Baking ethics into company culture: learning from recent lapses of others, many organizations are making genuine efforts to create effective cultures of ethics. However, persistent missteps in this process continue to be seen.

• Author: Bauer, Christopher
• Position: ETHICS

Business confidence has plummeted to new lows and large numbers of compliance, legal, finance and risk executives--as many as 90 percent in a recent Deloitte/Compliance Week poll--say they expect fraud activity to remain steady or increase in 2009.

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In this environment, it's no surprise that the subject of "ethics" is frequently in conversations and on the minds of finance executives. And, many organizations are indeed making genuine efforts to develop cultures of ethics. Unfortunately, almost as many of those attempts are failing, compared with those that are succeeding.

To make matters worse, many of those failed efforts are viewed by their creators as rousing successes, and so their inherent weaknesses will never be revealed, let alone reengineered for success.

To learn from the missteps of others in developing a culture of ethics, it's helpful to be aware of the predecessors' most frequent errors and oversights. Here are some of the most frequently seen errors:

"We've Got An Ethics Code. We're Fine"

It's unsettling how many companies believe that simply writing an ethics code is a magical thing. Once written and heralded by senior management, all things ethical will be fine.

Just like other organizational policies and procedures, the existence of an ethics code has no bearing on how well employees are trained in its components; how well it is applied to a firm's day-to-day operations; and how well things are handled if a violation is found.

Ethics need to exist in the fabric of the organization and not just in an employee manual or attestation statement assuring that employees have read and presumably understand the policies.

To complicate this matter, the majority of ethics codes are actually fairly useless documents. An overwhelming majority of them are just poorly disguised codes of conduct, risk-management documents or overly elaborate statements of the obvious (i.e., "please don't lie, cheat, steal or do other bad stuff that will embarrass us and get us into trouble").

A code of conduct can be a tremendously helpful document--but it shouldn't be confused with an ethics code. The former should tell folks what the rules of conduct are, while the latter should also help employees know what to do when there isn't a rule for something.

Still other documents sometimes labeled as ethics codes are actually risk-management documents designed to do nothing more than protect the company from inappropriate employee behavior.

As important as that is, the purpose of an ethics code is to help employees solve problems on the job; risk management documents simply...