Up Online This Morning - FSGO advisory group co-chair Patricia Harned and Win Swenson talk with TheCorporateCounsel.net’s Broc Romanek about newest ERC report: The Federal Sentencing Guidelines for Organizations at Twenty Years. Broc asks Pat and Win about some the lessons learned and major surprises in working with a blue-ribbon advisory group. Follow the link here: http://bit.ly/KYwIr3
In case you missed it, I had a blog post in The Huffington Post last week. Here’s a little sneak at what is there:
“The (Federal Sentencing Guidelines for Organizations) apply to federal agencies; but presently executive branch organizations are not expected by the President to actually follow them. So they don’t. To date, only one portion of an agency — the FBI — even comes close. And as the typical Washington blame game goes on to address the GSA and the Secret Service; it is getting in the way of actually solving the problem…”
To read the rest, click here.
Anniversaries are a good time to take stock – to celebrate achievements and reflect on the future. This past year, the ethics and compliance industry reached such a milestone – the 20th anniversary of the Federal Sentencing Guidelines for Organizations (FSGO).
To those of us in the ethics business, the FSGO are significant because they provided the catalyst for the creation of effective compliance and ethics programs (ECEPs) at corporations across America. In so doing, the Guidelines essentially reshaped the way businesses think about ethics in the workplace.
In order to commemorate the anniversary of FSGO, ERC thought it would be appropriate to convene a Blue Ribbon panel to consider their impact and implications. We appointed an independent advisory group, and this week the panel released its final report.
To download the report, visit http://fsgo.ethics.org/FSGO.
Overall, our advisory group agreed that the FSGO have achieved some important successes, notably by getting companies to take direct responsibility for creating ethical workplaces and developing internal programs to govern corporate conduct. But the group also found that the FSGO could be even more effective if some parts were revised for clarity and given new emphasis, and also if government agencies were more consistent in their approach to promoting and recognizing ECEPs in their enforcement policies and practices. To encourage companies to work hard at ethics, the FSGO are designed to credit companies that have established ECEPs while penalizing those that take a more lax approach toward the management of compliance and ethics.
But our advisory group was concerned that government enforcement agencies are inconsistent in their approach to rewarding meaningful compliance efforts. Agencies don’t provide very much public information about the extent to which ECEPs matter, either.
Among other things, the advisory group urged DOJ and other federal agencies to work toward consistency and to provide transparency as they consider ECEPs in enforcement actions. Doing so will help companies know that they are receiving credit for their good work. The group also proposes that Judges use their oversight authority to ensure that negotiated settlements of misconduct cases reflect FSGO criteria and take account of ECEPs.
According to the group, the private sector also can do better. Specifically, the group said that organizations should embrace the spirit of the Guidelines by implementing c/e programs that are “part and parcel of the business fabric and not the result of mere box-checking.” It challenged businesses to define their mission as both financial performance and a commitment to integrity, and urged them to aggressively “raise the bar” in identifying and implementing best practices.
Navigating the world of the internet can be tricky. Often times it is difficult to tell where information came from, who created what, and what belongs to whom. The confusion is made even worse when you begin to look at the newer sites that were created for users to share fun and interesting things they found online.
Pinterest is a perfect example. If you haven’t heard of Pinterest, you will know about it soon. It is now the third most popular social network after Facebook and Twitter. According to the online publication, TechCrunch, Pinterest has 10 million monthly unique U.S. visitors faster and reached that milestone faster than any other site in the history of the web.
To see the ERC’s Pinterest page, please click here.
How does it work? Users can “pin” pictures and links to different pin boards they have created, and share these “pins” with their followers. All too often, though, the content being shared is not being properly linked back to the person or website that created it. Within the site’s page on “Pin Etiquette,” it was suggested that users avoid pinning purely for self-promotion. This seemed to counter another rule, stating users must have license to what they pin. Paired with the lack of appropriate tools to report pins infringing on copyrights, this lack of clarity has gotten internet users a little worked up.
The Pinterest Terms of Service have also caused scrutiny among site users, and many people have taken the time to point out certain terms that they deemed worrying. One of the most troubling is within this paragraph, taken directly from the current Pinterest Terms of Service: “By making available any Member Content through the Site, Application or Services, you hereby grant to Cold Brew Labs a worldwide, irrevocable, perpetual, non-exclusive, transferable, royalty-free license, with the right to sublicense, to use, copy, adapt, modify, distribute, license, sell, transfer, publicly display, publicly perform, transmit, stream, broadcast, access, view, and otherwise exploit such Member Content only on, through or by means of the Site, Application or Services.” Users who intended to pin their own original ideas, art or other material were particularly bothered by the fact that Pinterest would be able to sell the content they pinned.
The interesting thing about this situation is that Pinterest has just decided to update their Terms of Service, not long after the slew of blog posts and articles called them out. The new terms no longer claim that Pinterest has the right to sell user content, and they have “released simpler tools for anyone to report alleged copyright or trademark infringements.” These new Terms of Service went into effect on April 6, 2012. Pinterest has updated the “Pin Etiquette” section - no longer requesting that users avoid self-promotion. It is difficult to say if these changes will make a significant difference in how users share information with each other. We can hope, though, that it will lead to a more ethical use of content sharing, where more users begin to get permission to pin what interests them.
Perhaps just as important, the creative minds operating Pinterest see that users want more than just ways to safely report wrongdoing when they see it. Pinterest is a building their brand by giving its users a forum from which to rave about the products they like and support. They know better than anyone the power of the strong brand, and what can happen when a product disappoints its base. For more on that, please read our Fellows paper, Building a Corporate Reputation of Integrity, to see how some product reputation managers deal with questions from the public about a company’s ethics and how that can affect the bottom line.
It was great to sit down with Chuck Conconi from Focus Washington to talk about the National Business Ethics Survey. You can watch the entire interview here.
Last week the Department of Defense (DoD) shared an update on a multi-phased project to design a values-based ethics and compliance program.
In a quarterly newsletter entitled “Fraud Facts” released by SAF/GCR - Contractor Responsibility, the DoD provided some highlights on the latest efforts undertaken in the last nine months. At the Ethics Resource Center (ERC), we have been pleased to provide support to the current phase of the effort, along with a training development company called EthicsOne, Inc. We are developing a best-in-class “values-based ethics program” (VBEP).
What makes the project unique is that the DoD intends to undertake an effort to transition from a compliance-based ethics program to a values-based approach. In the Fraud Facts newsletter, EthicsOne president Steve Cohen and I added the following comments about the initiative:
“Right now, DoD is a rules-based organization. It manages the largest workforce in the world with a set of explicit rules, long-standing traditions, commitment to service, and a chain of command in which every individual knows where they stand. It is impossible not to be impressed with how well it runs. Yet, DoD is also subject to the same reality that all organizations face; rules have limitations.
“Best-in-class VBEPs have several distinct features. They are based on a set of core values that are not only communicated from the top down, but they are integrated into everyday decisions throughout the organization. (VBEPs) also train all employees on ethical decision-making every year. They focus on building an ethical culture where employees are encouraged to raise concerns, and they are rewarded for upholding standards of integrity.”
We applaud the DoD for its efforts thus far, and we look forward to the days ahead!
You can read the latest edition of Fraud Facts here.
Facebook seems to be in the headlines quite often, but this time it is not the social networking site itself attracting the attention. Instead, it is the practice of some employers who are asking job applicants to share their Facebook password, or log in to their account during an interview. Employers who defend the practice believe that by doing this, they can see if applicants are engaging in illegal behavior or other activities that are seen as less than desirable. The general response has been one of outrage, and the public, Facebook’s legal team, and lawmakers are all beginning to take a stand. Facebook posted a warning on Friday that employers may be opening themselves to all sorts of legal liabilities by continuing with this practice, and threatened to take legal action against anyone in violation of their policy against sharing passwords. Senators Chuck Schumer of New York and Richard Blumenthal of Connecticut want the U.S. Equal Employment Opportunity Commission (EEOC) and the U.S. Department of Justice to investigate the legality of it, believing it may be in violation of federal law. The Illinois and Maryland state legislatures are considering bills that would forbid public agencies from asking for access to social networks.
For years it has been customary for employers to look up public social networking profiles of potential candidates during the hiring process. It comes from an understandable interest by an employer to discern who a prospective candidate really is, and how he or she really behaves. After all, you may be impressed by the polished candidate in the interview, but it’s the everyday, unguarded person who shows up to work.
That said, pulling up Facebook sites in the interview and asking for passwords is taking it a step too far. First and foremost, you have to wonder how many of the company interviewers will agree to give up their own passwords when they are the candidate under consideration. But more importantly, if a candidate does turn over a password, is he/she then criticized for not demonstrating an ability to protect confidential company information?
Employers who engage in this interviewing practice shouldn’t be surprised to receive pushback from the public. In looking at ERC’s 2011 National Business Ethics Survey (NBES) data, only one third (33%) of US business employees thought it was appropriate for an employer to consider a person’s social networking profile when making a hiring decision. Sure, what a person posts about him/herself on a network is fair game for consideration of a person’s character, but searching for illegal conduct during the interview process is going too far. How different is it from an employer asking for access to bank accounts to see if money laundering has taken place? Or taking a candidate shopping, in order to see if they will shoplift?
If anything, candidates asked to give access to their pages in “real time” should conclude that there is a trust issue present within that company. These issues never had to be addressed in the past, but we can hope that in the near future a bright line will be drawn somewhere, helping to protect the privacy and dignity of social networkers.
Some three-and-a-half years since the near crash of the U.S economy, an anger still simmers about the activities that led to our economic decline. The New York Times op-ed by the now former Goldman Sachs executive Greg Smith will certainly re-ignite those fiery, raw emotions. There is a discussion to be had about what is ethical behavior in the securities world. And many will question Mr. Smith himself – whether he was wise to share his concerns about his employer via one of the world’s most widely read newspapers. Certainly Smith’s revelations will set off a new discussion as to whether Wall Street has fully embraced the ‘Greed is good’ mentality that has been so corrosive to our nation’s financial health and identity.
I hope newsrooms consider not just the financial services angle, but the overarching ethics angle to this story. Mr. Smith has put a face to a problem we see spreading across corporate America. ERC’s latest research shows that there is a historic a decline in culture in all business sectors across the country.
Just as Greg Smith described, two of the biggest drivers of culture are the tone at the top and the behavior of immediate supervisors. And as we reported in our 2011 National Business Ethics Survey®, 48% of US business employees told us that the tone coming from the top was not one of ethics. Further, 34% of employees do not believe their immediate supervisor cares about doing what is right. Those negative perceptions are on the rise over past years.
Mr. Smith says the culture has changed for the worse at Goldman, and as it did, considerations like the suitability of products became less important than turning a profit. Similarly our NBES findings show that where there is a weak culture, there is also more misconduct. In our study, of those who indicated their culture was “weak,” 90 percent had observed violations of the law or company standards.
While many people are asking how all this happened at Goldman Sachs, perhaps we should also be asking how this is still happening elsewhere. There is a very big story here about how our financial institutions handle the hopes and dreams we entrust to them. But don’t lose sight of the other story here – the leaders of our companies are not leading on ethics.
This is another way to look at Greg Smith’s New York Times op-ed – as seen through Wordle.net (a website that generates “word clouds.” The clouds give greater prominence to words that appear more frequently in the source). This shows what Smith discussed the most in his piece about why he left Goldman – clients, money and… culture.
Rush Kidder never worked for the Ethics Resource Center, but few people have contributed more to the work we do researching the ethics and compliance space. He founded the Institute for Global Ethics (IGE) and made that organization another resounding and important voice in the discussion of corporate ethics. Rush was a great thinker about how people can be motivated to behave ethically, and he was passionate about building ethical cultures in organizations. I have long been an admirer of Rush’s approach to training employees by introducing a concept of “ethical fitness” in an organization.
It saddens me that he is now gone. Yesterday ERC received word that Rush passed away earlier this week. We’ve lost a giant in our field, a fighter for our cause, and a terrific person who stood as an example of what we all talk about – ethics.
We are blessed to have the numerous works Rush has written over his many years as a researcher and ethicist. In his 40 year career, Rush wrote 12 books, and he provided valuable timely insight in his weekly Ethics Newsline column for 14 years. Before starting the IGE, Rush spent 21 years at the Christian Science Monitor where he distinguished himself as an editor and columnist. Part of the reason Rush’s work was always so impactful was that he applied his analytical capabilities as a writer to his passion for ethics.
For me personally, Rush was a sounding board, a partner on projects, and a kindred spirit in envisioning truly ethical organizations and individuals. Rush was even a fellow believer in character education – the area where I got my start in the ethics field. The last time Rush visited me at ERC, we talked a great deal about his most recent publication Good Kids, Tough Choices. We laughed that he and I had pursued parallel interests in our careers, but we approached them from opposite starting points. I got my start in ethics by focusing on character education, then broadened my work to corporations and government. Rush did it the other way. But we both reached the same conclusions.
Probably most importantly, Rush was a great encourager to me. He embodied the moral character he wrote about. He was gracious and appreciative, even though sometimes our organizations competed. Before he left ERC that last day that he visited, Rush signed a copy of his book for me. In it he wrote “For Pat, with great appreciation for your great work in the field. All the best, Rush.”
I would like to say the same about my friend and colleague. Rush, I will always remember you with great appreciation for your great work in the field. You will be missed.
For those of you who knew Rush, post your remembrances on an IGE page set up to pay tribute to him.
Greed Does a 180
Did you see Michael Douglas’s new Public Service Announcement for the FBI? Douglas’s public plea to help the FBI by reporting investors who have profited from the use of confidential information made headlines this week. Douglas’s ‘greed is good’ speech from the movie Wall Street won him the 1987 Best Actor Oscar and stirred a conversation about ethical behavior on Wall Street. It continues to be cited in discussions 25 years after the film’s release (in those conversations, many paraphrase the Douglas quote, which is actually “Greed, for lack of a better word, is good.” Now, Douglas is using that persona to help enforcement agencies. In so doing, Douglas is the perfect spokesman for a good cause – protecting the vast majority of investors who follow the law.
At the same time that the PSA went public, we learned that federal authorities are building insider trading cases against 120 people in an investigation that has reportedly shaken the financial and corporate worlds. I’d say that number is just the tip of the iceberg. We know that insider trading is on the rise, thanks to the data from the Ethics Resource Center’s 2011 National Business Ethics Survey. Four percent of our respondents said they saw witnessed insider trading. That’s up from just one percent in 2009.
As admirable as the PSA is, one important reality gets overlooked. Ultimately, the people who can best help the FBI eradicate insider trading are the senior executives in the organizations where the violations take place. Here is an important stat:
Employees who reported insider trading were nearly four times more likely to come from companies where senior leadership committed to the establishment of an organization-wide ethical conduct.
When leaders commit to building a culture of integrity, where reporting is encouraged and whistleblowers are protected, not only are employees more likely to report, but misconduct is less likely to happen in the first place. It’s a stunning reality – a little time invested by executives in prioritizing ethics goes a very long way.
I believe the FBI’s campaign will catch some of the bad apples out there, but talking to the public-at-large isn’t the most effective way. I’m glad to see the ad airing on CNBC, because that is just the audience that really needs to see it. Aim the PSA at the C-suite, and the FBI will really get somewhere.
