Shelley Trent Ethics Presentation 05 09


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Shelley Trent delivered a great presentation to the Memphis SHRM Chapter. Check it out!

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  • Good morning! I am excited to be with you to talk about an important and timely topic. We all know that the economy is in poor shape, but did you think about how ethics is a key cause of the downturn?
  • Shelley Trent Ethics Presentation 05 09

    1. 1. HR and Business Ethics: Lessons from the Downturn Shelly Trent, SPHR; Field Services Director
    2. 2. Ethics is Back in the News HR and Ethics Our financial crisis is due in large part to questionable business practices Madoff Ponzi scheme is among latest cases of fraud to hit the headlines Has HR done enough to create ethical business cultures?
    3. 3. Today’s Agenda HR and Business Ethics <ul><li>Current Status of Business Ethics </li></ul><ul><li>Sarbanes-Oxley Act of 2002 </li></ul><ul><li>Elements of an Ethical Business Culture </li></ul><ul><li>Role of HR in Business Ethics </li></ul><ul><li>5) Case Study: Cisco’s “Ethics Idol” </li></ul>
    4. 4. HR and Business Ethics Current Status
    5. 5. <ul><li>“ The nation’s business leaders are confronting a confusing and stark reality. Few have ever faced such calamitous circumstances. A daunting task lies before them: making sure their corporations survive and positioning their businesses for the opportunities that lie ahead after this storm subsides. Every action and decision matters. Urgency, speed and flexibility become imperatives. </li></ul><ul><li>“ Leaders are being tested for their values, authenticity and realism. They need to be tough-minded. They will have to exercise intellectual rigor and be intellectually honest about the challenges they face and whatever painful steps must be taken to keep their businesses on the right paths. This is a time for leaders to lead.” </li></ul><ul><li>Ram Charan, HRMagazine, February 2009 </li></ul>HR and Business Ethics Ethics is Back in the News
    6. 6. Wall Street Firms Implode HR and Business Ethics Starting with Bear Stearns, venerable financial institutions have faced bankruptcy The U.S. government has been forced to spend billions on rescue and stimulus plans News of CEO “golden parachutes” and untimely bonuses have shocked Americans The reputation of the banking and financial sectors is at an all-time low
    7. 7. Sarbanes-Oxley Act of 2002 HR and Business Ethics Passed by Congress in response to Enron and other scandals High-level oversight of publicly traded company financial records Companies must disclose whether they have a code of conduct HR is involved in onerous and expensive SOX compliance
    8. 8. SOX Provisions HR and Business Ethics Section 301: Must have complaint system, anti-retaliation statement Section 404: Must show adequate internal control structure and procedures for financial reporting Section 406: Must have code of conduct in place Section 806: Must have system to protect Whistleblowers
    9. 9. An Ethical Culture HR and Business Ethics <ul><li>SOX is not a panacea: It is only for publicly traded companies </li></ul><ul><li>and only a legal framework for ethics </li></ul><ul><li>HR professionals can take a leadership role by creating </li></ul><ul><li>cultures in which integrity is a priority </li></ul><ul><li>Being legal is not enough -- Litmus test must be: Is it ethical? </li></ul>
    10. 10. Six Basic Elements HR and Business Ethics Ethical Business Culture 1- Written Standards 2- Ethics Training 3- Mechanism for Getting Advice 4- Means to Report Anonymously 6- Ethics Inclusion in Performance Rating 5- Discipline for Misconduct
    11. 11. SHRM 2008 Business Ethics Survey HR and Business Ethics
    12. 12. Percentages of Ethics Practices in Place
    13. 13. Written Standards HR and Business Ethics <ul><li>Written values statements and codes of conduct are the </li></ul><ul><li>most common tools for employee awareness of ethics </li></ul><ul><li>A values statement allows organizations to identify, </li></ul><ul><li>articulate and communicate a clear set of guiding principles </li></ul><ul><li>The goal of a values statement should be to provide a </li></ul><ul><li>framework for deciding among competing ethical choices </li></ul>
    14. 14. Values Statements and Codes HR and Business Ethics <ul><li>Values statements should reflect universal guiding principles </li></ul><ul><li>63% of companies In SHRM’s 2008 business ethics survey </li></ul><ul><li>had values statements and 75% had codes of conduct </li></ul><ul><li>Codes of conduct should reflect an organization’s values and </li></ul><ul><li>provide guidelines employees are expected to follow </li></ul><ul><li>SOX provisions mandate that companies must have a code of </li></ul><ul><li>conduct in place </li></ul>
    15. 15. Codes of Conduct HR and Business Ethics <ul><li>Many organizations not subject to SOX provisions have </li></ul><ul><li>voluntarily adopted codes of ethics </li></ul><ul><li>Some industries have developed their own ethical standards </li></ul><ul><li>to which participating companies subscribe </li></ul><ul><li>SHRM has established a code of ethical standards for the </li></ul><ul><li>HR profession to which SHRM members agree to abide </li></ul><ul><li>This code can be accessed on the SHRM Web site at: </li></ul><ul><li> </li></ul>
    16. 16. Ethics Training HR and Business Ethics <ul><li>Ethics training in conjunction with the code and values </li></ul><ul><li>statement is essential for employee understanding </li></ul><ul><li>66 percent of the respondents in our 2008 business ethics </li></ul><ul><li>survey reported having ethics training programs </li></ul><ul><li>Although ethics training is not mandatory under SOX </li></ul><ul><li>provisions, it should be an ongoing process for employees </li></ul>
    17. 17. Ethics Training HR and Business Ethics <ul><li>Successful training may actually increase the number of </li></ul><ul><li>reported ethical violations or incidents of noncompliance </li></ul><ul><li>Organizations need to prepare for this and not misinterpret </li></ul><ul><li>the results. </li></ul><ul><li>It usually means that the ethics program is working, not that </li></ul><ul><li>unethical behavior is increasing. </li></ul>
    18. 18. Types of Misconduct Observed
    19. 19. <ul><li>“ If people are dishonest, </li></ul><ul><li>a course won’t </li></ul><ul><li>make them honest.” </li></ul><ul><li>Tom Campbell, Dean </li></ul><ul><li>Haas School of Business, </li></ul><ul><li>University of California Berkeley </li></ul>
    20. 20. Increased Percentage of Misconduct Reported
    21. 21. HR and Business Ethics Whistleblower Protections
    22. 22. Role of HR in Ethics HR and Business Ethics <ul><li>Many ethical situations are not clear-cut and require HR </li></ul><ul><li>expertise to arrive at a workable solution. </li></ul><ul><li>Most HR professionals in our 2008 survey said their HR </li></ul><ul><li>departments were a primary resource for ethics issues </li></ul><ul><li>Most also indicated involvement in formulating ethics </li></ul><ul><li>policies to a moderate or large extent </li></ul><ul><li>Unfortunately, many others do not feel they are truly part </li></ul><ul><li>of the ethics infrastructure, except to clean up the mess </li></ul>
    23. 23. Chief Ethics & Compliance Officer HR and Business Ethics <ul><li>Many organizations are beginning to name CECOs with </li></ul><ul><li>specific responsibility for ethics and compliance </li></ul><ul><li>At some organizations, the senior HR executive has taken </li></ul><ul><li>on this added role </li></ul><ul><li>To be effective, a CECO must have sufficient authority and </li></ul><ul><li>ideally should report to or be a member of the C-suite </li></ul>
    24. 24. 2007 PricewaterhouseCoopers Crime Survey HR and Business Ethics “ Internal controls are not sufficient. Rather, it is the ethical corporate culture that plays a key role in deterring fraud, with companies that have ethical policies and compliance programs reporting fewer economic crimes.”
    25. 25. Case Study – Cisco Systems In 2007, Cisco decided to rewrite its code of conduct and wanted a new ethics training tool To accomplish this, it partnered with The Network, a San Diego-based IT company The new user-friendly code of conduct rolled out in 2008 and was well received by Cisco’s 65,000 employees worldwide It also received an “A” rating by Ethisphere Magazine and was featured in CRO Magazine’s 2008 “100 Best Corporate Citizens”
    26. 26. Case Study – Cisco Systems In conjunction with its new code of conduct, Cisco launched “Ethics Idol,” an online cartoon parody of “American Idol.” The educational flash module on Cisco’s intranet engages employees in making decisions about ethical situations. “Ethics Idol” has helped raise awareness among Cisco employees that ethical dilemmas are not always cut and dry.
    27. 27. Business Ethics and CSR HR and Business Ethics <ul><li>Ethics and good governance are important elements of </li></ul><ul><li>corporate social responsibility and business sustainability </li></ul><ul><li>CSR also includes corporate concern for the environment </li></ul><ul><li>and for community needs </li></ul><ul><li>Fortune 500 companies like Cisco value their reputations </li></ul><ul><li>as good corporate citizens since it helps their stock prices </li></ul><ul><li>The rise of CSR to become a strategic business objective </li></ul><ul><li>has helped raise the profile of business ethics </li></ul>
    28. 28. Look to SHRM for Support HR and Business Ethics
    29. 29. Look to SHRM for Support HR and Business Ethics
    30. 30. Look to SHRM for Support HR and Business Ethics
    31. 31. <ul><li>Case Studies </li></ul>
    32. 32. HR and Business Ethics MY SPACE SURPRISE You are Director of HR for 21st Century Pharmaceuticals; in the final stages of filling a Senior Systems Analyst position in IT. It’s a critical position, overseeing several key systems for the organization. Director of IT has identified Jason Martin as top candidate; asks you to conduct reference check on his background. All professional/personal references checked out; your final step is to “Google” him and to see if he has home pages on and You find the normal photos, overview of interests and a personal blog. While reading the blog, you discover that Jason is passionate in his opposition to the use of animals in medical research, something that is a common practice at your company and in your industry. Do you hire Jason?
    33. 33. HR and Business Ethics TO THE NTH DEGREE You are HR Manager for Dominion Supplies; in process of filling new position of Call Center Operations Manager. Laura Grant has been a stellar Customer Service Rep for you for the past three years and is top candidate for the position. As part of your regular processes and policy, which states “ In consideration of an applicant for employment, or a current employee for promotion, transfer, reassignment or retention, Dominion Supplies may inquire into an individual’s background ,” you are verifying Laura’s educational background. She stated that she was graduate of Commonwealth University with a B.A. Degree in Business Administration on both her resume and her original employment application. Commonwealth University has reported that while Laura was a student there, she did not attain her degree. You meet personally with Laura and she admits that she falsified her degree. Your policies also state that falsification of information on the application form may be grounds for employment termination. What should you do?
    34. 34. HR and Business Ethics WOULD YOU MIND? A major metropolitan city has asked several IT companies to respond to a $50 million proposal to install a new computer system for the city and its various operating departments. HIGHTECH is one of the two finalists, and as part of the final negotiation process, the sales team has an opportunity to observe and become knowledgeable about the competing company’s (DIVERSE PLUS) sales and marketing group. Of DIVERSE PLUS’s five representatives, two are African American and one is Hispanic. One of the African Americans is female. HIGHTECH’s sales and marketing representation consists of five white males. The judging panel consists of six people – three are people of color and four are female. DIVERSE PLUS is awarded the contract. Upon debriefing the situation, the HIGHTECH team comes to the conclusion that one possible reason why the company was not selected was because its sales and marketing team lacked the diversity that DIVERSE PLUS had. Next week, HIGHTECH is scheduled to enter into an almost identical competitive bid situation with another major metropolitan government. The sales manager suggests that Roosevelt Jackson, an African American male hired by the department about six months ago, be the one to pitch the firm’s services to this client, even though he has not been involved in the project and knows little about it. Mr. Jackson is subsequently asked by management to “make the pitch.” Roosevelt Jackson then goes to you , the HR Director, to suggest that he sees this request as a form of racism and misrepresentation because the company has few people of color in its sales and marketing group and, in general, is not known for any special type of attention to diversity. While the request is offensive, he suggests to you that it also could have life-long career implications for him – either positive or negative. Also, he mentions a desire to help the company in its sales efforts. He’s not sure what he should do. How do you advise Mr. Jackson?
    35. 35. Thank You HR and Business Ethics Society for Human Resource Management (Please note that these slides are copyrighted material and may only be distributed to an audience at a SHRM speaker presentation. Further distribution is not allowed, except with permission by SHRM.