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Ethics as a Business ProcessBy Adam Turteltaub, corporate relations executive at LRNIn the 1980s, Ford announced that "Quality is Job 1." It was a profound statement, reflecting a corporate commitment to turning a once subjective measure into a source of product differentiation. It was also part of a wave in business dedicated to making quality not a measurement applied to goods, but a business process integrated into everything from product development and production to sales and marketing. Today, a similar transformation is taking place in the area of ethics, with strategically driven organizations seeking to integrate ethics as a process for business success. But how do you instill ethics as a business process? What are the benefits of doing so? As in the quality movement, there is a strong internal impetus for companies to recognize that doing the right thing generates significant business value. The impact of corporate scandals and missteps arising from failures to foster ethical compliance systems continues to weigh heavily in seeking to evolve the minds of most executives. Forward-looking companies are seeking to evolve business from soft art to hard science as a means to win in the marketplace, improve competitive advantage, achieve higher market valuations, ensure employee retention, foster fruitful partnerships and strengthen customer satisfaction. There are a variety of sources that provide a guide post for companies on this journey-new federal and state laws and regulations, listing rules and trade association recommendations-that place significant emphasis on the effectiveness of corporate culture as key to avoiding scandal, safeguarding corporate reputations and sustaining brand value. Yet to more fully reap the rewards of an ethical culture, companies understand they must have a complete grasp on the people, processes and information necessary to assess the underlying health of the company in an effective and ongoing way. In sum, they are looking at metrics that direct decision making, just as they do in manufacturing, sales and other elements of their business. People, Process and TechnologyThere are three key areas to consider when examining the creation of business processes around ethics: People: An organization must examine and manage the extent which ethical conduct is embedded into the fabric of business thinking and fully understand the ethical risks employees face. PeopleUnderstanding each employee's interactions and risk activities is essential. As John Stoxen, director of business conduct and compliance at 3M, explains, "When looking at our legal and ethical risks, we try to get a strong handle on what each employee does. Does he interact with competitors? Would she be put in a position in which a bribe would seem the only way to get a job done? That understanding enables us to better understand our risk profile, create new processes and put systems in place to significantly reduce that risk."As part of an employee-based risk assessment process, the relative danger of each risk must be weighed. Chicago-based utility company Exelon has developed a program in which managers identify potential risk areas, the likelihood of the risk occurring and the likely damage a failure could pose. The result is a better understanding of both the breadth and depth of the risks it faces. ProcessOnce the failure points have been identified, companies are increasingly using business process models that embrace a roadmap including a continuous loop of "Plan, Do, Improve." The Six Sigma methodology, for instance, defines five fundamental process steps-Define, Measure, Analyze, Improve and Control-to eliminate defects, achieve process improvement, reduce costs and increase profits.The OCEG Framework integrates these and other process models to similarly address compliance and ethics management in a process that first considers organizational culture and then cycles through steps to plan, respond and evaluate program design and operation for continuous improvement. A complimentary methodology has been proposed through the collaborative effort of several world-class companies-The Dow Chemical Company, Johnson & Johnson, Pfizer and Tyco-to integrate ethics, compliance and governance as a business process. It has taken the form of a Define, Prevent, Detect, Respond and Evaluate model to address every process associated with fostering a strong ethical culture. While most companies have traditionally performed key aspects of these fundamental process steps, only recently have many begun to unite these processes in a single, integrated, closed-loop business approach that allows for measurement, benchmarking and continuous improvement. As is the case with most closed-loop business processes, each step has a defined set of activities associated with it, and the data generated from each step informs how companies address subsequent steps and the effectiveness of the process as a whole. TechnologyYet, for the loop to truly be closed, companies need metrics to assess the effectiveness of their efforts. As the evolution of quality management systems have shown, even an integrated process approach has limited business impact when implemented in "siloed" business functions and managed through manual, paper-based methods that make it difficult for managers to see the complete picture.Without a platform to capture, access, manage and extract data, individuals are the gatekeepers of information and knowledge, limiting the ability to assess program status, share best practices, perform benchmark analyses and quickly generate reports for management review. Best practice-oriented companies have found power in technology that automates key pieces of the process to increase process Integrating risk and compliance activities on a common electronic platform enables companies to govern by dashboard and enjoy real-time insight into the organization's health. executive insight into the ethical health of an organization. This approach relies upon technology to consolidate key data and metrics within a centralized command center for use by executives and managers to gain real-time visibility into every activity associated with governance, ethics and compliance management for more informed and faster decision-making in efficiencies, reduce reinvention of key documents and deliverables, improve knowledge sharing and facilitate management insight. Even as integrated approaches to compliance and ethics management have developed, new technologies have been introduced to facilitate such processes by automating and uniting common governance, risk and compliance activities-education programs, policies, helplines, case management and approaches to compliance employee certifications-into one unified platform. These technologies insert new efficiencies and a centralized capability to synthesize data about an organization's governance, risk and compliance issues and implement continuous improvements Governing by DashboardThis has ushered in a new management philosophy, called governing by dashboard, which seeks to enable real-time executive insight into the ethical health of an organization. This approach relies upon technology to consolidate key data and metrics within a centralized command center fir use by executives and managersto gain real-time visibility into every activity associated with governance, ethics and compliance management for more informedand faster decision-making in an effort to mitigate risk, improve process efficiency and correlate data on an enterprise-wide basis.The promise is of real-time views of key data and performance indicators that provide compliance officers, the executive team and boards of directors with vital intelligence on the status of governance and compliance programs and processes to effectively identify problems, drill down to their root causes and take corrective actions. Once that promise is realized, companies will be able to have a truly closed-loop approach, and ethics will truly be "Job 1." Appeared in OCEG
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