The Corporate Ethics Committee In some organizations, ethics is managed by a corporate committee staffed by seniorlevel managers from a variety of functional areas. This committee is set up to provide ethical oversight and policy guidance for CEO and management decisions.12 It also represents an affirmation that top management really cares about ethics. At Lockheed Martin, the Ethics and Business Conduct Steering Committee meets once every quarter and has done so since 1995. The committee provides the organization with strategic direction and oversight on matters of ethics and business conduct. Each business area and business unit has also established a steering committee to oversee its ethics and business conduct operations. Members of the corporate committee include the general counsel (committee chairman), executives of large operating entities, and vice presidents from functional areas such as human resources, finance, audit, and communications. The two-way communication between the ethics office and these senior executives is essential. It gives the ethics office information about what concerns senior-level management, and it gives the firm’s leadership information about the types of issues that are coming into the ethics office from employees. The group’s role is viewed as strategic. The steering committees at all levels of the corporation review the ethics awareness training and business conduct compliance training programs, metrics on investigations and requests for guidance, trends, employee survey results, and matters referred by the business areas and business units. COMMUNICATING ETHICS Within the ethics infrastructure, good communication—downward, upward, and two way— is essential if an organization is to have a strong, aligned ethics culture. The organization must evaluate the current state of ethics communication and initiatives. It must communicate its values, standards, and policies in a variety of formal and informal ways that meet its employees’ needs. These communication efforts should be synergistic, clear, consistent, and credible. They also need to be executed in a variety of media, because people learn things in different ways. In general, the old advice to speechwriters still holds. ‘‘Tell ’em what you’re going to tell ’em, then tell ’em, then tell ’em what you told ’em.’’ In addition to receiving downward communication from management, employees must also have opportunities to communicate their ethical concerns upward. Finally, an open communication environment must be created that says it’s okay to ask questions, and it’s okay to talk about ethics. In the following section, we begin with some corporate communications basics—principles that should guide all ethics communication initiatives. CHAPTER 6 MANAGING ETHICS AND LEGAL COMPLIANCE 215 A number of the ethics officers we interviewed were sensitive to the negativity sometimes attached to the word ethics. Employees can get defensive when they hear this word. They ...

1. The Corporate Ethics Committee
In some organizations, ethics is managed by a corporate
committee staffed by seniorlevel
managers from a variety of functional areas. This committee is
set up to provide
ethical oversight and policy guidance for CEO and management
decisions.12 It also
represents an affirmation that top management really cares
about ethics.
At Lockheed Martin, the Ethics and Business Conduct Steering
Committee
meets once every quarter and has done so since 1995. The
committee provides the
organization with strategic direction and oversight on matters of
ethics and business
conduct. Each business area and business unit has also
established a steering committee
to oversee its ethics and business conduct operations. Members
of the corporate
committee include the general counsel (committee chairman),
executives of large
operating entities, and vice presidents from functional areas
such as human resources,
finance, audit, and communications. The two-way
communication between the ethics
office and these senior executives is essential. It gives the
ethics office information
about what concerns senior-level management, and it gives the
firm’s leadership
information about the types of issues that are coming into the
ethics office from
employees. The group’s role is viewed as strategic. The steering
committees at all
levels of the corporation review the ethics awareness training

2. and business conduct
compliance training programs, metrics on investigations and
requests for guidance,
trends, employee survey results, and matters referred by the
business areas and business
units.
COMMUNICATING ETHICS
Within the ethics infrastructure, good communication—
downward, upward, and two way—
is essential if an organization is to have a strong, aligned ethics
culture. The
organization must evaluate the current state of ethics
communication and initiatives.
It must communicate its values, standards, and policies in a
variety of formal and
informal ways that meet its employees’ needs. These
communication efforts should
be synergistic, clear, consistent, and credible. They also need to
be executed in a
variety of media, because people learn things in different ways.
In general, the old
advice to speechwriters still holds. ‘‘Tell ’em what you’re going
to tell ’em, then tell
’em, then tell ’em what you told ’em.’’ In addition to receiving
downward communication
from management, employees must also have opportunities to
communicate
their ethical concerns upward. Finally, an open communication
environment must be
created that says it’s okay to ask questions, and it’s okay to talk
about ethics. In the
following section, we begin with some corporate
communications basics—principles
that should guide all ethics communication initiatives.
CHAPTER 6 MANAGING ETHICS AND LEGAL

3. COMPLIANCE 215
A number of the ethics officers we interviewed were sensitive
to the negativity
sometimes attached to the word ethics. Employees can get
defensive when they hear
this word. They think to themselves, ‘‘Why are you here talking
to me about ethics?
Mine are fine.’’ Kent Druyvesteyn, former ethics officer at
General Dynamics, put it
this way. ‘‘Using the word ‘ethics’ unfortunately implies that
somebody has a deficiency.
So, I would urge you not to use that word at least until you can
make clear
what you mean by it.’’ This negative reaction to the word ethics
may be more of a
problem at some organizations than at others. Again, it depends
on the culture of the
firm. Companies have used the term values or business conduct
or business practices
successfully. The key is to know your own company and use
terminology that sounds
authentic within your organization’s culture.
Basic Communications Principles
ALIGN THE FORMAL AND INFORMAL COMMUNICATION
SYSTEMS When
most people think of a corporate communication system, they
think of the obvious—
the company newspaper, website, and annual report. However,
like culture, a corporate
communication system consists of formal and informal
components. Formal
communications include all formal written and electronic
communication—newspapers,
magazines, memos, recruiting literature, policy manuals, annual
reports, websites,

4. and advertising—as well as formalized oral communication such
as meetings
and speeches. But perhaps the most powerful component in a
corporation’s communication
system is an informal one known as the grapevine.
The grapevine—a continual stream of information among
employees about
‘‘what’s really going on’’—exists in every organization. It
contains news, rumors,
impressions, and perceptions. Surprisingly, research has shown
that from 70 to 90
percent of the information that passes through the grapevine is
accurate.13 In survey
after survey of employees in numerous and varied businesses,
the grapevine is where
they said they received most of their information about their
employer. (In those
same surveys, most people said they would rather receive
information from their
managers.) The grapevine can be examined to shed light on a
corporation’s credibility
since most employees are plugged into it, it provides
information fast and continually,
and it contains the ‘‘inside’’ scoop on corporate events.
One way to determine corporate credibility on various issues—
especially
ethics—is to compare the messages on the formal and informal
communications systems.
For example, suppose that BIG Company has a policy
prohibiting employees
from entertaining customers excessively. The policy is spelled
out in a manual, and
the president of BIG has reinforced the policy in speeches to
employees. Now imagine
that BIG’s head of marketing repeatedly wines and dines
clients. The costs of the

5. lavish entertainment are detailed in expense reports that are
approved by management
and processed by clerical and financial control employees. In
addition, other
employees are invited along when the clients are entertained,
and still more employees
observe the head of marketing entertaining guests in expensive
restaurants.
Regardless of how strongly BIG’s formal communication
system states the official
216 SECTION III MANAGING ETHICS IN THE
ORGANIZATION
policy, the informal communication system—the grapevine—
will communicate
what’s really going on: BIG is saying one thing and doing
another. The company
says it prohibits lavish entertainment, yet it condones that
forbidden behavior in at
least one high-level employee. As a result, BIG’s ethics culture
is out of alignment
and it has no corporate credibility on the subject of customer
entertainment. Furthermore,
its credibility on other ethical issues is probably suspect.
Now imagine another situation. LITTLE Company has a
strongly worded policy
regarding sexual harassment. Moreover, LITTLE’s senior
executives have frequently
stated that sexual harassment will not be tolerated. Suppose a
manager, Pat, is
accused of sexual harassment. The charge is investigated, found
to be accurate, and
Pat is fired. The exact details of the incident may not be on the
grapevine, but in
most cases, just the bare bones of that story will send a strong
message. The messages
on the grapevine will match what’s said by LITTLE’s formal

6. communication system.
Employees will get the word very quickly that LITTLE means
business on the issue
of sexual harassment, and the corporation will have increased
its credibility by
‘‘walking the ethics talk.’’
The importance of informal communications can’t be
overstated. Since truth and
honesty are at the core of any ethics effort, if a company is
saying one thing and
doing another—if the messages on its formal communication
system and its grapevine
don’t match—it has little or no credibility and probably
shouldn’t attempt a formal
ethics communication effort until it has regained its credibility.
How can you
compare the formal and informal messages? Ask employees.
Employee surveys and
focus groups can provide feedback that will serve as the
beginning of an effective
comparison. How does an organization establish or regain
credibility? Designing
consistent policies and enforcing those policies are the only
route an organization
can take to gain credibility on ethics issues. If policies are
enforced for only part of
the employee population, or if there are different rules and
treatment for different
employees, there’s little an organization can do to gain
credibility until consistency
is established.
ANALYZE THE AUDIENCE The first thing to do when
designing a communication
program is to analyze the needs of your audience. Consider
what employees already

7. know, what they need to know, what biases and abilities they
have, what the desired
and required behaviors look like, when they should be asking
questions, and where
they can go to report their concerns and to ask for help.
When designing ethics communication for a typical employee
population, organizations
need to consider three kinds of people. (Because the terms are
easy to visualize
and remember, we use military jargon to describe the three
types.)
Good Soldiers Group I includes the ‘‘good soldiers.’’ These
people understand
and follow the rules and policies of the organization, and they
have good ethical compasses.
They have the judgment or experience required to discern the
difference
between right and wrong, and they have the moral grounding to
do the right thing.
Be careful to note that these aren’t just soldiers who follow
orders, right or wrong.
CHAPTER 6 MANAGING ETHICS AND LEGAL
COMPLIANCE 217
They know that good soldiers are expected to question an order
they believe to be
illegal or morally wrong, and they would do so.
Loose Cannons In Group II are the ‘‘loose cannons’’—these
people may have
good ethical compasses, but they don’t know their corporation’s
policies. They may
not even be familiar with general ethical standards in business.
Loose cannons may
be inexperienced; or they may have transferred from another,
unrelated industry with
very different norms; or they may never have read a policy

8. manual. Whatever the
reason, loose cannons may be well meaning, but they’re naive.
Without guidance,
loose cannons may not even consider ethics in the business
environment.
Grenades People in Group III are ‘‘grenades,’’ and they’re
neither ignorant nor
benign. These employees may or may not know the rules, but
they don’t care either
way. They have their own agenda, and they lack any company or
professional
loyalty. We call them grenades because their activities can blow
up suddenly and
severely damage the organization.
Although the communication needs of the three groups overlap,
the emphasis for
each specific group is clear. Good soldiers need support because
good people often feel
pressured to compromise in order to ‘‘fit in.’’ Good soldiers
need to know that their
instincts are right and their behavior is not the exception; in
fact, it represents the organizational
model. Loose cannons need to be educated; they need to know
and understand
basic norms of ethical conduct and specific company policy and
standards. Grenades
need to know unequivocally that ethical lapses will not be
tolerated. They need to see
good behavior rewarded and ethical lapses dealt with swiftly,
consistently, and firmly.
There are probably only a few grenades in any organization. But
they surely
exist everywhere, and the system must be prepared to deal with
them. Good soldiers
may account for a substantial portion of employees, but perhaps
not the majority.

9. Since very few employees ever read a policy manual cover to
cover, most people
learn policy on a need-to-know basis. It’s safest to assume that
most employees fit
into the loose cannon category. The challenge in designing
effective ethics communication
programs is meeting the needs of all types of employees.
This focus on the ethics audience assumes that most employees
don’t come to
the organization perfectly principled and completely prepared to
make the right decision
in every situation. Recall from earlier chapters that most
employees are highly
susceptible to influence from outside themselves, so the
organization has to provide
guidance—and, despite advances, the perfect integrity test
hasn’t been invented.
Since polygraphs were outlawed for most types of employee
screening in the United
States, more organizations have turned to paper-and-pencil
honesty or integrity tests
to screen prospective employees. Most of these tests attempt to
predict the prospective
employee’s inclination to steal from the organization, although
others have a
more general focus on workplace deviance. Integrity tests have
been evaluated by
the American Psychological Association and the government’s
Office of Technology
Assessment. The two organizations’ reports generally agree that
research on integrity
218 SECTION III MANAGING ETHICS IN THE
ORGANIZATION
tests is improving and that evidence supporting the tests’
ability to predict dishonest
behavior has increased.14 Nevertheless, many problems

10. remain, and organizations
will continue to have imperfect employees who need guidance
on ethical issues.