Developing an ethics program

¶ … Ethics Program for Nonprofit Organizational Consultants

Appropriate standards and procedures section for a code of ethics.

Because of the potential for conflicts of interest and the requirement to use government funds appropriately, there is need for a unified set of ethical standards for consultants advising nonprofit organizations (NPOs) today (Kelly, 1998). Moreover, Smith and Richmond (2007) emphasize that, "There is concern that nonprofit organizations do not use charitable dollars as efficiently as possible to advance their charitable mission. This potential lack of efficient flow of funds contributes to the need to examine accountability within nonprofit governance" (p. 75). Besides helping nonprofit organizations use their resources more effectively, a code of ethics can help these organizations avoid missteps and mistakes that can adversely affect their credibility (Smith & Richmond, 2007). According to these authorities, "Competitive advantage is supplied when nonprofit organizations disclose their ethics codes. Oversight agencies, such as the Better Business Bureau (BBB) Wise Giving Alliance, evaluate and compare organizations on numerous measures of performance and accountability" (Smith & Richmond, 2007, p. 76). Although every NPO is unique in some fashion, some of the general issues that should be included in the standards section for such a code of ethics for an NPO consultancy include what types of consultation services are acceptable and advisable for nonprofit organizations to pay for using government-provided funds and which individuals within the NPO should be responsible for the decision-making process used to make this determination. For this purpose, this firm's general ethical standards are as follows:

Harassment.

The NPO consultancy will foster a work environment free of harassment of any type.

Discrimination.

The NPO consultancy will comply will all relevant federal, state and local laws and regulations concerning discrimination.

Confidentiality

Recognizing the special trust that is placed on nonprofit organizations, the NPO consultancy will ensure the confidentiality of all transactions with its clients.

Employee relations.

The NPO consultancy will ensure that employee grievances are processed in a timely and fair fashion, and that all personnel receive equitable opportunities for advancement, pay increases and training based on a standardized performance appraisal system.

Client relations.

The NPO will maintain the strictest levels of professionalism, courtesy and confidentiality in its dealings will its clients.

The contents of the procedures section for such a code of ethics would also focus on how to administer these foregoing issues effectively and what steps should be taken when inappropriate or unlawful activity is identified as described below.

B.

Plan for an appropriate ethics training program.

In order to ensure that all of the factors that should be taken into account in formulating an ethics training program for the NPO consultancy, Smith and Richmond (2007) recommend that all employees be included in the planning process. This approach is also consistent with the guidance provided by Myers (2003) who reports, "The best way to draft a code of ethics all employees will follow is to bring together a multidisciplinary team from all parts of the organization. Employees must then be trained in what the code means using real-life dilemmas they might encounter on the job. To help guide the planning process for developing an appropriate ethics training program, Sims (1999) recommends that any ethics training programs should be evaluated using the following four criteria, reactions, learning, behavior, and results as follows:

1. It is useful to examine individuals' reactions to the content and delivery of the ethics training. If individuals see the training as irrelevant or contrary to the norms of the organization, it is unlikely that the training will change their behavior.

2. Individuals' learning might be tested. If individuals never learn or retain critical information in the ethics training program, they will not be able to apply it.

3. NPO consultants might look for changes in behavior; it seems logical to attempt to measure this behavior and compare behavior designs employed in these comparisons; and,

4. NPO consultants should examine the results of training. It is possible that the training can be successful in teaching ethical principles and in changing the behavior of the individuals who receive training but that the results of those changes might not be relevant, worthwhile, or quite what the organization expected (Sims, 1999, p. 158).

When is training offered?

All employees of the NPO consultancy will receive initial training concerning the firm's ethical standards and practices upon hiring. Refresher and adjunct training will be provided as the need is identified by the noncompliance investigation team's reporting and the trended data that results. For example, if a given area has received a significant number of violations, this area will be targeted with specialized training.

What does training consist of?

The training provided by the NPO consultancy will be specifically tied to the firm's mission statement and statement of ethical standards.

Who will administer training?

The noncompliance investigation team will be responsible for the provision of in-service training but the firm may outsource some training if the requisite expertise does not exist in-house.

What is the duration of training?

The duration of the training will depend on the subject area content. For example, the initial training will require one full days of attendance by new hires as well as existing employees and officers who have not received this training. Other adjunct and specialized training may require shorter or longer periods depending on the issues being covered.

Will employees' knowledge of the standards and procedures be tested for comprehension?

Content-based tests will be administered following the completion of each training session to ensure that attendees acquire the level of proficiency in the subject area required to maintain ethical standards and practices.

C.

Systems to monitor, audit, and report misconduct.

According Smith and Richmond (2007), an organization's audit committees and boards of directors are important players in helping NPOs ensure they have appropriate policies in place to monitor and audit transactions and that allow employees to report suspected fraud to an NPO consultancy's top management or its board of directors. For this purpose, the Sarbanes-Oxley Act ("the Act") in particular provides some useful guidance and is the controlling legislation for reporting misconduct in the corporate sector in the United States today. In this regard, Smith and Richmond report that, "The Act creates significant employment-related protections for whistleblowers (Public Law 107-204 Section 806). Adoption of this provision by nonprofit organizations may assist employees by allowing them to feel shielded when reporting unethical activities" (p. 76). The Act specifically stipulates that a for-profit organization is prohibited from discharging, suspending or harassing employees ". . . that report any form of corporate wrongdoing (Public Law 107-204 Section 806(1)(1))" (Smith & Richmond, 2007, p. 76). The adoption of this section of the Act by organizations providing consultancy services to NPOs is highly congruent with the guidance provided by Smith and Richmond which states, "Supporters of the nonprofit sector encourage nonprofit organizations to adopt regulations of the Sarbanes-Oxley Act in order to have similar standards as those in the for-profit sector" (2007, p. 76). The processes to be used for monitoring and auditing compliance with these ethical standards and procedures are described further below.

Processes for monitoring and auditing compliance with the ethical standards and procedures.

This NPO consultancy will monitor compliance with the firm's ethical standards and procedures using an incident reporting system that employs a standardized reporting form in which violations will be categorized according to type of offense and weighted as to severity and the results of this tracking program trended over time and problem areas that are identified will receive special attention from noncompliance investigating team as described further below.

Responsibilities for investigate reports of noncompliance.

A noncompliance investigating team comprised of a member of the board of directors, a supervisor and a member of the office staff who are all appointed by the chief executive officer have responsibility for investigating reports of noncompliance with the firm's ethical standards and procedures. The team will provide the results of their investigation to the chief executive officer who will make a decision, in collaboration with the human resources director, concerning the disposition of the violation as described further below.

Consequences for non-compliance with the ethical standards and procedures.

The consequences associated with violations of the NPO consultancy's ethical standards and procedures will be determined on a case-by-cases basis, but the seriousness of the offense, any past infractions and the receipt of relevant training will be taken into account in this determination. Consequences may range from an oral reminder concerning the specificities of the firm's ethical standards and practices to a written reprimand placed in the individual's personnel file to outright discharge, again depending on the severity and type of violation that was involved.

D.

Plan to review and improve the ethics program over time.

A five life cycle model developed by Sims (1999) is particularly appropriate for helping nonprofit organizational consultant fine-tune and improve their codes of ethics over time. According to Sims, "The five life cycle stages are: entrepreneurial, collectivity, formalization, elaboration, and renewal or decline. Each phase of the life cycle suggests how the ethics training program can be improved and where there are weaknesses in the process" (p. 158). These five life cycles are described further in Table 1 below.

Table 1

Five Life Cycle Model for Reviewing and Improving Ethics Programs in NPO Consultancies

Life Cycle Stage

Description

Entrepreneurial

This stage is primarily concerned with identifying the goals and the means. Key components of this stage are identifying needs and intended uses for outcomes assessment results, identifying key audiences and obtaining their support, shifting modes of thinking from input measures to output measures, reexamining the mission and goals/objectives of ethics training, and developing a general mission for the outcomes assessment effort. This stage also includes the identification of one individual or group who is responsible for managing the assessment.

Collectivity

This stage focuses more closely on the execution of the assessment effort. Who initiated the effort? Who is interested in the results? What will be assessed? How will the assessment be carried out? Cooperation and support so essential to a successful assessment effort are jeopardized if interested and affected parties are not included in the assessment process.

Formalization

This stage is essential to the development of formal assessment procedures, such as setting the time schedule for the outcomes assessment effort, selection of appropriate assessment instruments, and collection and analysis of data. If the results are to be persuasive, it is important to have agreement and discussion when these design decisions are made.

Elaboration

This stage emphasizes the dissemination and incorporation of assessment results into the decision-making process in the ethics training program. This stage is critical to establishing the link between outcomes assessment of ethics training data as a reflection of program (and particular module) quality. It is important at this stage to make sure that all recipients of the data have the knowledge required to successfully interpret the results.