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How to foster an ethical workplace

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Archives - May 2006
Monday, May 01, 2006

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By Brandon Sawyer

In the wake of heavily publicized fraud trials for a series of former Enron executives, the 29,000 Oregon employees who answered this year’s Oregon Business’ 100 Best Companies to Work for in Oregon survey remain confident in the ethical leadership of their companies.

“Trust in top managers to make ethical business decisions” ranked eighth in satisfaction among the 50 workplace qualities they rated. But in terms of importance, they rated it even higher: fourth, behind “trust between managers and employees” (No. 3), “adequacy of compensation” (No. 2) and “treatment of employees by managers” (No. 1). The message: The ethical relationship between employee and manager is critical; fostering a culture that honors this should be the goal of any enterprise that wants to attract the best talent.

Nearly 3,400 employees of Providence Health System, the No. 41 large 100 Best company, took the survey, more than any other participating company, and ethics came up again and again in their write-in comments.

One employee wrote, “I feel there is a strong standard of ethics used in high-level business planning, as well as in everyday activities by all of our employees.” Another notes: “Bottom line is caring for patients and community, not making a profit.”

At EthicsPoint of Portland, the No. 45 best small company, employees were similarly proud of the ethical foundation. “We are selling a service,” wrote one, “that creates ethical value in a world of mistrust. We collectively believe we are contributing to a better world.” The service is EthicsPoint’s confidential and anonymous hotline and secure Web form allowing clients’ employees to report any misdeeds they have witnessed.

Most of Providence’s employees know its core values by heart, says Elizabeth McCabe, the regional director of mission integration. That mission, to continue the healing ministry of Jesus with special concern for the poor and vulnerable, hasn’t changed since it was founded in the Northwest by Mother Joseph of the Sacred Heart and other Sisters of Providence in the 1850s.

McCabe answers “150 years,” when asked if high ethical standards have led to business success. And she isn’t surprised that Providence’s employee satisfaction swarms around these issues. “People feel valued when they’re working in an ethically grounded organization,” she says. “There’s a positive resonance between who the employees are and the work they’re doing. Every person who works for us is an illustration and expression of our mission.”

In the case of EthicsPoint, John Hall, vice president and co-owner, believes the company’s culture and its employee standard-bearers are responsible for its 800% growth during the past two years. Its mission is to help organizations realize a sustainable ethical culture in which employees would have no fear of coming forward, either directly to their supervisor or to another department such as human re-sources, in order to report questionable business practices.

Ethical tone, says Hall, must start at the top. “If the leadership isn’t committed to developing a strong ethical foundation, then it is all talk and no action, which employees will see right through.”

Raising standards can also begin with new hires, says McCabe. Providence looks for candidates whose personal mission resonates with that of the organization. And employees are continually educated about its ethical standards to the point that they automatically ask themselves whether a particular action is in line with ethical policy and, if not, they’ll politely remind management.

Building blocks toward an ethical organization
1. Establish policies and procedures that define your ethics culture, usually outlined in your code of conduct.
2. Board of directors and executive leadership need to be accountable to ensure policies and procedures are integrated with proper oversight.
3. Train employees to policies and procedures.
4. Establish an “open door policy” for employees to bring issues forward without fear of retaliation.
5. Apply consistent treatment to similar ethics issues and violations.
6. Continually learn from ethical issues and make appropriate changes to policies and procedures.
— John Hall, EthicsPoint

On the Providence St. Vincent Medical Center campus, the Providence Center for Health Care Ethics regularly wrestles with challenging technological and end-of-life issues just as front-line employees, in caring for patients, are regularly forced to make ethical considerations. McCabe says there’s bound to be ethical spillover from the medical realm into business and management.

Most questions can be solved informally among staff, but if a problem is tricky enough it requires a “formal ethical discernment.” Any employee can call for one of these, but generally a mission director will guide it. Each Providence acute care site has its own full-time mission director. They have three responsibilities: being a “fire-keeper” for the sponsoring religious order (Sisters of Providence); orchestrating community benefits and social responsibility; and guiding ethical processes.

“Ethics,” says McCabe, “is about, in a complex world, making the best choice possible out of a range of options. In a formal process, once you’ve identified the question and the stakeholders, you weigh them and look at it from a variety of lenses. Discernment is really shaped by the question.” While some of the parties involved might not be happy with the final “best” choice, she says that allowing them to have their perspective heard and honored is so important and valuable that she’s only ever heard praise about the discernment process itself.

Hall agrees: “It is very simple. We do what is right with the information we have and we do it with honor and respect.  If your company lives by high standards, you are judged by high standards. And we extend that honor to our clients equally, no matter how small or large.”

Hall has helped launch a number of startups, including Unicru, Sterling Internet Solutions and BLT Technologies, a prepaid phone card company he sold to WorldCom during its buying frenzy days. Working with WorldCom for a year, he says, he knew something was awry (the company was later to become another accounting scandal), but was too young to trust his instincts. Eventually, he retreated from the business world to pursue nonprofit work with a children’s ministry. But EthicsPoint’s peculiar business model drew him back. He and CEO David Childers came on board to take the startup to the next level. “Ethics and values,” he says, “are really very simple things in a big bad business world.”

That business world has lost a lot of trust, thinks Hall, in part due to the quarterly mindset of many executives. Information is so readily available, he notes, that the investment community is predicting what a company should earn well in advance, and executives like those who misled Enron’s stakeholders become obsessed with meeting or beating analysts’ expectations. Such a short-term view stands in stark contrast to the sustainable ethical culture that EthicsPoint aims to promote.

The regulatory backlash to corporate accounting abuses, namely Sarbanes-Oxley, has been a boon to EthicsPoint business as public corporations, privately held companies and even nonprofit organizations scramble to comply with new restrictions and reassure their stakeholders, including employees and customers, that they are raising ethical standards. “Employees now have federal whistleblower protection from retaliation,” says Hall, “that can land a violating party up to 20 years in prison.”

How can a fallen company regain its stature?

“Perception is reality,” Hall says. It’s not that authenticity doesn’t matter. Just the opposite. A company can claim to be open, honest, honorable and ethical all it wants, but until it earns the trust of employees, shareholders, customers and the public, they’re not buying it. And in Portland he finds this to be especially true. “We may be a big city by size, but when it comes to bad business practices, we are a small town,” he says. “Hopefully, this inspires companies to continue to do the right thing.”


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Editor's Letter: Power Play

January-Powerbook 2015
Thursday, December 11, 2014

There’s a fascinating article in the December issue of the Harvard Business Review about a profound power shift taking place in business and society. It’s a long read, but the gist revolves around the tension between “old power” and “new power” as a driver of transformation. Here’s an excerpt:

Old power works like a currency. It is held by few. Once gained, it is jealously guarded, and the powerful have a substantial store of it to spend. It is closed, inaccessible, and leader-driven. It downloads, and it captures.

New power operates differently, like a current. It is made by many. It is open, participatory, and peer-driven. It uploads, and it distributes. Like water or electricity, it’s most forceful when it surges. The goal with new power is not to hoard it but to channel it.

The authors, Henry Timms and Jeremy Heimans, don’t necessarily favor one form of power over another but merely outline how power is transitioning, and how companies can take advantage of these changes to strengthen their positions in the marketplace. 

Our Powerbook issue might be viewed as a case study in the new-power transition. This annual book of lists provides information on leading businesses, nonprofits and universities in the state. Most of the featured companies are entrenched power players now pursuing more flexible and less hierarchical approaches to doing business. Law firms, for example, are adopting new technologies and fee structures to make legal services more accessible and affordable.

This month we also take a look at a controversial new U.S. Securities and Exchange Commission rule requiring public companies to disclose the median pay of workers, as well as the ratio between CEO and median-worker pay. 

Part of the 2010 Dodd-Frank financial reform law, the rule will compel public companies to be more open about employee compensation, with the assumption that greater transparency will improve corporate performance and, perhaps, help address one of the major challenges of our time: income inequality.

New power is not only about strategy and tactics, the Harvard Business Review authors say. “The ultimate questions are ethical. The big question is whether new power can genuinely serve the common good and confront society’s most intractable problems.”

That sounds like a call to arms. Or a New Year’s resolution. Old power or new, the goals are the same: to be a force for positive change in the world. Happy 2015!

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