An ounce of prevention: Contractors need a solid ethics program
- By Darryl Crapps
- Apr 16, 2008
Does your organization have a formal and proactive ethics and compliance program? If not, now is the time to establish one. It's not a matter of whether you trust your employees to do the right thing. It is a matter of educating them on how to deal with customers, vendors, business partners and others so they will know expected ethical behavior.
Every business should pay attention to a number of areas involving ethics, including conflict of interest, harassment or discrimination, gifts and gratuities, software licensing, work environment, use of company property, proper reporting, workplace violence, drug policy, antitrust laws, confidential information disclosure, government contracts, safety and environmental matters, and accounting practices.
Also, there are new rules to consider. Government agencies now require formal ethics programs for all contractors receiving awards greater than $5 million where the period of performance is 120 days or more.
The new rules require government contractors to:
1. Have a code of ethics and business conduct.
2. Have internal controls to detect and prevent improper conduct in connection with the award of performance of government contracts or subcontractors.
3. Notify the government without delay anytime they become aware of violations of federal criminal law pertaining to contracts or subcontracts.
It may appear to be a long list of issues to consider, and rules can be complex. However, good guidelines will clarify the issues. At our company, Sentel, we have had a formal ethics and business conduct program since 2006. We firmly believe it has assisted our team to better understand what is expected of us in terms of ethical behavior.
On the public-sector side, a recent study by the Ethics Resource Center, in Washington, provides mixed reviews on the progress of ethics in federal, state and local government since ERC's previous study in 2000 - the year before the Enron scandal. The good news is that in government agencies with a solid and well-implemented ethics program, ethical misconduct fell by about 60 percent, and the reporting by employees of negative behavior in their workplaces increased by about 40 percent. The bad news is that even though reporting bad behavior increased, about 30 percent of government workers said they did not report ethics violations because they feared possible retaliation.
Here are six guidelines any organization can use to create and maintain an effective ethics program.
1. Establish your ethics program guidelines in writing. When new employees join your organization, they should be thoroughly briefed on the company's ethical standards and expectations and provided a copy of the company's code of conduct.
2. Make it safe to report perceived misconduct. A no-retaliation policy is critical to the success of any ethics compliance program. Provide a formal process in which allegations of misconduct are handled according to proper human resources and legal guidelines, and respect the privacy of all individuals when allegations are being investigated.
3. Assure anonymity. In our company, employees may raise concerns without identifying themselves if they so choose. We have a toll-free ethics helpline where confidential, anonymous concerns can be reported. Calls to this number go directly to voice mail, and you can leave a confidential, anonymous message.
4. Place someone in charge of ethics and compliance. We have a full-time chief ethics and compliance officer whose job it is to advise our team on ethical standards and issues that concern all interactions with clients, vendors, partners and other business affiliates. Our ethics and compliance officer keeps employees informed by publishing a quarterly newsletter with updated information about ethics- and compliance-related matters.
5. Offer regular training. All employees should receive annual training on general ethics guidelines, but executives who deal with higher-level issues should receive special training. Extra training might, for example, include government contracting/relations, anti-trust, the Foreign Corrupt Practices Act and information on export control-restricted countries.
6. Provide an employee-friendly ethics and compliance program by which staff members can inquire about their own actions - past, present and future - to determine whether their actions are appropriate and within the company's ethical business expectations and standards.
Every organization needs to take a proactive stand on ethics. Managers have the added responsibility to demonstrate through their actions the importance of ethical business conduct. In any business, ethical behavior does not simply happen; it is the product of clear and direct communication of behavioral expectations modeled from the top and demonstrated by example.
Our actions are what matter.Darrell Crapps (firstname.lastname@example.org) is president and chief executive officer at Sentel Corp., of Alexandria, Va.