Month: January 2018

“Moral as well as legal obligations will be fulfilled openly, promptly, and in a manner which will reflect pride on the Company’s name.”

These words form the basis of a very fine code of conduct. Unfortunately, this code did not prevent Enron’s problems when it finally collapsed upon itself. So legislators passed Sarbanes-Oxley to fix the problem. The problem still grew resulting in almost the collapse of the financial system in 2008. The more regulations you pass to address the problem seem to magnify the next series of problems.

Various professional organizations provide for very comprehensive codes of conduct. Some groups expanded their codes to now include such things as principles for diversity. Just about everyone agrees that these constitute fine statements for people to aspire. Some disagree that they should not be forced to sign such principles. Others disagree that the principles do not go far enough.

If anyone needs to be reminded to simply act as a decent human being, then yes, the codes do not go far enough. But do fine statements actually work? Do people needing to change their behaviours actually change their behaviours based on something written down on a website, PDF, piece of paper, scroll or basalt? The last refers to the Code of Hammurabi of eye for an eye fame which we saw in the Louvre. A replica would make a fine reminder in any office lobby of the possibility of retribution for nefarious acts.

The various societies of Professional Biologists developed a pithy one page Code of ethics outlining responsibilities to the public, employer or client and within the profession. Membership requires adherence to the various codes listed, but these societies do not appear to govern the ability to practice as a biologist. You become a biologist when someone else calls you a biologist. I am not aware of any society that handles complaints, even if there were any. The biologists in breach rarely get into the paper.

The code of ethics for engineers begins to look more like a brochure. The code requires the highest standards of honesty and integrity. Engineers are expected to perform under a standard of professional behaviours that requires adherence to the highest principles of ethical conduct. Over the past four years the Ontario society may have averaged 6 complaints per year. They seem to be doing relatively well ethics wise.

We begin to enter a serious stage with the Code of Ethics for Professional Accountants. At 114 pages, the code does go into greater detail as to how one should serve not only the client but the greater public interest. The fundamental principles include integrity, objectivity, professional competence, confidentiality and professional behaviours.  The Ontario CPA decisions list over 600 case over the past 30 years. Interesting, and perhaps indicative of accounting behaviour, the cases are listed by rule infraction instead of by year. The discipline journal of cases resembles a tax code.

The various law societies also come in around 113 pages, but have expanded this with some useful commentary and handy indexes found in the back and something that is not found in other codes of conduct, namely definitions. These are found at the beginning of each section. The essence of the code holds out integrity, competence, quality of service, confidentially and conflicts as some of the main pillars. In Ontario there appears to be a steady increase of complaints since in 2008 there were 132 decisions and 199 decisions in 2017. An almost 50% increase over a decade.

For comparison purposes, we might look at the Canadian Curling association’s Code of Ethics of 6 bullet points and Fair Play of 5 bullet points which would easily fit on a beer label. This would at least keep it top of mind. Infractions never seem to make the paper unless it occurs at some national level. To avoid the most common infraction, some rinks use a detector if a curling stone is released after crossing the hog line.

So, more regulation does not appear to be solving ethical infractions. An argument could be made that the problem would have been worse, but it’s always hard to prove how many icebergs you really did miss. People only remember the one you didn’t miss.

What appears to be missing from the paper code of conduct solutions would be an ethical culture and an overall ethical program. An ethical culture must originate from management. The various governing societies can help visualize what the tone should sound like, but management must be the one singing it. An ethical program requires more than just a well-defined code of conduct. You also need guidance, a system for obtaining advice and ethical training.

Some of this necessary infrastructure appears to be lacking in a number of governing societies. Compulsory Professional Development can cover some ethical training, but 1 ½ hours of required training a year may be far too low to effect meaningful change. Even a day a year would be insufficient to change some groups reticent to let go of old paradigms.

A system should also be put in place to ensure others can ask questions if necessary. The most effective way to impact change would be to add sufficient transparency to what is occurring prior to any problems arising. Attempting to resolve an issue is far more difficult than trying to prevent the problem from arising in the first place. Reporting of problems after they have occurred can be problematic as people can be reluctant to report issues for fear of direct or far more likely, indirect reprisals.

Studies have shown that people act more honestly and ethically if they perceive that they are being watched. For example, people are far more inclined to contribute towards the coffee fund if a poster containing a pair of eyes is set up on the wall. The same effect could be had by filling in reports on levels of diversity or other steps taken by firm to minimize or otherwise address ethical issues.

Adding a reporting requirement may increase regulatory requirement, but this is actually different from simply adding another page to the code of conduct that may have no effect. Adding a process that increases transparency could have a beneficial impact on changing the corporate culture and address other systemic society issues.  Making small process changes can nudge various organizations and the people within them to make better ethical choices.

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