Tone At The Top Matters When It Comes To Policing Ethics

Pat Harned, CEO of the Ethics and Compliance Initiative (ECI), has a doctorate in character.

Harned earned a doctorate in philosophy education from the University of Pittsburgh, but specifically she learned how people develop character and influence organizations. This makes her an ideal fit for her current role at ECI, which serves as a membership organization for ethics and compliance practitioners, while also conducting research on corporate ethics trends and offering certifications for ethics programs.

Harned and ECI works with CEOs and corporations to ensure they are implementing an ethics and compliance program and that the company is staying on top of ethics violations. In the era of sexual harassment, data security and privacy, and more, trends in corporate social responsibility are a crucial area for CEOs. She spoke with Chief Executive for a wide-ranging interview about ECI’s business ethics survey, trends in ethics and more. Below are excerpts from this interview.

How did you get to your role currently as the CEO of the Ethics and Compliance Initiative?

I first came to this organization almost 20 years ago. And my background is in education. I have a PhD in character development, essentially how people develop character and the influence of organizations on them. And I came to our center to help create a character development program for schools. So we, the organization wanted to get into the business of writing curriculum to help teachers teach character in the classroom. But I wasn’t here very long before I started to get involved in the research work we were doing, which has been primarily focused on the global business ethics survey, which I’m sure we’ll talk about.

“if they’re not regularly committing to talking about the importance of ethics, if they’re not taking steps to model the kind of conduct that they expect others to adopt, they need to start..”

Over time, I got much more involved in the corporate work that we were doing, mostly because there was not a lot of difference between what you try to do in a classroom and what you’re trying to do in a workplace in terms of just influencing and encouraging the right kind of conduct. So over time, I rose up in leadership and then we had our then president left the organization and I stepped into an acting role, and then it became permanent. So it wasn’t ever really my career plan. But then again, I think for most people, they end up in jobs that they probably never expected to be in. So yeah, that’s how it happened.

 So talk to me a little bit about the Ethics and Compliance Initiative and talk about what you guys do for the readers who might not know what an organization like you would focus on.

What we essentially do is really three primary things. We do research to try to help businesses and other organizational leaders understand what are the drivers of ethical conduct in their organizations. We look at trends, what are the big issues that people are seeing in the workplace, and we do a lot of studies around the things that businesses do that actually are productive in creating an ethical culture. And then based on that research, we consult with organizations if they ask for us to fill similar surveys internally so that they can just gauge how they’re doing against the benchmarks that we’ve collected.

The second big thing that we do is we are a membership organization for ethics and compliance practitioners. As you probably know, most organizations these days, especially if they are publicly traded or doing governmental work or global organizations, they have [people who work on] ethics and compliance functions. So we host events and do professional development for those folks, just to help them improve their practice.

We also provide certification of practitioners, who are interested in demonstrating that they have the knowledge base to build and sustain what we call a high-quality ethics and compliance program.

Let’s talk about that global business ethics survey. What were some of the major findings, the major issues that we’re seeing in the business world today with culture? As you stated at the beginning, it’s obviously kind of a hot topic these days. So what are some of the big things to take away?

It is a hot topic. Sadly, I think we’ll never reach a place where there’s not a need for a nonprofit in the ethics and compliance world, in the ethics and compliance space. Our global business ethics survey this year is the first year we’re doing this, but we are releasing a report every quarter.

And so, it was a good news, even worse news story. We’ve been doing this study since 1994, and we were glad to see that the extent to which employees are observing what they consider to be misconduct, whether it’s a violation of their company code or a violation of the law, has declined. It’s almost at the lowest levels we’ve seen since we started doing the study. The other very good indicator that we saw was that employees are more willing and have been more willing to report misconduct when they’ve observed it.

So when we talk with business leaders, very often, we say, you can’t prevent misconduct from happening in your workplace. As long as you’re hiring people, you will have misconduct but what really matters is, when people observe it, are they going to tell management about it so that they can step in and intervene. And the fact that misconduct is at its low, close to its lowest but reporting has reached a historic high is a very good sign.

Did anything that really kind of popped out that made you think, “Wow, I really didn’t think that was the case. But apparently, it is”?

Well, there were two things that were surprising and yet disappointing. You know, we’ve often seen that when reporting rises in an individual organization, or on a broader level, when reporting rises, retaliation also rises. So we knew that if reporting was going to be at an all-time high, retaliation probably would be as well, but they tend to rise and fall in tandem. And what we saw this time was that, while reporting rose, retaliation rose much higher. It doubled since the last time that we feel did the survey. And that was very surprising and very troubling because retaliation is often a leading indicator of culture issues ahead for an organization.

The second thing that we saw that was surprising and also disappointing is that you would think, and in this environment where on the heels of pretty much every major corporate scandal that happens, later you hear a word that there was a culture problem. People couldn’t raise concerns. There was tremendous pressure. And you would think that, because of that, there would be more of an emphasis on culture, more efforts to strengthen cultures in businesses across the country, and we’ve not seen that. So if anything, the extent to which people are saying that they work in strong ethical cultures hasn’t changed. And we would have hoped that that would be on the increase, because the stronger your culture, the less likely it is that your company will experience problems.

What’s the CEO’s role in curbing some of these issues?

Well, one of the phrases that gets said in our industry, and I’m sure in a lot of industries is “tone at the top matters.” In fact, one of the things that our research has shown is that there are two drivers of culture in an organization. The first comes from the CEO and the C-Suite. The tone that they set, there are expectations that this will be a company with a high standard of integrity. The second major driver is immediate supervisors, managers who on a day to day basis, carry out that expectation. So I think the first thing that CEOs need to know is that they have an a very large influence on whether or not the standards of the organization are going to be taken seriously. So if they’re not regularly committing to talking about the importance of ethics, if they’re not taking steps to model the kind of conduct that they expect others to adopt, they need to start.

The second thing, I think, is for them to make sure that they have given the resources that are necessary for the organization to create a high-quality ethics and compliance program. And there are a lot of indicators of what that looks like. In fact, we can give you a report that is our framework of what some of those objectives are, and the principles that are behind it. But it’s really the CEO that has to be the champion of that making sure that leaders understand they have a role in it, they should be making sure that their chief ethics and compliance officer reports to them directly and also to the board. But then, they also need to make sure that they are holding people accountable for their responsibility in assessing and mitigating risk and driving a strong culture.

Read more: Fast Growth is No Excuse For a Flawed Corporate Culture