ETHICS REPORTING SYSTEMS
Chapter Eight
Copyright © 2012 John Wiley & Sons
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Chapter 8
Learning Objectives
Understand why some employees do not report ethical misconduct
Describe how to engage employees in discussing ethical misconduct
Administer an internal reporting system for ethical issues
Create an Ethics and Compliance Officer and ombudsperson position
Manage an assist line to receive employee complaints by telephone or Internet
Describe the negative outcomes whistle-blowing has on both the whistle-blower and the organization
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Employee Silence on Ethical Misconduct
Exhibit 8.1 highlights how often an observed ethical misconduct that benefited the organization or an employee is unreported
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Employee Silence on Ethical Misconduct
Why don’t employees intervene whenColleagues and managers ethically
misbehave?
Why don’t employees at least inform theperson’s superior?
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Employee Silence on Ethical Misconduct
Insert Exhibit 8.2
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Ethically Approachable Managers
The best ethics reporting system is a manager who welcomes ethical discussions with employees
Employees are more likely to discuss an ethical concern with a manager if these types of discussions occur on a regular basis rather than only during dire circumstances
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Ethically Approachable Managers
Becoming an “approachable” manager is an important managerial skill for helping employees overcome fears about discussing any workplace problem
Approachability also means having frequent interactions with subordinates
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Ethics & Compliance Officer
The Federal Sentencing Guidelines provide a judicial incentive for assigning a high-level employee the responsibility of managing ethical performance
A growing number of organizations assign this responsibility to an Ethics & Compliance Officer
The position enables sensitive information to be shared without being diluted or stymied by the chain of command
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Ethics & Compliance Officer
Insert Tips and Techniques Ethics & Compliance Officer Attributes
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Ethics & Compliance Officer
Insert Exhibit 8.3
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Ethics & Compliance Officer
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Ombudsperson
By providing employees with an institutional voice, the ombudsperson serves as a deterrent against managerial abuse of power
An ombudsperson is held legally accountable to a professional Code of Ethics
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Ombudsperson
The International Ombudsman Association’s Codeof Ethics highlights four ethical principles andcorresponding policies1.Independence: The ombudsperson is independent
in structure, function, and appearance to the highest degree possible within the organization
2.Neutrality and impartiality: The ombudsperson remains unaligned and impartial and does not engage in any situation that could create a conflict of interest
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Ombudsperson
3. Confidentiality: The ombudsperson holds all communication in strict confidence and does not disclose confidential communications unless given permission to do so. The only exception to this privilege of confidentiality is when there is an imminent risk of serious harm
4. Informality: The ombudsperson does not participate in any formal adjudicative or administrative procedure related to concerns brought to his or her attention
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Chaplains
Chaplains are members of a religious clergy trained in providing spiritual advice
Corporate Chaplains originally provided care for employees and their families
Over time, their list of services expanded to include helping employees manage ethical dilemmas and interactions with other employees
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Assist Lines
Types of InquiriesMany organizations now refer to this
communication channel as an assist line rather than an ethics hotline
The phrase “ethics hotline” makes it seem as though the employee is snitching
“Assist” more accurately describes most of the calls that are received
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Assist Lines
Assist lines are a method of obtaining information about situations that may be unethical or illegal
Nearly all Fortune 500 companies provide toll-free assist lines for employees from all over the world to share their concerns
Small organizations can contract out to an assist line managed by a third party
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Assist Lines
Effective Assist LinesAssist line success requires honoring
confidentiality at all times
Assist lines can be designed to uniquely address professional issues or to ensure that assist line contractors adequately address specific concerns
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Assist Lines
How an Assist Line WorksEthicsPoint—an employee anonymously
contacts EthicsPoint by email or telephone and receives a confidential case identification number
Employees comfortable with the system can provide their names, but this is not required
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Assist Lines
The response system is scripted to gather as much information as possible from an anonymous employee
The information is categorized based on the type of issue and operations area and then routed to the appropriate manager at the employee’s organization
The manager who receives the information responds to the EthicsPoint system using the case identification number
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Whistle-blowing
When to Blow the WhistleBegin by consulting with an attorney. Legal
advisors recommend that the following four conditions be met before an employee informs an external authority:
1.Serious harm is involved2.The whistle-blower has already expressed his or
her concerns to an immediate superior3.The whistle-blower has exhausted other
communication channels within the organization4.The whistle-blower has convincing, documented
evidence
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Whistle-blowing
The False Claims Act was initially passed in 1863 during the Civil War to prevent defense contractors from fraudulently selling Union Army rifles, ammunition, and horses
President Ronald Reagan’s administration strengthened the Act in 1986
An employee who independently sues his or her employer for fraud can now receive between 15 and 30 percent of the total recovery amount plus attorney fees and related costs for successful lawsuits
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Whistle-blowing
Insert Exhibit 8.5
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Whistle-blowing
Reporting Tax FraudThe IRS created a Whistleblower Office to
receive information about possible individual or corporate tax frauds
The IRS Whistleblower Office modeled a Whistleblower Reward Program after the False Claims Act, paying whistle-blowers 15 to 30 percent of the unpaid taxes recovered
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Whistle-blowing
Insert Exhibit 8.6
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Whistle-blowing
Sarbanes-Oxley Act of 2002 (SOX)According to SOX, no publicly traded
company or subcontractor of that company can discharge, demote, suspend, threaten, harass, or in any other manner discriminate against a whistle-blower
It also establishes criminal penalties for retaliation against whistle-blowers of fines and imprisonment up to 10 years
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Whistle-blowing
Negative Outcomes for Whistle-blowersResearchers report that soon after blowing
the whistle, many whistle-blowers experience1. Negative performance evaluations2. Undesired job transfers3. Demotions 4. Criticism or avoidance by coworkers5. Physical, psychological, and family problems6. Loss of job or forced retirement7. Blacklisting impeding employment8. Protracted legal battles waged at personal expense
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