Creating an ethical organization starts with education

Do your employees know not to share material information or trade secrets with your competitors? Do they know how to report sexual harassment or threatening behavior without fear of retaliation? And when a favorite vendor flashes those coveted concert tickets, is it okay for employees to accept them?

While their conscience might be telling them what's right and wrong; their company should be telling them too. Because when companies fail to outline and communicate their expectations related to compliance, they may not only face costly lawsuits, they could also be creating a negative workplace and earning an unfavoravle reputation among customers -- all potentially leading to poor business results.

Who's at risk?
Compliance lawsuits don't discriminate; they affect both big and small businesses at an increasingly alarming rate.

While questionable ethics at large companies such as Enron, Tyco and Boeing make national news (in May, Boeing agreed to pay $615 million under a tentative deal with federal prosecutors to avoid criminal charges relating to alleged ethical breaches by its employees), smaller businesses have their own share of attention-grabbing lawsuits. In fact, smaller businesses may be more prone to compliance-related lawsuits because they often don't have the infrastructure, staff or financial resources needed to combat these issues.

Recent amendments to the Federal Sentencing Guidelines require both public and private companies to adopt comprehensive ethics and compliance programs, and to train all workers, from the top of an organization to the bottom, on these programs.

It just makes good business sense
Most employers know that compliance is the right thing to do, but they might not realize it's also the smart thing to do.

Organizations that demonstrate they have an effective ethics and compliance program in place can reduce the potential fines and other punishment they might face. According to the U.S. Sentencing Commission, "The potential fine range for a criminal conviction can be significantly reduced -- in some cases up to 95 percent -- if an organization can demonstrate that it had put in place an effective compliance and ethics program and that the criminal violation represented an aberration within an otherwise law-abiding community."

"Good ethics are good for business," said John Bruellman, vice president of Compliance Services at Ceridian. "When businesses emphasize compliance, they not only reduce their risk of penalties, they benefit in other ways as well."

Compliance programs are shown to give companies a competitive edge, foster a more ethical environment that reduces employee theft, and help employers attract and retain top talent. A 2004 Stanford Business School survey of more than 800 MBA students from 11 leading North American and European schools found that 97 percent of them would forego significant financial benefits to work for an organization with a better reputation for ethics and corporate social responsibility.

Creating compliance programs
Compliance programs involve much more than writing down some rules and having employees sign on the dotted line. "The four main components are developing, training, maintaining and reporting," Bruellman said. Ceridian recently introduced a suite of Risk Management Solutions to help organizations manage compliance for all aspects of an employee's lifecycle -- from hire through termination.

For example, pre-employment background screening and drug testing services can help companies make the right hiring decisions; code of conduct manual development and training can help communicate compliance issues to current employees; and exit interviewing and COBRA services are available for when employees leave the company.

"The fourth element of compliance -- reporting -- is key to a successful program," Bruellman said. "Unethical behavior thrives in organizations where employees are encouraged to look the other way or fear losing their job if they blow the whistle on the company or their boss."

Even with the creation of the Sarbanes-Oxley Act in 2002, designed to counter unethical corporate behavior and open the door for workers to report it, employees seem reluctant to report misconduct. "Employees, especially those at smaller companies where everyone knows one another, need an outlet to confidentially report unethical behavior," Bruellman said. "We can set up ethics hotlines and help employers educate their employees about the importance of reporting incidents without fear of losing their job or retaliation from other workers."

But even the best compliance manuals, training and reporting mechanisms won't work if ethical behavior is not communicated and practiced at all levels of the organization. After all, Enron Corporation's 64-page code of conduct seemed to be ignored, especially by top management, no doubt leading their employees to follow suit.

"We want to help companies develop compliance programs so they are freed up to concentrate on their core business," Bruellman said. "We will continue to expand our compliance solution offerings, not only to small businesses, but to larger customers as well."

For more information about Ceridian Risk Management Solutions, contact your Ceridian representative or visit www.hrcompliance.ceridian.com/hrcompliance.