Codes of conduct are a starting point for honest companies, but it takes chief executive commitment to breathe life into a corporate ethics programme

Codes of conduct and ethics statements are fundamental to going beyond compliance. Their real value, however, is in the way companies make them come alive for employees.

To do this, companies use a range of initiatives involving the employees themselves. The chief executive takes an active role in this process.

The codes are visually prominent and carefully articulated, but this is not enough. Ethically alert organisations make efforts to ensure attention to codes and to motivate employees to enact the codes and make them part of their everyday activities.

The companies we investigated for our book ensure that employees, colleagues, managers and officers understand the codes and interpret them correctly. The design of codes and handbooks and the strategic use of language play a role here, but there is more to it than this.

Chief executives and their companies link the necessity for ethical behaviour with the success of the organisation. They allow employees to be accountable and responsible, giving them a personal stake to make a difference. The codes are intertwined with personal satisfaction and professionalism.

The numerous written codes and related initiatives we examined also indicate the evolutionary nature of ethics in the companies in our study. Initiatives are ongoing, with many of the companies revisiting their codes yearly, allowing employees to interpret and discuss the codes via hotlines or corporate forums. Companies edit, build, and adapt codes and initiatives to changing challenges and times.

Our study underlines the meticulous approach companies take to written corporate materials such as vision statements, codes of conduct and codes of ethics. The sheer variety of tangible initiatives – from ethics programmes to training sessions, from meetings to special tools and events – shows how each company makes an effort to differentiate its written code, making it specific to the organisation and thus building ethical capital.

Simple guides

Right from day one, the importance of integrity was paramount at Hospira, the healthcare company that was spun out of Abbott Laboratories in 2003, says chairman and chief executive Christopher Begley. “One of the first things we did for our Hospira colleagues was identify a book called The Integrity Advantage, which really spells out why integrity is so critical to both an individual’s and an organisation’s success,” he says. “We gave it to all of our employees the day the company launched. We also used it to help develop our code of business conduct.”

Begley says Hospira’s code “spells out integrity in simple language – simple languages, really, because we issued it in several languages to reach our global population”. After making sure each Hospira employee and contractor had received a copy, the company explained the code in face-to-face training sessions all over the world. Finally, employees and contractors must pass a test on the code and formally sign up to it. Each new employee and contractor that joins the company must complete these tasks.

Like other organisations intent on nurturing a climate of ethics, Hospira communicates its values and its attention to ethics with a system for employees to report oversights, and a hotline for workers with questions or concerns. This very important outlet ensures a constant ethical dialogue. Employees who do not want to draw too much attention to a situation can still discuss it and get feedback.

This outlet for active participation also helps keep enthusiasm high at Hospira – something Begley says is key. Active participation keeps ethics and codes alive in each employee and allows them to evolve. Employees are able to discuss and draw on the codes to meet the challenges of diverse situations as they emerge. The nature of the hotline allows room for interpretation even when employees are challenged by a not-so-clear situation that does not fall neatly into a set of existing codes.

Begley admits that the advantages of being a new company take work to keep alive. “Several years following the launch of our new company, what continues to keep me up at night is the notion that one day the novelty of our new culture will wear off,” he says. “I know that unless we work hard to sustain the enthusiasm, it is likely to burn out. So we are continuously working on ways to deepen our employees’ emotional attachment to our evolving culture, and to help instil a lasting passion.”

During the last two Olympic games, the company has held its own Hospira Olympics, a competition to reward employees that have demonstrated a commitment to the company’s values.

High expectations

Like Begley, William Nuti, chief executive of technology company NCR, is clear about his expectations of integrity. He says: “As I convey regularly to our employees, our goal in business is to not only hit our plan, but to exceed it. The same goes for striving to achieve the highest level of ethical performance.” He adds: “We want to make sure that we provide as much clarity as possible to assist employees in determining what is acceptable.”

To encourage employees to report any potential wrongdoing or anything that they may see as questionable conduct, NCR established an “AlertLine” through which anonymous reports can be made. The hotline is managed by a third party 365 days a year and, importantly given NCR’s global reach, it can handle 75 languages. Employees can also report questionable conduct to NCR’s ethics and compliance office, the law department, or corporate security.

NCR provides web-based code-of-conduct training and an annual certification programme as well as other ethics and compliance training for all employees. It also takes advantage of targeted training as it relates to specific positions within the company or particular countries. This targeted training covers subjects such as conflicts of interest, competition considerations and the US Foreign Corrupt Practices Act.

Nuti says: “We regularly discuss during all-employee webcasts the types of ethical situations that one could encounter and also communicate at a high level what types of actions have been taken.”

Bringing ethics to the individual involves employees at all levels as well as managers. Nuti’s communication aims to ensure a culture of ethics. “One of the key elements that I assess is whether managers are setting the right tone and creating a culture of integrity, trust and openness,” he says. To further solidify its efforts, NCR uses external assessments of its ethics and compliance programmes to provide snapshots of how well they have been communicated and absorbed by employees, and where they need to improve.

Values-based culture

Robert Stevens, chief executive of Lockheed Martin, says the defence company’s approach to ethics is “values-based”. He explains: “We believe that ethical conduct requires more than simply complying with the laws, rules, and regulations governing our business. Ethics is first among our company values.”

Stevens’ support for Lockheed Martin’s programme and initiatives is evident. His personal involvement in many of the activities exemplifies the relentless efforts by chief executives and companies to keep ethics at the top of people’s minds throughout an organisation.

Lockheed is very specific and deliberate in its ethical practices (see below). Certain initiatives allow Lockheed to assess the current climate in the organisation. Others allow constant communication and serve as short reminders of the value placed on ethics, for example the “integrity minute”, which is available online along with other materials.

This comprehensive system of practices helps Lockheed secure employees’ constant attention to ethics and helps them to stay involved. It ensures that ethics is not a collection of point-in-time rituals but something that is actively pursued throughout the organisation. And this involvement and attention to ethics is an all-important factor in building an honest corporation.

Comprehensive and universal

There are a series of key elements to Lockheed Martin’s ethics and compliance programme.

· Code of conduct published in 17 languages and distributed to employees around the world.

· Chairman’s award for ethics: presented annually to employee who best exemplifies the corporation's commitment to ethics and integrity.

· Ethics awareness training: each year, all 130,000 employees must participate in one hour of live ethics awareness training.

· Office of ethics and business conduct: headed by the vice-president for ethics and business conduct, reporting to the chief executive and the board.

· Ethics and business conduct steering committee: senior executives from each of the business areas and from key functional departments sit on this committee, which provides strategic guidance to the office of ethics and business conduct.

· Full-time ethics officers at each major business unit (part-time ethics officers at smaller sites) offer guidance, respond to employee concerns, and coordinate investigations of employee wrongdoing.

· Biennial ethics surveys to gauge staff perceptions on ethics.

· Ethics helpline: a toll-free telephone number available to all employees worldwide to seek guidance and report concerns.

· Compliance training: 13 compliance training courses to make employees aware of the laws, rules and policies applicable to their jobs. All managers must take an “ethics tools for leaders” training course.

· “Integrity minute”: short video messages with an ethics theme are sent to employees via email.

· Ethics tips for leaders: short messages are sent to all leaders via email. Recent topics include building trust with employees and facilitating ethics awareness training.

This is an edited extract from Above the Board: How ethical CEOs create honest corporations by Patrizia Porrini, Lorene Hiris, and Gina Poncini. Reproduced with kind permission of McGraw-Hill Education.

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