Walking the Walk – Corporate Ethics

There are many who believe that “corporate ethics” is a modern phenomenon, but 2,000 years ago, Cicero addressed the topic in his “On Duties”. The issue has certainly been launched into today’s’ headlines by an endless lineup of corporate scandals. The need for a functioning ethics program is more than a good idea; it is a mandate from investors and regulatory agencies.

In a study originally published in 1990 by The Center for Business Ethics at Loyola Marymount College, Thomas I. White noted that 75% of our nation’s major corporations had a Code of Conduct in place and 33% offered some form of “ethics training” program but only 15% had both. Today’s percentages are likely to be much higher since under the 1999 guidelines for the Federal Prosecution of Corporations, the Justice Department was given latitude for reducing charges for a company that could demonstrate they had an ethics program in place and made good faith efforts to implement it.

For companies in the business of gaming, the need for ethics is most critical. With that in mind, I have endeavored to provide a paradigm for assessing your current ethics program or putting a new program in place.

It starts at the top

Take heed CEO’s, the success of an ethics program must come from the senior leadership of the company. Do as I say, not as I do, does not work in building an ethical business culture. Furthermore, when employees see unethical practices being used or condoned by their superiors, they are being sent a clear message that it is all right to cheat as long as you don’t get caught.

If those arguments aren’t enough, consider the plight of Enron, WorldCom or the dollars being paid by the Tobacco industry. Even closer to home, consider the fines that have been paid by well-known casino companies for the inappropriate actions of some of their key employees. In today’s world ethics are good business.

The building blocks

An ethics program can consist of a variety of elements and will take into consideration the nature of your business, the diversity of your employees and the parts of the country or world where you operate. The following are the basic needs of any ethics program:

  • A Statement of Corporate Values. The program must have a documented statement of what the firm believes to be important in the way they do business. This statement should be made a part of the company’s public documentation.
  • A Code of Conduct. All employees of the firm should be expected to know and abide by a written code of conduct which is available to them for reference at all times. This could vary greatly depending on some of the factors noted above, but should be designed by representatives of human resources and the office of the general counsel. Those departments will also have the responsibility of overseeing the implementation of the program with the support and approval of the board of directors.
  • Ethics Training. Workshops to train employees in how to deal with potential problem situations need to be an ongoing part of the program. When confronted with complex business situations, employees are rarely presented with easy ethical answers. We assume too much if we assume that our “good employees” will always do the right thing. Even the best people can make bad decisions when confused or under great pressure.
  • Available Channels of Communication. An “ethics hotline” of some type needs to be provided as recourse for employees who have a personal ethical issue to deal with or to make an accusation of wrongdoing.
  • Ethics Committee. Some companies have a standing ethics committee of the board of directors that assists in overseeing the companies ethics program. Whether that is the case or not, one or more independent directors, along with the VP of human resources, the general counsel, VP of compliance and any other key leaders the company designates should oversee the working of the program by meeting on a regularly scheduled basis.
  • Scheduled Evaluation. Like any good program, the ethics program should strive for continuous improvement by regularly evaluating its effectiveness. Suggestions from all levels of employees should be considered in making the program fit the needs of the company.

The benefits

There is much more that can be said about the value of building an ethical culture in your company. First however, it is crucial to note that ethics in the workplace must be managed. Management is, in fact, a system of values.

Among the real benefits that can be achieved with a working ethics program are greater teamwork and productivity, less “stressed” employees and reduced turnover. In addition, a strong reputation as an ethical company can be a great “public-image” builder. Ethics are not something tangible that you can trace directly to the bottom-line of your P&L, but all the benefits mentioned will create greater profits and prevent ethical/legal problems before they start.

 
 

Keith Kefgen, New York
CEO & Managing Director


[email protected]


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