The Global Challenge
Executives often ask, "Where does it say that we have to have an ethics and compliance program?" This is not an unusual question. This is not an impertinent question. Most assuredly, this is a multi-part question.
In essence, the boss is asking, "What requires us to do something about ethics?" To merely respond, "It's just the right thing to do" may not answer the real question that the executive has just asked. In reality, your executive may want to know, "Where is this written? What are others doing about ethics and compliance? How do our efforts compare? Are we ahead of or behind the competition?"
Most major corporations operate in multiple countries, under multiple legal and regulatory authorities. It can be difficult, if not impossible, to identify the exact controlling legal authority for creating and sustaining ethics and compliance initiatives. It can be a real challenge to determine what a company must specifically do. Conducting business ethically, avoiding corruption, sustaining ethical business cultures, and complying with the law are high-level answers to the question, "What must we do?"
Business, however, thrives on more concrete answers.
Many countries have adopted or are currently considering laws that would establish the parameters for ethical and legally compliant corporate conduct. Some of these laws cover public and private business conduct. Some of these legal approaches also cover government conduct. As of mid 2008, compliance laws and regulations have been adopted by Australia, Belgium, Brazil, Canada, China, the European Union, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Korea, Lebanon, Netherlands, Poland, Russia, South Africa, Sweden, the United Kingdom, and the United States. More countries are adding to the world's supply of compliance law every year.
Even where the legal systems for ethics and compliance are somewhat similar, how companies respond to these laws is not always the same. Some organizations attempt to comply with every law in every country where they operate. Some organizations devote considerable legal resources trying to reconcile inconsistent legal approaches. Some organizations opt for either the highest or the lowest common denominator. To complicate things further, enforcement mechanisms often vary according to the country and its government.
Where the legal principles are clear, it is a relatively straightforward task for businesses to agree upon the standards for ethics and compliance programs. These legal principles become the blueprints as a company develops, implements, and assesses its ethics and compliance program. However, where the standards are not clear—as can be the case where a company operates in a number of global regions and/or is headquartered in jurisdictions that have not adopted compliance legislation—it is more difficult to articulate baseline standards.
Many organizations, headquartered outside of the United States, recognize that the American approach to corporate ethics and compliance is fairly well developed and adequately documented. But, modeling a corporate compliance initiative only on the Federal Sentencing Guidelines for Organizations is limiting. It may also be politically naïve. A U.S.-centric approach to ethics and integrity can alienate executives, parliamentarians, employees, labor unions, and civil society representatives. To justify creation of a robust ethics program because it is the norm in the United States ignores the reality that most businesses operate on a global and transnational platform.
A Proposed Solution
Global Ethics & Integrity Benchmarks* presents a set of universal standards that describe what it takes for an ethics and compliance program to be effective and successful. This benchmarking tool, designed for use as a self-assessment protocol, permits organizations to review and evaluate what they are currently doing in terms of ethics and integrity—apart from any single jurisdiction's laws and regulations. It bridges the gap that conflicts of laws considerations can never successfully navigate.
Global Ethics & Integrity Benchmarks is a tool for helping multinational organizations assess and measure their progress in making a formal and transparent commitment to ethics and integrity in the workplace. Business conditions and attitudes can vary greatly worldwide. These benchmarks have worldwide and incremental applicability. They address the need for a universal approach to workplace ethics and integrity. Though legal standards and expectations for businesses differ (within a predictable range), the fundamentals of workplace ethics should transcend national boundaries and legal systems. These Global Ethics & Integrity Benchmarks focus on how individuals treat each other in the workplace, and how their organizations treat them as individuals.
Relying upon the advice and experience of a global panel of experts, we have prepared these benchmarks to help our colleagues answer their leader's probing questions of necessity, effectiveness, and legitimacy. The Global Ethics & Integrity Benchmarks presents twelve categories or dimensions of activity that most typically fall under the heading of ethics and integrity. They include:
1. Vision and Goals covers the organization's overall concept of and approach to ethics and integrity, including its formal articulation of the organization's underlying philosophy about ethical and moral conduct, and how these expectations are embedded in the fabric of the organization. This benchmark includes how organizations identify and define their core ethical values or principles, as well as how organizations integrate those values into everyday business conduct.
2. Leadership covers the responsibilities of the organization's leadership in shaping, guiding, and supporting the organization's ethics and integrity initiatives. It examines how leaders and managers are held accountable for promoting ethics and integrity. This category includes an assessment of the organization's "Tone from the Top" at both the senior executive and governance levels.
3. Infrastructure explores the way the organization structures or organizes its ethics and integrity function so that it can carry out its goals effectively. This category covers how the ethics function is structured, staffed, and resourced, as well as its formal and informal reporting relationships. This category also includes the roles and responsibilities of those individuals who are assigned to implement the ethics and integrity function.
4. Legal Compliance, Policies, and Rules includes the core laws, policies, rules, and guidance that comprise the legal framework for the organization's ethics and integrity systems. This category assesses the internal framework that provides the floor for ethical behavior. It also includes compliance with the external legal framework, established by the multiple jurisdictions and legal frameworks within which the organization operates. This category includes the systems and controls used to ensure and demonstrate that employees and the organization are legally compliant. What is essential is that the organization has translated its legal commitments into concrete actionable guidance that is enforceable.
5. Organizational Culture addresses the overall organizational culture and how it promotes ethical conduct in the context of the organization's mission, vision, structure, and strategy. This category explores the degree to which an organization focuses on shaping its organizational culture (both the written and unwritten rules that dictate how work is performed and goals reached) and whether that culture actively promotes ethical conduct. This category addresses how culture is defined (the history and traditions of the organization), who "owns" and shapes culture, how culture is measured, and the degree to which employees find the culture supportive of ethics and integrity.
6. Disciplinary and Reward Measures describes how the organization sets and enforces its standards for ethical conduct and behaving with integrity. This category addresses rewards and punishments, incentives that promote ethical behavior, and disciplinary action taken to limit or punish unethical work conduct. This category includes how the organization promotes ethical conduct through its performance appraisal process, and whether ethical conduct is linked to compensation and/or other types of non-monetary benefits.
7. Whistleblowing explores how the organization encourages individuals (both internal and external to the entity) to speak up and make reports of questionable conduct. This category explores the methods and protections offered to individuals who wish to make the organization aware of possible unethical behavior, misconduct, or illegal actions. It includes the making of both confidential and anonymous reports, and the systems used by the organization to protect whistleblowers from retaliation or retribution.
8. Measurement, Research, and Assessment evaluates how ethics and integrity are measured, whether the organization undertakes research to support ethics strategies that create a culture of ethics and integrity, and the organization's assessment processes around ethics, integrity and organizational culture. This category includes the organization's commitment to continuous improvement, based on benchmarking and other evaluation methodologies.
9. Confidential Advice and Support describes how the organization provides confidential, neutral, professional, and independent ethics advice to employees, supervisors, managers, executives, members of governing bodies, and other stakeholders.
10. Ethics Training and Education explores ethics and integrity awareness, skill-building training and education, and the integration of such training into the overall development of all employees. This category includes the provision of ethics-related training and skill building throughout the life cycle of staff members, and the degree to which these initiatives are integrated into other organization-wide training commitments.
11. Ethics Communications describes how the ethics and integrity initiative is articulated and promoted, both internally and externally. This category covers how the organization defines its stakeholders and how it gears its key messages to distinct audiences.
12. Corporate Social Responsibility covers the organization's efforts to establish links with and invest in the communities and stakeholders with which it interacts. This category also covers government relations, environmental consciousness, sustainability, and community impact.
These categories may resonate with any number of legislative or regulatory approaches, but do not reflect the legal environment of any single sovereign nation.
Global values are at the foundation of the Global Ethics & Integrity Benchmarks. Global values, including integrity, can be found in all religions, texts on moral philosophy down through the ages, and in the United Nations Universal Declaration of Human Rights and its resulting rights-related conventions and principles. Though there is significant "play" in how global values (such as integrity) can be defined and their scope of application, there is little doubt that what unites us as human beings is this ethical dimension. Different cultures, nations, and societies may differ about how to prioritize specific moral values. Nevertheless, all human societies seem to accept that a set of basic human values exists and that these values tend to unite—rather than divide—us.
These benchmarks reflect emerging successful organizational practices. They can and will change over time, evolving as all workplace practices grow and improve. Organizations that do benchmarking may look upon these benchmarks as prescriptive of effectiveness or simply as descriptive of current best practices. We believe the descriptive approach is safest, as context is usually critical in assessing the importance and relevance of the benchmarks. In one context, a specific best practice might be ignored while in another context it may be a critically desired factor. From a global perspective, therefore, it is imperative not to blindly follow these benchmarks, but to first evaluate the relevance and importance of each of them to your organization.
Using the Global Ethics & Integrity Benchmarks
Organizations can use these Benchmarks in a number of ways. Here are several suggestions:
How Not to Use these Benchmarks
Equally instructive is how not to use the Global Ethics & Integrity Benchmarks. These benchmarks have been created based on our experiences and the experiences of the expert panel. While we are confident that the benchmarks represent realistic and successful practices, they are not based on a systematic empirical study. Therefore, please use these benchmarks as guidelines, not as requirements. They should not be used to determine whether an organization has met specific legal standards set by any one jurisdiction. Do not use them to make compensation decisions or to judge the effectiveness of individuals who have organizational responsibility for implementing ethics and integrity programs. The benchmarks are not the same as legal advice, and do not replace consultation with your organization's legal counsel.
We believe that the Global Ethics & Integrity Benchmarks provide a valuable tool for global organizations as they develop, improve, assess, and evaluate their ethics and compliance efforts. We welcome feedback from users, detailing how the instrument has been used and what kinds of results were received. Next iterations of the tool will reflect both the evolution within the fields of ethics and compliance as well as the practical experiences of business ethicists and compliance professionals worldwide.
Ms. Dubinsky is the Chief Ethics Officer for the International Monetary Fund. Dr. Richter is President of QED Consulting, a management consulting company that specializes in the areas of leadership, values, culture, and change.
* Global Ethics & Integrity Benchmarks is provided free of charge with the provision that its copyright is always respected and acknowledged. For more information about the Benchmarks and to download a copy of the complete assessment tool, please visit www.qedconsulting.com.