Ethics in the Workplace

48
Contract Management ∕ July 2016
Ethics
IN
THE
Workplace
A COMPARISON
BETWEEN THE
Contract Management
AND General Business
Workforces
Contract
BY DR. RENE G. RENDON
managers perform
AND DR. JOHN W.
WILKINSON
a critical function within
their organizations. Organizational success
can depend on how proficiently
contract managers buy
and sell through
contracts.
As the primary focal point for
contractual issues, contract managers manage horizontal interfaces with external organizations as
well as vertical interfaces with senior leaders in their own organization. This puts contract managers, compared to other business
employees within the same organization, in a challenging position
from a perspective of ensuring ethical behavior while complying with laws, codes, and regulations. This is why the contract
management workforce receives mandatory and extensive education and training on ethics rules and compliance requirements
involved in the expected performance of their contract management duties.
The NCMA Contract Management Body of Knowledge (CMBOK)
includes extensive coverage of ethical standards expected of the
contract management workforce in
government and industry organizations. However,
not everyone in these organizations, including their senior leaders,
may be aware, knowledgeable, or even in compliance with established ethical standards of conduct. Thus, in their position within the
organization, contract managers face additional ethical challenges
than other general business employees in the organization do.
In 2015, the NCMA membership was surveyed to identify ethics
and compliance strengths and challenges in the contract management workforce. These results were then compared to the general
business workforce.
The purpose of this article is to discuss some of the highlights of
the results of these survey comparisons.
The Survey
In April 2015, the “Ethics & Compliance Initiative,” through the
Ethics Research Center (ERC), collaborated with NCMA to survey
Contract Management ∕ July 2016
49
ETHICS IN THE WORKPLACE: A COMPARISON BETWEEN THE CONTRACT MANAGEMENT AND GENERAL BUSINESS WORKFORCES
the NCMA membership on their current ethics environment
and to identify possible ethics risks and challenges.1 The NCMA
membership, which includes buyers and sellers from all aspects
of contract management, represents the contract management
workforce in this comparison. The survey results were then compared to ERC’s National Business Ethics Survey (NBES) database
of past survey results from the general business workforce.2
The survey items focused on four measurable outcomes related to
ethics and compliance—survey participants were asked whether,
during the course of their employment, they:
Were pressured to violate the law,3
Observed misconduct,4
Reported the observed misconduct,5 and/or
Experienced retaliation for reporting the misconduct.6
Key Findings
The survey results are discussed by comparing the responses
from the NCMA members representing the contract management workforce with the ERC database containing averages from
the responses of the general business population. As previously
discussed, the survey focused primarily on four measurable ethics
and compliance outcomes. The key findings for each outcome are
discussed as follows.
PRESSURE TO VIOLATE THE LAW
The survey findings indicate that 23 percent of the contract management workforce respondents experienced pressure to compromise ethical standards or violate the law, compared to nine
percent of the general business population. Additionally, four of
the top six greatest sources of pressure are procurement-related
and include:
The survey also included items related to:
Deadlines,
The ethical culture of their organizations (from the perspective of
top management, supervisors, and coworkers)7;
Interpreting requirements loosely, and
Strength of the ethical culture of their organizations8; and
Organizational independence.9
The survey was a voluntary, anonymous, online survey that was
deployed to approximately 18,000 NCMA members representing
buyers, sellers, and other members of the contract management
workforce—such as academics and consultants. Of the eligible
survey participants invited to take the survey, 897 responded, resulting in a response rate of 4.9 percent. The sampling error of the
findings is +/- 3.2 percent at the 95-percent confidence level.
Comparison of the Contract Management
and General Business Workforces
% of Employees who...
Performance goals,
Vaguely worded contracts.
These four sources of pressure were reported by more than 40
percent of the contract management workforce respondents who
indicated they experienced pressure to violate the law during the
course of their employment.
Another interesting finding is that when pressure to violate the
law decreased, the survey respondents reported fewer observations of misconduct and fewer instances of retaliation. In terms of
buyers compared to sellers, 30 percent of buyers felt pressure to
violate the law, compared to 19 percent of sellers.
Comparison of Buyers and Sellers
% of Employees who...
23% 9% 45% 37% 77% 63% 14% 21% 75%
30% 19%
55% 40%
74% 82%
18% 11%
Felt Pressure
Observed
Misconduct
Reported
Misconduct
Experienced
Retaliation
N/A
Felt Pressure
Observed
Misconduct
(Types Comp. to NBES)
Contracting Workforce
General Business Workforce
(ECI, 2016, page 5)
Reported
Misconduct
Experienced
Retaliation
Reported
Retaliation
Buyers
Sellers
(ECI, 2016, page 9)
50
Contract Management ∕ July 2016
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ETHICS IN THE WORKPLACE: A COMPARISON BETWEEN THE CONTRACT MANAGEMENT AND GENERAL BUSINESS WORKFORCES
OBSERVED MISCONDUCT
The survey findings indicate that 45 percent of contract management workforce respondents observed misconduct, compared
to 37 percent of the general business population. The types of
misconduct included:
Contract violations,
Improper contract awards,
Insights—
Ethical Culture
Improper use of single-source awards,
Violating organizational conflict of interest rules, and
Misuse of contract change orders.
Additionally, of those contract management workforce respondents that felt pressure to violate the law, over 80 percent
observed misconduct in their organizations. In terms of buyers
compared to sellers, 55 percent of buyers observed misconduct,
compared to 40 percent of sellers.
REPORTING OF OBSERVED MISCONDUCT
The survey findings indicate that 77 percent of contract management workforce respondents reported the misconduct that
they observed, compared to 63 percent of the general business
population. Additionally, 84 percent of the survey respondents
felt prepared to handle this misconduct of others, compared to
80 percent of the general business population. In terms of buyers
compared to sellers, 74 percent of buyers reported the observed
misconduct, compared to 82 percent of sellers.
RETALIATION FOR REPORTING
MISCONDUCT
Ethics Culture Comparison Contract
Management and General Business
Workforces
Overall Culture
Top Management
Culture
63% 68%
Supervisor
Culture
Employees being held accountable for their actions;
Senior leaders being trustworthy, keeping promises, and setting a
good example; and
Organizations recognizing employees for acting ethically.
In addition to the key findings on the four measureable ethics outcomes previously discussed, the survey responses revealed some
interesting insights related to the ethical culture of the respondents’ organizations, broken down into three categories:
Top management culture,10
Supervisor culture,11 and
Coworker culture.12
72%
The survey findings indicate that 53 percent of contract management workforce respondents felt that the ethics culture among
their top managers was “strong/strong-leaning,” compared to 69
percent of the general business population. The survey findings
also indicate that the contract management workforce respon-
Ethics Culture Comparison of Buyers and
Sellers
Percent “Strong/Strong-Leaning”
69%
The ethical culture of an organization is determined based on
several factors, including:
TOP MANAGEMENT CULTURE
For those respondents that reported the observed misconduct,
the survey findings indicate that 14 percent of the contract
management workforce respondents experienced retaliation,
compared to 21
56% 60% 53%
percent of the general business population. Additionally, of those
who experienced retaliation, 75 percent reported that retaliatory
behavior to their organization. There is no NBES data available for
reported retaliation for the general business workforce. In terms
of buyers compared to sellers, 18 percent of buyers experienced
retaliation for reporting the observed misconduct compared to 11
percent of sellers.
65%
Coworker/Non-mgmt
Culture
Percent “Strong/Strong-Leaning”
49%
Overall Culture
Contracting Workforce
General Business Workforce
(ECI, 2016, page 11)
Buyers
Sellers
(ECI, 2016, page 11)
52
Contract Management ∕ July 2016
61%
46%
58% 60% 66%
Top Management
Culture
Supervisor
Culture
72%
75%
Coworker Culture
ETHICS IN THE WORKPLACE: A COMPARISON BETWEEN THE CONTRACT MANAGEMENT AND GENERAL BUSINESS WORKFORCES
dents have varying perceptions on accountability for violating
standards, with fewer respondents perceiving that those managers higher up the chain of command are held accountable. More
specifically, 71 percent of the contract management workforce
respondents agreed that top managers were held accountable,
compared to 81 percent of the general business population.
Also, 63 percent of the contract management workforce respondents agreed that senior leaders can be trusted, compared to 78
percent of the general business population. Less than 65 percent
of the contract management workforce respondents indicated
that their top managers kept promises, compared to almost 80
percent of the general business population. Furthermore, 71
percent of the contract management workforce respondents indicated that top management sets a good example, compared to 81
percent of the general business population.
Finally, 38 percent of the contract management workforce respondents indicated that their organization recognizes workers for doing the right thing, compared to 60 percent of the general business
population. In terms of buyers compared to sellers, 58 percent
of the sellers felt that the ethics culture of top management was
“strong/strong-leaning,” compared to 46 percent of the buyers.
SUPERVISOR CULTURE
The survey findings indicate that 63 percent of contract management workforce survey respondents felt that the ethics culture
among their supervisors was “strong/strong-leaning,” compared
to 68 percent of the general business population. The survey
findings also indicate that 78 percent of the contract management
workforce respondents agreed that supervisors are held accountable, compared to 83 percent of the general business population.
Also, 76 percent of the contract management workforce respondents agreed that supervisors can be trusted, compared to 80
percent of the general business population.
Felt Pressure
68%
28%
Observed
Misconduct
Weak + Weak-Leaning Ethics Culture
Strong + Strong-Leaning Ethics Culture
73%
86%
Reported
Misconduct
22%
In terms of buyers compared to sellers, 75 percent of the sellers
felt that the ethics culture of their coworkers was “strong/strongleaning,” compared to 72 percent of the buyers.
Insights—
Strength of Ethical Culture/
Degree of Independence
The survey responses also revealed some interesting insights related to the perceived strength of an organization’s ethical culture
and the degree of organizational independence. An organization’s
ethical culture can be described as “weak/weak-leaning” or
“strong/strong-leaning.” To what degree internal or external
sources influence an organization characterizes its degree of independence.
Precent of Employees in Agreement
Effect of Culture on Ethics Outcomes
11%
COWORKER CULTURE
The survey findings indicate that 72 percent of the contract
management workforce respondents felt that the ethics culture
among their coworkers was “strong/strong-leaning,” compared
to 65 percent of the general business population. Additionally, 88
percent of both the contract management workforce respondents
and the general business population agreed that nonmanagement employees were held accountable. Furthermore, 80 percent
of the contract management workforce respondents agreed that
coworkers could be trusted, compared to 77 percent of the general business population.
Ethics Organizational Independence Comparison
of Contract Management and General
Business Workforces
Ethics Culture Comparison of Contract
Management and General Business
Workforces
38%
In terms of buyers compared to sellers, 66 percent of the sellers felt
that the ethics culture of the supervisors within their organizations
was “strong/strong-leaning,” compared to 60 percent of the buyers.
39% 11%
66% 31%
77% 79%
19% 8%
Felt Pressure
Observed
Misconduct*
Reported
Misconduct
Experienced
Retaliation
4%
Experienced
Retaliation
Neutral + Disagree that Organization is Sufficiently Independent
Agree, Organization is sufficiently Independent
*Type of misconduct comparable to NBES
(ECI, 2016, page 18)
(ECI, 2016, page 15)
Contract Management ∕ July 2016
53
ETHICS IN THE WORKPLACE: A COMPARISON BETWEEN THE CONTRACT MANAGEMENT AND GENERAL BUSINESS WORKFORCES
STRENGTH OF ORGANIZATION’S ETHICS
CULTURE
The strength of an organization’s ethics culture also has a substantial impact on its ethics outcomes. The contract management
workforce survey respondents who agreed that their organization
had a “strong/strong-leaning” ethics culture reported stronger
ethics outcomes compared to respondents who agreed that their
organization had a “weak/weak-leaning” ethics culture.
They are more likely to report misconduct (79 percent compared
to 77 percent); and
Specifically, the following ethics outcomes were observed among
the survey results of those respondents who agreed that their
organization had a “strong/strong-leaning” ethics culture, as compared to the survey results of those who indicated their organization had a “weak/weak-leaning” ethics culture:
The survey findings reveal that the contract management workforce,
as represented by the responding NCMA membership, felt pressure to violate the law, observed ethical misconduct, and reported
the observed misconduct at a higher rate than the general business
population. This should not be surprising to any member of the
contract management workforce. The fact that contract managers are positioned at a pivotal point, interfacing with both internal
and external organizations on all contractual matters, gives them a
unique vantage point for identifying any ethical violations or procurement fraud “red flags” compared to the general business population.
Additionally, since the contract management workforce receives
extensive training on procurement integrity and ethical rules, they
have a heightened awareness of these ethical requirements and an
increased sensitivity to violations in the workplace. The lower percentage of retaliation experienced when reporting misconduct, compared to the general business workforce, may indicate that members
of the contract management workforce have a stronger commitment
to procurement integrity and have a higher level of credibility in the
eyes of the senior management.
They are less likely to feel pressure to compromise standards (11
percent compared to 38 percent);
They are less likely to observe misconduct (28 percent compared
to 68 percent);
They are more likely to report misconduct (86 percent compared
to 73 percent); and
They are less likely to experience retaliation for reporting misconduct (4 percent compared to 22 percent).
ORGANIZATIONAL INDEPENDENCE
The effect of organizational independence on ethics outcomes
is also significant. The contract management workforce survey
respondents who agreed that their organization was “sufficiently
independent” of undue influence from outside their organization
reported stronger ethics outcomes compared to respondents
who were neutral or disagreed that their organization was sufficiently independent.
Specifically, the following ethics outcomes were observed among
the survey results of those respondents who agreed that their
organization was “sufficiently independent,” as compared to the
survey results of those who were neutral or disagreed:
They are less likely to feel pressure to compromise standards (11
percent compared to 39 percent);
54
They are less likely to observe misconduct (31 percent compared
to 66 percent);
Contract Management ∕ July 2016
They are less likely to experience retaliation for reporting misconduct (8 percent compared to 19 percent).
Implications
The comparison of these survey results between buyers and sellers is most interesting. The percentage of buyers experiencing
the four main ethics outcomes targeted by this survey was higher
compared to the sellers. Only the percentage of buyers reporting
the observed unethical conduct was lower compared to sellers. It
would be interesting to know what percentage of buyers in the
survey work for government agencies compared to buyers working
for industry. Perhaps there is a difference in ethical culture between
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ETHICS IN THE WORKPLACE: A COMPARISON BETWEEN THE CONTRACT MANAGEMENT AND GENERAL BUSINESS WORKFORCES
the contract management workforce in the government and the
non-contract-management workforce in the government, resulting
in increased instances of pressure, observed ethical misconduct,
and experienced retaliation? Perhaps only the government contract
management workforce receives the extensive training on procurement integrity and ethical rules as opposed to the non-contractmanagement workforce within the government, or perhaps only the
government contract management workforce has the heightened
awareness of these ethical requirements and the increased sensitivity to violations in the workplace? After all, it is the government
contracting officer who signs the contract and who is responsible
for ensuring the contract management process is conducted in
accordance with procurement statutes and regulations. While other
members of the acquisition team (e.g., program managers, requirements managers, financial managers, technical managers, etc.) have
the same goal to achieve the expected contract performance, they
are typically measured by different career field metrics and may not
necessarily share this concern. These findings (buyers compared to
sellers) deserve additional investigation to further explore this area.
It is also interesting to note that the survey findings reveal that a
lower percentage of the contract management workforce, compared to the general business population, perceives that the ethical
culture of top management and supervisors are “strong/strongleaning.” Yet, a greater percentage of the contract management
workforce perceives its coworkers as having a “strong/strong-leaning” ethical culture. Once again, this may be because the members
of the contract management workforce perceive themselves as having a stronger commitment to procurement integrity and having a
higher level of credibility among their contract management peers.
It is also noteworthy that the strength of the top management,
supervisor, and coworker ethical cultures are consistently higher
among sellers than among buyers. However, the survey results do
not indicate whether the top management and supervisors are
within the contracting authority chain of command or within the
organizational chain of command. Within the government, many
members of the contract management workforce report to more
than one supervisor and top manager, some within the contracting chain of authority (e.g., the procuring contracting officer, the
level above the procuring contracting officer, the chief of the contracting office, the director of contracting, etc.) as well as within
the organizational chain of command (e.g., the project manager,
program manager, program executive officer, etc.). Once again,
these questions (i.e., what is the percentage of buyers that work
for the government and what is the percentage of top managers and supervisors that are part of the contracting chain or the
organizational chain) deserve additional investigation to further
explore this area.
The survey results were very clear in showing a relationship
between the strength of an organization’s ethics culture and the
organization’s degree of independence on its effect on ethics outcomes. The contract management workforce survey respondents
56
Contract Management ∕ July 2016
who agreed that their organization had a “strong/strong-leaning”
ethics culture reported stronger ethics outcomes. The survey
respondents who agreed that their organization was independent of undue influence also reported stronger ethics outcomes.
These findings indicate the importance of ethics and compliance
programs in organizations—within both industry and government.
Organizational ethics and compliance programs should ensure that
the following outcomes are achieved:
All employees—not just the contract management workforce—are
competent in the ethics rules and regulations,
The organizational processes are mature and aligned with ethics
and compliance requirements, and
Effective internal controls are in place to ensure that competent
employees comply with the mature processes.
These “auditability components” (i.e., competent people, mature
processes, and effective internal controls) play a significant role in
establishing a strong ethics culture in an organization.
Recommendations
This survey is intended to provide a benchmark for ethical behavior in organizations with a contract management workforce. It
is a snapshot of trends and should assist in the development of
organizational strategies to influence organizational culture.
In order to be more helpful, we recommend the following areas be
addressed for future surveys concerning the ethical behavior of
the contract management workforce.
DEFINITIONS Though most contract management professionals understand
what unethical behavior is, this survey gives the same weight to
splitting requirements as it does to bribes and kickbacks.
RECOMMENDATION
Define tiers of unethical behavior. Examples could be:
Tier 1 (splitting requirements),
Tier 2 (unsupported sole source awards), and
Tier 3 (requesting/offering/accepting kickbacks and bribes).
TIMEFRAME
Establish a definite timeframe for the witnessing of unethical
behavior (e.g., “within the past 12 months”). It is unknown as to
whether the witnessed unethical behavior occurred recently or 20
years ago.
RECOMMENDATION Pick a timeframe so positive and negative trends can be effectively measured with future surveys.
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ETHICS IN THE WORKPLACE: A COMPARISON BETWEEN THE CONTRACT MANAGEMENT AND GENERAL BUSINESS WORKFORCES
RETALIATION
This term needs to be further defined. What specific actions constitute “retaliation” for blowing the whistle on observed misconduct? Was the whistleblower forced to receive additional/unnecessary training, was the whistleblower fired as a result of reporting
the misconduct, or was it somewhere in between?
The implications of the survey findings point to the importance of
personnel (both contracting and noncontracting) being trained
in ethics rules and compliance requirements; processes that are
mature, aligned, and supportive of ethics rules and compliance
requirements; and internal controls that are effective in ensuring
that the personnel comply with the required contract management processes. CM
RECOMMENDATION Ask the whistleblower to identify the type of retaliation.
WHISTLEBLOWING
Is it unethical behavior to not report
unethical behavior? Why would someone not report unethical
behavior? This could help shape whistleblower policies.
ENDNOTES
1. Ethics & Compliance Initiative, “National Business Ethics Survey of the Contracting Workforce” (Arlington, VA: Ethics Research Center, 2016). (To view the complete report, visit the NCMA website—www.ncmahq.org.)
2. ECI has fielded the biennial NBES since 1994, providing business leaders a
snapshot of trends in workplace ethics and an identification of the drivers that
improve ethical workforce behavior.
3. ECI, op. cit., at 2, 6, and 9.
RECOMMENDATION Policies that discourage or prevent whistleblowing should be investigated. In addition, what, if anything, is being done to people
who are “frivolous” whistleblowers?
COMPLIANCE
Though the survey results clearly show that unethical behavior
exists, how far out of compliance are the survey results from established business practices?
RECOMMENDATION Consider using established sources of acceptable ethical behavior
in future surveys (e.g., Federal Acquisition Regulation Part 3, “Improper Business Practices and Personal Conflicts of Interest”).
Conclusion
Contract managers, because of their position in the organization,
face additional ethical challenges than many other employees in
any given organization. The ERC and NCMA survey of the NCMA
membership on their current ethics environment identified possible ethics risks and challenges.
The survey findings revealed that the majority of the surveyed
contract management workforce did feel pressure to violate the
law, did observe ethical misconduct, but reported the observed
misconduct at a higher rate than the general business population.
The survey also showed that the contract management workforce
perceives that the ethical culture of top management and supervisors is “strong/strong-leaning” at a lower rate than the general
business population. Finally, the survey results were very clear in
showing a relationship between the strength of an organization’s
ethics culture and the effect this factor had on ethics outcomes. The
survey findings also showed a relationship between the organization’s degree of independence and its effect on ethics outcomes.
58
Contract Management ∕ July 2016
4. Ibid., at 1, 7, and 9.
5. Ibid., at 1, 5, and 9.
6. Ibid., at 1 and 9.
7. Ibid., at 2, 12, and 14.
8. Ibid., at 15.
9. Ibid., at 18.
10. Ibid., at 2, 12, and 14.
11. Ibid., at 12 and 14.
12. Ibid., at 2, 12, and 14.
AUTHORS:
DR. RENE G. RENDON, CPCM, CFCM, NCMA FELLOW
Associate professor, U.S. Naval Postgraduate School (Contract
Management MBA program)
Member, NCMA Board of Directors
Past recipient, USAF Outstanding Officer in Contracting Award,
NCMA National Education Award, and NCMA Outstanding Fellow
Award
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DR. JOHN W. WILKINSON, CPCM, CFCM, NCMA FELLOW
President, tHInc, LLC
Chief Standards and Accreditation
Officer, NCMA
Member, NCMA’s Board of Advisors
Member, Central Virginia Chapter
Past recipient of NCMA’s Blanche Witte Memorial Award, National
Achievement Award, and the Charles A. Dana Distinguished Service Award
{{ [email protected]
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