Organizational Ethics:The Malevolence of Unintended Consequences

RCPA 2014 ANNUAL CONFERENCE

Brian M. Block, ARM, ARM-P

Managing Director

“We’re Aggressive About Your Safety”

“START WITH THE END IN MIND”…stephen covey

• FURTHERING YOUR MISSION• COMPANY SUSTAINABILITY• PERSONAL ENRICHMENT (WEALTH)• FEEDING OUR FAMILIES

AGENDA• INTRODUCTION AND WELCOME• WHY ETHICS? WHY AN ETHICAL AUDIT?• UNINTENDED CONSEQUENCES• ERM: ORGANIZATIONAL ROLE AND FUNCTION• NEGLIGENCE AND DUTY OWED• CONDUCTING AN ORGANIZATIONAL ETHICS AUDIT • THE MALEVOLENCE OF UNINTENDED CONSEQUENCES• ETHICAL DILEMMAS: DISCUSSION• Q&A

WHY ETHICS?• TO BUILD AND COMPLY TO A COMMON SET OF VALUES UPON

WHICH WE FASHION PROFESSIONAL WORK ACTIVITIES.• TO HAVE A SET OF VALUES, PRINCIPLES, AND STANDARDS AS

GUIDANCE WHEN PROFESSIONAL OBLIGATIONS OR PRINCIPLED DILEMMAS EXIST

• TO ASSURE THE WELFARE AND PROTECTION OF THE INDIVIDUALS AND GROUPS WITH WHOM WE WORK.

• TO ASSIST OURSELVES AND OTHER PROFESSIONALS TO RECOGNIZE THE BOUNDARIES RELATED TO THEIR COMPETENCE AND THE LIMITATIONS OF THEIR EXPERTISE.

• TO PROVIDE THE GENERAL PUBLIC A SET OF STANDARDS UPON WHICH TO BUILD EXPECTATIONS AND ACCOUNTABILITIES REGARDING THE SERVICES OFFERED.

WHY AN ETHICAL AUDIT?• TO COMPARE PRESENT POLICIES AND PROCEDURES

AGAINST ACTUAL PRACTICES AND IN CONSIDERATION OF KEY RISKS AND THE MANAGEMENT OF THOSE KEY RISKS

• TO ASSESS THE EXTENT TO WHICH PRACTICES, PROCEDURES AND POLICIES ARE IN PLACE TO PROTECT CLIENTS, IDENTIFY ETHICS-RELATED RISKS, AND TO PREVENT ETHICS COMPLAINS AND ETHICS-RELATED LITIGATION

• TO COMPARE ACTUAL EMPLOYEE BEHAVIOR AND THE GUIDANCE OF EMPLOYEE BEHAVIOR PROVIDED IN POLICIES AND PROCEDURES

UNINTENDED CONSEQUENCES

AN ACTION OR LACK OF ACTION THAT RESULTS IN AN OUTCOMENOT INITIALLY INTENDED; A SET OF RESULTS THAT WAS NOT INTENDED AS AN OUTCOME• THOSE RESULTS MAY INDICATE

• A POSITIVE EFFECT• POTENTIAL PROBLEMS THAT MAY BRING ABOUT A REDUCTION

IN QUALITY • A NEGATIVE EFFECT

• THOSE RESULTS MAY BE ANTICIPATED OR UNANTICIPATED• THOSE RESULTS ARE CAUSED BY SPECIFIC ACTIONS OR

FAILURE TO TAKE ACTION

PRECAUTIONARY PRINCIPLE

“when an activity raises threat to the integrity of the organization precautionary measures should be taken even if some cause and effect relationships are not fully established”

or simply…“when circumstances or evidence gives us good reason to believe that an activity, technology or substance may be harmful to the enterprise we should act to prevent harm”

ASSOCIATED STRATEGIES OF ENTERPRISE RISK MANAGEMENT

• HEIGHTENS THE CORPORATE “SAFETY” CULTURE• RESPONDS WITHIN THE RISK CORRIDOR OF THE

ENTERPRISE • MAINTAINS THE INTEGRITY OF THE ENTERPRISE’S

CHARTER, SCOPE OF SERVICE, ADMISSION BOUNDARY, AND PROGRAMS

• RESPECTS EMPLOYEE TENURE, ENSURES EFFECTIVE SUPERVISION, AND IMPROVES COMPETENCIES

• IMPROVES ORGANIZATIONAL COMPETENCIES• PROTECTS THE ENTERPRISE’S ASSETS• STRATEGICALLY AND DILIGENTLY KEEPS SUSTAINABILITY

IN THE FOREFRONT

DUTY OF CARE STANDARD

• THE AVERAGE PRACTITIONER ASSUMES THAT THE ORGANIZATION’S PRACTICE IS LIMITED IN ITS SCOPE OF SERVICE TO THOSE THINGS RECOGNIZED AS BEING DONE WELL OR COMPETENTLY. SUPERVISION AND TRAINING.

• THE REASONABLY PRUDENT PRACTICE STANDARD USES A

PERSPECTIVE OF ACCEPTED PRACTICES BY THE FIELD IN THE MOST GENERAL TERMS; LICENSURE AND ACCREDITATION, “TRADE ASSOCIATION” STANDARDS.

• THE STANDARD OF EXCELLENCE OR “DO NO HARM AND DO THE RIGHT THING WELL.” IF NOT WRITTEN THE PROVISION OF CARE IS ASSUMED AS A LEGAL AND BINDING CONTRACT THE NATURE OF WHICH IS OPEN TO INTERPRETATION BY THE CONSUMER.

CORPORATE NEGLIGENCE

THE ORGANIZATION IS:• HELD RESPONSIBLE FOR THE WELL-BEING OF

CONSUMERS• EXPECTED TO HIRE COMPETENT EMPLOYEES• EXPECTED TO PROPERLY TRAIN EMPLOYEES • EXPECTED TO OVERSEE CARE • EXPECTED TO IMPLEMENT AND OBSERVE SAFETY

POLICIES• ACCOUNTABLE FOR THE ACTIONS OF ITS EMPLOYEES

CORPORATE NEGLIGENCE DEFINED BY:1. A DUTY OWED TO EITHER THE PLAINTIFF OR TO THE

GENERAL PUBLIC2. THE DUTY OWED IS VIOLATED (BREACH)3. THE VIOLATION OF THE DUTY RESULTED IN HARM TO

THE PLAINTIFF (DIRECT CAUSE AND INJURY)4. THE INJURY WAS FORESEEABLE BY A REASONABLE

PERSON

DUTY OF CARE

• AN ORGANIZATION MUST UNDERSTAND THEIR DUTY OWED FROMTHE PERSPECTIVE OF WHAT HAZARDS NEED TO BE MONITORED.

• FROM UNDERSTANDING THOSE HAZARDS A DETERMINATION MUST BE MADE ABOUT WHAT NORMATIVE RISK MANAGEMENT PROTOCOLS ARE NEEDED AND WHAT SPECIAL TECHNIQUES MAY BE REQUIRED.

• FROM UNDERSTANDING THE HAZARDS, THE ORGANIZATION MUST HAVE ACTED, USING NORMATIVE OR SPECIAL RISK MANAGEMENT PROTOCOLS, TO ASSURE DEFENSIBILITY WHEN ALLEGATIONS AND/OR THE ACTUAL OCCURRENCE OF SERIOUS ADVERSE INCIDENCES OCCUR.

AN ETHICAL AUDIT: INTRODUCTION• IS AN ANALYSIS OF YOUR CODE OF CONDUCT• ENSURES THAT BEHAVIORS AN ORGANIZATION ESPOUSES

IN ITS CODE OF CONDUCT AND POLICIES AND PROCEDURES EXISTS IN PRACTICE AND THE BEHAVIOR FORBIDDEN IN THOSE DOCUMENTS DOES NOT OCCUR

• OCCURS ON AN ANNUAL BASIS AND ON AN AS-NEEDED BASIS IN RESPONSE TO RISK ASSESSMENTS

• IS NOT A COMPLIANCE AUDIT SINCE COMPLIANCE REFERS TO ADHERENCE TO LEGAL REGULATION

• COMPARES INTERNAL BEHAVIORS TO INTERNAL GUIDELINES

AN ETHICAL AUDIT: INTRODUCTION• MAY BE WOVEN INTO AN INTERNAL AUDIT PROCESS,

PREFORMED INTERNALLY IN RESPONSE TO CHANGING RISK PROFILES OR MAY BE CONDUCTED BY AN EXTERNAL AUDITOR.

• SHOULD INCLUDE AN EVALUATION OF MANAGERS AND SUPERVISORS PERFORMANCE.

• HOLDS MANAGERS AND SUPERVISORS ACCOUNTABLE FOR EMPLOYEE CONFORMANCE WITH ETHICS (CODE OF CONDUCT).

• INCLUDES A RELATIONAL AUDIT CONSIDERING THOSE WITH WHOM THE ORGANIZATION INTERACTS (CONSUMERS, DONORS, GENERAL PUBLIC, OTHER STAKEHOLDERS)

ETHICAL PRINCIPLES: CODE OF CONDUCT

THE ORGANIZATION AND ITS EMPLOYEES• HELP PEOPLE IN NEED, BASED ON THEIR PREFERENCES AND NEEDS• RESPECT THE INHERENT DIGNITY AND WORTH OF THE PERSON• RECOGNIZE THE CENTRAL IMPORTANCE OF HUMAN RELATIONSHIPS• BEHAVE IN A TRUSTWORTHY MANNER• PRACTICE WITHIN THEIR AREAS OF COMPETENCE AND DEVELOP AND ENHANCE

THEIR PROFESSIONAL EXPERTISE • AVOID SITUATIONS OF CONFLICT OF INTEREST• MAINTAIN PRIVACY AND CONFIDENTIALITY• SHALL NOT ENCOURAGE OR PARTICIPATE IN PHYSICAL INTIMACY WITH CLIENTS• SHALL NOT VIOLATE THE PRINCIPLES OF TITLE VII OF THE CIVIL RIGHTS ACT,

INCLUDING SEXUAL HARASSMENT

ETHICAL PRINCIPLES: CODE OF CONDUCT

THE ORGANIZATION AND ITS EMPLOYEES• SHALL NOT USE DEROGATORY LANGUAGE IN THEIR WRITTEN OR VERBAL

COMMUNICATION• SHALL NOT DUMP CLIENTS• SHALL TREAT COLLEAGUES AND CO-WORKERS WITH RESPECT• SHALL NOT USE THEIR PROFESSIONAL POSITION TO FURTHER THEMSELVES PERSONALLY • SHALL EXPEDIENTLY AND EFFECTIVELY DEAL WITH UNETHICAL, INCOMPETENT, OR

IMPAIRED COLLEAGUES AND CO-WORKERS• SHALL STRIVE TO ACHIEVE, MAINTAIN, AND FURTHER SKILLS TO MEET THE NEEDS OF THE

PERSON SERVED• SHALL NOT PARTICIPATE IN, CONDONE, OR BE ASSOCIATED WITH DISHONESTY,

MISREPRESENTATION, FRAUD, OR DECEIT

ETHICAL PRINCIPLES: CODE OF CONDUCT

THE ORGANIZATION AND ITS EMPLOYEES• SHALL NOT PERMIT PRIVATE CONDUCT TO INTERFERE WITH THEIR ABILITY

TO FULFILL THEIR PROFESSIONAL RESPONSIBILITIES• WILL ACKNOWLEDGE THE WORK OF OTHERS AS MAY BE NECESSARY• REFRAIN FROM ENTERING INTO MULTIPLE RELATIONSHIPS• SHALL NOT EXPLOIT PERSONS OVER WHOM THEY HAVE SUPERVISORY

AUTHORITY OR ARE CONSIDERED A CLIENT• OPERATE WITH INFORMED CONSENT WHENEVER POSSIBLE• ???

AN ETHICAL AUDIT – ON-GOING PROCESSES

• REVIEW ORGANIZATIONAL POLICY & PROCEDURES FOR HANDLING ETHICAL ISSUES, DILEMMAS AND DECISIONS

• IDENTIFY ETHICAL HAZARDS WITHIN THE ORGANIZATION, WITHIN DIVISIONS, WITHIN DEPARTMENTS AND WITHIN PROGRAMS.

• RANK ORDER THOSE HAZARDS. • ESTABLISH MONITORS FOR ON-GOING (NOT REACTIVE)

ASSESSMENT. • USE PERIODIC SPOT-CHECKS TO ASSURE CONFORMANCE. • TAKE CORRECTIVE ACTION AS NECESSARY

AN ETHICAL AUDIT – ANNUAL PROCESSES

• GATHER AND ANALYZE EMPIRICAL TREND DATA THAT SUMMARIZES ACTUAL ETHICAL COMPLAINTS AND LAWSUITS AND VIOLATIONS OF THE CODE OF CONDUCT INTERNAL TO YOUR ORGANIZATION

• GATHER AND ANALYZE INFORMATION AND DATA ABOUT “ETHICAL ISSUES AND TRENDS” IN YOUR FIELD OF BUSINESS.

• REVIEW ORGANIZATIONAL POLICY & PROCEDURES AGAINST INTERNAL AND EXTERNAL DATA.

• TAKE CORRECTIVE ACTION AS NECESSARY.

THE MALEVOLENCE OF UNINTENDED CONSEQUENCES

IN SPITE OF THE ORGANIZATION’S GOOD POLICIES AND PROCEDURES, CREDENTIALED AND/OR EXPERIENCED EMPLOYEES, CODE OF CONDUCT AND BEST PRACTICES EMPHASIS ADVERSE INCIDENCES, ASSET DEVALUATION, INSURANCE CLAIMS AND OTHER LOSSES CONTINUE TO OCCUR.

ARE THE NEGATIVE OUTCOMES AVOIDABLE?

THE MALEVOLENCE OF UNINTENDED CONSEQUENCES

SOURCES OF UNINTENDED CONSEQUENCES

• IGNORANCE• ERROR• IMPERIOUS IMMEDIACY OF INTEREST• BASIC VALUES• SELF-DEFEATING or SELF-FULFILLING PREDICTION• BENIGN NEGLECT• SUPERVISORY NEGLECT/FAILURE TO SUPERVISE

THE MALEVOLENCE OF UNINTENDED CONSEQUENCES

SUPERVISOR ACCOUNTABILITY• CARE, CUSTODY, AND CONTROL

—WELL-BEING OF CONSUMERS• OVERSIGHT

—IMPLEMENT AND OBSERVE SAFETY POLICIES; OVERSEES CARE• SUPERVISION

—ACTIONS OF ITS SUPERVISEES• ASSURES EMPLOYEE COMPETENCY

—HIRE COMPETENT PROFESSIONALS; PROPERLY TRAIN EMPLOYEES

• MAY PROVIDE DIRECT SERVICE

AN ETHICAL DILEMMA EXISTS WHEN THERE IS MORE THAN 1 RIGHT ANSWER

GENERAL DISCUSSIONCASE DISCUSSION

THANK YOU

Brian M. Block, ARM, ARM-PManaging Director

Wolverine Loss Control Services610-390-0388

bblock@bbinslv.com

NEGLIGENCE

1. Scope of Service?

2. Performance of An Ability or Skill?

3. Does the Public Believe You’re The Expert?

4. Did Harm Come To Another Person In Care?

5. Could Anything Have Been Done To Prevent The Harm From Occurring?

…therefore…To What Standard of Care Is Your

Organization Being Held?

TYPES OF LIABILITY

• STRICT LIABILITY – It’s All Your Fault

• VICARIOUS LIABILITY – You Should Have Known What They (S/He) Were Doing

• CONTRIBUATORY LIABILITY – We Both Should Have Known Better