H How to Ensure Ethics and Integrity Throughout an Organization

Briefing April 2008
How to Ensure Ethics
and Integrity Throughout
an Organization
At a Glance
A fundamental issue facing organizations today
is how to ensure employees act ethically and
with integrity.
The goal of an effective ethics office is to create a culture where questions are encouraged.
Leaders should use constant reinforcement to
make ethics and integrity an everyday “lens”
through which employees view their roles.
Tailoring messages to the specific circumstances of the employee makes it easier to
talk about ethics and integrity.
H
igh-profile scandals in both the public and
private sectors over the past few years have
raised a fundamental concern for organizations:
how to ensure employees act ethically and with integrity.
Although public, corporate, and not-for-profit organizations have developed and implemented ethics and integrity programs, the focus now is to move beyond strict
compliance programs toward ensuring that ethics and
integrity become values lived by everyone within an
organization.
The challenge facing organizations is how to most
effectively make the transition from programs to lived
values. Key issues for organizations seeking to make
this change include the following: To what extent
should they relinquish their focus on compliance and
Governance and Corporate Social Responsibility
2 | The Conference Board of Canada
the letter of the law? Should they focus primarily on
principles and “soft” approaches to ethics? And what
is the best way to combine both approaches?
In January 2008, The Conference Board of Canada convened an expert roundtable of ethics and compliance
practitioners to reflect on new developments and discuss best practices and lessons learned across the public, corporate, and not-for-profit sectors. The decision
to hold the roundtable was spurred in part by new legislation and institutions recently introduced in the public
sector and by the coming fifth anniversary of the
Sarbanes-Oxley Act.
This briefing reports on a new institution in Canada dedicated to ethics and integrity in the public sector and outlines some key lessons in ensuring ethics and integrity.
Public Sector Integrity Commissioner:
Dedicated to Integrity in the Federal
Public Service
In the public sector, one of the more significant developments is a new institution dedicated to promoting integrity in the Canadian federal public sector. This institution
is the new office of the Public Sector Integrity Com­
missioner.1 The position was created in 2007 by the
Public Servants Disclosure Protection Act and is unique
in Canada and the world. The Commissioner is appointed
by resolution of both houses of Parliament and reports
directly to them. As such, the position is highly independent. The establishment of the office also provides a significant opportunity to promote and communicate the
contributions ethics and integrity can make to the public
service and Canadians. The Commissioner’s mandate
covers the more than 400,000 federal public sector
employees who work for federal departments, agencies,
and Crown corporations.
The Commissioner plays two key roles in support of
integrity in the federal public service. First, she receives
allegations of wrongdoing in the public sector and has
the discretion to determine whether to launch an investigation. She has robust tools for investigating and, when
1
Public Sector Integrity Canada, www.psic-ispc.gc.ca.
wrongdoing is found, publicly reporting her findings to
Parliament and making recommendations for corrective
action. Second, she provides protection against reprisals
for public sector employees who participate in a disclosure process. The ability to protect whistleblowers will
contribute significantly to creating a culture where
employees feel comfortable raising questions on issues
relating to ethics and integrity.
In addition to carrying out these two roles, the Com­
missioner emphasizes the importance of integrity in
the federal public sector through communications,
education, and prevention activities.
The establishment of the office also provides a significant
opportunity to promote the contributions ethics and integrity can make to the public service and Canadians.
The work of the Public Sector Integrity Commissioner
will contribute to broader efforts to maintain a culture
of ethics and integrity across government. Such a culture is vital to the prosperity and effective functioning
of Canadian society: When public servants are not perceived to be acting ethically and with integrity, citizens
may lose trust in the institutions of government. The
federal public administration is a fundamental national
institution and a key part of Canadian parliamentary
democracy.
The 1996 report A Strong Foundation: Report of the
Task Force on Public Service Values and Ethics remains
the most comprehensive study of ethics and values in the
federal public service. The report clearly outlines the link
between integrity in the public service and trust.
The distinctive form that integrity assumes in the
public service is the ability to hold a public trust
and to put the common good ahead of any private
interest or advantage. Integrity in the public service
also imposes on public servants, at all levels, a
commitment to the trust and therefore an obligation to speak truth to power: to provide ministers
and their superiors with a full range of analysis
The Conference Board of Canada | 3
and advice that will help them to take the best
possible decisions for the public good.2
What is the most important role of the senior ethics
executive in an organization?
What can be done to ensure senior ethics executives
By promoting trust in the institutions of government—
and working to ensure ethics and integrity are lived
values in the public sector—the Public Sector Integrity
Commissioner can improve the ability of the public
service to navigate the challenges of an increasingly
complicated and interconnected world and to meet the
needs of Canadians.
Lessons in Ensuring Ethical
Behaviour in Organizations
Organizations in the corporate and not-for-profit sectors
have also taken significant steps to ensure that ethics
and integrity are lived values for their employees.
For example, in the wake of the Enron and WorldCom
scandals, the corporate sector created a number of programs and institutions to help protect it from ethical
lapses by employees and leaders. And the not-for-profit
sector recognized the importance of trust and integrity
to their operations even earlier. In Rebuilding Trust,3
the Conference Board reports that this sector is one of
the most trusted in Canada. Leaders in this sector are
keenly aware of the role ethics and integrity play in
creating trust, protecting reputations, and providing
not-for-profit organizations with the legitimacy they need.
The January 2008 Conference Board roundtable was
designed to explore lessons learned by organizations
in their efforts to embed ethical behaviour and integrity
in their operations. Discussions centred on three key
questions:
What is the most effective way to ensure that ethical
conduct is the primary lens through which employees view their interactions with all organizational
stakeholders?
2
John C. Tait, A Strong Foundation: Report of the Task Force on
Public Service Values and Ethics (Ottawa: Canadian Centre for
Management Development, 2000 reprint), p. 56.
3
Zachariah Ezekiel, Rebuilding Trust in Canadian Organizations
(Ottawa: The Conference Board of Canada, June 2005).
are viewed as contributors to the organization’s
brand rather than simply as enforcers?
These deliberations produced a list of actions that can
prevent the integration of ethics and integrity throughout
organizations. (See box “What Does Not Work.”)
By promoting trust in the institutions of government—and
working to ensure ethics and integrity are lived values in
the public sector—the Public Sector Integrity Commissioner
can improve the ability of the public service to navigate
the challenges of an increasingly complicated and interconnected world and to meet the needs of Canadians.
What Does Not Work
Focusing exclusively on either compliance or ethics.
Focusing solely on inhibiting business—being the
office of “no.”
Talking about integrity exclusively in terms of ethics
without connecting this discussion to organizational
effectiveness.
Putting too much emphasis on the right tone at the
top without appreciating the importance of ethics and
integrity through all levels of management.
Having ethics offices that work in isolation from other
divisions or business lines in the organization.
Ensuring Ethics and Integrity: What Does Work
Opinion leaders and practitioners had various suggestions
for organizations seeking to build ethical behaviour and
integrity throughout their operations. (For a summary,
see box “What Works.”) From these suggestions, three
key themes emerged:
the need for both ethics and compliance roles;
the need to set the right tone through constant
communication; and
the need to work through partnerships and
collaboration.
4 | The Conference Board of Canada
The Need for Both Ethics and Compliance Roles
In some organizations, ethics programs initially focused
exclusively on legal compliance. The ethics offices
were seen as policing agencies and consequently faced
a great deal of suspicion and concern from employees
and leaders.
When ethics offices are seen as enforcers—as the offices
of “no” or as actively seeking opportunities to expose
wrongdoing by employees—a culture of hostility and
silence can develop. In this culture, the ethics officer
is seen as someone to be avoided or as adding no value
to the organization. Organizational issues are not discussed openly, and the silence may actually contribute
to unethical behaviour. For instance, managers’ fears of
discussing organizational performance issues may lead
them to take unethical actions to meet targets.
Roundtable participants emphasized that leaders need to
create an organizational culture in which managers and
supervisors also “walk the talk” on ethics and integrity.
The ethics office should be seen as a non-threatening
environment where employees can raise their concerns
without fear of being judged or penalized. An effective
ethics office creates a culture where asking questions is
encouraged—where employees feel safe raising questions instead of pointing fingers.
On the other hand, roundtable participants cautioned
that ethics offices without a compliance or enforcement
role may suffer a loss of credibility if they are seen as
secondary to the “real business” of the organization. Thus,
creating and enforcing codes of conduct and ensuring
compliance with laws and regulations are as important
as creating a non-threatening environment. In addition,
the compliance function helps the office demonstrate its
contribution to the organization’s success by helping it
protect the organization’s reputation. Linking ethics to
reputation can also make discussions about ethics more
concrete for employees who may struggle to connect
abstract notions of ethics and principles with their
day-to-day work.
The lesson from the corporate and not-for-profit sectors
is to integrate the compliance and ethics promotion roles.
This will give ethics offices the tools necessary to build
a culture of ethics and integrity.
The Need to Set the Right Tone Through Constant
Communication
The need for the right tone at the top has long been
recognized as a key contributor to creating a climate
of ethics and integrity. Employees look to the leadership of their organization to connect the talk around
organizational ethics and integrity with the actions the
organization expects from them. Organizational leaders
must not only communicate regularly about the important role of ethics and integrity in their work, but they
must also “live” these principles inside and outside the
organization.
Employees will be the first to recognize inconsistencies
between stated organizational values and leadership
practices. Leaders who fail to embody the organization’s ethical principles undermine all other efforts to
promote ethical actions. In contrast, strong leadership
based on ethics and integrity will be reflected throughout the enterprise.
Moreover, it is not enough for organizational leaders to
ensure the consistency of their own messages and actions.
Roundtable participants emphasized that leaders need to
create an organizational culture in which managers and
supervisors also walk the talk on ethics and integrity.
If they don’t, it will undermine the leaders’ credibility
with employees.
Organizational leaders need to constantly reinforce the
importance of ethics and integrity, so that they become
the guiding theme for employee behaviour and the work
of the organization. Communication does not need to
focus on ethics per se but should link the goals and
aspirations of the organization with its principles and
values. Leaders must create an environment where the
ethical culture of the organization is discussed, understood, and reflected in the actions of employees at all
levels of the organization.
The Conference Board of Canada | 5
It is also important for values and ethics to be incor­
porated in employee performance discussions. As one
participant at the roundtable said, “The emphasis should
not only be on what you produce, but also how you
produce it.” Tying performance to values and ethics
reinforces the message that leaders and managers think
ethics is important.
The Need To Work Through Partnerships
and Collaboration
An ethics office should ensure it is not working in isolation. Rather, it should strive to build partnerships with
the other divisions or business lines of the organization.
These connections are important because they help the
ethics office promote awareness of its role throughout the
organization. They also help the office better understand
the pressures and challenges faced by the different business lines, enabling it to better tailor its communications
to all parts of the organization.
An ethics office that understands the specific circumstances of employees can support managers in leading
discussions on ethics and integrity by providing practical
tools and techniques. These may include worksheets or
case studies based on real and relevant organizational
examples, which help managers raise ethical dilemmas
and engage their staff in ethics discussions.
What Works
Taking a balanced approach to compliance and ethics
that gives ethics offices responsibilities in both areas.
Linking ethical decisions to value creation or value
protection for the organization.
Embedding ethical discussion throughout the organization.
Linking ethics and integrity discussions to concrete
examples relevant to each business line.
Communicating messages on integrity in terms that
relate these issues to important business goals such
as protecting the organization’s reputation, effective
recruiting, or meeting customer expectations.
Ensuring the right tone at the top is reflected in the
words and actions of all levels of management.
Building ethical considerations into performance
reviews by discussing not only what was accomplished
but also how it was accomplished.
Creating strong links between ethics offices and the
different branches and divisions of an organization.
Conclusion: An Opportunity
for Canada
The new office of the Public Sector Integrity Commissioner
should go a long way in helping to prevent and resolve
wrongdoing in the federal public sector and protect
whistleblowers from reprisals. At the same time, responsibility for ethics and integrity is shared across the public
sector. The creation of this new role also presents a
starting point for employees and executives to discuss
the importance of values and ethics in the federal public
service. The net result should be a federal public sector
where ethics and integrity are values lived by all its
employees.
An ethics office should strive to build partnerships with
the other divisions or business lines of the organization.
The scandals of the past few years have forced leaders
in all sectors to more seriously consider the relationship
between ethics and organizational success. The January
2008 roundtable revealed that a great deal of progress
has been made in understanding how to make ethics and
integrity the lived values of all employees. This road is
not straightforward, and progress can seem elusive. At
the same time, some Canadian organizations are recognizing that ethics and integrity are a key means of differentiating themselves in today’s highly competitive
public, cor­porate, and not-for-profit sectors.
Methodology
This briefing is based on discussions at a Conference Board
of Canada expert roundtable held on January 31, 2008. The
event brought together a cross-section of senior ethics executives from the private, public, and not-for-profit sectors to
reflect on their experiences in promoting ethics and integrity
in organizations. A list of roundtable participants is provided
at the end of this briefing.
The Conference Board of Canada has dedicated more than
five years to the study of ethics and compliance in Canadian
organizations.
6 | The Conference Board of Canada
Roundtable on Lessons Learned in Ethics and Integrity in Canadian Organizations:
A Conference Board of Canada Dialogue—Held January 31, 2008
Participant List
Michael Allen
President and Executive Director
United Way/Centraide Ottawa
Jean-Daniel Bélanger
General Counsel
Public Sector Integrity Canada
Bonnie Boretsky
Vice-President, Compliance
Canada Post Corporation
Anne Buchanan
Coordinator, Organizational Excellence
Canadian Council for International Co-operation
Joe Chidley
Editor
Canadian Business
Georges Dessaulles
Compliance Director Canada—Consumer and Corporate
RBC Financial Group
Zac Ezekiel
Senior Manager, Business Conduct and Projects,
Domestic Bank Compliance
Scotiabank
Nigel Fisher
President and Chief Executive Officer
UNICEF Canada National Office
Al Hatton
President
United Way of Canada-Centraide Canada
Cheryl Leis
Ethics Advisor
Boeing Canada Technology Ltd.
Valerie L. Macdonald
Assistant General Counsel
Farm Credit Canada
Carole Mackaay
General Counsel and Corporate Secretary
VIA Rail Canada Inc.
Heather MacNab
Senior Advisor, Corporate Compliance and Whistleblowing
Canada Post Corporation
Annie Martineau
Chief, Privacy and Compliance Officer
Merck Frosst Canada Ltd.
Richard Morris
Vice-President, Audit and Inspection
Business Development Bank of Canada
Christiane Ouimet
Public Sector Integrity Commissioner
Public Sector Integrity Canada
Stephanie Rich
Senior Counsel, Privacy and Ethics Officer
Aeroplan
Michèle Thibodeau-DeGuire
President and Executive Director
Centraide of Greater Montreal
Alexander Todd
President and Chief Executive Officer
Trust Enabling Strategies
Christina Van Loon
Senior Communications Advisor
Public Sector Integrity Canada
Michael Weil
President and Chief Executive Officer
YMCA Canada
Conference Board Staff
Michael Bassett
Senior Research Associate, Governance and
Corporate Responsibility
Prem Benimadhu
Vice-President, Governance and Human Resource Management
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How to Ensure Ethics and Integrity Throughout an Organization
by Michael Bassett
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