3344 Organisational Ethics Policies a Primer

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Why is policy important?The term policy is used in many different waysin English, and translation of these various sensesinto other languages can be particularly problematic.It is defined here as a framework for making andevaluating management decisions in organisations,from sub-units within agencies to entire governments.The term covers a continuum from minor administrative

or procedural rules (it is our policy that all claimsfor payment must be accompanied by an originalinvoice), to higher-order, strategic priorities andissues (our international aid policy will be directedtowards supporting the Millennium DevelopmentGoals).Those who work in, or in partnership withgovernmental aid agencies and international non-governmental organisations (INGOs) which

administer aid programs have a particular interest inpolicy setting: They must be able to define not onlywhat outcomes are to be expected, when, by whom,and under what conditions, in the usual way, butalso how any particular policy of the organisationsatisfies a public interest test which is coherent withthe organisations mandate, objectives, and values.

Organisational ethics policies: a primer

www.U4.noApril 2009 - No. 4 U4BRIEF

Most people are familiar with codes of conduct. Often overlooked, however, is the importantrole that organisational ethics policies have not only as the backbone for such strategiesbut also for more general policies such as transparent accounting and non-discriminatoryhuman resources practices related to the ethical performance of an organisation. This U4Brief describes the different dimensions of ethics policies and outlines elements of goodpractice in developing and implementing them.

Anti-CorruptionResourceCentrewww.U4.no

by Howard WhittonThe Ethicos Groupwww.theethicosgroup.org


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Staff conduct and management:two dimensions of ethics policies

When considering an organisations policy on ethicsmatters, there are two dimensions to bear in mind. Atone level the organisations policies and standards willreflect its policies for encouraging ethical conduct byindividual staff, volunteers, and others who deliver

the organisations activities. This level of policy-making and standard-setting should include specificpolicies that govern such matters as the giving andreceiving of personal gifts, ancillary employment,conflict of interest situations, patronage, politicalactivity, fraud, harassment, political activity, andwhistleblower reporting of defined wrongdoing,among many other matters. Standards are increasinglynecessary to regulate relations with external suppliersthat may be required to subscribe to particular ethicalstandards as a conditionality of doing business withthe organisation, dealings with representatives of

governments, and relations with media, lobbyists,and other non-government organisations.

The second dimension focuses on the organisationspolicies for encouraging ethical management inorder to protect its integrity. Policies which setstandards for competent financial management, merit-based recruitment and advancement, transparentaccountability for organisational decision-making,effective protection of staff and others who disclosemisconduct fraud andcorruption, meaningfulprogram evaluation, and

workable disciplinaryprocesses, are essentialto demonstrate integrity,as an organisation, tofunding agents andnational legislatures whoare legitimately concernedto see their funds used appropriately.

At the level of the organisation, ethics policy isproperly concerned with providing that assurancewhich is essential to all trust-based relationships,

namely that the organisation will not abuse itsprivileged position, deal inequitably with beneficiariesor any other party, support corruption, or act fromself-interested motives, in any of its dealings withrecipients of international aid and developmentassistance, whether they are individuals, communities,businesses, governments, or partner agencies.

Basic elements of effective ethics policies

Good policy in relation to organisational ethicsand integrity matters is no different in principlefrom good policy in any other area. It must firsthave unequivocal authority and the endorsement ofboards and senior management, and must be:

founded on the organisations core values,omandate, and ethical principle

developed in consultation with those affectedoby itrealistically achievableowritten in plain language, coherent with otheropolicies, and easily availableclearly understood by staff, and by otherostakeholdersconsistent with the organisations policies ono

rewards and sanctionsregularly reviewed and evaluated with allostakeholdersuniversally applied, and transparentlyoenforced.

Management boards and organisational leaders willuse policies for a wide range of purposes, such asstrategic development of the organisations objectivesand priorities; managing risk factors; or specifyingthe preferred methods to be used for intervention,aid delivery, or regulating staff conduct. Policies also

provide the basis for evaluation, and modification orabandonment of policies and practices. Policies, in thissense, are the rules of the game, and fundamentalethics concerns are necessarily part of the rationalefor those rules. In this context, an organisationsethics policy creates part of the normative frameworkfor the expression of the acceptable means by whichthe various duties of management may be pursued.

Generally, an aspirational approach based onvoluntary compliancewith the ethical principlesgiving focus to the

organisations practices,will provide scope andencouragement forindividuals to maximisethe ethical valuesexpressed in its governancepolicy. However, when

the management in an organisation is weak (that is,when set standards are implemented badly or not atall), special attention will need to be directed towardsvulnerable areas, through the development of specificpolicies, which need to be coupled with appropriately

targeted training, rewards, and sanctions, until theorganisations integrity is restored.

When organisations aim at improving integrity,ethics, and governance in other words, theirethical performance they typically deal in somedetail with the following major areas of ethical risk:

financial management and accountabilityostandardsinternal and external audit processesoprofessional ethics, conduct, and conflict ofointerest standardsfair treatment rules for staff and clientsoprocesses for the prevention of fraud andoother abuse of trustintegrity mechanisms governing properodecision-makingprovision of transparent information too

ethics policy is concerned withproviding the assurances essential to

all trust-based relationships


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stakeholderscomplaints and whistleblower disclosureoprocessesprincipled policy dispute processesotransparent and objective evaluationomechanisms.

A strong, overt commitment by organisational leaders

to high standards ofintegrity is crucial: the righttone from the top is aprerequisite for policies tohave a trickle down effect.That commitment can beshown in the making andpromulgation of policies, but must also be shown inother ways. Coherent leadership in the application ofethics-related policies send powerful signals within anorganisation and to external stakeholders, especiallywhen appropriate sanctions are deployed against

conduct which fails to meet set standards. Conversely,failure by management to ensure that its ethics policiesare taken seriously also sends powerful signals aboutthe organisations commitment, and its reliability.Consistent and coherent application of an ethics policyis therefore essential.

While each organisation should develop the ethicspolicies that best suit its current circumstances andstrategic direction, experience demonstrates that somecommon elements are essential for success:

Basic ethics-related policies, including the

following:

a code of conduct/ethics based on theoorganisations core valuesprofessional practice standards interpreting theocodes principlesprocedures for managing conflict of interestosituations (including the registration of relevantinterests and assets of decision makers)procedures for offering and accepting gifts andobusiness courtesiescriteria for the proper use of organisationalo

assets and authorityprohibition of harassment and discriminationoin the workplacecriteria for protected reporting of unethical oroillegal behaviourrights of clients to obtain service, includingocomplaint procedures for failure to meetstandardsobligations for accountability and transparency,oand information provisionstandards for dealing with confidential andoprivileged informationconstraints on ancillary and post-separationoemploymentstandards for providing reasons foroadministrative decisions.

A commitment to training staff in the full rangeof ethics-related activities. Training will improve

personal awareness and strengthen the ability todefine and manage improper conduct, whether byco-workers, managers, or external stakeholders.The range of training themes should includethe organisations integrity system, specific anti-corruption measures, harassment-free workplaces,non-discrimination principles, financialmanagement and audit, integrity in procurement

practices, donorrelations, personal andinstitutional conflict ofinterest, accountability,responsibility, proceduralfairness, and strategicproblem-solving.

Policies and procedures for regular managementreporting to boards and executives, in particularto enable monitoring of matters which may be ofparticular concern from time to time.

Independent, external scrutiny of policies providean important resource for boards and executivesfor ensuring that espoused core values and actualbehaviours are aligned, and to identify areasof policy and management practice requiringimprovement.

Policies and procedures for protected reportingof improper conduct, both to enhance workerand stakeholder confidence in the integrity of anorganisation, and to provide avenues for earlydetection of inappropriate behaviour. Genuine

whistleblowing must be effectively endorsed, andeffectively protected, to ensure the organisationscredibility.

Procedures for the sanctioning of improper conductand failure to meet relevant standards by staff,structured so as to enhance managementscapacity to deal effectively with ethical issues inthe workplace.

Administering ethics policies

An effective ethics policy is a necessary overhead costin the management of any organisation. Failure ofimplementation is often hard to measure, whether inmonetary or reputational terms. What does corruptbehaviour cost? How do we measure the benefitof prevented corruption? How do we calculate thecostbenefit analysis of training in, and enforcementof, the organisations integrity system? All thesequestions must be considered if the value of ethicsrisk management is to be properly understood.

It is furthermore important to keep in mind that costsof failure may be higher now than they were in thepast. As recent scandals have demonstrated, blamefor ethical default is now personal, permanent, andoften sensationally public. Some administrative toolsfor maintaining policy effectiveness include:

a consistent and coherent applicationof ethics policies is essential


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All views expressed in this brief arethose of the author(s), and do notnecessarily reflect the opinions ofthe U4 Partner Agencies.(Copyright 2009 - CMI/U4)

a standardised and accessible format foropolicy documentsclear procedures for policy-making by theorelevant authority (board or executive)effective mechanisms for communicatingopoliciessustained commitment to delivering skills-obased training in the application of policy andstandards, and assessing training outcomes,especially for middle and senior managersestablished procedures for holding ando

updating policy documents (register, manual,index, etc) to ensure that there is no uncertaintyabout authoritycommitment to ensuring that the ethicaloperformance of the managers and leaders ofthe organisation, and of organisation itself, isformally reviewed and evaluated on a regularbasis.

The importance of institutionalising ethics

Ethics and integrity standards based on abstractnorms and values are often not properly understood

as policy by managers. In practice, however, ethicspolicy statements set standards by defining functionalrole responsibilities and limits on conduct. They canalso serve as dictionaries of terms, and as cautionaryreminders of specific cases. Their principal purposeis to provide assurance about the terms of trust onwhich the organisation claims to rely.

Understood in this way, it becomes clear that properlyformulated ethics policies not only regulate businessconduct and personal acts, but also offer an importantform of liability limitation. They limit unreasonable

expectations, and set criteria for the judgement ofindividual conduct. Conversely, ethics policies canbe seen to constitute implicit organisational promisesof performance against the set standards, whetheraspirational or disciplinary in character, or both.Such policies because of their inherent concernwith ethical norms and principles can also fosterlegitimate dissent by those who are at odds with theorganisations performance against its set standards,or with the established standards themselves.

Managers and leaders need to understand that ethicsand integrity policies provide a crucial expressionof the organisations ethical standards, whichnecessarily have significant implications for theirrole as gate-keepers in relation to those standards.Institutionalising such standards, in the ways set outin this paper, is increasingly seen as appropriate andfeasible, and an essential way of demonstrating thatan organisation is concerned about its integrity.

Further Reading

Whitton, H (2008) Making Whistleblower ProtectionWork: Elements of an Effective Approach U4 Brief2008:24 Bergen: CMI/U4

Whitton, H (2009) Teaching Ethics in HighlyCorruption Societies: Concerns and OpportunitiesU4 Brief 2009:5 Bergen: CMI/U4

Photo of School of Athens by Rafael Sanzio (public domain,

available at:

http://upload.wikimedia.org/wikipedia/commons/9/94/Sanzio_01.jpg)

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3344 Organisational Ethics Policies a Primer