By Staci E. Hensley
Ethics: “The principle of right and good behavior; the specific moral choices
an individual makes in relating to others; the rules or standards of conduct governing the members of a profession.”
Remember Enron? WorldCom? Bernie Madoff?
Corruption and illegal dealings by these business giants ruined countless lives, left employees, retirees and investors destitute, permanently tainted the public’s view of big business, and resulted in a 150-year jail sentence for Madoff.
The lessons learned about the costs of dishonesty shouldn’t be forgotten, especially as ethical crises in the business world tend to run in ten-year cycles, says Shannon Warren, founder of the nonprofit Oklahoma Ethics Consortium. The good news is that with an already above-average reputation for honesty and fair dealing, Oklahoma is one of the most proactive states in the country when it comes to ensuring ethical practices in its business community.
Much of the credit for this goes to Ok Ethics. For nine years the group has sponsored monthly forums featuring national speakers, hosted symposiums and provided other assistance, all designed to raise awareness and provide practical insights on dealing with ethical issues that arise in the workplace. Promoted mostly through word of mouth, today it has roughly 800 members representing more than 200 companies, with chapters in both Oklahoma City and Tulsa.
It also sponsors annual competitions like the Compass Awards, given only to those demonstrating the highest level of business ethics. Previous winners include Devon Energy, Coppermark Bank, Kimray and Ideal Homes.
“Oklahomans have always had a pretty strong sense about doing the right thing,” Warren said. “I think our growth has a lot to do with the fact that we’re in Oklahoma, where values such as honesty, fair play and commitment are important aspects of doing business. A great source of inspiration!”
Why an Ethics Program?
No matter what their size, companies function much better if they have an active and effective ethics and compliance program in place. These programs provide several key benefits. Specifically, they:
* Enhance the company’s reputation and stature.
* Establish a code of conduct that reduces the risk of criminal behavior.
* Detect wrongdoing, foster quick investigations and minimize consequences.
* Demonstrate the company’s ethical/legal philosophy during an investigation.
* Reduce fines if a company is found guilty of wrongdoing.
Ok Ethics offers a tool kit and other tangible assistance to its members who want to start their own program. There are also myriad sources of help available, including the Ethics Resource Center (www.ethics.org) and the National Association of Corporate Directors (www.nacdonline.org).
Yet putting a policy in place won’t do any good unless it’s enforced.
“Building a successful, ethical company requires more than a cliché open-door policy,” Warren cautioned. “Instead, leadership must get out of the office and be approachable.”
Who’s Most Vulnerable?
For some, desperate times can indeed produce desperate measures. Or at least it can be a strong incentive to throw ethical behaviors out the window, even in small ways. Today’s economy is rife with layoffs, corporate belt-tightening and elimination of many in-house ethics and watchdog programs. The lack of enforcement can sometimes tempt employees to take out their frustrations in various dishonest behaviors.
Some common examples: unauthorized use of company computers and other resources for personal business, swiping office supplies, calling in sick when they’re not, and covering for co-workers who are doing the same. Frequently it escalates to lying, taking credit for others’ accomplishments, abusing subordinates or co-workers, and taking “revenge” against those who report bad behavior through things like denying raises and promotions. And, of course, there are actions that are illegal as well as unethical, such as bribery, fraud and embezzlement.
According to the ERC, there are several categories of employees who are much more likely to commit ethical breaches, including:
*Younger workers (18 to 29).
* Frontline supervisors.
* Small businesses with fewer than 500 employees.
Ignoring this behavior is a recipe for disaster, since ERC surveys have found that abuse of company resources has jumped an amazing 84 percent in companies undergoing layoffs and compensation/benefit reductions, and Internet abuse in particular increases by 81 percent. Small businesses are particularly affected during tough times, as employees tend to take cutbacks and job uncertainty much more personally.
“Probably some of the more dangerous issues have to do with rationalizing our own behavior,” Warren said. “Truly being ethical requires that we must first be honest with ourselves. It requires humility, candor and a sincere desire to do the right thing. I think most people want to be ethical, but find themselves in high-pressure situations that create challenges. What we do is provide an opportunity to build ethical muscles.”
Conscience vs. Necessity
As anyone who’s been in the workplace knows, when employees aren’t happy, productivity suffers. A key source of unhappiness occurs when workers find their job duties conflict with their personal values. An ERC survey found that more than a third know co-workers at all levels that routinely cross the line.
“Clearly, while Enron and other scandals focused attention on management ethics, we also need to emphasize the need for more ethical behavior all the way down to the office cubicles and shop floor,” said former ERC president Patricia Harned, Ph.D.
It can be hard to decide on a course of action when you see bad behavior in the workplace, especially if it’s a supervisor. On average, one out of three employees have observed misconduct but failed to report it, according to a 2011 National Business Ethics Survey conducted by the ERC. Instead, they often become disillusioned and either join in the activity or leave the company.
Depending on their size, most companies will have a policy in place for reporting wrongdoing, usually one that goes up the chain of command. Larger firms often have an Employee Assistance Program that can be helpful as well. Exposing wrongdoing may not make you popular in some quarters, but in the long run, you’re doing the company a favor, especially if your information reveals activity that’s illegal as well as unethical. No matter what the case, it’s better to report the problem than turn a blind eye and become complicit, although that can be easier said than done.
Warren said that one of the greatest dangers is assuming ethical problems are “fixed” when they’re only dormant.
According to the Ethics & Compliance Officer Association, corruption scandals occur in ten-year cycles, since it generally takes only a few years for companies to start becoming lax about their standards. The slacking off leads to a ‘comfortable’ period that’s characterized by rationalizing, moral deterioration and nurturing the seeds of escalating ethical misconduct. The end result is a build-up, exposure, unwanted headlines and a public outcry.
“In other words, organizations must continually and painfully be reminded of the need to adhere to higher standards,” Warren said.
That pain often hits where it hurts the most – a company’s bottom line. Research studies from multiple sources have developed and analyzed a ten-point rating scale measuring a company’s reputation. For large corporations, a drop of even one point in public trust can mean as much as $53 million a year in lost business.
“Difficult times either bring out the worst or best behavior,” Warren said. “By 2015, headlines will tell us which companies took the wrong path by failing to recognize the signs that are so clearly apparent now.”
Meanwhile, companies that remain committed to integrity and honest practices will continue to attract employees, customers and investors. That’s especially true in Oklahoma.
But problems do need to be kept in perspective.
“We have to recognize that those getting the bad press are the exceptions to the rule,” Warren said. “Ok Ethics reinforces and reminds people that the norm and best way to do business is through time-honored principles of honesty and fairness. I think that our monthly meetings serve to inspire individuals that they are not alone in doing the right thing. Our Okie roots are firmly steeped in principles of down-to-earth honesty. We don’t really need bad news to remind us what’s important. So you can chalk up the continued commitment to integrity in the workplace as another ‘Oklahoma Standard.’”
Supporting the Next Generation
Sadly, universities across the country are dealing with an epidemic of cheating. In fact, a Bloomberg Businessweek article recently commented that catching college cheaters “requires a level of vigilance and research better suited for the corridors of the National Security Agency than the cluttered desk of a humble teacher.”
Nonetheless, Oklahoma’s students, like its business leaders, are ahead of the curve in their dedication to truth and fair play. With the full support of the nonprofit Oklahoma Ethics Consortium, universities around the state have established highly successful ethics programs aimed at producing trustworthy leaders and employees.
As only one example of their success, for the past two years members of the University of Oklahoma Ethics Team took first-place honors at the regional Ethics Bowl, and this year placed ninth in national competition.
The contest is fierce. A moderator poses questions based on a case taken from a set of 15 cases, focusing on topics such as the classroom, personal relationships, professional ethics or social and political ethics. The team’s answers are judged by a panel, based on intelligibility, focus on ethically relevant considerations and deliberative thoughtfulness.
“The importance of the student initiatives at the state’s higher education institutions can’t be overstated, especially as many of these students go on to be hired by member companies,” says Shannon Warren, Ok Ethics founder. “The future lies in our youth’s hands, so it’s important to ensure that they understand how important ethics are to running a successful business.”