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HR Magazine, February 2005 - Do the Right Thing

Kathryn Tyler   2/1/2005
 

HR Magazine, February 2005

Vol 50, No. 2

Ethics training programs help employees deal with ethical dilemmas.

Three days before Senator Paul Wellstone died, he told me, ‘Keep doing what you’re doing,’ ” speaking about ethics, recalls Nan DeMars, an ethics speaker and author in Minneapolis.

Wellstone, who died in a plane crash in 2002 while campaigning for re-election to the U.S. Senate from Minnesota, told DeMars, “I have a conversation with each employee on the first day: ‘If I get puffed up with the importance of being a senator and slide off the ethical compass, I want you to shore me up.’”

“If every boss would have that attitude with every employee, we would be far ahead” in creating an ethical workplace culture, DeMars says. Wellstone, she says, understood the importance of having ethical discussions with employees, an increasingly popular concept.

Spurred by corporate scandals and surveys showing how little employees trust executives, many companies have started establishing codes of ethics governing the way they operate. Ethics training at corporations gained traction in the mid-1990s in response to the Federal Sentencing Guidelines for Organizations (FSGO) of 1991.

“FSGO set minimum standards in order to lessen penalties if an organization is found responsible for misconduct,” says Patricia J. Harned, president of the Ethics Resource Center (ERC), a nonprofit organization in Washington, D.C. Although voluntary, “many companies comply with FSGO, which requires implementation of a code of conduct, ethics training, high-level oversight, establishment of an ethical culture and periodic measurement of program effectiveness,” she adds.

Ethics training got another boost with the passage of the Sarbanes-Oxley Act of 2002, which requires publicly traded companies to disclose whether they have adopted a code of ethics for senior officers.

“More for-profit companies have provided ethics and compliance training than ever before,” says Harned, citing 2003 research by the ERC showing that 54 percent of employees say their organizations provide ethics training.

Today, companies are revamping their ethics training programs in response to an amendment to the FSGO of 1991, which went into effect Nov. 1, 2004. This amendment outlines much stricter ethics training requirements and emphasizes creating a legal and ethical company culture.

“Companies are moving away from the notion of having ‘ethics programs’ and focusing on encouraging a culture committed to ethics and compliance,” in which ethics is part of almost every business discussion, says Dov Seidman, chairman and CEO of LRN, a legal and educational consultancy in Los Angeles.

The Benefits

Most companies begin ethics training to comply with legal mandates and to gain liability protection. While that is a strong rationale, the training may also improve employee morale, recruitment and retention.

With ethics training as a foundation, ethical issues “will be dealt with before they become serious concerns,” says Stephen M. Paskoff, Esq., president of ELI, an ethics training company in Atlanta. “Your organization will develop a reputation of fairness,” candidates will want to work for you, and other companies will want to do business with you.

“People want to work for leaders they trust,” adds Dwight “Ike” Reighard, chief people officer at HomeBanc Mortgage Corp., a financial institution in Atlanta. DeMars agrees: “When employees walk out of an ethics workshop, they feel proud of their companies. They feel empowered” to make the right ethical decisions.

The Logistics

To establish an ethics training program, first set standards for ethical behavior at your organization and determine what you want the training to accomplish, says Paskoff. Companies should outline goals for the training and produce documents to support it, such as a code of ethics.

To be effective, the training must be mandatory for all employees. “All members of an organization should participate—from the boardroom to the shop floor. If leadership is exempt, it sends a clear message to employees that some people are exempt from the rules,” says Harned.

Ethics training should include the following: a copy of the organization’s code of ethics, a discussion of relevant compliance laws, an ethical decision-making model, resources for help and role-playing scenarios.

A code of ethics. Employees should receive a copy of the code of ethics and should understand the underlying meaning. Marty Taylor, vice president of organizational services for the Institute for Global Ethics, a nonprofit organization in Camden, Maine, says strong ethics programs cover five elements: responsibility, respect, fairness, honesty and compassion. Your company’s code of ethics should define these elements and set the appropriate behavioral standard. Other hot ethical topics are workplace romance, e-mail appropriateness, Internet use, confidentiality, security and harassment—physical, verbal and emotional, says DeMars.

Compliance laws. Employees must comprehend laws that apply to their jobs. For instance, managers who conduct applicant interviews need to know if any questions are illegal. Employees who receive vendor gifts must understand the legal limits—or the limits placed by employers—on the dollar value of any gifts.

Decision-making models. Decision-making models present questions employees can ask themselves to help them make ethical decisions. For instance, employees at Dallas-based Texas Instruments Inc. receive this compass:

  • Is the action legal?
  • Does it comply with our values?
  • If you do it, will you feel bad?
  • How would it look in the newspaper?
  • If you know its wrong, dont do it!
  • If youre not sure, ask. Keep asking until you get an answer.

Employee ethics resources. Teach employees how to report ethics violations and where they can go to ask questions. Employees should have confidential vehicles for reporting violations outside the chain of command—a toll-free telephone number with voice mail, an e-mail address and a physical drop box.

“For many years, HomeBanc has operated what we call our Associate Hotline, which goes directly to a voice mail in our CEO’s office so that employees can voice concerns directly to the CEO, who can then take action,” says Reighard.

Role-playing scenarios. Practical scenarios where employees can test their ethical knowledge are crucial. “To make it relevant to employees’ jobs, provide some real-world examples from your business and detail how they fit or violate the policy,” says Reighard.

Examples must be in line with the audience, recommends Paskoff. “While the underlying message is the same, find different examples for different positions,” says Paskoff. “For an entry-level position, you might say, ‘Don’t falsify an expense report and meal. Don’t list a $10 cab ride as $20.’ But that same example would sound trivial” to upper-level managers. Remember to include positive examples—people doing things right. “Many training programs tell employees what they should not do. Few show employees [how to do] the right thing,” says Harned.

Taylor asks training participants to bring in ethical dilemmas they’ve had at work to understand how the decision-making model would apply. “When they bring in their own stories, it creates a better team feeling and they remember the model,” says Taylor. How do companies feel about using confidential information in the classroom? “We don’t share [any information] outside of the classroom. Trust is built. It creates an environment where people feel safe.”

“It is helpful to have a group around you to argue and talk,” says DeMars.

Online vs. In-Person Training

The benefits of interactive ethics training through role-playing is one reason why experts say it should be in-person. The most effective training begins with in-house, in-person sessions, led by organizational leadership,” says Harned. After in-house training, organizations may “reinforce training online to be sure the training is consistently delivered.”

Seidman agrees: “Web-based technology reaches every employee in any part of the world. We can tailor it to each employee’s job with real-life scenarios they confront. Companies can take their code of conduct in over 30 languages and unify their global culture.”

However, to get the maximum benefit, at least part of the training should be done in-person. An external vendor may be able to help facilitate the training, but it is most compelling if it comes from executives and other respected individuals within the organization. Taylor recommends finding volunteers within the company to serve as ethics champions. “Find extraordinary people other employees pay attention to,” he suggests, and ask them to be mentors that other employees can go to for advice on ethical dilemmas.

Once a standard is set, it’s vital to publicize what happens when employees fail to meet that standard. “It’s important for other employees to know disciplinary action is quick, consistent and fair,” says Taylor.

Last, HR professionals must set metrics to measure an ethics program’s success, such as tracking the number of employee grievance complaints and evaluating employee responses to ethical attitude surveys. One way to measure if your ethics program is working is to include ethics questions in your employee exit interviews.

Summarizes Paskoff, “The goal of ethics training is to get everyone to apply a few simple sets of behaviors to solve problems, what never to do, and where to go for help.”

Leaders Set the Standard

The most important component of any ethics training program is senior management’s continued public commitment to it. “Ethics are important to all companies, and a major breach in ethics can result in a profound loss of customers, credibility, reputation and valued employees,” says Reighard. “A lot of the companies that flamed out so spectacularly had ethics policies as thick as phone books. But the leaders of those companies were not following their own policies, and many people within those organizations knew it. All the ethics training in the world won’t help if your leaders don’t live it.” (For more information on how one company used its leaders as models, see "A Consistent Message from Management".)

Gundars Kaupins, SPHR, a member of the Society for Human Resource Management Ethics Panel and a management professor at Boise State University in Boise, Idaho, agrees: “Ethics training provides more legal protection only if there is management commitment to ethical decision-making.”

Concludes Paskoff, “Training is just one component. Ethics needs to be integrated into business communication. It needs to be regularly on the lips and pens of executives. When they meet with employees and talk about how the company did in sales this month, they need to also remind employees of values and standards. The message needs to be communicated in a variety of ways with routine frequency.”

Kathryn Tyler, M.A., is a freelance writer and former HR generalist and trainer in Wixom, Mich.
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A Consistent Message From Management

Public Service Co. of New Mexico (PNM) started its ethics program in the mid-1990s to comply with government guidelines and to improve its image after a public outcry over rate hikes. We had an incentive to show a new side of ourselves, says Sarah Smith, director of business ethics and corporate compliance at the Albuquerque-based government-regulated gas and electric utility with 2,600 employees.

In 2001, Smith benchmarked other utilities ethics programs and was impressed with one from San Francisco-based Pacific Gas and Electric. The training involved video vignettes of employees having to make an ethical choice. The video paused, and the supervisor was supposed to talk through the options, says Smith. We were able to purchase [the tapes] for a lot [less] than what it would cost us to produce them ourselves. PNM added a segment from the CEO talking about ethics and compliance. Employee groups received customized combinations of vignettes appropriate to their positions.

We produced 200 videos and facilitator guides and sent them to the supervisor groups, says Smith. She encouraged the supervisors to conduct the training, but, she says, some werent very confident and asked me to do it.

In 2005, PNM plans to roll out a refresher with a new video course and stringent requirements that supervisors conduct the training discussions. Smith believes that having supervisors guide the post-video discussions makes it compelling. Ethics training should be done in-person. But we wanted to have a consistent message. We went the video-discussion route so that we could have a consistent message and a live dialogue.