Three Ideas on Codes, Policies, and Tech

Ethisphere has published a report looking at common practices in transparency, codes of conduct, and written policies among firms on its 2019 World’s Most Ethical Companies list, and compliance officers may want to give it a read as you ponder how to keep your programs responsive to current challenges.

The report reviews issues such as what examples of misconduct compliance officers share with employees, the technologies firms use for interactive codes of conduct, and even the quality of written compliance policies. It draws on data from the 128 companies that landed on Ethisphere’s WME list this year.

First, to state the obvious: yes, Ethisphere publishes reports like this so more companies will participate in its WME rankings next year. So what? The best practices this report flags are still good thinking, regardless of any commercial motives. Let’s look at three of them.

Delivering More Transparency

First, most WME firms try to be transparent about allegations of misconduct within the enterprise, but those practices vary.

Ethisphere puts its finger on perhaps the most difficult challenge compliance officers face: employee cynicism about the company’s business practices. Too many just don’t believe that a company’s commitment to ethical conduct is serious, and when you lose that battle, a host of other headaches crop up — everything from whistleblowers going outside the company to report misconduct, to employees feeling more emboldened to commit misconduct themselves.

You combat cynicism by building trust. You build trust by showing people how serious you are. Showing, not telling. That means letting employees look at what the compliance function is doing. It means transparency.

Yes, WME companies practice transparency upward, where the CCO briefs the board of directors in executive session about program management and conduct issues. Forty-nine percent do this at least quarterly, another 35 percent do it less often, and only 16 percent never do it.

More important is transparency about the ethics and compliance program downward, to rank-and-file employees (or even third parties). We have mixed news here.

Almost all WME firms (91 percent) do share examples of misconduct with employees to illuminate specific points about corporate compliance. That’s good. On the other hand, only 35 percent give employees a more comprehensive picture of ethics and compliance activity — the volume of reports, types of allegations, how cases were resolved, and so forth. See below.

I’m not sure that’s wise. The more aggregate statistics you share, the more employees can understand the overall amount of compliance activity within the organization, and that’s what defeats cynical attitudes.

When you present only specific examples of misconduct, inevitably some employees will wonder, “What about all the other cases you don’t share with us?” Sharing overall activity, even in aggregate, answers that question.

Better Codes of Conduct

Ethisphere also found WME firms using technology to make their codes of conduct more useful — moving beyond traditional memos or magazine-style layouts “to take advantage of the novel capabilities offered by digital media,” as Ethisphere put it.

Whether in PDF or online e-book form, leading codes now make use of videos, interactive learning aids, and interactive navigation elements. Combined, these features make for an engaging experience that keeps readers’ attention and helps them better understand the guidance in the code.

That is a stellar idea. Digital technologies allow you to transform your code of conduct from a bland list of the rules into a training tool. Interactive codes, where employees can explore at their own pace and see visual examples of written points, are a far better way to learn than reading a manual written in 10-point type.

Yes, the idea of interactive codes isn’t a new idea; companies have been developing code of conduct apps or multimedia codes for several years. This report simply underlines how good the idea is. The sooner compliance officers embrace it, the better.

Ethisphere also noted another trend: codes of conduct are getting shorter.

Overall, the report said, the codes of WME firms have slimmed down from 9,000 words several years ago to roughly 7,000 words today. Codes now stress general principles more often, and then link to other policy documents with more detail.

I call this the Boeing approach. Boeing’s code of conduct is only 341 words in English. It covers seven core ethical principles, all printed neatly on one page, and that’s it. Then employees can read Boeing’s other ethics and compliance policies (which are many) on the company’s website. 

That is a far better approach to inculcating ethical awareness than drafting a code so long it needs its own index. (Looking at you, Walmart.) And with interactive technology so widely available, there’s really no need for long codes of conduct any more, either. (Sure, Boeing itself is not the most shining example of corporate conduct right now, but the point about simplicity in codes of conduct still holds.)

Shifts in Written Policies

Ethisphere reviewed more than 400 policies from its WME firms, and graded them on a 1 to 5 scale across five criteria for completeness, tone, structure, authority, and examples. As you can see below, companies generally scored well — except on examples and learning aids.

That brings me back to the report’s other findings about interactivity in the code of conduct. With today’s technology, there’s no good reason for that learning aids point to score so low.

Ultimately, as ethics and compliance becomes a more important business function in the 2020s, firms will need to meld their training methods into their codes of conduct and other written policies. That’s what makes the lessons about ethical awareness stick, and ethical awareness is what organizations will need in our volatile, highly regulated business landscape.