Episode Three: Ethics Programs

Summary

The president, ethics director, general counsel, and chief human resources executive of a defense contractor are sitting at a conference table, waiting to receive an out-briefing by Pat, an ethics consultant from a fictitious Business Ethics Center at Northern University. When asked by the company president for the “bottom line,” Pat explains that although the company has all of the mechanical pieces, its ethics program lacks “feeling.” Pressed further, Pat explains that the code of conduct is long and difficult to read, the employees do not refer to the code, a majority doubted senior and middle management were committed to the ethics program, a significant percentage of employees approved of time mischarging, the mass training was ineffective, the con icern line was not being used, employees feared retaliation for reporting unethical conduct, and a majority of the employees doubted the company management would take the “moral high road” when faced with an ethical dilemma.

Discussion Objectives

DII signatories have developed comprehensive ethics and compliance programs. The episode is intended to encourage discussion about methods of evaluating ethics programs generally, about various details of ethics programs, and about how to ensure a companyis ethics program is more than a mechanical exercise.

Suggested Discussion Questions

What do you think the consultant means by his conclusion that the Western Industries ethics program seems to “lack feeling?”
As a general matter, how do companies judge whether their ethics program is perceived as being largely mechanical?
With respect to codes of conduct, how can companies judge the practical usefulness of a code? How important is length? How is important is format? How can the company insure that the code is readily understandable to all employees? Should it be of concern to Western that most employees could not locate their copy of the code, and apparently do not ever refer to it? What can companies do to encourage more regular reference to a code?
How should a company measure the commitment of management to an ethics program? Is a survey question like the one posed by the consultant meaningful? Since the university consultant apparently believes that management at Western is committed to a program, he concludes that there is a communications problem. If this in fact a communications problem, how could it be addressed?
What is the significance of the consultant’s findings that employees at Western do not believe that the ethics program helps them to solve ethical dilemmas? Is this a problem? If so, how could it be addressed?
What types of surveys of employees are useful? For example, can a survey show the extent employees’ knowledge of particular compliance details? Can a survey accurately measure what actions employees will take under certain circumstances, for example, would an employee call the hotline to report misconduct by a fellow employee? Can a survey accurately measure general employee attitudes through the “agree – disagree” type of questions the consultant used in the video tape? For example, would responses to the question discussed at the end of the tape about whether management would take the moral high road if confronted with an ethical dilemma provide reliable data? In Western’s case, where 83 percent answer negatively, what should the company do?
With regard to training, how should companies approach refresher training? How should companies determine the particular training needs of groups of employees? How should companies meet those needs? How can companies make ethics training something more than just a mechanical exercise?
With regard to internal reporting systems, how informative is the number of calls received? Is there a target percentage of employees that companies should desire? What might a low call rate signify? What might account for skepticism regarding corporate representations of confidentiality and non-retaliation for concern line callers? Assuming that the company is committed to these practices, how can these apparent employee concerns be addressed? How would you address the apparent lack of satisfaction with the company’s responses expressed by many of those who did call the concern line?
Of what significance is the opinion letter from outside counsel on the sentencing guidelines? Given this CEO response, did the CEO and the consultant seem to be talking past one another? If so, how? If you were the CEO and had just received this report, how would you proceed?