and high schools) or MAXIMize the Moment Junior (for use with students in third to sixth grades). Request a free copy of this lesson
at: Please note: We will ask you to register using your name and email address. For more information on MAXIMize the
Moment, visit: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Ask the Expert: How Do People Respond to Business Pressures? "The question as it has been posed is rather broad-based," writes ERC Programs Manager Jerry Brown, "and exceeds the scope of what can be covered in this response. Since we are an ethics organization, I presume the author is asking how individuals respond to business pressures to commit misconduct, shade the truth, distort performance goals or ignore rules and regulations in order to be perceived as an effective 'team player'." In his response, Mr. Brown comments on the findings of the National Business Ethics Survey as they relate to pressure to commit misconduct, as well as focusing on how decreasing that pressure can benefit an organization. Read the response at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Suggested Changes to the Proposed Amendments to the Federal Sentencing Guidelines for Organizations ERC President Stuart Gilman, along with Robert J. Olson, Principal Consultant, Meta Ethics, and Michael Hoffman, Executive Director, Center for Business Ethics at Bentley College, submitted a letter to the U.S. Sentencing Commission suggesting additional changes to the Proposed Amendments to the Federal Sentencing Guidelines for Organizations. The final report of the Ad Hoc Advisory Group on the Organizational Sentencing Guidelines was delivered on October 7, 2003 After congratulating the Commission for its work on the proposed amendments, they state their concern that the proposed changes do not go "beyond compliance". As they stand now, say the writers, the Proposed Amendments:
Along with the letter, the three authors submitted their suggested changes to Chapter 8B2.1 and a Justification for those changes. Read the suggested changes (in PDF)
at: Read the Justification for Suggested
Changes to Proposed Amendments to FSGO (in PDF) at: Read the final report of the Ad Hoc
Advisory Group on the Organizational Sentencing Guidelines, including
the executive summary and an appendix of proposed changes at: The Commission seeks comment on the proposed amendments, issues for comment, and any other aspect of the sentencing guidelines, policy statements, and commentary. Written public comment regarding the proposed amendments should be received by the Commission not later than March 1, 2004. Public comment should be sent to: United States Sentencing Commission, One Columbus Circle, N.E., Suite 2-500, Washington, D.C. 20002-8002, Attention: Public Affairs. For more information, read the December
30, 2003, Federal Register Notice at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** OECD Conference on Guidelines on Managing Conflict of Interest in the Public Sector New forms of conflict between the private interests of public officials and their public duties arise as the public sector becomes increasingly commercialized and works more closely with business and non-profit sectors. When conflict-of-interest situations are not properly identified and managed, they can seriously endanger the reputation of government organizations and result in corruption. The Organization for Economic Co-operation and Development (OECD), in partnership with the National Association for Business Economics (NABE) and the Ethics Resource Center (ERC), is sponsoring a free conference on the OECD Guidelines on Managing Conflict of Interest on the Public Sector on Thursday, March 11, 2004. Mr. Janos Bertok, Principal Administrator in the OECD Public Governance and Territorial Development Directorate, will speak about the Guidelines, which represent the first international benchmark for developing a comprehensive conflict-of-interest policy in the public sector. Presented in the form of an OECD Recommendation, the Guidelines provide a practical framework of reference for reviewing existing policy solutions and modernizing mechanisms to ensure that public officials perform their duties in a fair and unbiased way, and that official decisions are not improperly affected by public officials' self-interest. The conference is part of the OECD's Breakfast Series and will be held at the OECD Washington Center, 2001 L Street, N.W., Suite 650, Washington, DC 20036. Registration and coffee start at 8:30 AM followed by the program from 9 AM to 10 AM. Although the conference is free, attendees are asked to register before March 9 for planning purposes. Register for the OECD Conference at: Read the OECD Recommendation on Guidelines
for Managing Conflict of Interest in the Public Service (2003) at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Beyond Reproach: The Incumbent's Bind The ERC has agreed to write a monthly column for The Government Services Insider, a new monthly newsletter focusing on the activities and best practices of the Federal government professional and technical services industry. In an ethics feature called "Beyond Reproach," the ERC will provide analysis and action recommendations regarding how to resolve a specific ethical question arising from actual business circumstances, based on ideas solicited from readers. This column was published in January 2004. Concern: "Our firm is as straight as they come, but I get uneasy when I see how we exploit current contracts for our own use. We gain, passively, inside knowledge of the follow-on opportunities and re-competes, even though the clients try to wall us off from this information. It's just what happens when you're the incumbent or on site. Our company has a self-proclaimed strong ethics program, but it is almost silent on this issue. How can we stay out of trouble?" Response: For government contractors, writes ERC President Stuart Gilman, inside information, whether passive or active, is a disaster waiting to happen. Depending on the knowledge gained, you could be financially punished under the terms of the contract, found civilly liable, lose the contract or be debarred. In extreme cases there are actual criminal penalties. All of this is bad news, and the legal reasons to manage this issue seem fairly obvious. Obeying the law in this area is not enough, however. Ethical behavior means being proactive when confronted with a values conflict. It is not a valid excuse that you pick up the information passively -an accidental e-mail, water fountain conversation, or document dropped on your desk. How you handle this situation determines the ethical climate of your organization. Read the rest of Dr. Gilman's response
at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Update on the ERC's Student Ethics Office™ Model Pilot Programs The Student Ethics Office™ (SEO™) model meets students' needs while maximizing results by tapping into their insights and enthusiasm. SEOs™ are modeled on corporate ethics offices and replicate most of the elements of a corporate ethics office, so students not only capitalize on the expertise of partnering companies, but they see how ethics will pertain to their working life. The ERC is currently working with three schools in Maryland and in Virginia to pilot the SEO™ model regionally and Ethics Today will regularly report on their progress. Two of three schools have completed their focus groups and are now taking online surveys to help determine their shared "core values" -- the set of ethical values that are essential and by which they would like people in their school community to live. Following a recommendation from the schools, the ERC is translating those surveys into Spanish in order to reach the highest percentage of the school community, including administrators, teachers, students, and parents. One of the schools also organized a focus group with Spanish speaking parents. "This is a great way to be training future leaders," said ERC Associate Consultant Katie Sutliff, who coordinates the program. "It's exciting that we're not only encouraging students to be ethical leaders, but also giving them the opportunity to put it into practice and watch them flourish." Learn more about the ERC's Student
Ethics Office™ (SEO™) model and find out how you can get
involved at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Publications and Media Coverage Two recent books include references to the findings of the ERC's National Business Ethics Surveys:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ -- On February 12, ERC President Stuart Gilman spoke to the Southwest Chemical Association on the importance of having a good ethics program. In his presentation "Ethics For Your Organization: Why Doing the Right Thing is Good Business," Dr. Gilman emphasized that ethics is an essential element of a successful business. Good ethical practices not only reduce legal risk, he noted, they can build an organization's reputation, protect leadership from being blind-sided, and reduce cynicism among employees. He went on to discuss some continuing areas of concern revealed by the ERC's National Business Ethics Survey 2003, including organizations in transition, younger employees and new hires, and organizations that lack a full ethics infrastructure. He noted some positive attitudes that came out of the Enron scandal, including the realization that, to be effective, a compliance program should also be accompanied by a "values-based" program and training. He concluded by emphasizing the importance of a "living code of conduct" and citing some examples of good ethical models.
Read more about the Montenegro program
at: The ERC has worked with JAI on several occasions over the past few years, including participating in their 2003 and 2002 Marmon Group Global Trade Institute and developing an online business ethics curriculum available to students in classrooms in 112 countries. Read more about the ERC's character
education programs at:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 Merck & Co., Inc., and the Merck Company Foundation for contributions in support of the ERC Fellows Program and for general support. The ERC thanks the Claude Moore Charitable Foundation for contributions in support of the character education programs. The ERC also thanks all individuals for contributions made through the 2003 Combined Federal Campaign fund-raising drive and through their annual corporate giving drives. CFC contributions help students by providing schools with relevant, timely educational resources that encourage good character by modeling positive decision-making and creating healthy dialogue. 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. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ PLEASE NOTE: Ethics Today will be published 11 times this year, with the July and August issues combined into one. An index will be published at the end of August. ======================================================= 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
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