Christopher Bauer's Ethics Nexus

Adding Value To Your Values Statement

My appreciation for values statements that are both well written and well implemented grows and grows. Done right, they not only drive cultures of ethics but, in the same stroke, drive better management, leadership, and customer service. This really is 'silver bullet' stuff with the ability to provide a major uptick to every organization's functioning and bottom line.

As I work with more and more organizations on the values statement development and implementation process, there are a number of problems I see time and time again. Let me hopefully save you some trouble by putting the three most persistent problems I see out here right now. Hopefully this will help you avoid them in your writing (or re-writing) process.

Too Long - If your values statement is too long, how in the world will each of your employees be able to keep it in mind all day, every day? If they can't keep it in mind all day, every day, how can you expect them to use it as a fundamental guideline for their decision-making each day? (And, if it isn't helping them make better decisions all day, every day, you really haven't finished honing it yet...) Plus, we've all heard the idea 'if everything is a priority then nothing is a priority', right? That applies 100% here. Until you're honed and honed to the point that your values statement contains only the most imortant, most persistent priorities for your employees' decision-making process, you aren't finished.

Too Much 'Squishy' Language - Clarity is king, queen, and the entire court here. If you are using words like "integrity" and "synergy", you automatically lose. It's not that those are bad things, it's that most people - myself included - really have no clue what they mean until you put them in practical, everyday terms. Until each and every employee knows how each item on your values statement translates into specific things they are to do or not do in their job, you aren't done.

Seeing It Part-Way Through - As I often tell my clients, writing and implementing a values statement is the toughest simple-sounding job most of us will ever take on. The concepts are easy in the extreme. However, really getting it right takes a lot of thinking, talking, and time. (In organization of over fifty or so, my experience is that it typically takes a minimum of six months, and sometimes up to twelve, to really get it right.) All too many organizations simply get tired of the process and settle for something that isn't really finished. Here's why that is dangerous... When effectively implemented - which is, I guess, a discussion for another time - a well-written values statement will be getting every one of your employees on the same train; you had better be getting them on the right train! In my growing experience, a poorly written or poorly implemented values statement can, in fact, be far worse than having none at all. The best possible outcome is that employees will resent the time taken in the development process and the false promise that things will be better/easier/more productive for them. Far more dangerous is the prospect of getting everyone on the same page but, in fact, getting them on the wrong page.

Need help in getting your writing or implementation process off the ground? Let me know and I'll be happy to help. In the meantime, see if you can avoid these three all-too-frequent pitfalls described above. Doing so will greatly increase the value of your values statement and, done right, that value can be huge.

Are Your Claims of Ethicality Either Ethical or Legal?

An extremely interesting post on the Conflict of Interest Blog caught my eye this morning and I appreciate Jeff Kaplan for posting it. In that post, a case is described in which Goldman Sachs is reported to have defended some of their inappropriate activities, in part, by claiming that their promises of ethical behavior were merely "puffey" and not actually intended to be a promise of ethical behavior. Therefore, as the logic goes, they shouldn't be held legally liable for breaching their promise of ethical behavior. Besides perhaps setting a new low water mark for indefensible defenses, it also got me thinking about the hollowness of so many promises of ethics from a wide range of organizations.

For example, how many companies have an ethics code which, among other things, prominently states that ethical behavior will be expected. In essence, the ethics code simply promises ethical behavior. Besides the awkward circularity of that logic, how can you possibly assure - or, really, even adequately support - ethical behavior if you don't provide specific guidance regarding what that ethical behavior actually involves. Without such guidance, might not your organization's claims and promises of ethical behavior be just as likely to be viewed a "puffery" as were Goldman Sachs'? After all, an empty promise is largely what puffery is all about, yes?

The court has now held that false promises of ethicality are not a legal shelter and I suspect we can all agree that any type of false promise is a defacto ethical violation as well. So, is your organization prepared to show that its ethics code represents a genuine, concerted, persistent, effective effort to develop and maintain a culture of ethics? Remember, you need to be able to demonstrate all four of those qualities and the need to be able to do so has always been an ethical mandate. Now, however, it appears as if it might be a legal mandate as well.

Is Your Social Networking Policy Legal?

In the rush to develop effective and enforceable social networking and social media policies, many organizations have written policies that are sensible on the surface but which are, in fact, both ethical and legal nightmares waiting to happen. Do you know whether or not yours pass either test?

 

For those of you living in the U.S., the NLRB had now written three reports providing guidance on do's and don'ts for social networking and social media policies. Though many of you live outside of the U.S., I would suggest that you review these reports as well both because they are thought-provoking and because similar ideas and mandates may well be heading your way at some point.

 

Even if you live outside the U.S. where the NLRB has no legal jurisdiction, their reports speak to a number of ethical considerations we should all keep in mind. Among these are:

• The line between protecting an organization's reputation and the employee's right to express their opinions and beliefs online is perhaps not  a line at all but, rather, a continuum. How can you write a policy that protects appropriate free expression but still provides reputational protection for fellow employees and your organization as a whole? I think that the NLRB reports provide a number a thought-provoking ways to consider accomplishing that.

• Yet another continuum is found in the balance between making a policy broad enough to cover both the reputation of your employees and organization as a whole as well as the need to protect internal information and yet still be specific enough to be enforceable. Here again, the NLRB reports may give you some ideas, regardless of your location and, indeed, regardless of your feelings about the NLRB's stance on these matters.

Long time readers will know that I have long-advocated that a rough policy on social networking and social media is still better than none. After all, one can't possibly enforce a policy that doesn't exist. In the rush to develop a policy, however, don't overlook that case law is still rapidly evolving and your policies are, consequently, likely to need to evolve rapidly over time as well. Hopefully a careful reading of these three NLRB reports, along with any future reports, may well help you think through how you can develop something clear and enforceable that will protect your organization while still allowing both the legal and ethical protections every employee deserves.

Associaton of Certified Fraud Examiners Releases 2012 Global Fraud Study

The Association of Certified Fraud Examiners (ACFE) had released its 2012 "Report to the Nations on Occupational Fraud and Abuse". As all ACFE studies, it is a trove of interesting and useful, if sometimes alarming, data.

The current study analyzes data from 1,388 verified fraud cases from around the world and these data were reported via an online survey of ACFE members between October and December of 2011. To be included in this study, the investigation of these cases must have been completed at some point between January 2010 and the time of the survey.

Among the many compelling findings found in their executive summary are the following:

• On average, survey participants estimated that typical organizations are losing approximately 5% of revenues each year to fraud and abuse. (This corresponds closely to the figure frequently cited for major corporations in the U.S. So, these findings suggest that this estimate is both worldwide and probably, in fact, unrelated to the size of the organization.)

• The median fraud loss in this sample was $140,000 but more than a fifth of the cases resulted in losses of greater than $1,000,000. (Here again, theses figures correspond relatively closely with domestic U.S. studies from the last several years.)

• Occupational fraud reported in this study was far more likely to have been discovered by a coworker than through formal oversight and audit programs. (This is why effective ethics and compliance training must help employees learn to recognize danger signs for fraud and abuse as well as how best to respond to them. After all, they are the folks most likely to actually notice something is amiss. Obviously, formal oversight and auditing process are critically important; just don't fool yourself into thinking that they are any more effective than they actually are.)

• A significant majority of the perpetrators in this study (87%) had neither been charged or convicted of a fraud-related offense or punished/terminated by a previous employer for fraud. (This provides stil more data supporting the already-large pool of evidence that, despite our stereotypes, only a fraction of fraud and fiscal abuse is perpetrated by the 'criminaly-minded', reagrdless of one's definition of 'criminal-mindedness'.)

It is interesting that, as has often been the case with ACFE studies, these findings are based on 'worst case' reports of informants. (In other words, informants were asked to report on the worst case they had seen during the study period.) Although in theory that should skew these data significantly in the direction of overly liberal estimates, the findings are far more similar than different to those of other studies not using a 'worst case' data set. It's tough to know exactly what that means but my money is on the likelihood that patterns of fraud and abuse are so similar across cases that the range from best case to worst case, once the amount is large enough to be both reported and material, is actually smaller than one might imagine.

Much, much more is reported in this current ACFE report and giving it more than a passing glance is highly recommended.

 

Some Good News and Bad News From The Ethics Resource Center's 2011 National Business Ethics Survey

The Ethics Resource Center recently released the results of their 2011 National Business Ethics Survey. Long term readers of this blog and my Weekly Ethics Thought will know that I am always impressed with their research methods and clarity of reporting. This year's study is no different in that regard.

While, as always, I heartily recommend downloading a copy for closer personal review, here - with a little added editorializing - are the key points from their executive summary in the meantime:

• Since their prior survey two years ago, the number of employees in their sample who witnessed misconduct at work fell by four percent. That would be great news except that the new number is still a stunning 45 percent.

• Those reporting misconduct, once seen, rose two percent. Certainly good news but, again, not-really-so-good in that the improved figure is only 63 percent making reports in this sample.

• Alarmingly, retaliation against employee whistleblowers rose significantly to 22 percent. While the form and intensity of that retaliation can be all over the map from worst-case to relatively benign, that any type of retaliation should be reported in that high a percentage means that organizations need to work far more diligently to train on and rigorously enforce non-retaliation policies.

• Reports of pressure to compromise standards rose five points to thirteen percent - also a significant cause for alarm, it seems to me.

• Perhaps of the greatest overall concern, the percentage of companies in their sample with weak ethical cultures climbed back to "near-record" levels - an astounding 42 percent. If that isn't a call to re-double our efforts to build and maintain cultures of organizational ethics, I don't know what is.

So, did ethics improve in the last two years according to this study? A little. Kinda. In some ways. However, sorry to say, from my view the road ahead, overall, remains longer than the road behind.

The Ethics Lessons Learned From News Corps and Rupert Murdoch

The news world and blogosphere have been filled for the last couple of weeks with all of the revelations regarding Rupert Murdoch and the wild ethical transgressions by employees of News Corp. Along with these stories there have been loudly trumpeted all the valuable ethics lessons we are to have learned from this still-unfolding debacle.

So what exactly have we learned? Here, I believe, is precisely what we have learned; nothing. Really.

For all the lurid details and alarming oversteps, please tell me one new thing we have actually learned about ethics here.

Is it news that owners and executives still maintain the responsibility for the work done in their chain of command?

Is it news that tone at the top - including the top of any portion of the organization (e.g. managers and supervisors at all levels of the organization) - has a significant impact on the behavior of employees and contractors alike?

Is it news that transgressions which are ignored are likely to continue if overlooked and essentially certain to continue if rewarded?

I keep looking for even one new thing about ethics that we are to gather from all of this and I seem to keep coming up empty.

If you have gleaned something new and enlightening, I do hope you will come forward and share it.

In the meantime, sadly, all I think we may end up learning from Rupert and son is that - as has historically been the case so often - simply knowing what is right can be a startlingly poor predictor of doing what is right. (Especially when there is so very much to gain by stepping, even egregiously stepping, over the line.)

Isn't It Too Late For Ethics Training?

I am constantly amazed and alarmed by how often I am asked if ethics training is really worthwhile. The argument I hear most often is that ethics are something we ought to have learned at home or in church or in school when we were all younger and, if the job hasn't been done by now, what's the use?

This all stuns me for so many reasons and here are just a few of those reasons:

1.) 'Old dogs' do, indeed, learn new tricks. Give someone a compelling reason why their attitudes or behavior should change - something you can clearly show them will contribute to their personal success - and you might be amazed how much new learning can take place. (Even more so if that learning is novel, interactive, and fun. And yes, ethics training can be all three of those...)

2.) Even if ethics training won't magically send the unwashed to their knees begging for forgiveness, you can certainly help folks who want to do the right thing to have an easier time doing so. Again, just make it compelling, relevant, and easily applicable. (Yes again, ethics training can be all three of these as well.)

3.) As a part of helping the folks who wish to do the right thing, you can also help them become better able to see when others are enaging in behavior that may not be appropriate. You can then arm the 'good ones' with the right tools to intervene both immediately and effectively. Might that help reduce the risk and rate of problems with those folks who, for whatever their reasons, may not be on the right path? I certainly believe so.

Might all three of the above be reasons that ethics training for all of your employees could be of value? I certainly think so and, in fact, that the value can be huge.

How Retail Mentality Can Clobber The Fiduciary Mindset - Ethics Video

I just stumbled onto a nicely done video that captures how a retail mentality can wreak havoc with the fiduciary mindset. This one happens to be about a bank (HBOS) but the concepts ring true across industries and organizational types alike.

It's hardly news that a sole focus on the bottom line can easily lead to ethical compromise. I like this video, though, because it does such a nice job of describing, in simple terms, how easy it is to incentivise inappropriate employee behavior just by shifting the organizational focus from trust and customer service to retail sales figures. 

Those of you who know my work certainly know that I am hardly either 'anti-retail' or 'anti-profit'. However, we all need to remember that losing sight of ethics in the pursuit of profits, whether in retail or any other endeavor, can easily have catastrophic consequences.

What Milton, NY Understands About Ethics That Most Businesses Don't

My catching up on goings-on around the country for my Municipal Ethics News and Views blog started with this piece blaring the opinion that the San Diego ethics commission is an expensive redundancy that overreaches. Now if it's true that they are "hiring a new investigator to check whether campaigns are using 12-point type for their 'paid for by' lines, as required by city law, instead of the 6-point type required under state law", I share some of the writer's concern. However, the central argument is that most of the local ethics code is already covered by state law. Maybe so, but does the state have both the resources and the interest in monitoring local government ethics at the same level as local governments do? With rare exceptions, I hardly think so. Bravo to San Diego - as well as the other California cities with their own ethics commissions - for taking the proverbial bull by the horns and assuring that their city's ethics stay in line. Is there a question about how they are spending their resources? If so, that needs to be openly discussed and challenged - but not used as the foundation for a wholesale dismissal of the importance of the commission and its overall mission.

It's easy to attack local government ethics codes, or the code of any organization, for exactly the reasons they need to be in place - they require that those covered by the code do what is right as opposed to what is merely easy or convenient at the time. This piece from Macon.com quotes councilman James Timley as saying of their ethics code, “I didn’t vote for it... You want to do all this stuff that makes you feel good and look good, but I told you this would come back to get us.” Now I need to allow both that this quote might be out of context in the article and that I haven't seen the Macon code. However, the sentiment is a both common and unfortunate one. This happens to be regarding a local government ethics code but it's a complaint is heard throughout the private sector as well.

If one doesn't support an ethics code because it truly does overreach or because it is either toothless or otherwise unenforceable, you have my total support. However, in that case, work to create a more appropriate document and enforcement structure, not dismiss the idea of a code! That a code makes some things less convenient is a ludicrous reason to attack it, assuming that the inconvenience is simply due to assuring that officials and employees are doing the right thing. Should codes be as 'user-friendly' as possible? Absolutely! But, like it or not, sometimes doing the right thing in government, business, or anywhere else for that matter, is not what happens to be the most convenient.

Meanwhile, little Milton, New York seems to 'get it'. After, apparently, a history of ethics concerns, they decided that they needed to take some serious steps towards assuring improved ethics and did exactly that. In fact, as this piece from the Saratogian reports, they managed to do what most far larger governments and businesses haven't been able to achieve - they got everyone into the same room, decided in a bipartisan manner what needed to be addressed, and then did exactly that. Bravo! Of course, their code has yet to be formalized and approved but - if the reports of their start are any indication - they are truly well ahead of the pack compared both to many local governments and businessses.

ETHICS U - Great New Ethics Site From LAUSD

I've been impressed in the past with the Los Angeles Unified School District's ethics initiative and so, apparently, have all of you since one of their great ethics videos is one of the most viewed links on this blog. They have now unveiled their new "ETHICS U" website and I recommend that everyone have a look at it. Yes, this means you too...

Regardless of your industry or job description, there are concepts there that you can use. Perhaps more importantly, it provides a great model for how an organization's ethics website can be set up so as to be informative and helpful to employees at all levels of an organization.

Rather than my trying to somehow summarize what's there and describe it's great functionality, just go give it a look. If you're looking for a model for your organization's ethics site, I'd say that they've developed one of the best ones out there. Consider me (perhaps obviously) a fan. Are there other sites with more depth and breadth out there? Absolutely. Do they function nearly as well? Not in my mind.

Have a difference of opinion? Let me know. Like their site as much as I do? Let them know. Ethics programs like theirs can use all the support we can possibly provide!