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Ethics Today Online Published by the Ethics Resource Center ****************************************************************************
================================================== ** A Word from the President: Measuring Ethical Culture If on your summer vacation, you decided to stop in with the family and visit the designated ethics and compliance officer at all the organizations along your travel route, aside from the fact that you'd wear out the good will in your family, you would see that most organizations have a few things in common when it comes to their approach to ethics. Just over 85% of organizations across the US have codes of conduct, and 81% of organizations have a mechanism to hold people accountable to those standards. Other commonalities are the presence of anonymous reporting lines and training programs on topics in ethics and compliance. It's not so awfully surprising that organizational ethics and compliance programs have these elements in common. For over a decade, organizations have designed their ethics and compliance programs based upon recommended elements in the Federal Sentencing Guidelines for Organizations (FSGO). Not only has FSGO helped create an industry standard, but until very recently, if you had the FSGO recommended elements of an effective program in place, you could be reasonable confident that you had an effective program in place. Simply having the elements of a program in place, however, is like getting ready for your summer road trip. Packing your bags, gassing up the car, and mapping out your route don't mean that your trip will actually turn out the way you've planned (especially if there are kids involved). Similarly, from the perspective of the US Sentencing Commission and FSGO, having program elements no longer means that you have an effective program. The FSGO 2004 revisions (FSGO 2004) now specify that program due diligence includes "periodic measurement of program effectiveness." Simply put, even if you have the mechanisms of a program in place, you must now show that your program actually works. Organizations should be able to demonstrate that their programs are effective and actually achieve outcomes generally expected of an ethics and compliance program. In addition, FSGO 2004 states that organizations should "otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law." In other words, a program that works can meaningfully demonstrate that it is fostering an ethical culture within the organization. But how does one demonstrate the effectiveness of an ethics program? And, more problematically, how does one identify and measure ethical culture? These questions form the framework for ERC's current research agenda, which has a multi-pronged approach. First, based on our decades of working closely with organizations on ethics and compliance issues, ERC has developed measures of culture and effectiveness through employee surveys and a rigorous methodology to collect reliable data. We have the capability to generate community- and industry- specific benchmarks, allowing us to understand ethics program effectiveness based on a number of different indicators. Second, we've developed new ways to expand our datasets, and I'm pleased to announce a new "Donate Your Data" program, which allows companies to donate to ERC data accumulated from their internal surveys which deal in whole or in part with ethics and compliance. Our enriched overall data set allows ERC to formulate thoughtful research pieces on topics that are important to business leaders, such as ethical culture and the effectiveness of training programs. Third, our Fellows Program Measurement working group has identified two critical topics to address: Measuring the Impact of Culture with an emphasis on the Effects of Leadership at Varying Levels in the Organization; and Measuring Training Effectiveness. The working group members meet on a monthly basis to share insights, best practices and organizational experience in measuring training and program effectiveness. In addition, ERC has started disseminating its findings, beginning with a series of webcasts presented in May and June on "Understanding, Affecting and Measuring "Ethical Culture." ERC research staff and guest speakers presented three online seminars on "What Is Known About "Ethical Culture" and Why We Should Care," "The Impact of Leadership on Ethical Culture," and "Measuring Ethical Culture." A synopsis of these webcasts, which identifies many of the key issues, is included below. As we look ahead, we anticipate that these programs will serve as the solid groundwork for meaningful research on the topic of measuring ethics program effectiveness and ethical culture. In the meantime, we trust that the contents of this issue will help you to think about how you can frame your own measurement efforts. Patricia J. Harned, Ph.D. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ **ERC Webcasts on "Understanding, Affecting, and Measuring Ethical Culture” In May and June, ERC researchers and guest speakers presented a series of three 1˝ hour web-based seminars on the ethical elements of organizational culture, or ethical culture. ERC Senior Project Manager Abby Davidson presented the first webcast on "What is Known about Ethical Culture and Why We Should Care," including discussion of the elements of organizational culture and the impact of ethical culture on outcomes. She cited the following as examples of ethical culture:
She also discussed the impact of Ethics-Related Actions (ERA's), which include such things as communicating about ethics, setting positive examples and holding employees accountable for ethical conduct. ERC research has found that where management displays more ERAs, misconduct is reduced, reporting increases and pressure to commit misconduct is reduced. Ms. Davidson, along with special guests John C. Lenzi, Chief Compliance Officer, Altria Corporate Services and Michael Monts, VP Business Practices, United Technologies Corporation (UTC), presented the second webcast on "The Impact of Leadership on Ethical Culture." Mr. Lenzi discussed Altria's 2003 Compliance Index, which is a set of items used to measure perceptions about corporate ethical compliance. and their 2004 Compliance and Integrity Survey on Culture. He said they found "Clearly having senior management and immediate supervisors ’talk the talk’ AND ‘walk the walk’ has the most impact." Mr. Monts talked about "Ethics in Evaluating Employee Performance" at UTC, discussing their "Business Practices Competency", which is tailored to managers and considers to what extent the following behaviors are displayed:
The third webcast, on "Measuring Ethical Culture," was presented by ERC Senior Project Manager Skip Lowney, along with David M. Mayer, Ph.D., Assistant Professor, Department of Management, College of Business Administration, University of Central Florida, and Michael P. Campbell, Chairman Employee Ethics Committee, Science Applications International Corporation (SAIC). Mr. Lowney reiterated that “ethical” culture is the unwritten code of conduct by which employees learn what they should think and do. The elements of ethical culture are the identifiable beliefs and actions that comprise an ethical culture, and which we can measure. These identifiable beliefs and actions are termed Ethics-Related Actions (ERA's). He noted that ERC measures eighteen ERA's within organizations; collects data on them through the survey questions; and then creates an index from them. Mr. Mayer discussed 10 tips for measuring ethical culture, including:
Mr. Campbell discussed his organization's internal surveys, the organization's participation in ERC's industry group surveys and benchmarking, along with the importance that empowering employees -- through ownership, positive leadership and a sense of participating -- has on developing the essential elements of an ethically committed organizational culture. Participant satisfaction was high for ERC's first foray into online learning and more webcasts are being developed for the upcoming year. Advance notice of new programs will be announced in this newsletter and on the ERC website.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ **Why Measure Ethical Effectiveness One might ask "Why measure the effectiveness of an ethics and compliance program?" Charles Ruthford, Ethics Program Development, The Boeing Company, and ERC Fellows Measurement Working Group leader, says two reasons jump to mind: it's good business practice and the Federal Sentencing Guidelines state "The organization shall take reasonable steps - to evaluate periodically the effectiveness of the organization's compliance and ethics program." In this article, he also discusses two different categories for measurement: process and outcome. Read this article at: http://www.ethics.org/resources/article_detail.cfm?ID=881 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ **Is Your Culture a Risk Factor? "Culture is the leading risk factor for compromising integrity and compliance in companies today," says this white paper by Working Values. "Yet many organizations are unable to implement a truly effective ethics and compliance program because they lack sufficient knowledge of how their culture can create vulnerabilities and risks. And without that knowledge, companies cannot measure progress towards meeting ethics and integrity goals." Read this white paper at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ **ERC Launches "Donate Your Data" Program Many organizations conduct regular employee surveys to learn more about ethics, compliance, risk and misconduct in the workplace. "While the data from these surveys are useful for understanding the dynamics of an individual organization, it also has tremendous potential to benefit the ethics industry as a whole when merged with data from other organizations," said Dr. Patricia Harned, President of the Ethics Resource Center. ERC's "Donate Your Data" program allows organizations to donate ethics-and compliance-related data, from current or past surveys, for use in ongoing research on topics of key concern to business leaders. Data from entire surveys or from individual questions (including ethics questions in HR surveys) are of interest. Donated data will enrich the overall data set that ERC uses to formulate thoughtful research pieces on topics that are important to business leaders, such as ethical culture and the effectiveness of training programs. Where the data has been collected in a comparable manner, it will also enhance ERC's benchmarks for ethics and compliance program effectiveness. Read this press release at: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ERC Chair Stephen D. Potts Appointed to Chair Johns Hopkins Review Following a wave of public controversy in April 2006 over a consulting relationship with an external company, Johns Hopkins University leadership set in motion a review of institutional policies and processes related to business relationships. "The goal is to establish a clear, consistent, comprehensive, university-wide set of principles and criteria for evaluating proposed relationships, especially proposals that envision the use of the Johns Hopkins name," said William R. Brody, president of The Johns Hopkins University and Edward D. Miller, dean and CEO of Johns Hopkins Medicine in a press release. The university asked ERC Chairman of the Board Stephen D. Potts, former director of the U.S. Office of Government Ethics, to lead this review. Read the Johns Hopkins press release at:
Recent Presentations by ERC Staff Character Development Manager Rielle Miller presented on "Ethics & Moral Choices" at the first Non-Profit Leadership Summit hosted by the Council for Nonprofit Innovation in Arlington, VA on May 16th Ms. Miller and Character Development Associate Lena Thomson presented on Academic Integrity and the work of ERC's Character Education department to a group of Israeli Education Ministry officials. sponsored by the State Department, on June 6 at ERC. ERC President Patricia J Harned, Ph.D., and ERC Board Chair Stephen Potts participated in The Business Civic Leadership Center (BCLC) 2006 Partnership Conference: Strengthening Organizational Values and Stakeholder Trust. Dr. Harned moderated a session on organizational development strategies. Mr. Potts was part of a panel that discussed how business, nonprofits and government agencies can work together to promote trust and integrity. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ** Publications and Media Coverage Theory & Practice / What Would You Do? Ethics Courses Get Context, Wall Street Journal, June 12, 2006 As U.S. employers have bolstered workplace ethics training in the wake of a rash of corporate scandals earlier in the decade, says this article, they often deluged employees with long lists of do's and don'ts. The article mentions the findings of ERC's 2005 National Business Ethics Survey and quotes ERC President Patricia Harned. "Lots of companies are training, but
it's not really making a big difference," says president of the Ethics
Resource Center. Dr. Harned said much of the training isn't "sophisticated"
enough. Employers often rely too much on one-size-fits-all ethics programs,
instead of tailoring programs to different types of workers at different
levels of the hierarchy, she says. Read this article 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. ERC thanks the following for recent contributions:
We invite you
to join our loyal contributors in lending your support. To find out
about how to support the ERC, 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) 2006 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: http://www.ethics.org/today/et_archives.html For questions about your subscription, please email ethicstodayonline@ethics.org The Ethics Resource Center, 1747 Pennsylvania
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