February 25, 2004 Barbacane Thornton 1

10 Steps You Can Take Now To Make Ethics Come Alive in Your Organization

Kate Nelson, Ethics Alliance

February 25, 2004 Barbacane Thornton 2

Step #1 – Articulate a Vision

Everyone needs to sing from the same hymnal: Shared vision Shared mission Shared values

February 25, 2004 Barbacane Thornton 3

Step #2 – Articulate Policy

Keep it short Make it clear Give examples Prioritize when possible Communicate it Train employees

February 25, 2004 Barbacane Thornton 4

Step #3 – Know Who “You” Are

Do background checks Check references Ask the right questions during

interviews (best predictor of future performance is past performance)

February 25, 2004 Barbacane Thornton 5

Step #4 – Identify Your Risks

Where is there most likely to be a problem?

What is measured in your organization?

How are people rewarded? Ask your people: “What keeps you up

at night? or “What could hit the fan here that would really embarrass us?”

February 25, 2004 Barbacane Thornton 6

Step #5 – Analyze Your Rewards

For what are people paid? What incentives exist? How are people rewarded for doing

the right thing? How are people punished for doing

the wrong thing? Are people held accountable for living

values or only for results? Who is getting promoted?

February 25, 2004 Barbacane Thornton 7

Step #6 – Create a Process for Raising Issues

Place to get advice Protection for the messenger Training for managers in what their

role is in this process Clear blueprint for raising issues

beyond the manager level

February 25, 2004 Barbacane Thornton 8

Step #7 – Use Moral Language

Are we doing the right thing? Is this fair? Could anyone be harmed by this?

February 25, 2004 Barbacane Thornton 9

Step #8 – Understand Employee Needs

Good Soldiers Knows rulesGood ethical compass

Encouragement

Loose Cannons Good ethical compassDon’t know rules

Training

GrenadesNo ethical compassRules don’t matterPersonal agenda

Senior management exampleSwift discipline

February 25, 2004 Barbacane Thornton 10

Step #9 – Involve Executives

Needs to come from the top Walk talk Understand ethical leadership

February 25, 2004 Barbacane Thornton 11

Two Pillars of Ethical Leadership(Moral Person and Moral Manager by L. Trevino, California Management Review, Summer 2000)

Moral Person Traits

Integrity Honesty Trustworthiness

Behaviors Do the right thing Concern for people Being open Personal Morality

Decision-Making Hold to values Objective & fair Concern for society Follow ethical decision rules

Moral Manager

Role modeling through visible action

Rewards and discipline

Communicating about ethics and values

February 25, 2004 Barbacane Thornton 12

Executive Reputation and Ethical Leadership(Moral Person and Moral Manager by L. Trevino, California Management Review, Summer 2000)

Hypocritical leader

Ethical leader

Unethical leader Ethically neutral leader

Strong

Weak

Moral Manager

Weak Strong

Moral Person

February 25, 2004 Barbacane Thornton 13

Step #10 – Communicate and Train

Communicate vision and values Communicate all elements of ethics

program Hold managers and employees

accountable Create interactive training around

known risks Train regularly

February 25, 2004 Barbacane Thornton 14

Know Thy Customer

One of your long-time volunteers (and contributors) is a wealthy man in his 60s who annually manages the cash collection “tent” at your largest annual fund raiser (netting over $250,000 annually) You’re very familiar with his behavior, and over several months you detect a marked change. He’s unable to concentrate, uses inappropriate words, and is increasingly forgetful. He asks you to ensure that all credit card machines and cash box are placed in his custody for the event. You express concern and say that you think the event is becoming increasingly too large for him to take on so much responsibility. He vehemently disagrees and insists that you leave him in charge. You:A) ‘give him control of the funds. He contributes large funds.B) fax a letter to him and be frank about your concerns.C) tell him you can’t give him control without Board approvalD) contact his family and explain your concerns.

February 25, 2004 Barbacane Thornton 15

Know Thy Customer Scores

A) -10B) 30C) 10D) 20

February 25, 2004 Barbacane Thornton 16

DiversityFor over five years, Bruce has managed the family foundation of Sam Stewart, an irascible but shrewd client who has been a source of significant revenue for your organization. Bruce is moving to another job, and you’ve named Julia as his replacement. Julia has worked closely with Bruce and his clients, which is why Sam’s call comes as a surprise. “Don’t get me wrong,” Sam says. “I like Julia. But I’m not going to have some little girl managing my account. Replace her or I’m leaving.” You:A) remove Julia from Sam’s account.B) say she is best qualified to manage his account and if he can’t deal with her, your organization is probably not the best resource for him.C) ask Julia to voluntarily resign from the account.D) replace Julia with a male colleague, but ask her to manage things from behind the scenes.

February 25, 2004 Barbacane Thornton 17

Diversity Scores

A) -30B) 30C) -20D) -10

February 25, 2004 Barbacane Thornton 18

Journalism EthicsAs a reporter for the only newspaper in Smalltown, PA, you’ve heard rumors that Red Company is about to have a huge layoff because of the recession in the women’s apparel business. When you interview the company president, she confirms the rumors, but asks you to keep the story out of the paper for a week. She’s meeting with buyers in NYC next week, and their orders would dry up if they knew the extent of Red’s financial woes. The future of the entire company is in jeopardy. You:A) ask for an exclusive in return for holding the story.B) print the story the next day as planned.C) hold the story as she asked.D) speculate on the layoff without exact numbers; hold the details until the NYC meetings are over.

February 25, 2004 Barbacane Thornton 19

Journalism Ethics Scores

A) -30B) 30C) -10D) -30

February 25, 2004 Barbacane Thornton 20

How to Fraud-Proof Your Organization

Jeff Fry, Ethics Alliance

February 25, 2004 Barbacane Thornton 21

Fraud Defined

“Deliberate deception in order to secure an unfair or unlawful gain.”

In other words:“To gain something of value by false

pretenses.”“To cheat.”

February 25, 2004 Barbacane Thornton 22

Where is Fraud Risk Highest? Where goods are exchanged

Goods can be money, products, services, influence

High risk areas: purchasing, sales Where there are close relationships

If nothing else, could be the appearance of a conflict

When people are being hired – credential fraud Employees Vendors

February 25, 2004 Barbacane Thornton 23

Preventing Fraud Establish clear controls with effective

checks and balances Train employees around their

responsibilities Make sure your issue-raising process is

robust Check credentials carefully (on front end) Articulate a clear conflict of interest policy

and live it Go beyond an audit – periodically analyze:

“How did we make this decision?”