Christopher Bauer's Ethics Nexus

Ethics Training: Are We Expecting Too Much From It or Too Little?

One of Chris MacDonald's ever-thought provoking blog posts ("What's More Important: 'Social Responsibility' or Basic Honesty?") quoted and led me to Peter Foster's recent post ("Trading Honesty for 'Social Responsibility"). Though admittedly not the central idea of Foster's post, the quote that caught my eye was this:

"It is surely also intriguing that the current financial crisis should have come after an explosion in the business ethics industry and the steady rise of the corporate social responsibility movement up the corporate hierarchy. You would be pushed to find any financial institution involved in the current debacle who was not dedicated to the very latest in independently monitored and internationally benchmarked governance practices, complete with high-sounding “codes” and commitments to carbon neutrality and fighting child poverty. And wasn’t the regulatory side of corporate governance meant to have been rendered cast iron by Sarbanes-Oxley? "

Of course there is plenty to ponder in this comment - as well as the rest of the article - but what stuck out to me was the recently-familiar implication that ethics and compliance training programs are simply not an effective piece of the response to the ever-rampant ethics problems to which we seem to see no end.

I think we all know by now that Enron had what could reasonably be called a model ethics code and that Sarbanes-Oxley hasn't miraculously made corporate fraud a thing of the past. Okay. But does that really tell us anything about whether we are expecting too much from ethics programs? I don't think so...

So, are we expecting too much from ethics training programs? Absolutely - if you think that these programs are supposed to somehow keep criminally-minded fraudsters from plying their trade. No ethics training program I know would have kept Bernie Madoff from being Bernie Madoff any more than they would have kept Al Capone from being Al Capone. However:

1. I know of no credible ethics training program that claims to magically convert the criminally-minded into the saintly. (And if you know of one, I'd suggest that their own ethics need some serious adjusting...)

2. A well-conceived and appropriately implemented ethics training program ought to help those wishing to do the right thing to be more easily and persistently able to do so.

3. Such a well-developed ethics training program ought to also help those honest folks more easily recognize and respond to the inappropriate actions of others, thereby reducing the potential impact of wrong-doers, whether or not that wrong-doing was intentional or a matter or either poor training or bad judgment..

4. The how-can-a-company-attending-to-ethics-still-have-Enron-like-problems question doesn't really wash in the fist place. Why? Because research shows repeatedly that the percentage of ethical problems caused by truly criminally-minded folks is barely even a blip on the statistical screen. A number of those folks will always be out there and, true, ethics training or a "high-sounding code" is unlikely to do a lot about them. However, for the overwhelming majority out there who really want to do the right thing, an appropriately conceived and delivered ethics training program can be extremely beneficial. Don't buy it? Look at the research from the Association of Certified Fraud Examiners, the Ethics Resource Center, and others showing - over and over again - that companies with ethics programs sustain dramatically lower fraud loss costs, etc. Quibble if you like that most of the data are correlational but I don't believe that significantly dampens the findings - it still makes the case that attending to ethics is related to improved employee behavior.

So, are we expecting too much from ethics training? Sure, if you want it to do more than it reasonably can. However, I think the far bigger problem is companies who merely give it lip-service or, perhaps, a half-hearted effort at implementation because they see it as either irrelevant or probably ineffective. With that attitude going in, any program's effectiveness will be hobbled right from the start. Once organizations see the the huge ROI of programs that are actually well designed, appropriately targeted, and fully implemented, I think they often come to see that they've actually previously been expecting far too little from ethics training.

Your thoughts?

Who's Responsibility Is Corporate Social Responsibility?

I don't focus much on corporate social responsibility (CSR) in this blog. Now and then, though, issues in CSR find their way into my thinking about business ethics in general and the updating of a recent Weekly Ethics Thought on our over-reliance on 'tone at the top' got me thinking about a parallel issue in corporate social responsibility.

It seems I'm reading more and more complaints from consumers and employees alike, all feeling angry that corporate leaders are not 'allowing' CSR to flourish as it should. While I share their distress in large part, I find myself chafing at comments suggesting this lack of corporate support for CSR within organizations somehow prevents those complaining from fulfilling their personal vision of what CSR is all about. It seems to me that this attitude fundamentally means that they're bailing on their personal responsibility for promoting the values they espouse.

1. As for employees - as with all things ethical - a lack of 'tone at the top', however unfortunate, never prevents local action within an organization. There can be departmental initiatives and there can be individual initiatives and all can create tangible results . Obviously, neither of these ought to reduce one's efforts to promote better corporate citizenship on the part of the larger organization. My point is simply that we need to not use poor organization-wide policies or practices as an excuse to avoid making a difference where we can.

What can you do in your particular role and in your particular company? Beats me because we all work in different capacities and in different types of industries. BUT, my money says that you're fooling yourself if you think that you can't figure out how to make some kind of tangible difference with a little thought. Hopefully your efforts will light others up and have some degree of viral impact. However, it seems to me that the only real measure of success is whether or not you are persistently working at ways to bring your stated values - and your business' stated values - to life. Anything beyond that is simply a wonderful bonus.

2. As for consumers - vote with your activism and wallet. Will you make a difference as a single voice? Again, beats me. However, at worst you'll sleep better at night knowing that you've been true to your values and, in all likelihood, you will have actually been a part of a larger movement that will hopefully have a collective impact on the business or industry about whom you are concerned.

Is an appropriate 'tone at the top' hugely helpful in creating and sustaining appropriate CSR efforts? Obviously so. However, to use the lack of such tone as a reason not to work towards a smaller scale difference strikes me as being essentially similar to complaining about the government but refusing to vote.

Has The Global Financial Crisis Helped Change Corporate Ethics For The Better?

The question I seem to be getting over and over these days is whether or not I feel that the global financial crisis has yet had a positive impact on corporate ethics. The best answer I can give is that I only wish it were so.

Despite the perpetual wringing of hands, statements of grave concern, and well-publicized vows of better controls, I can't say that I've actually seen much change. In fact, things remind me more and more of the period following the Enron collapse. Then, as now, ethics were on everyone's lips and bold commitments were made to shore up badly needed repairs in the corporate fabric. Though we got Sarbanes-Oxley out of it here in the U.S., the reality on the front lines was that not much else had really shifted. The primary change, as I have maintained ever since, was that there was a dramatic increase in the number of folks professing to be concerned about the ethics of their companies and industries. Otherwise, most things were pretty much business-as-usual on the front lines. 

Even when post-Enron professions of interest in better ethics were heartfelt, in most companies they never actually translated into much. In fact, we have seen ethics problems move back to pre-Enron levels in a variety of industries as I have posted about previously. Sadly, it's been a dismal showing all-in-all and, of course, we have the current global financial crisis as yet another flamboyant measure of that.

Being the pathological optimist that I am, I continue to hope that the current global financial meltdown will have significant, positive, and lasting impact on corporate ethics. However, at least to date, no matter whom one asks, ethics continue to always be someone else's problem rather than the problem of the individual or entity with whom one is speaking. Until that shifts, I'm afraid that we haven't got the remotest chance for positive changes, let alone lasting ones.

Edelman's 2009 Trust Barometer - A Reflection of Ethics and the Global Economic Crisis?

Edelman has released it's 2009 Trust Barometer and, as always, it is essential reading. 

It can't come as a surprise that trust in corporations is at an all time low and it certainly doesn't seem like a stretch to suggest that this lack of trust is simultaneously a cause and effect of the current global economic meltdown.

As always, there is a lot of good reading to be done through reviewing the entire document but a few of the highlights (or, perhaps, lowlights...) are that:

• there was a 20% plunge in their sample's trust in businesses to do what is right. Mind you, that would be a huge enough issue but remember that the figure was already at an alarming 58% previously. Now it sits at a terrifying-but-hardly-surprising 38%. 

• Only 27% of their sample felt that information coming from a government official was credible and 29% felt it was credible coming from a corporate CEO. (That latter figure drops to a mere 17% when looking at the U.S. sample of 35 to 64 year olds.)

• Globally, 62% of their sample said that they trust corporations less in the last year than the year before and remember, this is relative to the year before. We're talking about a level of trust that was already heading south out and has simply continued to fall.

Though these figures shouldn't be big surprises, sometimes it's helpful to have some specific support and metrics for what we simply presume to be true.  

As one of the innumerable steps needing to be taken to somehow quell the current economic crisis, trust in companies needs to be restored. Mind you, this was already a problem of significant magnitude prior to the meltdown but it's now gone from being a really good idea to an essential component of the equation. The foundation for increasing that trust? A fundamental shift to cultures of unbending ethics in those companies. Among so many other things, this means not just promoting corporate social responsibility as a PR tool but a true, systematic and system-wide shift in how these companies do business. (And, of course, this also requires coming to the realization that CSR, in itself, in no way means that there is a culture of ethics. CSR programs are an extension of corporate ethics - and an entirely optional one at that - not a substitute for them.) 

Will all this be easy to do? Certainly not. But it'll beat the pants off of going under which is what so many of these companies face doing unless they make the shift to to functioning with highly, conspicuously, and persistently ethically-based operations.

PR's Role In Ethical Business and CSR: Tips for Consultants of All Kinds

Nice article in The Firm Voice (a publication of the Council of Public Relations Firms) on PR's role in reinforcing the need for ethics and CSR in communicating with their clients. Though I was appreciative that they quoted me, the strength of the article is in the range of views from a variety of PR experts (unlike myself...) who do a nice job of collectively providing both tips and rationales for keeping a frank and persistent discussion of ethics in the conversation with clients. Even though the piece is geared towards PR professionals, the ideas in the piece feel like a great fit for experts - and perhaps particularly consultants - in all fields.

Though I'll strongly suggest reading the entire article, one quote that particularly stood out to me was from Ann Subervi of Utopia Communications who said:

"Too many agencies use CSR, ethics and reputation management as buzz words to close a sale. They would do well to make sure they are internalizing these concepts before they look to sell them to others. Few agencies actually do true ethics training, and fewer still enforce ethics among the rank and file—or their clients."

Amen on all counts, I'm sorry to have to say. All-the-more unfortunate is that her comments hold true for so many companies in so many different industries with whom we all seem to deal every single day.

Greenwashing - Whitewashing - Hogwash: What Are You Doing About Them?

In writing up a forthcoming edition of my Weekly Ethics Thought, it occurred to me that I was really writing more commentary than anything (read: blog material...) so I decided to post it here instead. Here 'tis:

Last year, TerraChoice Environmental Marketing published an interesting study of ways in which companies suggest that products are environmentally safe when, in fact, they are not. The study is called "The Six Sins of Greenwashing".

Among the things I found fascinating about their study is how the types of greenwashing they discuss are really no different than the ways in which individuals and organizations whitewash things all day long when the picture isn't as pretty as they'd like others to imagine. Here are the six greenwashing techniques listed by TerraChoice with my interpretation of what they mean in everyday whitewashing terms:

• Hidden Trade-Offs - Using the exception to prove the rule or using 'selective' statistics to make a point that the full range of data can't really support.

• No Proof -  Your point may or may not be correct but even if right, there aren't actually data to support it. (Of course, there is never anything wrong with making unsubstantiated statements - just be sure that they are clearly labeled as opinions and not facts!)

• Vaugueness - Maybe if you just make things a little less clear, others will assume that your bewildering arguments and behavior are okay when they aren't. Sins of willful information omission probably fit in here as well.

• Irrelevance - Give 'em something that looks or sounds really meaningful and hope they don't realize that what you've given them isn't actually at all relevant to the issue at hand. Magicians, fraudsters, and politicians all seem to be good at this. (Now that I see those three categories in print, side-by-side, it's kind of a scary-looking trio!)

• Lesser of Two Evils - Find a way to label something in a more positive light - or, at the very least, in a less negative light - and it will start to look much better by contrast against other similar, bad ideas, products, or behavior. (Here, I'd suggest the slightly different lot of marketers, fraudsters, and politicians as the most adept practitioners.)

• Fibbing - Here, the kindhearted folks at TerraChoice were far more delicate with their wording than am I. I believe that the somewhat more blunt term for this type of behavior is lying!

The original study is extremely interesting and is certainly recommended reading. However, whether you read it or not, my point is that we all need to think about whether we are engaging, or allowing others around us to engage, in these types of deceptive, evasive practices. If so, ethics demand that that we take every reasonable step to confront those actions. After all, if we see greenwashing, whitewashing, or just plain old hogwash being handed out to believing customers and don't credibly try to stop it, that automatically makes us one of the liars, too.

How Much Do Prospective Employees Value Employers' Ethics?

Here's a study I'd love to believe. (I only wish I could...) According to this summary at BusinessGreen.com, a majority of graduating MBAs would be willing to sacrifice as much as $15,000 of salary to work in a company "with a reputation for 'ethical and caring policies." I love the idea that professionals entering the workforce would have that level of caring about ethics and corporate social responsibility. Unfortunately, I can't make those findings fit with either the other studies I've seen or with my experience in speaking with new and soon-to-be graduating business students. (Mind you, I hear far more emphasis on the importance of ethics from these folks than I used to. But a majority? And making a substantial financial sacrifice as well? It just doesn't fit my experience, much though I wish it did.)

Here's what actually got me most concerned about this report, though...

The article states,

"The results of similar studies have been openly questioned by critics who claim that respondents only tend to rate CSR as an important factor in response to inquiries from researchers, because they do not want to appear greedy or selfish. However, Montgomery said that the online survey had been carried out anonymously, limiting the chances of biased responses, and that previous research had suggested that graduates do tend to select roles based on their ideals. He cited previous research that had asked graduates to predict the type of role they would accept, and had then tested their responses against the jobs they ended up with. It found that students had made a correct prediction 68 per cent of the time, suggesting that the majority would follow through on their commitment to look favourably on ethical employers."

As for the first comment, if I recall my social psychology correctly, many folks are just as likely to fudge their responses on anonymous surveys to make themselves feel better about their response. This is particularly true when the response would, if not anonymous, create a negative impression of the respondent. (As opposed to survey questions where the character of the respondent would not be a factor were it not anonymous.) What are the percentages of those likely to fudge such survey responses? I can't recall, I'm afraid, if I ever actually knew.

The second point is the one I found more awkward, though. It is true that sixty-eight percent of respondents is, of course, accurately described as a majority. The other, admittedly 'glass-half-empty' interpretation though, is that forty-two percent is still a sizable minority who wouldn't accurately predict the roles they would accept. Add the possibility that an additional percentage of respondents might be prone to respond to such surveys, even if anonymous, with socially desirable responses rather than perhaps accurate ones, and one needs to wonder just how compellingly this study's conclusions can be supported.

I'll say it again... I truly hope that their conclusions are accurate! I just wish I felt more sure that I could accept those conclusions without a whole lot more information to back them up.

Non-Profits’ Ethics On A Downward Slide?

I’ve been slowly working my way through the Ethics Resource Center’s recently released National Nonprofit Ethics Survey. It is extremely well researched and documented as are all of their studies.

There is, predictably enough, the usual combination of good news and bad news. Among the pieces of good news is that the nonprofits in their sample with well implemented-ethics programs saw levels of misconduct drop to nearly zero. Further, in those cases where misconduct did occur, 100% of cases were reported. Good news, indeed. It’s certainly tough to make a better case than that for the return on investment for ethics training and solid ethics program development and implementation.

Unfortunately the bad news may well be worse than the good news is good. Legal violations in their sample, as well as violations or organizations’ standards, rose to roughly the same levels as those found in the for-profit business world. So, even though ethics training and program implementation is shown to be highly effective in reducing problems, the nonprofit sector appears, at the moment, to perhaps be ‘racing to the bottom’ with the for-profit business world as far as the level of their need to build and maintain cultures of ethics.

As is typical of the ERC’s reports, there is a ton of great detail in this study and a review of this report is highly recommended for anyone in the nonprofit world.

I’d love to be able to write off this unfortunate ‘bad news’ finding to awkward sampling error on the ERC’s part but, aside from the fact that their research always looks impeccable, these findings closely mirror what I see and hear as well. 

Over the last few years, it seems to me that many of the same pressures on non-profits to succeed - by any number of standards, including financial - have been rapidly accelerating as financial support becomes tougher for many to find. Perhaps it’s no coincidence that all of their behavior more closely resembles the for-profit world now. It will be a shame of significant proportions if a deterioration of their ethics is a byproduct.

Let’s Focus Less On Tone At The Top!

I can’t imagine that anyone would reasonably argue against the importance of tone at the top in building and maintaining a corporate culture of ethics. But is it possible that we’ve driven this almost truistic stance a bit too far down the road? I’m thinking more and more that we have.

Make no mistake, I’m not suggesting that we need to be any less focused on tone at the top, it’s simply too important. Rather, I’m suggesting that we can’t let the lack of tone at the top impede efforts to build pockets of ethical culture within organizations in the absence of that tone.

I talk with far too many employees or not-quite-senior executives who have become so caught up in the need for tone at the top that when they don’t see it – and they so often don’t – this becomes an excuse for not doing as much as is possible to build and maintain at least a ‘subculture’ of ethics among the areas and individuals over which and whom they have control. To be clear, these are usually not individuals who run from responsibility or don’t see what needs to be changed. However, they have become so focused on their concerns about the lack of tone at the top that they have forgotten how much they can do on their own in spite of that missing tone from above.

At the risk of trading one truism for another, ethics ultimately come down to individual choices anyhow. So, even if appropriate choices aren’t actively modeled or encouraged from the top down, they can still be carried out at any other level starting from the individual and then up through the work group, department, division, etc. Conversely, a lack of ethical tone shown by senior managers, owners, or a board in no way prevents a manager or lower level executive from building and maintaining a culture of ethics within their particular managerial domain.

Can it be extremely discouraging to be an ethically-attuned individual or department in an organization without the best possible tone at the top? Sure. That can’t be a reason, though, to shrug off one's responsibility for doing the right thing.

Are Ethics Hotlines Less Hot Than They Seem? (And Other Flaws In Employee Reporting of Ethical and Legal Misconduct)

The recently released 2007 National Business Ethics Survey by the Ethics Research Center reports that employees in their sample were unlikely to use ethics hotlines to report observed misconduct. In fact, only 3% of their sample stated a preference to use an ethics hotline to report misconduct. In contrast, 44% of their sample stated that they would rather bring such matters to the attention of higher management and 43% preferred going to a supervisor.

None of this means that the use of ethics hotlines should be discontinued. After all, any available, functional opportunity for employees to report misconduct is worthwhile assuming that such reports lead to immediate and appropriate investigation. However, too many companies who set up ethics hotlines seem to believe that these lines will have far more impact than is actually likely. That would be fine except that they so often either skimp on the development of other avenues for reporting misconduct or on training employees on using the other existing processes. The logic in such cases is usually, “We have a hotline for reporting problems now so we’re obviously covered.” That is, to put it mildly, extraordinarily shortsighted.

Unfortunately, many employees are skeptical about the anonymity of hotline calls and, even more importantly, lack faith that a hotline report will actually lead to an investigation. Perhaps even more significant, though, is that many employees would simply rather speak about legal or ethical problems with someone they know rather than talking to an anonymous voice on the other end of a hotline service.

Ultimately, of course, what matters most is whether or not misconduct is reported to someone in a position to investigate. In the ERC sample, however, only 42% stated that they had reported observed misconduct and, from my experience, even that frighteningly low figure seems high.

On a possibly positive note, more than a third of the ERC sample stated that they would take matters into their own hands rather than go through official channels. That would, of course, lower the number of reports but simultaneously reduce the number of problems going without intervention. I would feel better about supporting that positive spin, however, if there was any way to assure that ‘taking matters into their own hands’ persistently led to an appropriate resolution of the problem. From my experience, though, I’m not at all sold that we can count on that.

To be clear, I think that informal peer-to-peer resolution of ethics concerns is always preferable if additional reporting or other intervention isn’t required by law or internal policies and procedures. However, until employees are given effective training on how to intervene – and then persistently reinforced for doing so – what passes for informal intervention is far too likely to be little more than a well-intentioned effort leading to little or no reduction in wrongdoing. Unfortunately from what I see over and over again, absent training and reinforcement, employees are likely to both overestimate their positive impact on co-workers and underestimate their potential to tolerate continued post-intervention transgressions. Related to the latter concern is that too many employees feel they have discharged their duty if they attempt to intervene informally although no change occurs. They need to be aware that an unsuccessful effort to intervene is a starting place rather than representing the end of their obligations to assure an appropriate investigation and resolution.