Keys to Creating an Effective Ethics Program

David L. Perry, Ph.D.

What steps can executives take to develop and implement a comprehensive, long-term initiative in organizational ethics? Here are the measures recommended by the Ethics Resource Center, a private, not-for-profit corporation based in Washington, DC:

1. Assess organizational values and vulnerabilities to misconduct.

Many organizations make the mistake of assigning a small group of staff (usually from the legal department) to write a code of ethics, without first making any attempt to find out what kinds of ethical issues employees really face in their day-to-day jobs. Not only does an inadequate upfront organizational assessment result in a weak and irrelevant code of ethics, it also means that management remains ignorant of the kinds of problems that can’t be addressed in a code alone.

Management simply can’t afford not to know, for example, whether the organization’s goal-setting practices, incentive and reward systems, and performance evaluations encourage ethical conduct or undermine it. It does little good to state in a code of ethics that quality and safety are paramount if in practice employees are constantly rewarded only for cutting costs. Making the effort to identify employee values can also provide the foundation for consensus on the organization’s fundamental ethical principles.

2. Create opportunities for management to discuss organizational values and risks.

Data emerging from an organizational assessment will often call for developing clear standards of conduct, employee training, and changing management systems and practices. Management must reach consensus on the high-priority issues as well as action plans that must be formulated to tackle those issues head-on. If management does not develop a strong sense of ownership of the ethics program, employees will perceive it to be merely a temporary fad and not a long-term commitment.

3. Develop and communicate clear standards of conduct.

Once management understands the issues, a written code of ethics can be created or revised. This code should affirm a basic set of organizational values, principles or commitments, establish ground rules in areas where they are needed, provide illustrations and guidelines in some of the "gray" areas, and explain how employees can obtain further advice and counsel without fear of retribution. New-employee orientations should include a healthy dose of instruction in the organization’s ethical standards and ethics-related case studies. In addition, ongoing discussions should be woven into managerial training courses.

4. Refine management systems and practices to support the ethics program.

This is at once the most difficult and the most important step, because it gets at the basic tools that managers use to manage: goal-setting (strategic, departmental, individual), incentive and reward systems, performance appraisals, and disciplinary practices. All of these practices need to be evaluated according to whether they serve to reinforce the ethics program. This isn’t a single step, but an ongoing process of refinement and improvement.

A successful ethics program cannot be measured by the number of employees who can certify having read the corporate code or attended training sessions. Ethics has to do with the organization’s basic culture and operating values--the pride and satisfaction employees find in their work, the attention to quality and service, the degree to which suppliers and customers are treated fairly and honestly--all of which impinge upon the organization’s overall reputation and success.

(A slightly modified version of this article was originally published in Healthcare Executive, March-April 1993. Dr. Perry worked on the staff of the Ethics Resource Center from 1989 to 1992, where he advised many major corporations like Boeing and McDonnell Douglas on developing and refining ethics programs.)

Go to Dr. Perry’s CV.