by HR’s role in cultivating an ethics-friendly corporate environment can be placed into four broad categories.
Organizational integrity is a many-legged stool that more and more businesses are determined to build. The concept has taken hold in the wake of what’s been perceived, with justification, as a period of swashbuckling recklessness in business behavior, and in recognition of the resulting overlay of new regulatory and compliance measures intended to drive greater business discipline.
The legs of the stool consist of clear financial controls, models for effective management and governance, corporate reputation, security, compliance, employee morale and productivity, respect for customers and other stakeholders, and an ethical framework to guide both individual and collective business behavior. Surmounting the legs are policies and processes that support all of these attributes.
First, HR professionals must help ensure that ethics is a top organizational priority. Pat Wright, head of Cornell University’s Center for Advanced Human Resource Studies, has stated that, in the wake of business scandals, HR leaders will take on a “Bigger role in monitoring the culture of the organization in terms of its ethical status,” according to Human Resources Report. But monitoring alone won’t suffice. HR executives must either take on the mantle of ethics champion or ensure that some other capable person in the organization does so. Such a champion will need to be highly experienced and respected, having enough organizational clout to make a difference.
Second, HR must ensure that the leadership selection and development processes include an ethics component. After all, leaders at all levels of the organization need to both model ethical behavior and communicate ethical standards to employees, suggests research conducted by Ethics Resource Center . Selection procedures can filter out people who, despite making their numbers, are known for cutting ethical corners. And leadership development should include not only ethics theory but real-life examples, perhaps from mentors, on how managers have handled ethical dilemmas in the past.
Among the most difficult aspects of ensuring ethical leadership may be convincing top management, including board members, that they too should receive ethics training. A Conference Board survey of over 80 ethics, HR and legal officers found that only about a quarter had held training programs for their boards of directors. Yet, over half (55%) of these respondents said their boards are “Not engaged enough” in major ethical decisions associated with their organizations.
Promoting gender diversity among top leadership might have a positive impact on ethics, at least among Canadian firms, suggests a report by The Conference Board of Canada. It showed that 94% of boards with three or more women make sure of their organization’s adherence to conflict-of-interest guidelines, while only 68% of all-male boards do the same. The same survey indicated that boards with larger numbers of women also are more likely than all-male boards to ensure that codes of conduct are followed in their organizations.
The third major HR responsibility is ensuring that the right programs and policies are in place, keeping in mind that the U.S. government is developing a stricter set of sentencing guidelines. A news release notes that under the U.S. guidelines first promulgated in 1991, “An organization’s punishment is adjusted according to several factors, one of which is whether the organization has in place an effective program to prevent and detect violations of law.” In light of recent scandals, the U.S. Sentencing Commission has “sent to Congress significant changes to the federal sentencing guidelines for organizations, which should lead to a new era of corporate compliance.” This amendment would strengthen the criteria that companies are required to use when developing their compliance programs.
HR professionals should, of course, be aware of these guidelines and how they’re evolving. But even more challenging is the need to customize programs to the specific risks in a given corporate culture. “Getting it to work is not simple,” said Ed Petry, executive director of the Ethics Officer Association, in Workforce Strategies.
Finally, HR must stay abreast of emerging ethics issues. This doesn’t mean just following legislation, which tends to be reactive rather than proactive. It means looking at the entire social and business environment and spotting conflicts of interest and other ethics problems before they develop into full-blown scandals. A combination of tools can help with this. Obviously, employers need to pay close attention to the questions and concerns that are flagged via employee hotline services and other feedback systems. To gauge what’s happening outside the company, HR can turn to environmental scanning techniques that help them see how new developments ranging from emerging technologies to global culture clashes could result in ethical problems down the road.
The general distribution of responsibility is like this:
Board of directors: Guide the definition and development of the desired culture, ensuring that it aligns with business goals and meets the needs of all stakeholders.
CEO and senior management team: Define the desired culture and cultivate it through leadership actions including setting objectives, strategies, and key results that prioritize culture-building; and designing the organization and its operational processes to support and advance the company’s purpose and core values.
Human Resources department: Design employee experiences that interpret and reinforce the desired culture. Also, implement strategies and programs that enable the rest of the organization to fulfill their culture responsibilities, such as offering training programs that develop leader capacity for culture-building and employee engagement; and developing culture guidebooks, processes such as performance management, and systems such as rewards and recognition programs that nurture the desired culture.
Compliance, Risk, and Ethics department: Provide input to the CEO and senior management team on the definition of the desired culture from the perspective of ethics and risk. Also, ensuring that execution on the desired culture across the organization aligns with the company’s risk management strategies through tools such as ethics decision trees, processes such as a whistleblower program, and systems such as compliance monitoring that align with the desired culture.
Middle managers: Deliver employee experiences that interpret and reinforce the desired culture. Also, implementing culture-building strategies, cultivating employee engagement with the desired culture, and fulfilling the culture-building responsibilities of employees.
Employees: Provide input to the CEO and senior management team on the definition of the desired culture and culture-building programs and tactics by providing insights on how the desired culture aligns with or differs from the actual culture, customer perspectives, and employee needs and expectations. Employees should provide feedback on existing culture-building efforts and ideas for new ones. Also, creating, adhering to, and enforcing routines and norms that interpret the desired culture; and aligning their attitudes and behaviors with the desired culture.
