Design and Corporate Responsibility. For most organizations,
effective leadership develops an organizational culture that
guides the day-to-day actions of its involved stakeholders.
Leadership will guide by integrating the rules, principles,
or values it desires. Success is when the organization's involved
stakeholders act in accordance with leadership's desires simply
because "that is the way we do things around here."
The nature of
an organization's program must be congruent with or "fit"
its culture. If it has a compliance culture, it may easily
implement a compliance program. But if it has a more values-based
culture, it will find a compliance program actively or passively
resisted. In any event, until the rules, principles, or
values are fully integrated, anything short is still essentially
a compliance program from its stakeholders' points of view.
and Principles into Practice. Implementing an ethics
or compliance program (referred to here as a "Corporate
Responsibility Program") can be a complex and daunting
task. The goal is to make ethical norms the basis for decision-making
and action at all organizational levels. Implementation
requires broad as well as intimate understanding of organizational
culture, history, structure and systems and its external
A recent study
and experience find several organizational and Corporate
Responsibility Program design factors that influence ethics/compliance
Legal Context (the extent to which its industry is characterized
by government laws and regulations, whether its employee
base is compliance- or values-oriented, the national
cultures influencing its operations)
Culture (executive and supervisory leadership, fair
treatment of employees, ethics in discussion and dialogue,
ethical conduct rewarded, organizational focus)
(whether the approach taken is compliance-based, values-based
or designed to satisfy external stakeholders or protect
Characteristics (e.g., an ethics/compliance officer,
a code of conduct, a telephone hotline, and performance
(detection of violators, follow-up on reports, and consistent
What tends most
to lead toward effective Corporate Responsibility Programs
is the ethical culture of the organization, program follow-through,
and program orientation. The program must integrate well
within the ethical and legal context. Formal program characteristics
themselves are of relatively little importance.
Within the ethical
culture, what helps are the perceptions that executive and
supervisory leadership is strongly committed to ethical
conduct; that employees are treated fairly, that ethics
issues are talked about, and that ethical behavior was rewarded.
What hurts is a culture that requires unquestioning obedience
to authority or that is focused on self-interest.
orientation, what helps is emphasizing shared organizational
values, supplemented with compliance and external stakeholder
aspects. Where balance between the three lies depends upon
the culture of the organization, the health of the organization,
and the urgency of its situation. What hurts is perception
that the program is designed to protect management.
follow-through, what helps most are consistent policies
and actions, and following up on reports of misconduct.
described in the executive summary below is intended as
a guide to implementing a Corporate Responsibility Program
reflecting the above influences and others learned through
experience. It is divided into seven sections, each of which
identifies key issues to address in building a Corporate
Responsibility Program. A detailed description of the required
documents and structures follows it.
and Plan for an Ethics Initiative
explores the need for an ethics initiative: this often
includes an ethics environment assessment and
planning sessions to review assessment recommendations.
influence of national culture(s).
all documents into appropriate languages.
in-depth ethics/compliance risk assessment and stakeholder
contextual meaning of organizational social responsibility
and environmental ethics considerations.
rationale and proposal for an ethics initiative, build
a supporting "ethics network," and formalize an Ethics
Initiative Action Plan for CEO and Board approval.
on the ethics initiative using a comprehensive communication
goals and strategies with those of involved stakeholders.
personnel to lead the effort, and provide them with
adequate staff and other resources.
educate key personnel as necessary.
and Document the Organization's Core Purpose, Core Values
reflect on the organization's history, culture and related
draft new core ideology and vision statements as necessary.
them throughout the organization for review and feedback.
core ideology and vision statements and present for
approved statements as widely as deemed appropriate,
including external stakeholders.
and Document the Organization's Mission and Standards of
reflect on the organization's history, culture, and
draft organizational and principal division mission
them throughout the organization for review and feedback,
and present for Board approval.
Draft a formal
code of ethics/conduct based on shared organizational
visions and values.
code of ethics for review, make revisions, and present
for Board approval.
review and align existing policies with core ideology
and vision statements and ethics code.
4. Build a
Formal Organizational Ethics Structure
the roles of the Board of Directors, audit committees,
and CEO and their reporting relationships.
of outside legal counsel, auditors, and ethics and compliance
ethics infrastructure, which may include: appointing
ethics officer(s), standing committees, an ombuds, etc.
and clarifying the roles, responsibilities and jurisdictions
of each. Ensure that there is adequate supporting staff
and other resources.
communication channels between senior leadership and
risk analysis and integrate into organization strategies.
of ethics office in strategy and operational policy
of ethics/compliance office in organizational social
responsibility, including philanthropy, public relations,
and government relations.
or attend conferences that provide best practices or
benchmarking, e.g., the Ethics Officer Association,
Health Care Compliance Association, or the ERC Fellows
provisions organized labor contracts or labor law into
the Corporate Responsibility Program. In US, this includes
code of ethics as a bargaining issue, with rare exceptions.
In many countries, matters in a US code or routinely
provided by contract or labor law.
diligence process in hiring, placement, performance
evaluation, and retention.
regarding confidentiality of sources.
process for conflict resolution consistent with organizational
vision and values.
process for dealing with external stakeholder, especially
government in the event of misconduct.
the Ethics Initiative embraces all applicable legal
process for learning from problems, conflicts, and mistakes.
Auditing, Monitoring and Reporting Mechanisms to Support
means to monitor, record and evaluate ethics and compliance
systems to advise employees and other agents on ethics
and compliance matters, and to ensure employee and other
agent safety (e.g., from retribution) in ethics reporting.
plans to guide decision-making in the event of an "ethics
crisis," such as a hazardous waste spill or product
regarding exit interviews.
the Organization's Vision, Values, Standards and so forth
comprehensive ethics/compliance training and education
means to implement this strategy and develop the content.
Include general ethics training and area-specific training
all employees receive ethics orientation and training.
and validate the effects of communications and training
at all organizational levels.
interactive Web site to communicate to stakeholders
and the public the essence of the Corporate Responsibility
7. Align Ethics/Compliance
initiatives with other Organizational Systems
and vision of organizational units (e.g., branches,
departments) with company-wide statements.
ethics and compliance goals into organizational strategic
ethics and compliance efforts into other organizational
initiatives (e.g., HR, IT, PR, Labor-Management, government
assignments to existing capabilities to achieve creative
tension, flow, and learning and growth (facilitation/intrinsic
systems to encourage behaviors consistent with organizational
vision and values (manipulation/instrumental value).
publicize disciplinary actions for ethical abuses.
to share ethics and compliance ideas with regulators,
suppliers, vendors and clients.
to wrongdoing and prevent further wrongdoing.
problems, conflicts, and mistakes and communicate lessons
learned as appropriate.
and judicial actions leading to effective Corporate
Responsibility Program Documents and Structures. The
following are typical documents and structures and system
adopted as part of a Corporate Responsibility Program.
Core Values, and Vision Statement
Norms and Standards
and Systems that:
standards and procedures.
employees and other agents to report wrongdoing.
appropriate conduct and discipline inappropriate conduct.
problems, conflicts, and mistakes.
a Corporate Responsibility Program. As the table in
2 suggests, the actual strategy employed to implement
a cultural change will depend upon the urgency of the situation,
the time available, and whether the culture of key stakeholders
will support the change.
There is no one-size-fits-all
Corporate Responsibility Program. The kind and degree of
participation in designing the ethics initiative will depend
upon the situation and the condition or health of the organization.
The following questions for self-governing organizations
in the attached "Model"
may be helpful.
It will take
attention to all aspects of organizational life to implement
a Corporate Responsibility Program. From a systems view,
all tasks of the organization must be evaluated.
The people who are to perform these tasks must be
considered to see if the challenges of the tasks are balanced
with the capabilities of the people. The formal structure
must be designed and developed to provide the capacity for
the people to realize their potential toward shared ends.
But most importantly, the organization culture must
usually be changed so that organizational aspirations can
The dirty little
secret of ethics/compliance program implementation is that
it is a disruptive and long-term (3-5 years) process if
the organization is not otherwise healthy. To be successful,
it must often raise fundamental issues. It takes time from
business as usual. Moreover, it is highly unlikely that
all stakeholders will embrace it. If they did, the organization
would not need the initiative. Some members, especially
some of long standing, will have to leave for the initiative
to take hold. It may be no other way.