The issue of personal information protection is a hot topic. Companies such as Google and Facebook have been questioned in regards to their privacy policies, as the personal information gathered from users has been leaked to the public on multiple occasions. Most recently, the University Health Network made headlines when patient information was leaked due to the theft of an unprotected USB key- we discussed the topic in the post “Maintaining Information Security and Privacy.” Sharing information has been made easier due to the Internet and electronic files, which raise concerns when it comes to regaining control over personal information protection. As technology advances, the risks surrounding information privacy continue to increase. Will your organization be ready to respond to tighter information controls?

A Call to Action

According to the Ottawa Citizen article “World is losing grip on privacy: watchdog,” Ontario’s Privacy Commissioner Ann Cavoukian stated:

“The world has less than a decade to make the protection of personal information and online privacy a priority before the concepts are lost forever. Ann Cavoukian says legislation meant to safeguard privacy already can’t keep pace with the flow of information and advances in technology.”

The Ottawa Citizen article raises the point that there are currently no laws in place requiring private companies to disclose incidents where personal information has been leaked or stolen. Unfortunately, many companies only go public about information privacy breaches if there’s a significant amount of data lost- with each company’s definition of “significant” varying significantly. The article then suggests that governments around the world should take privacy matters into their own hands in order to protect personal information and hold companies responsible for failure to do so.

I feel that it would make a difference if governments enforced greater control and accountability of privacy issues. However, in order to reach ethical goals and act as good corporate citizens, companies must build privacy protection controls into their business strategies immediately. Companies cannot afford the costs associated with information breaches or the lack of trust from the public- take initiative and be proactive in protecting information.

Suggestions for Keeping Personal Information Private

Accountability: Treat personal client, employee and patient information as if it were your company’s most important trade secrets. If an information breach occurs, make an announcement immediately- regardless of the size of the breach.

The Ottawa Citizen article “World is losing grip on privacy: watchdog,” by Vito Pilieci, discusses Cavoukian’s suggested plan for implementing stricter privacy laws:

“Cavoukian has been trumpeting her Privacy by Design agenda to privacy commissioners all over the world. The concept takes a radical look at the way privacy issues are governed and forces companies to make the safeguarding of personal information the standard in every new product, technology or service they release. Before mining personal data, a company must approach each individual, ask for access to the information and explain exactly what the information is going to be used for. Numerous European countries, as well as the U.S. are adopting Cavoukian’s concept.”

Define Intention and Use of Data: Let consumers, clients and the general public know what is done to personal information once it has been collected by a company and provide them with options as to whether or not they grant your company permission to share their information. People want to know that companies are taking the proper measures to keep their information safe. Consumers use cards that contain personal information to pay for items, they are asked to divulge increasing amounts of information and proof of identity when signing up for services or making purchases and in return, companies are being trusted to use this information for the sole purpose of providing the service or business transaction- not selling client lists to marketing companies.

Think of Your Users First: Privacy concerns have increased significantly due to the rise of social media. Google and Facebook have demonstrated a lack of concern for the privacy of their users, as both companies only took additional privacy matters into consideration after services were launched and users were furious with the lack of information protection.

When Google Buzz first launched, many Gmail users were confused by the service and the ability to opt-out of it in order to refrain from having their contacts, location, comments and other information available to anyone viewing them. In response to the criticisms, Google made many announcements and multiple privacy revisions. Google encouraged users to set their privacy settings to the appropriate level they desire and disabled users’ auto-connect capabilities so that they now have the opportunity to accept and reject people’s requests to connect.

In the hydro industry, homes in Ontario are going to be added to a smart grid system, which is described in the Ottawa Citizen article:

“With a smart meter, the electrical utility knows how much electricity a person is using and when. The utility can also tell when a person is home or out, based on power usage. Some utilities in the United States have expressed interest in selling that data to market research companies. Cavoukian believes that information should not be shared openly. She said she has been working with Toronto Hydro and Hydro One to ensure utilities in Ontario keep personal information private. The two large utilities have agreed to make privacy a top priority. ‘It’s your information, you should be able to decide what happens to it,’ Cavoukian said in applauding the approach of the Ontario utilities.”

I’ll have to side with Cavoukian on this issue- I should be able to decide what happens to my personal information. The next time your company collects a client’s information or launches a new product or system, consider the impact it will have on your company’s ability to protect personal information.

On Friday, HP CEO Mark Hurd was asked by the company’s board of directors to submit his resignation. As reported in the TechCrunch Article “HP CEO Mark Hurd Resigns, This Looks Messy,” the outcome of an investigation into sexual harassment allegations against Hurd “concluded that there was no sexual harassment violation, however it did find that Hurd violated HP’s ‘Standards of Business Conduct.‘” When news broke about his departure, Hurd claimed he himself hadn’t lived up to his own standards regarding integrity and respect. Therefore, if he wasn’t able to live up to these standards himself, what message does that send to the rest of the employees at HP?

Numerous reports state that the board’s decision to ask Hurd to resign was based solely on the lack of judgment he had demonstrated in violating the company’s code of conduct. This case is another example of how the unethical acts of a single individual lead to consequences that must be paid for by an entire organization. However, hopefully HP can use this event as an opportunity to rebuild and focus on ethics and compliance throughout the company.

Investigation Findings

An investigation was launched at the end of June as a response to allegations of sexual harassment that had been filed against Hurd. The woman who brought forward the complaint was a marketing consultant hired by HP for certain projects, but was never an employee at HP. During the investigation, investigators came across inaccurately documented expenses that were claimed to have been paid to the marketing consultant for her services. Falsifying the use of company funds violates HP’s Standards of Business Conduct, therefore, resulting in the demand for Hurd’s resignation. I give the board at HP a lot of credit for holding Hurd accountable for his actions and not accepting his offer to simply pay the company back the sum of the expenses he falsely claimed.

Hurd’s resignation raised many questions about the financial future of the company, as Hurd’s time at HP was marked with the success of increasing the company’s performance and value. However, in a press release issued by HP, they focus on the issue of the company’s financial sustainability, assuring investors and the public that the decision to ask Hurd to leave was due to the fact that his actions deemed him unfit to continue as the company’s leader.

The Wall Street Journal published an article, “Text of H-P Memo From Interim CEO,” which features the memo sent to all HP staff by interim CEO and HP CFO Cathie Lesjak, regarding Hurd’s departure:

“This is to advise you that Mark Hurd, Chairman and CEO of HP, has resigned from the company effective immediately. Mark’s resignation was submitted at the request of the company’s Board of Directors as a result of inappropriate behavior in which he engaged that violated HP’s Standards of Business Conduct and undermined his ability to continue to lead the company.”

Consequences

Anytime a company’s CEO falls under investigation, the entire company pays the price. Many begin to question the credibility of a company whose leader demonstrates unethical acts and the inability to make responsible decisions. HP has already started suffering the consequences of their former CEO’s unethical decisions. The New York Times article, “Boss’s Stumble May Also Trip Hewlett-Packard,” stated:

“But turning the page on the scandal will not be easy. While Ms. Lesjak maintained that investors remained confident in the company, H.P.’s share price tumbled 10 percent on Friday as word of Mr. Hurd’s departure rippled through Wall Street.”

As of yesterday, HP stocks have rebounded. However, it’s still too early to determine the full impact of Hurd’s actions on HP.

Opportunities

Unfortunately, it usually takes an event such as this for a company to learn from its mistakes and make positive changes within the workplace. A New York Times article, “Division of Roles Could Help H.P,” suggests that this event has opened up the opportunity for HP to divide the roles of Chairman and CEO. There is no word on whether or not HP plans on splitting up the job, however, it might be a wise decision to make based on some of the situations the company has found itself in recently. The division of these two roles has been gaining in popularity amongst corporate America, and is already common in many other countries.

The division of roles aids in increasing the accountability of those at the top. While some feel the division of roles leads to confusion over who is in charge, I feel that the separation of duties puts a system of checks in place on the CEO, making it difficult to get away with unethical acts, such as falsifying expense reports. For some companies, managing both the board of directors and the company can strain the CEO, creating an imbalance in the attention given to either side. When the CEO and chairman roles are divided between to two different individuals, there is someone present who can question the CEO on their decisions, rather than the CEO simply reporting to themselves.

In the blog post, “The FCPA – Tone at the Top and in the Middle,” by Thomas Fox, Fox raises a very good point about the importance of the tone at the top in relation to the HP case. The tone at the top sets the stage for the overall direction and culture within an organization. HP must carefully select a new CEO who will successfully lead the company with integrity and uphold their ethical commitments in order to avoid future blemishes to the company’s reputation.

The Global Reporting Initiative is comprised of a very large group of experts who collaborate on the development of global standards for sustainability reporting. Joining the GRI is voluntary. With transparency and sustainability emerging as growing trends in the late 1990’s, the GRI was created to provide companies with a standardized sustainability reporting framework. Dissatisfied with the level of transparency in corporate reporting, the GRI works to make sustainability reporting mandatory, as opposed to voluntary. In a previous post, “Social Responsibility Reporting Best Practices: Allstate,” I discussed the application of the GRI reporting techniques at Allstate. The economic downturn has forced businesses and their leaders to make changes to their internal controls and business processes by adopting sustainable solutions.

The GRI provides guidance for these companies, offering best practice reporting solutions, through the implementation of the G3 Guidelines, to increase transparency and emphasize the need for sustainable business practices. Breaking the reporting process down into various components and serving as a resource of best practice reporting examples, the GRI makes sustainability reporting far less daunting.

About the Global Reporting Initiative

The vision of the GRI is the desire that the disclosure on economic, environmental, and social performance becomes as common and comparable as financial reporting, and as important to organizational success. Through the GRI Sustainability Reporting Framework, the GRI works to increase the transparency and exchange of sustainability related information. In 2009, GRI released the Amsterdam Declaration on Transparency and Reporting, which calls on the government in each country to make the disclosure of environmental, social and governance performance mandatory for companies. In the article “First GRI-Certified Training on Sustainable Reporting in Canada” Rock Lefebvre, Vice President, Research and Standards, at Certified General Accountants Association of Canada stated:

“The GRI Guidelines represent the best approach for achieving the goal of standardized sustainability reporting.”

The GRI and the G3 Guidelines have formed collaborative partnerships with the UN Environment Programme, the UN Global Compact and the Earth Charter Initiative. A number of documents and agreements from other organizations- such as the OECD and ILO, have also been referenced for the purpose of creating the G3 Guidelines.

Reporting Framework

In an overview provided by the GRI, the G3 Guidelines:

“Provide guidance for organizations to disclose their sustainability performance. It’s applicable to organizations of any size or type, and from any sector or geographic region, and has been used by thousands of organizations worldwide as the basis for their sustainability reporting. It facilitates transparency and accountability by organizations and provides stakeholders a universally-applicable, comparable framework from which to understand disclosed information. The Framework is continuously improved and expanded as knowledge of sustainability issues evolves and the needs of report makers and users change.”

The reporting framework provides guidance on setting report boundaries, defining report quality and report content. When following the G3 Guidelines, companies must also include a company profile, sustainability strategy, management approach and key performance indicators for measuring sustainability initiatives.  The GRI is continually involved in projects identifying and influencing the future trends related to sustainability.  These projects help the GRI remain on top of current issues and make updates to the guidelines. Updates are made to the reporting framework by category, instead of overhauling all guidelines at the same time. Guideline updates are shaped by stakeholder input and the outcomes of the projects GRI is involved with.

Important Documents

The GRI publishes reports related to the progress made in sustainability reporting, government commitment to sustainability, as well as the achievements and progress made at GRI. Each year, the GRI publishes their own sustainability reports and last year, published their first Year in Review report, documenting the organization’s progress towards established goals. A series of “Learning Publications” have been developed to assist business leaders integrate sustainability into their workplaces, beginning with basic concepts in reporting, understanding the value of sustainability reporting and innovative reporting examples.

Companies following the G3 reporting framework are invited to submit their reports to the GRI. In doing so, company names are added to a public list that’s made available on the GRI website. GRI has prepared a number of tools to provide report makers with assistance, as preparing a sustainability report for the first time can be overwhelming. Templates, software, training and sample reports are just a few of the solutions GRI has to offer to those responsible for publishing a company’s sustainability report.

Health Provider Partners May Face Privacy Fines- Reuters

A federal rule has been proposed in the United States that could hold billing companies, customer service contractors and other businesses that handle medical records, responsible for information breaches. If this rule comes into effect, the number of businesses that would be required to comply with Health Insurance Portability and Accountability Act (HIPAA) requirements would significantly increase. This will be an important topic to follow as it develops, as the concerns over protecting private medical information have been growing for awhile.

According to U.S. Health Secretary Kathleen Sebelius, the article reports that:

“The changes would be ‘the most sweeping improvements to HIPAA practice and security standards since they went into effect in 2003.’”

Yesterday, Monday June 28^th, 2010, the US Supreme Court voted on a decision in the Free Enterprise Fund and Beckstead and Watts, LLP v. Public Company Accounting Oversight Board and United States of America case. The vote rejected a challenge to the constitutionality of the Sarbanes-Oxley Act. The PCAOB was created under Sarbanes-Oxley in 2002, to oversee the auditors of public companies. The goals of the PCAOB are to protect investors and public interest through the promotion of informative, fair and independent audit reports.

In the New York Times article “Justices Uphold Sarbanes-Oxley Act,” Floyd Norris writes:

“The court turned aside a broad challenge to one part of the law, which established the Public Company Accounting Oversight Board (PCAOB) to regulate the accounting industry. Some commentators had forecast that the court might throw out the entire law because of problems with the way the accounting board is appointed, but the justices refused to do so. Instead, in a 5-to-4 split, the court found that the way members of the oversight board could be removed was unconstitutional.”

This case raises awareness of the issues surrounding separation-of-powers and accountability. As it currently stands, Sarbanes-Oxley continues to live on as a law. However, changes have been made to the removal process for members of the PCAOB. Prior to the decision from the Supreme Court, the Securities and Exchange Commission (SEC) had the ability to appoint 5 people to the PCAOB, and their removal could only be warranted if there was a good enough reason to do so. Now, the SEC can remove members as they please.

Yesterday’s decision allowed those within the accounting industry to breathe a sigh of relief, as accounting rules are important and help foster trust with investors. A lack of accounting rules (among other things) in the pre-Enron and WorldCom days lead to the need for standardized accounting rules.  Therefore, if Sarbanes-Oxley was to be eliminated in its entirety, what would the future look like for businesses and investors?

The Wall Street Journal article, “3rd Update: US Supreme Court Invalidates Part Of Accounting Board,” written by Brent Kendall and Fawn Johnson, provides an overview of the reactions to the Supreme Court’s decision, as well as the separation-of-power issue:

“Roberts said the structure of the accounting board violated constitutional separation-of-powers principles because it was too difficult for the president to remove board members. ‘The president cannot take care that the laws be faithfully executed if he cannot oversee the faithfulness of the officers who execute them,’ Roberts wrote. The court, however, refused to strike down the accounting board in its entirety, saying the board’s mere existence didn’t violate the Constitution. PCAOB said it will continue to run all programs as usual, and no legislation will be needed to bring it in line with the Constitution. ‘We are pleased that the decision allows the PCAOB to continue without interruption to carry out its important mission of overseeing public company audits,’ said PCAOB Acting Chairman Daniel L. Goelzer.”

Many business leaders and employees question the impact of ethics on an organization. Some wonder if corporate ethics even matter, while others swear by acting ethically. Today’s consumers, along with laws and regulations, place pressure on organizations to become more transparent and make business decisions in an ethical manner. Some studies even suggest consumers will pay premium prices for goods and services from companies known for being good corporate citizens. With ethics and compliance violations frequently in the news and gaining public attention, organizations are increasingly held accountable for their actions. From the tone at the top to written corporate policies, corporations are facing a reality where ethics matters.

The Chartered Institute of Management Accountants (CIMA) prepared a study to provide insight into the issue of ethics and how it can be integrated into every day business practices within the financial industry.

Incorporating Ethics into Strategy: Developing Sustainable Business Models

The Chartered Institute of Management Accountants (CIMA) conducted a study to learn more about how finance professionals incorporate ethics into corporate strategy to ensure long-term sustainability. In the report based on the CIMA study, they include an interesting fact about the impact of ethics on organizational success. Authors Victor Smart and Danielle Cohen write:

“Of the 28 companies that fell out of the world leading S&P 500 index in the past ten years, comparatively few casualties were claimed by shifts in technologies and markets. More were victims of massive fraud (as with Enron and WorldCom) or had leaders who’d failed to create a sustainable business model.”

Identifying factors leading to a company’s demise should demonstrate the consequences of unethical business decisions. Learning from failure is sometimes the best way for a message to get across, yet, many business leaders still turn a blind eye to unethical acts within their own companies. When managers and top level executives ignore ethics violations, it becomes hard for them to be taken seriously and set a positive example for their employees.

Here are the 5 main conclusions of the Incorporating Ethics into Strategy: Developing Sustainable Business Models study:

“1. Strong ethical policies that go beyond upholding the law can add great value to a brand, whereas a failure to do the right thing can cause social, economic and environmental damage, undermining a company’s long-term reputation and prospects in the process.

2. Once they have adopted an ethical approach, companies will often find there are bottom line benefits from demonstrating high ethical standards.

3. The ethical tone comes from the top.

4. High quality management information on social, environmental and ethical performance is vital for monitoring the environmental and social impacts of a company and for compiling connected reports showing how effective its governance arrangements are.

5. Management accountants have a particular ethical responsibility to promote an ethics based culture that doesn’t permit practices such as bribery.”

These conclusions emphasize the need for an increased commitment to corporate ethics. Many companies tend to believe acting ethically costs more than the company gains. However, respondents from the study have reason to believe otherwise, as bottom line benefits within their companies have been attributed to ethical actions. Another conclusion the study made was that the company tone is established at the top. This is a topic we have discussed in great length in previous articles, as the success of any ethics and compliance program rests on the shoulders of top company executives.

Study Recommendations

The Incorporating Ethics into Strategy: Developing Sustainable Business Models study recommends taking the following actions to integrate ethics into corporate strategy:

“1. Ethics must be embedded in business models, organizational strategy and decision making processes.

2. Senior managers and business leaders must demonstrate an ethical approach by example. This will show that middle and junior managers will be rewarded for taking an ethical stance.

3. Non-executive directors should act as custodians of sustainability, with the particular duty of ensuring that their executive colleagues are building a sustainable business.

4. Managers must come to problems with ‘prepared minds’, looking at ways in which an organization can benefit from an ethical approach rather than one that relies narrowly on cost cutting or compliance.

5. Finance professionals must play an active role as ethical champions by challenging the assumptions upon which business decisions are made. But they must do so while upholding their valued reputation for impartiality and independence.

6. Management accountants are encouraged to help ensure that their businesses are measuring performance on an appropriate timescale that will deliver sustained and sustainable success.

7. Business leaders should use the skills of the finance team to evaluate and quantify reputation and other ethical risks.

8. Finance professionals need to take social, environmental and ethical factors into account when allocating capital, so that sustainable innovation is encouraged.”

In a previous post, “Corporate Ethics Oath: A Tool For Understanding and Developing Workplace Ethics,” we discussed the MBA Oath introduced at Harvard Business School. In the same post we also discussed creating an Ethics Oath as part of a company’s ethics and compliance initiative. Since writing the post, there have been numerous discussions related to the effectiveness of these types of oaths. In order for these initiatives to be successful, they require support and enforcement from top level management right down to entry level employees. If employees aren’t held accountable for their actions, the opportunity to act unethically increases.

Upholding the Oath

In the post “Preparing for Courage: The MBA Oath,” on the WorkLore blog, the author discusses 10 misconceptions about compromise at work. The author discusses how the MBA Oath combats misconceptions, demonstrating how individual ethics and values can prevail. As outlined in the post “Preparing for Courage: The MBA Oath,” here are the 10 ways in which an ethics oath can help out in compromising situations:

“1.  The oath creates a counter balance to immediate pressures by reminding us of our larger responsibilities and loyalties.

2.  The oath reflects an understanding that we are not inherently ‘good guys’ or ‘bad apples,’ but must all continually pay attention and prompt each other to pay attention.

3.  With its emphasis on individual responsibility, the oath reminds us to consciously choose how we respond to external pressure, even from the top.

4.  The oath increases the chances we will make hard choices from positions of strength rather than ‘caving’ out of fear.

5.  By requiring us to commit to ongoing learning and working with our peers to be accountable, the oath helps us avoid developing blinders and identify issues as quickly as possible.

6.  Putting the oath in practice challenges us to test our assumptions about where we can and cannot differ or influence for the better.

7.  The oath helps us mentally prepare to set limits and keep an independent perspective. Knowing we may need to act with courage one day, we are more likely to build the internal reinforcement system that gives us the freedom and skills to say no when needed.

8.  The tone of the oath invites humility and a focus on serving positive outcomes even when situations require us to hold others accountable.

9.  By inviting us to commit to aims greater than ourselves, the oath increases the chance that we will discover purposes that are intrinsically gratifying and that allow us to actualize our gifts and talents.

10.  By calling out the need to contribute to economic, social and environmental prosperity, and naming the risk of preying on systems of unjust laws or corruption, the oath highlights our responsibility to serve the largest possible understanding of our interests and role in society.”

Accountability

There are many different opinions surrounding the effectiveness of making a pledge to ethics. Some believe signing or stating an oath means making a commitment to uphold the values included in the oath regardless of the situation. Others believe greed will overcome and the values in the oath become compromised for personal gain. There are valid examples to argue each side. At one point in time, Enron actually had a code of ethics in place- look what happened there. Other companies, including Campbell Soup Co. and American Express are continually praised for their corporate ethics codes. However, companies like them do more than just develop an ethics code, they FOLLOW the practices outlined in it.

The difference maker in many of these companies is the tone at the top. Employees are able to take company policies seriously, as they witness firsthand the commitment made by top level executives to uphold the company values. Leading by example and living the desired corporate culture significantly impact employee attitudes towards acting ethically.

Another factor contributing to the success of an ethics oath is accountability. Here are some questions to consider:

• Are the consequences for violating corporate ethics policies actually administered to violators within the company?
• Is every employee held to the same set of consequences for ethical violations?
• Are there existing documents, people or other sources of support available to help work through situations involving ethical dilemmas?
• Are employees given recognition for demonstrating ethical actions or for bringing in the most money?

Evaluating the answers to these questions can help employers address areas of weakness causing an ethics oath to be unsuccessful. If employees know they will not be questioned for making shady decisions or misguiding clients, chances are, their commitment to acting ethically will diminish.

Johnson & Johnson published their own form of an “ethics oath” entitled ”Our Credo“, as a way to communicate the mission, vision and accountability that Johnson & Johnson holds itself to for a variety of groups- doctors, nurses, patients, mothers, fathers, employees, those in the communities they operate in, as well as the global community and company stockholders.

Previously in our post, “Crisis Management and Ethics Best Practices: Johnson & Johnson“, we discussed the elements of the corporate culture at J&J and other practices they have adopted that have made the company a leader in corporate social responsibility.

Our Credo was created in 1943 by Robert Wood Johnson, a member of the founding family of the Johnson and Johnson Company. It was created just before the company became a publicly traded entity and long before the term “corporate social responsibility” was used for accountability in the workplace. On the Johnson and Johnson corporate website, they state that:

“Our Credo challenges us to put the needs and well-being of the people we serve first. Our Credo is more than just a moral compass- we believe it’s a recipe for business success. As a key player in the pharmaceutical and healthcare industry, Johnson & Johnson understands the responsibility they have when it comes to providing safe products to their consumers, as the risks tied to faulty products within this industry are particularly sensitive.”

The Ethics Oath

In an earlier post of ours, “Corporate Ethics Oath: A Tool For Understanding and Developing Workplace Ethics“, we discussed how creating and reciting a corporate ethics oath could be used as a tool to help strengthen the ethical culture within your company. As a refresher, here are some of the benefits of having your employees publicly recite an ethics oath:

• Positive Brand Value - According to this article about brand value on Ethisphere, making your commitment to ethics public means that you are showing an investment in your brand value. When businesses are perceived as committed to ethics, safety or another area of consumer importance, many consumers will disregard the cost of your service or product based on the fact that they feel they are buying the best.
• Increase in Commitment From Employees - When employees work for a company with a strong brand value, they are more likely to want to remain in as a part of your workplace and will usually end up promoting and endorsing the brand they work for because they truly believe in what their company offers.
• Perception + Expectation= Reality - Mistakes are sometimes unavoidable and when a company addresses an error head on, the perception and expectations set for that particular company now become a reality. When all both external and internal stakeholders in your company actually follow through on their commitments, the public develops even more respect for your brand image.
• EVERYONE is Accountable - Reinforcing the “tone from the top” concept- when lower level employees are with their bosses and managers standing in the same area and making the same commitment to ethics, employees at all levels are more likely to adopt and commit to making an ethical change because speaking the words of the pledge with everyone in their workplace has a much greater impact than a sign posted on the wall.

Many companies use storytelling and the mission of previous company leaders as a way to inspire employees and get them on board when working towards company goals. In the case of Johnson and Johnson, the importance of “Our Credo” has been evident since conception, and continues to play a signifiacnt role in the company today. When looking at the above benefits that an ethics oath can provide a company, Johnson and Johnson has been able to experience the rewards associated with each of these benefits.

The story of  Johnson and Johnson’s “Our Credo” is a great example of the positive impact a corporate ethics oath can have on a company. Here is the video version of “Our Credo”:

I came across an article that was published in the New York Times back in May called “A Promise to Be Ethical in an Era of Immortality”. I wanted to share the article and some thoughts about it with you, because it could lead to an interesting activity to make a more concrete commitment to ethics in the workplace.

Article Overview:

In brief, the article talks about the 2009 MBA graduates from the Harvard Business School and a new voluntary oath that has been introduced to students from any school.  It’s called the “MBA Oath” and those taking it are pledging to “serve the greater good as a business manager, promising that graduates will act responsibly, ethically and refrain from advancing their “own narrow ambitions” at the expense of others.”

One of the graduates in the article, Dalia Rahman, was quoted as saying “when you have to make a public vow, it’s a way to commit to uphold principles.” This made me think… what if companies and their employees made public oaths committing to serve the greater good? Many companies are joining or establishing groups designed to make these kinds of pledges, so why shouldn’t you? As Rahman said, when you say something and make it public, it becomes more concrete and you feel far more responsible to uphold that promise.

How Does This Apply to Me?

Your pledge doesn’t necessarily need to be a high profile public statement, it could be something as simple as having to pledge an oath out loud to your peers in the workplace as a group. With more reports of employees holding their peers accountable in the workplace, this could be an opportunity for employees at all levels to work together to maintain the integrity of their company.  Recently, many companies have been dedicating their advertising time on television and other sources to report to the public about how they are remaining committed to safety, ethics, quality and a variety of other issues.

These efforts could be seen as their forms of “pledging” to the public, attempting to strengthen the positive image tied to their brand. Once again, going public with these commitments means that stronger efforts will need to be made in order to uphold these commitments, because the public and your employees are now aware of where you stand, and if the actions do not coincide with your statements, they will want answers.

Workplace Application and Benefits:

For those of you who are involved in compliance and human resource departments, adding an element such as an “ethics oath” into ethics training for your staff could be part of a great team building exercise. Oaths could be created so that there’s a unique one for each level of management in the company, or all staff could take the same oath. How you carry out the pledging process and what is included in your oath will be unique to your business and its goals, but the general concept can be applied to businesses across all industries.

Here are a few ways that an “ethics oath” could help bring your workplace together and have a more profound effect on the workplace quest for ethics:

• Positive Brand Value - According to this article about brand value on Ethisphere, making your commitment to ethics public means that you are showing an investment in your brand value. When businesses are perceived as committed to ethics, safety or another area of consumer importance, many consumers will disregard the cost of your service or product based on the fact that they feel they are buying the best.
• Increase in Commitment From Employees - When employees work for a company with a strong brand value, they are more likely to want to remain in as a part of your workplace and will usually end up promoting and endorsing the brand they work for because they truly believe in what their company offers.
• Perception + Expectation= Reality - Mistakes are sometimes unavoidable and when a company addresses an error head on, the perception and expectations set for that particular company now become a reality. When all both external and internal stakeholders in your company actually follow through on their commitments, the public develops even more respect for your brand image.
• EVERYONE is Accountable - Reinforcing the “tone from the top” concept- when lower level employees are with their bosses and managers standing in the same area and making the same commitment to ethics, employees at all levels are more likely to adopt and commit to making an ethical change because speaking the words of the pledge with everyone in their workplace has a much greater impact than a sign posted on the wall.

Here’s the MBA Oath:

We thought you might be able to use this as a starting point for your own Ethics Oath.

MBA OATH – SHORT VERSION
As a manager, my purpose is to serve the greater good by bringing people and resources together to create value that no single individual can build alone. Therefore I will seek a course that enhances the value my enterprise can create for society over the long term. I recognize my decisions can have far-reaching consequences that affect the well-being of individuals inside and outside my enterprise, today and in the future. As I reconcile the interests of different constituencies, I will face difficult choices.

Therefore, I promise:

• I will act with utmost integrity and pursue my work in an ethical manner.
• I will safeguard the interests of my shareholders, co-workers, customers, and the society in which we operate.
• I will manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and the societies it serves.
• I will understand and uphold, both in letter and in spirit, the laws and contracts governing my own conduct and that of my enterprise.
• I will take responsibility for my actions, and I will represent the performance and risks of my enterprise accurately and honestly.
• I will develop both myself and other managers under my supervision so that the profession continues to grow and contribute to the well-being of society.
• I will strive to create sustainable economic, social, and environmental prosperity worldwide.
• I will be accountable to my peers and they will be accountable to me for living by this oath.

This oath I make freely, and upon my honor.

After yesterday’s post about the findings in the 2009 Ethics Resource Centre National Business Ethics Survey, we’d like to share some of the survey recommendations. Depending on your role, the ERC outlines specific steps to ensure you’re prepared when the ethics bubble bursts.  

They recommend that we begin preparing for a return to business as usual and implement corporate structures to incentivize and reward ethical behavior.

For Executives

• Prepare for the return to business as usual
• Establish performance goals for senior managers on ethical leadership

As we start to recover from the recession, it’s important that executives pay attention to the messages they’re sending to employees. Take the time to observe your own actions in the workplace and ensure that you’re a positive, ethical role model – as we mentioned in yesterday’s post, a successful corporate culture starts at the top. Through setting detailed goals for yourself, as well as for those at other levels of management, it becomes easier to measure the strength of the ethical corporate culture and improve upon weak areas.

The ERC also recommends measuring the current strength of your corporate culture. If your results prove to be positive, work on heightening your approach as performance increases. If your results prove negative, it is crucial to set an ethical example for your peers, put an ethics code into place and speak openly with employees about improvements that could be made to help build a stronger ethical culture.

The key benefit of being proactive and establishing a strong ethical culture is that the level of risk for future workplace misconduct will decrease. Making ethical practices part of employee expectations and performance reviews, assists in holding employees accountable for their actions, further reducing the risk of workplace misconduct. Senior managers need to focus on being ethical leaders in the workplace in order for others to follow.

For Directors:

• Create an ethics committee of the board
• Recruit knowledgeable ethics professionals to serve on the board
• Establish financial incentives for ethical leadership by the CEO

The ERC recommends the creation of an ethics committee to ensure that the activities of the board are monitored and that the board remains held accountable for its decisions. The ethics committee reviews information that measures the ethical culture of the organization and makes sure that ethical leadership is a key component of policy-setting, as it is a priority for senior level management.

Recruiting ethics professionals to be part of the board is also wise.  The ERC advises boards to have an ethics professional participating in key strategy decisions.

Establishing financial incentives for ethical behaviour from senior levels and the CEO is one way to reward a leader for their commitment to building an ethical workplace. When outlining performance goals for the CEO, there should be goals established that focus on improving the strength of the corporate ethical culture.

For Policy Makers:

• Emphasize culture and principles
• Encourage creation of board of ethics committee
• Encourage disclosure about corporate ethical culture

Meeting the minimum legal and regulatory standards will certainly not be a surefire plan for ethical conduct in the workplace. When investing the time to train employees to be ethical thinkers and creating an ethics code of conduct for the workplace, there should always be a system in place to monitor performance. Metrics that measure ethical culture lead to better outcomes and help predict trouble spots that will make managing ethics easier to handle.

Transparency is important within the workplace, but it’s also important to share as much information as possible with your investors. Informing your investors about your plans and actions regarding your ethical culture will put your investors at ease and will also have a positive impact on you brand image.

Asking for additional information about the progress of your ethics program from executives and other senior level management also makes it easier for policy makers to ensure that the company achieving their goals on the road to a strong corporate culture.

For Ethics and Compliance Experts:

• Focus on culture and collect data
• Start with management, especially if your organization is recession counter-measures
• Prepare for the return to business as usual

The ERC reminds us that assisting companies to sustain their ethical corporate culture and providing them with the proper tools to do so is the main purpose of ethics professionals. Assist managers in a culture assessment and help them to identify the skills needed to attain ethical leadership. Use cultural metrics to track trends and determine causes of patterns of misconduct, reporting, retaliation, openness and accountabil­ity.

Taking the time to work with top managers, who are the voices of the organization, is the best starting point. This makes it easier for managers to understand the changes needed, how to make them, and how their actions will impact employees at all levels of the business. The 2009 ERC Survey notes that managers are very influential in employee conduct and reporting.

The survey data also suggests that the awareness of workplace ethics improves in a crisis and old habits return when the crisis has been overcome. It’s important to address these concerns with senior level managers in order to create a plan of action to deal with any potential factors that could interfere with their progress.

What Does it All Mean?

The recommendations made in the 2009 ERC Survey demonstrate the importance of a commitment to building an ethical corporate culture at all levels. It’s necessary to work together to achieve success and it also requires an even stronger commitment once the recession is over. If we can adopt or strengthen our ethical behaviours now, should the state of the economy actually have an impact on ethics? What is it that stops people from acting ethically in any economic state?