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Ethics Reporting Systems
⚫ Explain why some employees do not report ethical misconduct
⚫ Describe how to engage employees in discussing ethical misconduct
⚫ Administer an internal reporting system for ethical issues
⚫ Define Ethics and Compliance Officer and ombudsperson position
⚫ Manage an assist line to receive employee complaints by telephone or Internet
⚫ Describe the negative outcomes whistle-blowing has on both the whistle-blower and the organization
Learning Objectives
Employee silence refers to when employees observe ethical misconduct at work but do not discuss the matter with the person engaged in the ethical misconduct or someone else in the organization with authority
Employee Silence on Ethical Misconduct
Why don’t employees intervene or report when
colleagues and managers ethically
misbehave?
Think about these questions in the context of your own
experience. What are some of the reasons you can think of?
Employee Silence on Ethical Misconduct
Chapter 8: Collins, Business Ethics
Ethically Approachable Managers
• Best ethics reporting system is a manager who welcomes ethical discussions with employees
• Employees more likely to discuss ethical concern if discussions occur on a regular basis rather than only during dire circumstances
Key word: TRUST A diverse set of managerial techniques and attributes can help employees become comfortable sharing sensitive ethical information
Ethically Approachable Managers
How to improve this managerial skill? This is trainable!
A manager must be willing to discuss his or her own ethical mistakes in a manner that humanizes the manger without losing authority.
Honest managers attract honest reactions. Managers pretending moral infallibility tend to alienate employees seeking moral guidance.
Ethics & Compliance Officer
• Federal Sentencing Guidelines provide incentive for assigning responsibility of managing ethical performance
• Growing number of organizations have Ethics & Compliance Officer
• Position enables sensitive information to be shared without being diluted or stymied by chain of command
Ethics & Compliance Officer
Chapter 8: Collins, Business Ethics
Ethics & Compliance Officer
Chapter 8: Collins, Business Ethics
Ethics & Compliance Officer
Chapter 8: Collins, Business Ethics
Ombudsperson
• Providing employees with institutional voice serves as deterrent against managerial abuse of power
• Ombudsperson is held legally accountable to a professional Code of Ethics
4 ethical principles of International Ombudsman Association Code of
Ethics
1. Independence: The ombudsperson is independent in structure, function, and appearance to the highest degree possible within the organization
2. Neutrality and impartiality: The ombudsperson remains unaligned and impartial and does not engage in any situation that could create a conflict of interest
3. Confidentiality: The ombudsperson holds all communication in strict confidence and does not disclose confidential communications unless given permission to do so. The only exception to this privilege of confidentiality is when there is an imminent risk of serious harm
4. Informality: The ombudsperson does not participate in any formal adjudicative or administrative procedure related to concerns brought to his or her attention
Chaplains
• Chaplains are members of a religious clergy trained in providing spiritual advice
• Corporate Chaplains originally provided care for employees and their families
• Over time, their list of services expanded to include helping employees manage ethical dilemmas and interactions with other employees
Most corporate chaplains have seminary degrees and are trained counselors
Assist Lines
• Many organizations now refer to this communication channel as an assist line rather than an ethics hotline
• The phrase “ethics hotline” makes it seem as though the employee is snitching
• “Assist” more accurately describes most of the calls that are received
Assist Lines
• Assist lines are a method of obtaining information about situations that may be unethical or illegal
• Nearly all Fortune 500 companies provide toll-free assist lines for employees from all over the world to share their concerns
• Small organizations can contract out to an assist line managed by a third party
Assist Lines
• The response system is scripted to gather as much information as possible from an anonymous employee
• The information is categorized based on the type of issue and operations area and then routed to the appropriate manager at the employee’s organization
• The manager who receives the information responds to the EthicsPoint system using the case identification number
How can an organization make an effective Assist Line?
Think about the kind of assist line you would want in your own
organization (or at this university). How would you advise your
organization in setting up an assist line?
Whistle-blowing
When to Blow the Whistle • Begin by consulting with an attorney. • Legal advisors recommend that the following four
conditions be met before an employee informs an external authority:
1. Serious harm is involved 2. The whistle-blower has already expressed his or her
concerns to an immediate superior 3. The whistle-blower has exhausted other communication
channels within the organization 4. The whistle-blower has convincing, documented evidence
Contacting someone outside the
organization about potential or actual
nontrivial misconduct inside the organization.
Whistle-blowing
• The False Claims Act was initially passed in 1863 during the Civil War to prevent defense contractors from fraudulently selling Union Army rifles, ammunition, and horses
• President Ronald Reagan’s administration strengthened the Act in 1986
• An employee who independently sues his or her employer for fraud can now receive between 15 and 30 percent of the total recovery amount plus attorney fees and related costs for successful lawsuits
Whistle-blowing
Reporting Tax Fraud • The IRS created a Whistleblower Office to
receive information about possible individual or corporate tax frauds
• The IRS Whistleblower Office modeled a Whistleblower Reward Program after the False Claims Act, paying whistle-blowers 15 to 30 percent of the unpaid taxes recovered
Whistle-blowing
Chapter 8: Collins, Business Ethics
Whistle-blowing
Sarbanes-Oxley Act of 2002 (SOX) • According to SOX, no publicly traded company or
subcontractor of that company can discharge, demote, suspend, threaten, harass, or in any other manner discriminate against a whistle-blower
• It also establishes criminal penalties for retaliation against whistle-blowers of fines and imprisonment up to 10 years
In 2001, prior to the passage of SOX, the SEC averaged 6,400
whistle-blowing reports a month. Two
years later, the monthly average
escalated to 40,000
Whistle-blowing
Researchers report that soon after blowing the whistle, many whistle-blowers experience
1. Negative performance evaluations 2. Undesired job transfers 3. Demotions 4. Criticism or avoidance by coworkers 5. Physical, psychological, and family problems 6. Loss of job or forced retirement 7. Blacklisting impeding employment 8. Protracted legal battles waged at personal expense
There are laws to prohibit all of these retaliatory actions, but they are often difficult to prove.
Ever heard of a guy named Edward Snowden?
He’s the most famous whistle-blower in recent history.
Whether you agree with his actions, this video shows how his whistle-blowing was
critical to starting a dialogue about government and privacy.
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