By Marilyn B. Hollar, CRM, ARM
A look at the importance of developing
an ethics program for your firm
Ethical behavior and integrity are vital for maintaining the trust that is the basis for all successful business relationships.
"The very exercise of developing a code is in itself worthwhile; it forces a large number of people to think through, in a fresh way, their mission and the important obligations they, as a group and as individuals, have with respect to society as a whole."
--Richard T. DeGeorge in Military Ethics: A Code of Ethics for Officers.
Why have a code of ethics for risk management? Some reasons might be to define acceptable behaviors, to establish a framework of professional behavior and responsibility, to integrate ethical guidelines into decision making, and to establish mechanisms for resolving ethical dilemmas. But perhaps most important, ethical behavior and integrity are vital for maintaining the trust that is the basis for all successful business relationships.
Ethical problems usually stem from two human qualities: ignorance and greed. Lapses in ethical behavior caused by greed are easy to recognize--kickbacks, padding the expense account, or stealing either time or materials from an employer. Lapses in ethical behavior caused by ignorance are harder to recognize. They are usually associated with what appear to be conflicts of interest, such as accepting large gifts from vendors, failing to report significant risks to the underwriter unless you are specifically asked, or performing claims administration while another arm of the agency performs a claims review.
While these three situations might be perfectly innocent and above board, they could also be construed the opposite way. For instance, accepting a large gift from a vendor may have no bearing on whether that vendor gets a contract; but if the vendor is awarded the contract, there is uncertainty as to whether the large gift was the reason. Consequently, a conflict of interest exists. Students of ethical behavior agree that if any degree of conflict of interest exists, that person should not be making the decision. The person getting the large gift should not be the one who decides to whom the contract is awarded. As can be seen, greed could also be the reason for a change in ethical behavior in all of these situations; the intent of the action determines whether the cause is driven by ignorance or greed.
How can we manage ethics in the workplace? Managing ethics in the workplace is an ongoing process. Ethics programs may seem more process-oriented than most management practices because the program produces a lot of deliverables--codes, policies, procedures, meeting minutes, authorization forms, newsletters, etc. However, the more important aspects of an ethics program are the reflection and dialogue that produce these deliverables.
The bottom line of an ethics program is to bring about preferred behaviors in the workplace. The best of ethical values and intentions might be regarded as relatively meaningless unless they generate fair and just behaviors. The actions that generate lists of values or codes of ethics are most effective when they also generate policies, procedures, and training that translate those values into appropriate behavior.
When an organization integrates ethics management into other management practices, that organization has laid the groundwork for handling future ethical dilemmas. Ethical decisions should be made by groups and the decisions from those groups should be made public as appropriate. It is also reasonable to realize that some unethical behavior, whether from ignorance or greed, is unavoidable, but having ethics programs in place reduces the frequency of such behavior.
Having some basic underlying ethical principles that describe the beliefs and values of the company or agency can guide behavior in the absence of any rules or codes. These should be developed, communicated, supported, and practiced by senior management, and form the foundation for the code of ethics. They can be incorporated into the company's mission statement as well as the policy and procedures manual. If properly developed and stated, the principles can act as an informal code until one is developed. Some basic examples of underlying principles are:
* To know, understand, and follow the law at all times
* To treat clients, coworkers, vendors, employees and suppliers as you would have them treat you--with dignity, fairness, and honesty
* To do what you promise and follow through on all commitments
* To do no intentional harm.
There are some business ethicists who believe that a code of ethics itself is not influential in managing ethics in the workplace. Usually, they explain, too much focus is put on the codes themselves. Employees may react to codes with suspicion, believing that the codes are window dressing. But many other ethicists note that--as stated earlier--it is the developing and continuing dialogue around the code that provides long-lasting benefits. When managing complex issues, especially in a crisis, having a code is crucial. More important, having developed a code is critical.
People depend on us in the risk management and insurance industries to protect their future. We must continually act with the highest ethical standards to keep their trust. *
The author
Marilyn B. Hollar, CRM, ARM, is academic director of Certified Risk Managers International (CRM) and received her B.A. degree from Texas A&M University. She has been in the risk management field more than 12 years. For more information on the CRM program, call (800) 633-2165 or go to www.TheNationalAlliance.com.