The "I" in ethics.

No set of rules really works until we make them part of ourselves. Here's an in-depth look at what ethics really means and how associations can effect an ethical makeover.

"So here's the truth about business ethics: There is no such thing as business ethics, only people ethics . . . . Ethics is a subset of morality that exists only among people, not among institutions, not among systems, not among organizations. So the 'code' must be within every employee. If people don't behave ethically, neither can the company.

- James A. Autry, Meredith Corporation chairman of the board, from his book Love and Profit

We tend to point to our nicely framed codes of conduct rather than to ourselves when asked about ethics. We reserve discussions of ethics for big problems - Ethics with a capital "E." But there is an "I" in ethics. To ensure that we consistently act with integrity in an increasingly complex and diverse world, we must develop personal rules of engagement. And we need to recognize that we make ethical decisions every day.

When the Johannesburg-based Institute for Personnel Management-South Africa (IPM-SA) celebrated its 50th anniversary, the group issued a public apology for participating in apartheid. "No, we didn't actively support apartheid," says former executive director Danielle Smith. "But we did nothing to stop it."

Tony Frost, IPM-SA past president, was in attendance for the apology. "Even though I was active in the fight for civil rights in South Africa - and got arrested for it - I personally could have acted more deliberately and consistently to end systemic racism in South Africa. We need to acknowledge our complicity in perpetuating unhealthy systems by our inaction as well as by our misdirected actions."

Most of us won't face situations like that faced by Frost and IPM-SA. But any time we neglect our responsibility to act deliberately in accordance with our beliefs and values, we are acting unethically.

Ethics isn't just something we devise in a strategic planning session and post in our headquarters' buildings. It involves a daily examination of our actions - and inaction - around the multitude of decisions we make, both large and small. Being ethical means that we never abdicate our personal responsibility for outcomes.

To be effective, ethics must be internalized. Leaders of nonprofit organizations must push that process down through all levels of their organizations. To be truly ethical, we must:

1. know our values and consistently commit to them;

2. be willing to stand up for what we believe, especially when it might be personally painful to do so;

3. share our world view with others;

4. ensure that our personal values and organizational values are in synch - and be prepared to act if they are not;

5. develop our own rules of engagement to direct our daily organizational and personal lives; and

6. demand that those around us also act ethically and build an environment that allows them to do so.

Ethics programs alone don't work

More and more organizations have ethics programs, and yet unethical behavior continues.

According to a 1998 survey by the Society for Human Resource Management, Alexandria, Virginia, and the Ethics Resource Center, Washington, D.C., more than half of respondents had observed workplace conduct that violated the law or the organization's standards of ethical business conduct - from lying to supervisors (witnessed by 45 percent) to lying on reports or falsifying records (36 percent).

Nearly half of respondents said they felt pressured by other employees or managers to compromise their organization's standards of ethical business conduct to achieve business objectives. The top five pressures identified were meeting overly aggressive financial or business objectives (50 percent), meeting schedule pressures (38 percent), helping the organization survive (30 percent), rationalizing that others do it (22 percent) and resisting competitive threat (18 percent).

However, more than 20 percent didn't report the misconduct to management. The top reason cited for not doing so was fear of not being considered a team player (96 percent). Others didn't believe managers would take corrective action (59 percent), feared retribution (41 percent), and didn't trust managers to keep reports confidential (38 percent). Yet, isn't it unethical not to report unethical conduct?

Though three quarters of organizations have a written code of ethics, nearly half of workers engaged in unethical and/or illegal acts in the past year, according to a 1997 survey by the Ethics Officer Association, Belmont, Massachusetts, and the American Society of Chartered Life Underwriters and Chartered Financial Consultants, Philadelphia. The most common behaviors reported involved cutting corners on quality (16 percent), covering up accidents (14 percent), abusing or lying about sick days (11 percent), and deceiving customers (9 percent). Some 4 percent of workers reported taking credit for a colleague's idea, and 5 percent lied to or deceived superiors on a serious matter.

More than 56 percent of workers reported pressure to act unethically or illegally on the job, said the survey. Yet at the same time, firms with ethics codes of conduct jumped 13 percent to 73 percent since 1994, while firms with training programs rose 7 percent to 40 percent, according to another recent survey by the Ethics Resource Center, Washington, D.C.

Even as we develop ethics programs for our organizations, ethical misconduct continues. Something is missing.

Beyond rules and platitudes

"Most organizational ethics codes are of two types," says ethics consultant David Thomas, founder of Omaha, Nebraska-based Thomas and Associates. "Either they are 'stay out of jail' codes, or they are statements of an organization's values. The former are legalistic; the latter are platitudinous. Though these latter codes express the proper sentiment, they lack an important level of specificity and invite little if any self-examination," notes Thomas. "They restate values at a level that makes it possible to read them and never be touched by them. We need to go beyond that to another level that forces a greater degree of self-review."

Thomas proposes what he calls "the ethics of choice" (see sidebar, "Building Your Own Rules of Engagement"), which goes beyond legality and platitudes to define in behavioral terms what is and is not ethical and clears the way for considerable self-review and self-examination.

"It is action-oriented," Thomas says, and it focuses on daily choices we make in our workplaces and with others.

Internalizing choices

"Ethics isn't something 'out there,'" echoes Johannesburg-based Frost. "To be ethical is to have fully internalized the values of the organization and to use those as a moral compass for making daily decisions."

Richard Rudman, vice president of policy development for the Institute of Personnel Management-New Zealand, agrees. "Ethics," he says, "is an internal construct rather than an external set of rules. Obeying other people's rules is not an issue of ethical choices; it is simply a matter of compliance, and that applies whether the rules are set by legislatures, association executives, or churches," Rudman notes.

According to Rushworth Kidder, founder and president of the Camden, Maine-based Institute for Global Ethics, "ethics is obedience to the unenforceable.

"Companies that regard ethics as law set up a compliance office that teaches you to skate as close as you possibly can to the ethical edge without falling over," Kidder continues. ASAE Ethics Committee Chair David Noonan believes that "most codes of ethics fail because they don't have a recovery mechanism" when you fall. "Recovery mechanisms are important because we are all human and all make mistakes," Noonan says.

Facing ethical conflicts

"Ethical dilemmas usually boil down to a conflict of interest, perceived or real," notes Bill Banzhaf, executive vice president of the Society of American Foresters, Bethesda, Maryland. Banzhaf has led SAF in identifying, evaluating, and addressing ethics issues for more than 10 years. "In the association world," Banzhaf goes on to specify, "that conflict can arise as we try to balance the needs of our volunteer leaders with those of the organization and the public interest.

"Other conflicts are more industry specific," Banzhaf notes. "In the forestry profession, the conflict might be, do we serve the landowner or the land? The answer, which is difficult for those of us who enjoy the clarity of yes-or-no questions, is that we serve both land and client.

"Is anyone fully ethical? There are always situations you cannot foresee, that your code cannot cover," Banzhaf says. "The most we can do is to act with intention, to be conscious of our actions, and to always ask questions."

For Judi Neal, the meaning of ethics is anything but theoretical. In fact, the concept is clear and very personal. A whistle-blower at a major multinational company, she faced death threats as a consequence of standing up for her beliefs. Now director of the East Haven, Connecticut-based Center for Spirit at Work and editor of the Spirit at Work newsletter, Neal says that ethics means integrity, courage, and authenticity. "Being ethical is being honest, even when it hurts you. It means that you're willing to fight for what's right and you're willing to be vulnerable."

Central to being truly ethical is the capacity to stand firm even when there may be a personal cost. Vaughan Limbrick, director of professional development for APICS, The Educational Society for Resource Management, Falls Church, Virginia, agrees with Neal. "Being ethical means living up to your belief system, even if it costs you. It means keeping certain things sacred and refusing to compromise, such as by keeping confidences and not laughing at racial or ethnic jokes," Limbrick says. "It also means staying rational as an individual when group think comes into play."

Values are at the heart

A mission statement says what you do. A code of ethics states how you do it and is based on personal and organizational values. Robert Haas, chairman and chief executive officer of Levi Strauss & Company, San Francisco, talks about values in a recent Harvard Business Review: "We've learned . . . that the soft stuff and the hard stuff are becoming increasingly intertwined. A company's values - what it stands for, what its people believe in - are crucial to its competitive success. Indeed, values drive the business."

A recent survey by the American Management Association, New York City, reveals that when people's personal values are congruent with their company's values, their personal lives are better and they feel more optimistic about their jobs, as reported by Dennis Jaffe and Cynthia Scott ("How to Link Personal Values with Team Values," Training & Development, March 1998).

Values are organizing principles for our lives. Consider the following processes for exploring them.

Ask yourself: What are my core values, and where did I learn them?

Most of us learn our personal values from family members. Hearing as a child, "If you're going to do something, do it right," "patience is a virtue," or "honesty is the best policy," is among the ways we acquire personal values.

The Los Angeles-based consulting firm Gardenswartz and Rowe suggests the following exercise to identify your values: Draw six circles and in each one list one source of your values (mother, teacher, church, and so forth). Then write the most important rules and values you learned from each of those sources. How do these values compare with those of others in your organization? You might find great values similarity, even among disparate groups of employees and members. Do any of these values ever come in conflict with one another? When there is a conflict, what influences your choices? How do your core values affect your behavior?

What is my teachable point of view? Business analyst and writer Noel Tichy asserts that great leaders have an articulated world view that is concise, memorable, and teachable to others. Limbrick reminds us that to be ethical, we must know our own values. "You can't have integrity if you can't articulate your world view," she says.

Ask yourself:

* Do the people in my organization know what I stand for?

* How can my employees and members tell that I'm ethical?

* Do others around me know that these are my core values?

* Do my actions reflect my core values?

What are my organization's core values? If you can't answer this question without looking in a board book or policy manual, you're not truly living the values of your organization. Like personal values, these should be intentional, conscious, teachable, and actionable. If you are exploring employment with another association, ask about their core values to ensure that they fit with your own.

The ethical organization's systems also reflect its core values. Jaffe and Scott report that "one company placed value on teamwork, but rewarded managers for individual results." Review your values and policy statements to be sure they complement, not contradict, one another. For instance, do you value diversity but have inflexible human resources policies?

Jaffe and Scott recommend a four-step process to articulate the organization's values:

1. Define personal values: Articulate your own personal values and determine which are most important.

2. Share values with the team: Understand others by learning about their key personal values.

3. Create a team values credo: Define values on how to work together. 4. Create a charter of team values: Translate values into behavior.

Thomas's "rules of engagement" can serve as a model for the creation of an organizational ethics code that incorporates personal and organizational commitment to values.

The return on investment

Focusing on a personal ethics of responsibility and values, says Thomas, will result in

* increased awareness of what influences personal and organizational growth;

* increased willpower to overcome inertia and act in accordance with the organization's mission as well as your own; and

* increased ability to imagine and create solutions.

The Japanese define ethics as "human logic," the logic by which we become human, Thomas says. Like Tony Frost and the Institute of Personnel Management-South Africa, we become more fully human and effective by developing personal rules of engagement, consistently living authentic and values-driven lives, risking personal pain to do so, and recognizing that not only is there an "I" in ethics, but also in innovation, opportunity, responsibility, and integrity.

RELATED ARTICLE: Does It Click?

Being ethical is about constantly making decisions, both large and small. When faced with a tough decision, use the Click Model, developed for Florida Power Corporation by Lee Gardenswartz, Anita Rowe, and Patricia Digh:

Consequence: What are the consequences if I do this? Who will benefit? Who will suffer?

Legal: Is it legal?

Image: Would I like to see this on the front page of the newspaper? Would I like to tell this to my kids?

Culture: Does this decision support or damage our organization's culture and values?

Knot: Does doing it cause a knot in my stomach?

RELATED ARTICLE: Building Your Own Rules of Engagement

David L. Thomas has developed "The Ethics of Choice," a set of 12 ethics that provide behavior-based rules of engagement to internalize and live by in our organizational lives. Consider how this excerpt applies to you.

Ethic #1: The organizational ethic. Definition: It is ethical to serve, refine, and advance the organization you have chosen to join. It is unethical to harm it.

1. It is ethical to learn everything you can about the organization of which you are a part (its structure, function, overall purpose, rules, parts, how they are connected, their function, the organization's history, its progress and status). It is unethical to remain organizationally ignorant.

2. It is ethical to learn about the needs of those served by your organization (i.e., who they are and what they value) and, as well, about the needs of those within the organization served by your division. It is unethical to remain ignorant of the needs of those you serve (your customers, consumers, clients, students, etc.).

3. It is ethical to perform your job accurately, efficiently, and pleasantly. It is unethical not to do your job to the best of your ability.

4. It is ethical to speak fairly and honestly or not at all of organizational members; to say about them only what you would say to them. The same applies to the organization as a whole. It is unethical to engage in malicious gossip, ridicule, or derisive humor.

5. It is ethical to follow the rules. It is unethical willfully and knowingly to break the rules or to remain ignorant of them.

6. It is ethical to seek the correction, modification, and/or revision of rules, procedures, and practices that are inconsistent with the overall purpose and stated values of the organization. It is unethical to accept - without attempting to correct - organizational practices that harm the ability of the organization to accomplish its purpose.

7. It is ethical to create organizational improvements that increase revenue, decrease costs, or enhance the organization's culture. It is unethical not to help the organization evolve.

8. It is ethical to leave an organization whose purpose and values conflict with your own. It is unethical to remain in an organization that asks you to violate your values or personal code of ethics.

From "The Ethics of Choice," by David L. Thomas, [e-mail]. Excerpted with permission, copyright David L. Thomas, Omaha, Nebraska, 1997.

RELATED ARTICLE: Values and Culture

The American Association of State Colleges and Universities, Washington, D.C., has articulated the values, actions, and goals they believe should characterize AASCU. They include:

* We direct our efforts first to those who serve our members.

* We value openness in communication, regardless of the topic.

* Our guide is honesty at all times and in all circumstances.

* We expect the best and we deliver the best.

* We promote societal progress and advocate values that serve that end.

* We celebrate the worth, value, and dignity of all persons in our organization and those with whom we work.

* We target our efforts to those who make a difference.

* We allocate and use resources wisely.

* We do the fight things right the first time. We learn from our mistakes.

* We encourage and value calculated risk behavior and recognize that we can't move forward without it.

* We value new ideas.

RELATED ARTICLE: Read This

* Confessions of an Accidental Businessman, by James A. Autry (Berett-Koehler Publishers), is for leaders who seek to integrate values and lessons from the whole of their life experience in the creation of innovative, productive organizations. Autry emphasizes the importance of learning how to be and not just what to do.

* Ethical Dimensions of Diversity, by Willie E. Hopkins (Sage Publications), takes an in-depth look at the relationship between the many kinds of diversity - including cultural, racial, and ethnic - and the ways they affect decision-making within organizations.

* Good Intentions Aside: A Manager's Guide to Resolving Ethical Problems, by Laura L. Nash (Harvard Business School Press, 1990).

* How Good People Make Tough Choices: Resolving the Dilemmas of Ethical Living, by Rushworth M. Kidder (Simon and Schuster, 1995).

* "What's the Matter with Business Ethics?" by Andrew Stark, Harvard Business Review (May-June 1993), pp. 38-48.

On the Web

* Association for Practical and Professional Ethics - php.ucs.indiana.edu/~appe/home.html

* Business Ethics Magazine - condor.depaul.edu/ethics/bizethics.html

* Center for Business Ethics - www.bentley.edu/resource/cbe

* Corporate Conduct Quarterly - www.singerpubs.com/ethikos

* Ethics Officer Association - www.eoa.org

* Ethics Resource Center - www.ethics.org

* Ethics Updates - ethics.acusd.edu/index.html

* Inc. Magazine has launched a new column called "Black and White" on business ethics - www.inc.com/incmagazine/archives/01980311.html

* Institute for Business and Professional Ethics - www.depaul.edu/ethics

* International Business Ethics Institute - www.business-ethics.org

* Society for Business Ethics - www.luc.edu/depts/business/sbe/index.htm

Patricia Digh is principal of RealWork, Washington, D.C. Global Leadership Literacies, co-authored with Robert Rosen, will be published in early 1999 by Simon and Schuster. E-mail: [e-mail].