Attention to ethics in the workplace and the demand for ethics and compliance regulations gained momentum as a result of several highly publicized corporate accounting scandals that occurred in the early 2000s, most notably those involving Enron, Tyco and WorldCom. In the wake of these financial debacles, public outcry demanded that the federal government step in and take strong, swift action to prevent these corporate improprieties from occurring again. This led to the enactment of Sarbanes-Oxley (SOX), federal legislation that set forth a host of new standards for corporate accountability regarding financial practices of publicly held companies, as well as penalties for non-compliance.
Another important piece of ethics-related legislation is the Dodd-Frank Wall Street Reform and Consumer Protection Act. Passed by Congress in 2010 in response to the financial misconduct that played a contributing role in the economic recession of 2007-2009, Dodd-Frank includes a number of components intended to encourage employees to report wrongdoing and protect reporters against retaliation.
Other examples of significant legislation that impacting ethical conduct in the workplace include:
- Securities Act (1933) and Securities and Exchange Act (1934): These laws were instituted following the 1929 stock market crash and stipulate various disclosures regarding securities trading.
- Foreign Corrupt Practices Act (FCPA, 1977): Includes anti-bribery provisions pertaining to the making of unlawful payments to foreign government officials.
- Health Insurance Portability and Accountability Act (HIPAA, 1996): Originally designed to enable workers to maintain their health insurance coverage for a period of time when leaving or losing a job, HIPAA also contains a provision (Title II) that 5 requires healthcare organizations to comply with stringent standards for securing electronic access to private health information (PHI) and other privacy regulations.
Specific Ethical Concerns
While fraud understandably receives much of the focus in terms of ethical breaches, there are a number of other ethical issues that are of concern to organizations these days. Examples include:
- Financial irregularities: Inadequate accounting controls, audit issues, billing errors or violations
- Bribery: In today’s global business climate where many organizations engage in business in foreign countries, there is a heightened concern about bribery and other potential FCPA violations.
- Privacy and security issues: The use of electronic recordkeeping systems creates concerns about identity theft and other data breaches that violate customer confidentiality and expose their personal information. Healthcare providers in particular face the risk of staff members inadvertently releasing PHI, which jeopardizes HIPAA compliance.
- Workplace safety: Employers that do not do everything possible to create a safe workplace environment could place their employees in harm’s way and also be found in violation of Occupational Safety and Health Administration (OSHA) laws.
- Ethics and compliance: Ethics and compliance issues include code of conduct violations, conflicts of interest and criminal misconduct such as theft, vandalism and sabotage, as well as potential violations of SOX or Dodd-Frank.
- Human resources issues: HR professionals must address a litany of ethics-related issues on a daily basis such as:
- Drug and alcohol abuse
- Misconduct
- Insubordination
- Discrimination
- Harassment
- Aggressive behavior
- Hostile work environments
- Abuse of authority
- Retaliation
- Time theft and attendance policy violations
Example of a Hotline Reporting Plan: Photo Credits CBS8.com
In an effort to combat unethical practices and detect them in the early stages, many organizations now encourage the reporting of inappropriate behavior as soon as it occurs. An effective and reliable reporting method used by organizations of all types is an anonymous reporting and whistle blower hotline. A reporting hotline is a method of communication that allows employees who witness unethical activities to report them in a confidential manner. In addition to financial improprieties, unethical activities can include sexual harassment, discriminatory practices, intimidation and conflict of interest to name just a few.
How can we help?
360factors, Inc. helps companies improve business performance by reducing risk and ensuring compliance. Predict360, its flagship software product, vertically integrates all risk, compliance and operational functions allowing companies of all sizes to successfully utilize its 30-day free trial of anonymous hotline reporting and whistle-blower software and manage regulations and requirements, policies and procedures, risks and controls, audit and inspections, and on-line training and qualifications, in a single cloud-based platform.
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