Workplace Ethics Advice

Global Survey on Ethics in the Workplace

Ethical Challenges in the Workplace

A recent survey on global business ethics was conducted by the American Institute of Certified Public Accountants (AICPA) and the Chartered Institute of Management Accountants (CIMA). There were approximately 2,000 respondents from close to eighty countries. The survey ‒ Managing Responsible Business: A Global Survey on Business Ethics --  explored some key ethical questions by focusing on four business challenges:

Ethical culture - The moral nature of an organization and the framework and architecture to support it, including formal roles and responsibilities, codes of conduct, and other policies. 

Accounting for ethics - The range and types of information collected and analyzed and how such information is reviewed and used.

Ethical dilemmas and pressures - The types of threats that employees and management accountants, in particular, face.

Business issues - Core areas of ethical concerns for business and how they're prioritized.

The key findings include the following:

Companies are recognizing the importance of establishing an ethical culture against a backdrop of a more competitive business environment. 

• 80 percent of survey respondents reported that their organization has a code of ethics or a similar document to guide staff about ethical standards in their work.
• 57 percent provide training on ethical standards at work.
• 25 percent offer incentives for staff to uphold the organization's standards of ethical conduct.
• 60 percent said their board of directors has formal responsibility for ethics; 49 percent said it's the responsibility of the CEO.

The survey revealed both good and bad news when it comes to the collection and reporting of ethical information. While more firms are gathering information, it's still only a minority, which indicates there's a gap between what firms say and what they do.

• 36 percent of organizations collect ethical information, and 40 percent report ethical information.
• 61 percent feel it's important to collect and analyze ethical information, but only one in five believes their organization will do so in the near future.
• 62 percent collect ethical performance information as part of the organization's regular management information gathering processes; 45 percent collect information in separate focused exercises, such as staff surveys. 

The survey shows that although the majority of respondents see their organizations as ethical, they're experiencing greater pressure to act unethically.

• 35 percent said they feel under pressure to compromise their organization's standards of ethical conduct. This has increased since a previous survey done in 2008, when 28 percent felt under pressure. 
• 23 percent have personally observed conduct that has violated organizational ethics standards and/or policy in the last twelve months. Of those respondents, a majority (69 percent) reported it, despite 26 percent feared that they could be regarded as troublemakers. Of the 69 percent, only half felt satisfied about the way their ethical concern was handled.
• 22 percent said they perceive the most pressure to compromise ethical standards of conduct comes from "working with colleagues from different functional areas within the organization." 

There's a wide range of ethical business issues that can impact business success, and some have a greater impact in particular sectors and regions. Security of information, bribery and corruption, conflict of interest, and environmental impact are issues management accountants are likely to encounter.

• When asked what ethical issues are relevant to their organization, 91 percent cited security of information, 78 percent said bribery, 74 percent reported conflict of interest, and 73 percent said environmental impact.
• 86 percent said they contribute to managing the ethical performance of their organization by "upholding their professional code," 83 percent said "ensuring the integrity of management information," and 80 percent said "leading by example." 

I have previously blogged about ways to establish an ethical organization culture. Some of my suggestions were not directly addressed by the survey. In some respects the survey information over-simplifies how to create an ethical culture in an organization. Written policies, codes of conduct, and other externally-oriented tools have less to do with establishing an ethical culture than creating trust in senior management. Senior management may have a code of ethics, ethics training, an ethics officer, ethics hot line, and all the other tools that, on the surface, make it seem ethics is a valued commodity. However, they may not “walk the talk” of ethics and since employees may not be listening, the trust essential to establish an ethical culture may not occur.

Blog posted by Steven Mintz, aka Ethics Sage, on July 2, 2012

Scope of Sexual Harassment in the Workplace

Sexual Harassment in the Workplace

Sexual harassment is a form of sex discrimination that violates Title VII of the Civil Rights Act of 1964. Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitutes sexual harassment when submission to or rejection of this conduct explicitly or implicitly affects an individual's employment, unreasonably interferes with an individual's work performance or creates an intimidating, hostile or offensive work environment.

Sexual harassment can occur in a variety of circumstances, including but not limited to the following:

• The victim as well as the harasser may be a woman or a man. The victim does not have to be of the opposite sex.
• The harasser can be the victim's supervisor, an agent of the employer, a supervisor in another area, a co-worker, or a non-employee.
• The victim does not have to be the person harassed but could be anyone affected by the offensive conduct.
• Unlawful sexual harassment may occur without economic injury to or discharge of the victim.
• The harasser's conduct must be unwelcome.

The victim should directly inform the harasser that the conduct is unwelcome and must stop. The victim should use any employer complaint mechanism or grievance system available.

When investigating allegations of sexual harassment, EEOC looks at the whole record: the circumstances, such as the nature of the sexual advances, and the context in which the alleged incidents occurred. A determination on the allegations is made from the facts on a case-by-case basis.

Prevention is the best tool to eliminate sexual harassment in the workplace. Employers are encouraged to take steps necessary to prevent sexual harassment from occurring. They should clearly communicate to employees that sexual harassment will not be tolerated. They can do so by establishing an effective complaint or grievance process and taking immediate and appropriate action when an employee complains.

What should you do if you think your boss may be doing something improper? Is it sexual harassment? It’s a question I deal with all the time in my ethics class. Sexual harassment is a form of sex discrimination. The legal definition of sexual harassment is “unwelcome verbal, visual, or physical conduct of a sexual nature that is severe or pervasive and affects working conditions or creates a hostile work environment.” Two specific legal definitions of sexual harassment have been established in employment law: quid pro quo harassment and hostile environment sexual harassment.  

Quid Pro Quo Harassment:  "Something for something.” Let’s assume your boss threatens to stifle your career advancement unless you sleep with him. This is unlawful whether you submit and avoid the threatened harm or resist and suffer the consequences. Your first step should be to make it clear to your boss this is an unwelcomed advance. At the same time, you should determine the company policy on reporting such matters. If the offensive behavior persists, I recommend you talk to a trusted advisor and/or attorney. It may become a legal issue pending resolution of the matter. In all likelihood your advisor will tell you to go to the Human Resources department where Equal Employment Opportunity Commission (EEOC) matters are dealt with.

Be sure to document your concerns – what did he or she do or say? When did he or she do it or say it? What did you say to the harasser? How did that person react to your concerns? Give a copy of the document to a trusted advisor or lawyer for possible use in a future legal action. The advisor can attest to the fact you provided the document on a specific day so that it wasn’t created after the fact.

If the HR department does nothing or your boss doesn’t change his or her behavior, it’s time to file a formal sexual harassment complaint with the federal EEOC and/or your state’s fair employment agency. You must first file with the EEOC before you file a lawsuit in federal or state court. Generally, you have 180 days to file the complaint. After you file a formal complaint with the EEOC or your state’s fair employment agency, you can also consider filing a lawsuit. You can sue for money damages, to get your job back, and you can also ask the court to make your employer change its practices to prevent future sexual harassment from occurring.

Hostile Environment Sexual Harassment:  This occurs when an employee is subjected to
comments of a sexual nature, offensive sexual materials, or unwelcome physical contact as a regular part of the work environment. Let’s assume your boss has a habit of sizing you up. He looks up and down your body with a sexually suggestive facial expression. Tell him or her it’s unwanted and unwelcome behavior and that it makes you feel uncomfortable. If your boss persists in being a jerk, then follow the steps above. Generally speaking, a single isolated incident will not be considered a hostile work environment. The courts look to see whether the conduct is both serious and frequent. Supervisors, managers, co-workers and even customers can be responsible for creating a hostile environment.

I’ll conclude with a few final comments. Both men and women can be victims of sexual harassment. In Fiscal Year 2010, the EEOC received 11,717 charges of sexual harassment down from the recent high of 13,867 received in 2008. The percentage of claims filed by men increased from 15.9% to 16.4%. The amount of monetary benefits paid out to victims, not including those obtained through litigation, increased from $47.4 million to $48.4 million indicating a greater success rate for the EEOC.

A recent Louis Harris & Associates poll indicates that 62% of sexual harassment targets took no action. Remember, it’s ethically improper and outright wrong for someone to use his or her power and authority over you to exact favors or create a hostile work environment. Speak out if this happens to you. Do not show any kind of interest in going along with advances or tolerating repeated offensive gestures, comments, or actions. Once you start to demonstrate by your words or actions (or inactions) that it is acceptable behavior, it becomes much more difficult to take appropriate action to end it in the future.

Blog by Steven Mintz, aka Ethics Sage, June 21, 2012

Whistle-blowing in the Workplace

Incentivizing Whistle-blowing: Another Point of View

I encourage readers of my “Workplace Ethics Advice” blog to write to me with questions about workplace ethics that I respond to in a confidential manner. From time to time I receive replies to one of my blogs that is thought-provoking and may present an alternative point of view. Today’s blog is such a case that was sent to me by Rose Tala (rOsebud@xtra.co.nz).

You state that the most troubling provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act is the offer of financial incentives basically in exchange for the disregard of an employee’s own company processes, and reporting fraudulent instances directly to government.  I agree with you in so far as saying that I believe this to be the most troubling provision, however my reasoning for this unlike yours, is not because it has the potential to attract the ‘vultures’ to circle overhead but more so due to the fact that the financial incentives have been authorized at a nations’ top-most ‘management’ level - Government. 

I find it most concerning that at this level, the resolution that they have come up with to deter fraudulent behavior, is in effect to replace one unethical action (i.e. fraud) with yet another unethical practice (i.e. incentivizing the reporting of fraud with monetary reward) rather than to encourage whistle-blowing for the sole purpose of being the morally correct thing to do.  

So, when you ask ‘is whistle-blowing’ ethical?  I think that in order to answer this correctly, one must take into account the context.  If the question is asked in the context of the Dodd-Frank reform, personally, I would answer no. In order to justify my answer, I will momentarily set aside the Dodd-Frank reform and speak from a ‘general’ perspective.  I will also draw on the Utilitarian ethical theory test to back up my answer.

At the foundation of a Utilitarian’s justification of ethicalness, is the question ‘what action would maximize happiness, and minimize harm?’  In the case of reporting fraudulent behavior, the Utilitarian’s options would be firstly to say nothing, secondly, to report the incident to a manager (internal whistle-blowing), and thirdly to report outside the organization, otherwise known as ‘external whistle-blowing’.

Now, let’s pick up these options one by one, and analyze their possible results.  The first option – saying nothing, would likely result in the continuation of the fraudulent behavior, and there could also be negative ramifications for the would-be whistle-blower if the fraud were discovered by other means, and part of potential whistle-blowers’ employment obligations would have required that they report the behavior.

The second option – reporting the incident to a manager, could result in putting a stop to the fraud, praise for the whistle-blower, praise for the manager, and the likely negative consequences would be the loss of employment of the person committing the fraud, and possibly some co-workers treating the whistle-blower with a degree of distrust in the future. 

Lastly, the likely results of the whistle-blower reporting fraudulent behavior outside of the organization would result in negative publicity for the organization, financial loss for the owners/stake holders, and at worst the loss of jobs at the organization resulting from business decline and/or legal action against it (the company).  The only foreseeable positive consequence from taking this action would be the cessation of the fraudulent behavior. Given these options, the Utilitarian would be morally obliged to take the second option – report the incident to a manager, as this option would foreseeably bring about the most happiness, and minimize harm.

Now, to summarize – let’s bring back the Dodd-Frank reform which was temporarily set aside and add this to the analysis of whether whistle-blowing is ethical, remembering that I believe that it has to be asked in consideration of the context in order to be answered accurately. 

Bearing in mind that in a ‘general’ context as illustrated above, and put against the Utilitarian theory test, the option of reporting fraud to a manager was the morally correct action to take.  If we now look at the same situation in the context of an environment where the Dodd-Frank reform is law, this would then expand the negative ramifications of the last option – reporting fraudulent behavior outside of the organization. 

The negative ramifications would be magnified as there would be added possibilities such as potential whistle-blowers being motivated not by doing the morally correct thing, but by financial gain.  Furthermore, it could lead to distrust among employees and managers as there could be the fear amongst staff that everybody is being watched.  These examples of possible negative consequences are only the tip of the ice-berg so to speak of external whistle-blowing.

So, in conclusion I do believe that whistle-blowing is ethical if done in the right way for instance, as above -- reporting to the manager --, and also if done for the correct reasons (i.e. because it is morally the correct thing to do) rather than for monetary reward.  In fact, not only is whistle-blowing ethical if it meets the previous criteria, but often necessary for the continued success of a company such as many of the failed finance companies in New Zealand, for example, in recent times. 

‘Honest and ethical behavior by employees should be encouraged and comprehensive whistleblower protection could well have encouraged finance company employees to come forward’ writes Susan Watson & Rebecca Hirsch in the New Zealand Herald Sunday May 27, 2012.  I do not however, feel that as you put it – the means (i.e. spying on co-workers and aggressively seeking out dodgy transactions), justify the ends (i.e. putting a stop to corporate fraud). 

In short, this resolution merely replaces one unethical practice with another so as I see it, whistle-blowing with the motivation of a financial incentive cannot possibly be considered ethical.

Blog posted on Workplace Ethics Advice by Steven Mintz, aka Ethics Sage, on June 6, 2012

Written by Rose Tala (r0sebud@xtra.co.nz)

The Role of Audit Committes in Corporate Governance

Audit Committees, Internal Controls, and Reliable Financial Reporting

In the aftermath of accounting scandals at companies such as Enron and WorldCom, Congress passed the Sarbanes-Oxley Act in 2002 that strengthens corporate governance mechanisms. One important requirement is for the audit committee of the board of directors to be completely independent of management. In the accounting scandals, the audit committee either didn't know about the fraud or chose to look the other way. A conscientious and diligent committee is an essential ingredient of an effective corporate governance system -- one that takes its role in financial statement oversight to heart and follows basic principles of responsibility, accountability, and transparency.

The Audit Committee Institute at the international accounting firm KPMG, issued "Ten To-Do's for Audit Committees in 2011." The most important are: (1) Focus on financial reporting and strong internal controls; (2) Review the company's whistleblower processes and compliance program; (3) Understand the significance of risks to  the company's operations and financial reporting; (4) Consider whether the company's disclosures provide investors with the information needed to understand the state of the business; (5) Set clear expectations for the internal audit function and communication with the external auditors; and (6) Understand the audit committee's role in information technology.

Traditionally, the audit committee's primary role has been to monitor the integrity of the financial statements produced by management. Deloitte and Touche, the international accounting and financial services firm, elaborates on the role of audit committees in financial reporting. They provide helpful advice for audit committees to discharge their expanded responsibilities under Sarbanes-Oxley including:

• Audit committees should be aware of the universe of corporate reporting and its various financial and non-financial components.
• Audit committees should review the financial statements, Management Discussion & Analysis (MD&A) and related news releases as a single package of information.
• The effectiveness of the audit committee's review of earnings news releases, financial statements and MD&A depends not only on its understanding of accounting standards and regulations, but to a great extent on the committee's knowledge of the company's business and the industries in which it operates.
• In addition to approving the financial statements, MD&A and earnings news release, the audit committee must understand and agree with the process by which these documents were prepared.
• The audit committee should seek assurances from the CEO and CFO as part of the CEO/CFO financial statement certification process that they have put in place effective disclosure controls and procedures to ensure that all reports have been prepared  properly and filed with the appropriate authorities in accordance with applicable requirements.
• Audit committees should regularly review their oversight responsibilities to determine whether they should include additional financial and/or non-financial disclosures

There can be no doubt that financial reports would be more reliable if audit committees adhered to these guidelines. The goal should be to establish an ethical corporate culture that supports good corporate governance. In addition to a watchful audit committee, an organization must establish effective internal controls to ferret out fraud, a strong internal audit oversight role to deal with fraud, diligent members of the board of directors to oversee management, and a management group that recognizes its primary responsibility is to conduct business operations in a responsible manner and report financial information in accordance with established accounting rules. Organizations that create such an environment are better prepared to deal with the challenges of maintaining an effective corporate governance system.   

Blog posted by Steven Mintz, aka Ethics Sage, on April 18, 2012

Executive Concern about Employee Generated Video Content

Uploading Questionable Videos is a Matter of Ethics

I often receive reports of advances in technology and social media innovations. Typically, I read them and that is it. However, I was sent information by Qumu, a leading business video platform provider, that I believe is well worth sharing with my readers.

Last week, Qumu  announced the results of its April 2012 Business Video Behavior Project, which looked at the topic of Employee Generated Content (EGC) in the enterprise.  In a survey of 240 managers and executives across a variety of disciplines, Qumu found that more than half of them (51.2%) are concerned that employees will upload irresponsible content to the company network, and 12% of executives even admit they worry about employees uploading embarrassing videos of them from company parties.

However, executives also report that the videos being uploaded to their networks are more effective than ever before.  In fact, the study found that 100% of them have never seen an inappropriate video uploaded to the company network, and the top comments executives made about the employee generated videos they have seen are that they have been useful (38.2%) and appropriate (35.3%). 

In addition to executive concern, the study looked at who produces the most interesting employee generated content, whether or not these videos make workers more productive and what the future demand for EGC will be.  The survey reveals that coworker videos are the most attention-grabbing.  When asked who produces the most interesting corporate videos, coworkers topped the list at 45.5%. However, CEOs produce the highest volume of videos (51.4% vs. 13.5%). 

A majority (73%) of workers feel employee-generated videos have increased their productivity to some degree, and 81.4% of executives believe demand for such videos will only continue to increase. When asked what types of videos employees have been generating most often, how-to videos came out on top with more than three quarters of executives (75.8%) saying they are the most common, followed by:

·         Communication from management (48.5%);

·         Town hall meetings (42.4%)

In fact, one of the most common use cases for how-to videos comes from customer service department personnel creating how-to videos. “By 2015, how-to customer service videos will be an essential part of Web customer service strategies, said Johan Jacobs, Gartner Analyst (Get More Value From Your 'How to' Customer Service Video Knowledge).

The results of the study demonstrate that employee-generated content is having a positive social and productive effect on the enterprise, said Ray Hood, Senior Vice President and General Manager at Qumu.  Qumu provides the opportunity for employers to better control the way video is shared, organized and distributed to employees.  The company provides automatic transcoding and an approval process prior to publishing that ensures corporate standards are upheld, as well as reports that show what videos employees are watching. 

My main concern is the content of the videos. Inappropriate video content threatens to infect the workplace environment and spread like a cancer. It is up to top management to monitor the content of videos and exercise judgment as to what should and should not be allowed for downloading purposes. It is a matter of ethics how an organization deals with these issues. It also sets the tone for other behavior within the organization. The use of employee-generated videos may be of greater concern than those made by executives. It is up to the executives to set a high moral tone and carefully monitor video content.

Blog posted by Steven Mintz, aka Ethics Sage, on April 13, 2012

PwC Identifies Internal Audit Risks

Small Businesses are Highly Susceptible to Fraud

PricewaterhouseCoopers recently issued its 2012 PwC State of the Internal Audit Profession. The study found that global economic uncertainty tops the list as the biggest perceived risk to companies this year, according to nearly three-quarters of the chief audit executives (CAEs) polled and other survey respondents. This year, in addition to CAEs, PwC also surveyed other stakeholders, including audit committee chairs and board members. PwC surveyed 1,530 executives from 16 different industries and 64 countries, including 870 CAEs.

The survey indicated that other significant risks have emerged, and businesses are asking internal audit to play a bigger role in helping companies navigate the changing risk landscape. While concerns about further economic uncertainty continue to be the main ones for business leaders, issues such as fraud and ethics, mergers and acquisitions, large programs, new product introductions, and business continuity were identified among the top risks affecting businesses.

Michael Cohn, a reporter with the trade publication Accounting Today, interviewed Brian Brown, a partner in PwC’s risk assurance practice, and discovered that the risk bar has been raised to provide an effective internal audit function. In other words, the internal audit group is scrutinizing risks more carefully to make sure they do not exceed a desired level. This is a critical change in the landscape and reflects the growing importance of internal audit and internal controls in the post-Sarbanes-Oxley era.

Survey respondents indicated that they were concerned about areas such as fraud and ethics, data security and privacy, and mergers and acquisitions. The single most requested area for increased internal audit focus was data privacy and security, with 46 percent of stakeholders asking for added capabilities in this area.

Internal audits provide a number of important services to company management. These include detecting and preventing fraud, testing internal control, and monitoring compliance with company policy and government regulation. The PwC study focused on executives working for larger companies. However, smaller companies may require these functions even more than large companies. A small business cannot afford employee fraud, waste, or a government fine. Establishing an internal audit function provides a vital step in the growth of a small business.

Small businesses lose millions of dollars every year to employee theft. Types of fraud committed by employees include skimming payments from customers, check tampering, cash theft and misuse of company credit cards, and improper payroll transactions.

A recent “KPMG Fraud Survey” found that organizations are reporting more experiences of fraud than in prior years and that three out of four organizations have uncovered fraud. Here are some simple tips to develop the internal controls needed to detect and prevent fraud:

1.      Use a system of checks and balances to ensure no one person has control over all parts of a financial transaction.

2.     Reconcile cash in bank accounts every month.

3.      Restrict use of company credit cards and verify all charges made to credit cards or accounts to ensure they were business-related.

4.      Ensure that company assets such as vehicles, cell phones, equipment, and other resources are used only for official business.

5.      Prepare all fiscal policies and procedures in writing and obtain Board of Directors approval and oversight.

I have previously blogged about the costs to business of employee fraud. According to a 2010 report from the Association of Certified Fraud Examiners (ACFE), incidents of occupational fraud are 31 percent more likely to occur at small businesses as opposed to larger companies. To add insult to injury, as many as 40 percent of small businesses owners are embezzlement victims and a staggering one-third of all bankruptcies are the direct result of internal theft.

The root cause of fraud is a lack of ethics in the workplace. To create an ethical organization environment, a company must start with an effective code of conduct built on core values such as honesty, integrity and trust. The code should be enforced using principles of responsibility and accountability. Most important, top management and the board of directors must ensure that the proper tone at the top is set and company decision-makers walk the talk of ethics.

Blog posted by Steven Mintz, aka Ethics Sage, on April 3, 2012

In Teachers We Trust

Ethical and Professional Responsibilities of Teachers to Students: A blog by Ali Brozek, student, California Polytechnic State University, San Luis Obispo

I am delighted to post a blog written by Ali Brozek, one of my ethics students, as part of an end-of-term assignment. My students are required to select a topic and analyze the issues from an ethical perspective. Ali’s blog is thought-provoking and the analysis well done. I, myself, had blogged about some of these issues last month.

In fourth grade, children are supposed to study fractions and grammar; however, children should never be exposed to learning what it feels like to have a cockroach on their face. At Miramonte Elementary School, the children of Mark Berndt’s fourth grade class unfortunately discovered that feeling.  Sixty-one year old Mark Berndt had been teaching at Miramonte Elementary, part of the LA Unified School District, for thirty years and was known as a great educator.  Sadly, his actions in the class room did not match his reputation. 

From 2005 to 2010, Berndt had been harassing his students and playing perverse jokes on them.  These events included blindfolding children and putting cockroaches on their face, feeding students spoonfuls of his semen, as well as other disgusting acts.  Most recently, Mark Berndt took bondage-style photographs of his students participating in a “food tasting game” which eventually led to the discovery of this torment. 

A photo technician who developed the pictures Berndt had taken reported this information, Berndt was ousted and an investigation ensued.  Investigators used DNA from spoons uncovered in Berndt’s classroom to connect Berndt to victims as well as identifying the children in the photos.  Previously, some students in Berndt’s class had complained about being uncomfortable.  Marlene Trujillo, one of Berndt’s prior students, said “Berndt often moved his hands under his desk, near his lap, at the front of the classroom.”  Marlene also noted that there was a large jar of Vaseline on his desk at all times.  Despite the warning, counselors dismissed the then fourth grader’s complaints thinking the students were fabricating the stories. 

Berndt was arrested on January 30, 2012, on 23 felony charges of committing twenty-three lewd acts on children.  Currently, Berndt is being held in jail on $23 million bail, one million per lewd act against a child.  As for Miramonte Elementary teachers, all have been reassigned to different schools while the investigation continues.  There is the potential of a case against another Miramonte teacher, Martin Springer, for committing lewd acts against children.  Investigators are trying to prevent any more harm to children while the facts are resolved.

Clearly, Berndt never considered the effects his actions had on his students or other stakeholders.  Berndt’s pathetic actions not only brought harm to the children but also disgrace on the entire school. The major question is how could have it gone on for so long without any action taken to stop the abusive behavior?  To its credit, LA Unified responded immediately to the accusations and instantly removed the children from harm’s way.  They have done exactly what is required of them by the law while doing what is best for the children and teachers of the school. 

From an ethical perspective it is clear that the rights of the children were violated.  According to the Rights Theory, every person is entitled to particular rights and should never be used only as a means to an end -- in this case the self-gratification of Berndt. Rights Theory is motivated by a sense of obligation.  Someone’s right implies that someone else has an obligation.  Applying this to the children at Miramonte Elementary, they had a right to a peaceful and prosperous learning environment; therefore, Berndt had an obligation to provide his students with such an environment.  Also, the children have a right to learn from a teacher who is concerned with their well-being and will not harass them.  Berndt therefore had an obligation to be the best teacher he could be and keep his personal issues to himself.  Evidently, Berndt did not do so.

Many ethical dilemmas are presented in this situation.  Parents place great trust in the people educating their children and Mark Berndt completely abused this trust.  Parents need to have faith in educators that their precious children will be taught in a safe and healthy environment.   A parent should never have to protect their child from an educator.   Children deserve a proper education and to be motivated to be the best they can be so they might contribute to the betterment of society.  Without trustworthy teachers and a prosperous learning environment, children will never be able to succeed.

The most perplexing issue in this case is the extent to which Berndt got away with his actions.  How did he get away with so much harassment?  Most teachers in today’s school system are dedicated educators who help guide our youth; however, there is always bound to be a bad seed.  There must be safety measures and controls at schools to guarantee that teachers earn student trust. 

The Miramonte school seemingly performed their due diligence by making background checks on every teacher, but Berndt’s record was clean.  Background checks are not enough.  If a teacher is prone to certain behaviors more must be done to ferret out such actions. At a minimum this means talking to others who know the teacher personally to get a candid assessment of the character of the individual before that person is entrusted with the health and welfare of young children.

Educators and administrators are ethically required to candidly discuss a teacher’s performance with subsequent employers when the character of a teacher is in question. Former colleagues must ask themselves: Would I want this teacher to be teaching children at my school? The universality aspect of Rights Theory encourages a decision-maker to emphasize the Golden Rule: “Do unto others as you would have others do unto you.”

Blog written by Ali Brozek and posted by Ethics Sage, aka Steven Mintz, on March 9, 2012

The 10 Greatest Cases of Fraud in University Research

Universities are not Role Models for Ethical Behavior

As a university professor I am quite interested in ethics in the academy. I have previously blogged about the commercialization of universities that can stifle academic freedom. Fraud can creep into research procedures, testing subjects, and interpretation of results to achieve an end result such as reporting results that support the position of the sponsoring organization.

I recently read an interesting piece about fraud in university research posted by onlineuniversities.com. What follows are some of the results discussed in the piece. The results are from a research study from the British Medical Journal. The study indicates that one in eight UK scientists has witnessed research fraud.

1.     Psychologist Diederik Stapel

Noted Dutch psychologist Diederik Stapel, of Tillburg University, was found to have committed academic fraud in several publications. The fraud spans about a decade of work, including papers on racial stereotyping, advertisements, and the power of hypocrisy. Stapel’s work has been published not just in psychology journals and publications, but also in worldwide newspapers including The New York Times. Doctoral theses that Stapel oversaw have also been called into question, with interviews from former students and colleagues revealing that more than a dozen theses may no longer be valid, putting not only Stapel’s reputation, but also former students’ degrees at risk.

2.     Dr. Anil Potti’s Cancer Research

In late 2010, Dr. Anil Potti resigned from his job at Duke University amid questions of research fraud. Before he resigned, it was discovered that Potti exaggerated his credentials, claiming incorrectly that he was a Rhodes Scholar, a discovery that led to the American Cancer Society suspending hundreds of thousands of grant dollars that were to be used for Potti’s work. Since then, nine of Potti’s papers on individualized treatments for cancer have been retracted, dashing the hopes of those who would like to believe that this "holy grail of cancer" research might actually work. Potti’s work sounded like a miracle, but his promise that 80% of patients enrolled in his drug trials would find the right drug for them proved too good to be true, and some of the patients involved with Potti’s research have filed suit against Duke.

3.     Plagiarism at KU

Two University of Kansas computer scientists, Mahesh Visvanathan and Gerald Lushington, were found to have plagiarized major portions of their research, for which they had published three articles with an international audience. So much of their work was lifted from other scientists’ work, that even "the entire summarizing statement in their presentation had come from someone else’s journal article," a presentation that they had planned to make at a conference in Sweden, which they ultimately did not make due to accusations of plagiarism. The two researchers have been working with the U.S. Office of Research Integrity, which found them to be ignorant and complacent about plagiarism in their research program at KU.

4.     Andrew Wakefield’s Vaccine Connection

In 1998, physician Andrew Wakefield published a study in The Lancet, claiming that his research indicated a connection between autism and the measles-mumps-rubella vaccine. This research was highly respected and undermined public confidence in the vaccine, leading to many parents refusing the shot. Ultimately, this led to increases in the number of cases of measles and mumps in the U.S. and Europe, with some areas reporting very dangerous and widespread outbreaks. When faced with an investigation in 2010, it was revealed that Wakefield and his colleagues had altered facts about the children in their study, and Wakefield had even been paid off by a lawyer planning to sue the manufacturer of the vaccine. The British General Medical Council found Wakefield guilty of fraud and misconduct, and his work is now viewed by the medical and research community as an “elaborate fraud.”  

5.     Hwang Woo-suk’s Stem Cell Research

In 2006, Korean researcher Hwang Woo-suk was found to have fabricated a series of experiments in stem cell research, a field in which he was once considered one of the pioneering experts. He was previously infamous for his two Science journal articles in which he reported success in creating human embryonic stem cells through cloning, but is now infamous for his massive case of fraud and scientific misconduct after it was revealed that much of his stem cell research had been faked. Hwang was charged with embezzlement and bioethics law violations, for which he was sentenced to a two-year suspended prison sentence and barred from engaging in stem cell research by the South Korean government, as well as fired from his position with Seoul National University.

6.     Bengü Sezen’s Research Misconduct

For Bengü Sezen at Columbia University, research was just a matter of manipulation. Over the course of a decade, Sezen held a "massive and sustained effort" to manipulate and falsify research data, and even created fictitious people and organizations to back up her data and results. When investigated by the Office of Research Integrity, Sezen was found guilty of 21 counts of research misconduct, with at least nine papers found to be falsified, fabricated, plagiarized, or unable to be replicated. It is likely that Columbia University will revoke her PhD, as reports paint her as a "master of deception" who would, "defend the integrity of her research results in the face of all evidence to the contrary." Sezen did not seem to care about the effect her fraud had on others, as the reports explain that young colleagues of the fake scientist spent "considerable time attempting to reproduce [Sezen's] results" to no avail, with three students even leaving the program as a result.

7.     The Columbia University "Miracle" Study

Just weeks after the September 11th attacks in 2001, the New York Times reported that Columbia University Medical Center in New York had discovered a virtual miracle of prayer: infertile women who had the support of prayer groups were able to become pregnant twice as fast as those who did not have the same faith-based support. The study was quite reassuring to those struggling to become pregnant, and was a great glimmer of hope for a worried nation. However, the study has been called into question, as all three researchers involved in the study either refuse to comment on their findings, or have been charged with fraud and conspiracy. The "prayer study" has been found to have a "bewildering study design" with many errors, and in fact may have never been conducted at all.

8.     Photoshopping the Benefits of Red Wine

News about the benefits of red wine sounds great to just about everyone, so researcher Dipak K. Das’ work indicating longevity for wine drinkers was welcomed with open arms. However, Das has been charged with widespread scientific fraud, spanning 26 articles in 11 journals. A report indicated that his published research articles contained 145 instances of data falsification and even fabrication, many of which involved cutting and pasting photographic images and manipulating them without an explicit description of what had been done.

9.     More Photoshop Manipulation

Dipak Das isn’t the only one using Photoshop to overcome research roadblocks: gastroenterology researcher Stefano Fiorucci at the University of Perugia has been indicted for fraud and embezzlement for the same charges. Fiorucci’s research manipulation won him about 2 million Euros in grant funding, but the case against him has, so far, resulted in four paper retractions as well as nine Expressions of Concern. He has been charged with embezzlement for using public funds for "research uses" which proved to be not just unauthorized, but also false. Fiorucci’s case is believed to be the first time that embezzlement charges have been brought against a scientist that has also committed fraud.

10. Penn State’s $3 Million Research Fraud

When undergrads plagiarize and falsify research, it’s unfortunate, but when it happens at the graduate and professor level, it’s federal fraud. At Penn State, Professor Craig Grimes has been accused of defrauding the National Institutes of Health and Advanced Research Projects Agency of federal grant monies, to the tune of $3 million. Grimes requested grants to study the measurement of gases in a patient’s blood, but the money was not spent for this research. Instead, clinical trials were never performed, and the grant funds were misappropriated, largely for the personal use of Grimes. Grimes has been charged with making false statements, money laundering, and fraud. He faces up to 35 years in prison and a fine of $750,000.

The bottom line on all these examples of research fraud is that universities are organizations facing the same ethical challenges as other organizations. They are not bastions of workplace ethics and, from my perspective, are more ethically challenged today than ever before in part because of reduced public and private funding for research and other commercial-type endeavors.

Blog posted by Steven Mintz, aka Ethics Sage, on March 2, 2012

Violence in the American Workplace Survey Reveals that Events Leading to Violent Encounters are Epidemic in the American Workplace

Violence in the Workplace

I have previously blogged about workplace violence. Given my keen interest in this topic and possible effects on employees and employers, I have decided to re-post a description and discussion of the results of a study on workplace violence conducted by AlliedBarton Security Services.

Survey Results Featured in New Workplace Violence Prevention Book by AlliedBarton Security Services President & CEO

CONSHOHOCKEN, PA, February 15, 2012  – Violence in the American workplace is clearly an epidemic according to a new survey released today. The “Violence in the American Workplace” survey conducted by AlliedBarton Security Services reveals that over half of Americans employed outside their homes (52-percent) have witnessed, heard about or have experienced a violent event or an event that can lead to violence at their workplace. 

The results of this survey are featured in the new book, “Potential: Workplace Violence Prevention and Your Organizational Success”, www.potentialthebook.com, by Bill Whitmore, Chairman, President and CEO of AlliedBarton Services, www.alliedbarton.com, America’s leading physical security services firm.

Potential shows how a range of stakeholders – from CEOs and senior leaders to building management, human resources, contract security and law enforcement – can work together to lower an organization’s workplace violence risk and enhance its overall morale and performance.  The new book was previewed at the 2011 American Society for Industrial Security conference and is now available to the public.

“Workplace violence often starts as verbal assaults or harassment and can escalate into threatening behavior, bullying, physical assaults and even, in some instances, deadly encounters,” says Whitmore.  “With the significant increase in unemployment in the past several years and the downturn in the economy, there is every reason to believe that these incidents may increase. This book is intended to encourage more senior leaders to take a proactive stance against workplace violence and reinforce how leaders at every level can play an important role.”

The objective for the survey was to determine if American workers have personally experienced violence in the workplace, witnessed violence while working, been threatened with violence, have concerns about workplace violence, have taken actions to ensure their own safety, and their attitudes toward their current employer. Conducted by David Michaelson and Company, LLC, this was a comprehensive nationwide scientific phone survey of 1,030 adults working outside the home.

Highlights of the research include:

·         Events that can lead to violent encounters are epidemic in the American workplace

Over half of Americans employed outside their homes (52-percent) have witnessed, heard about, are aware of or have experienced a violent event or an event that can lead to violence at their workplace. These events include open hostility, abusive language or threats and can escalate to significant physical harm to someone by another person. Even more significant is that 28-percent of workers report a violent event or one that can lead to violence happened to them at their current place of employment or they have been personally affect by this type of event. Overall, 12-percent have witnessed, heard about or are aware of an incidence of significant physical harm to another person, and five-percent have had this happen to them or have been personally affected by this type of incident.

·         High incidence of workplace violence and related events is reflected in a significant level of concern with personal safety in the workplace

One in three (34-percent) of those Americans employed outside the home are very or somewhat concerned with their personal safety.

·         Workers are reluctant to report violence and related events that occur at their place of employment

Even with high levels of concern for their personal safety, three in ten (29-percent) workers who witnessed, heard about or experienced workplace violence did not report the incident or take other action. The most common action taken was reporting the incident to a supervisor or human resources, which was done by two in three (62-percent) workers.

Workers who experienced or are aware of violence are even less likely to take other actions when violence occurs in the workplace. Of those reporting, 21-percent contacted security, 14-percent reported the incident to the police and 12-percent called a confidential employer-provided number.

·         Employers appear reluctant to take aggressive actions when violence occurs

Almost all (94-percent) employers take some action as a result of workplace violence. However, the most likely type of action taken is meeting with employees. Three in four (73-percent) workers who witnessed, heard about or experienced workplace violence report their employer held an employee meeting, and 69-percent say the employer met with the employee who experienced workplace violence.

However, employers appear much less likely to take other actions when these events occur. Only half (53-percent) took disciplinary actions. Even fewer implemented training for employees (45-percent) or supervisors (35-percent). Changes to physical environments (31-percent) or revisions to company policies (22-percent) were even less common. Increasing security through the involvement of police or other authorities or contracting with a security provider were the actions least likely to be taken as a result of workplace violence.

·         Perceived low level of involvement by senior managers when workplace violence occurs

Fewer than half (44-percent) of senior managers (CEO/President/Owner) are perceived as being concerned with workplace violence, with only 17-percent seen as being very concerned.  

·         Workplace violence is closely linked to lower employee morale and less positive attitudes toward jobs

Workers who experienced or are aware of violence or the conditions leading to violence at their workplace rate their current place of employment lower on every key measure than those who did not experience, witness or have awareness of these types of events.

Two in three Americans (63-percent) employed outside the home, strongly agree they are a valued employee. However, when comparing those who experienced or had awareness of workplace violence with those who did not share this experience, there are substantial differences. Fifty-eight percent who have an association with workplace violence strongly agree they feel valued. By contrast, 70-percent of those who did not share this experience have the same attitude.

The most striking distinction involves compensation. While 45-percent of employees feel they are paid fairly, there are significant differences between those who experienced or are aware of workplace violence and those who have not faced those situations. Fifty-five percent of those who have not experienced or are not aware of workplace violence strongly agree they are paid fairly. However, only one in three (36-percent) of those who faced this situation share this attitude.

·         In spite of the high incidence of workplace violence and related events, employees are highly likely to remain committed to their current employers

Seventy-one percent say they are very committed to their current employer for the next year and an additional 20-percent report they are somewhat committed.

·         Even with a high level of commitment to their current employers, high proportions of workers are seeking or considering seeking a new job

Workplace violence appears to be a significant contributor for workers in seeking a new position. Twenty-eight percent of those who experienced or are aware of workplace violence are looking for or are seriously considering looking for a new job. By contrast, only 17-percent of those who have not had this experience are considering new employment. Overall, one in four (23-percent) employees is currently looking for or is seriously considering looking for a new job.

AlliedBarton has been recognized by Training magazine, ASTD, Corporate University Xchange, Leadership Excellence and the American Business Awards, among others. Potential: Workplace Violence Prevention and Your Organizational Success is available from online retailers. Additional information about the book is available through Nancy Tamosaitis of Vorticom Public Relations by calling: 212-532-2208 or e-mailing Nancy at: nancyt@vorticom.com. 

All profits from the book will be donated to non-profit organizations dedicated to workplace violence awareness and prevention.

Blog re-posted by Steven Mintz, aka Ethics Sage, on February 21, 2102

 

 

 

Incentivizing Whistle-Blowing in the Workplace

Is Whistle-blowing an Ethical Practice?

 I have previously blogged about whistle-blowing and the Dodd-Frank Financial Reform Act, retaliation against whistle-blowers, and whistle-blowing within the corporate culture.  In this blog I look at incentivizing whistle-blowing as a way to encourage employees to come forward and report financial wrongdoing. This blog was first submitted and accepted as an opinion editorial in the Pacifc Coast Business Time and posted on TrustLaw Governance.

Is it right to spy on an employer and violate one’s confidentiality obligation in order to be financially rewarded for blowing the whistle on corporate wrongdoing? This is an important question from an ethical perspective in light of the greater acceptance by society of those who blow the whistle in part due to the increased level of fraud in government contracts and Medicaid programs, and fraudulent financial statements.

Estimates range from $60 - $80 billion fraud in Medicare based on $528 billion Medicare spending by the government in 2010. The government is actively seeking to recover fraudulent Medicare payments by encouraging employees to blow the whistle on illegal billing practices. It’s not just Medicare. Whistleblowing has come to the forefront since the early 2000s because investors have lost billions of dollars due to accounting fraud and homeowners have watched home values fade away because of the financial meltdown of banks and other financial institutions.

Fraud against the government may lead to whistle-blowing under the Federal False Claims Act. The Act imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. Under the FCA the Department of Justice is authorized to pay rewards to those who report fraud against the federal government in an amount of between 15 and 30 percent of what it recovers based upon the whistleblower's report.  The FCA was the government’s first attempt to incentivize whistle-blowing.

Additional laws have been passed in the last few years in response to accounting fraud at companies such as Enron and WorldCom and unethical practices by banks and financial institutions related to subprime mortgages. The Sarbanes-Oxley Act of 2002 protects whistle-blowers that report financial wrongdoing from retaliation by their employers including loss of job or other discriminatory employment actions. 

The Dodd-Frank Financial Reform Act that was signed into law by President Obama on July 21, 2010 allows whistleblowers to report a possible violation of the federal securities laws (including any rules or regulations) that has occurred, is ongoing, or is about to occur. The whistleblower must have a “reasonable belief” that a violation has occurred or is about to occur by possessing specific, credible, and timely information.

Dodd-Frank also incentivizes whistle-blowing by providing awards when a whistleblower voluntarily provides the SEC with original information that leads to the SEC’s successful enforcement of a federal court or administrative action in which it obtains monetary sanctions greater than $1 million. Under Dodd-Frank, an individual whistleblower may be eligible for an award of 10 percent to 30 percent of the monetary sanctions. Critics have called it the “bounty hunter” provision.

Amgen, a Thousand Oaks California company and leader in biotechnology, announced on October 24, 2011 that it had set aside $780 million to settle various federal and state investigations and whistle-blower lawsuits accusing it of illegal sales and marketing tactics of the anemia drug, Aranesp. To better market the drug, Amgen allegedly overfilled vials of Aranesp thereby providing doctors with free amounts of the drug to give patients and then charge to Medicare, Medicaid or private insurers. Millions were overbilled for this purpose.

In one lawsuit that  was filed five years ago, Kassie Westmoreland, a former employee, charged that Amgen  tried to persuade doctors to use Aranesp, rather than Procrit, a rival drug sold by Johnson & Johnson, by pointing to the extra profits the doctors could make by using the overfill and billing for it. The lawsuit filed under the FCA also alleged that Amgen offered kickbacks to doctors in the form of fictitious consulting arrangements and weekend getaways in order to steal market share from Johnson & Johnson. The federal government declined to join the lawsuit, but more than a dozen states did join, including New York and California.  Westmoreland could be entitled to part of any settlement under whistle-blower statutes.

Legislative support for whistle-blowing may serve as a deterrent to fraudulent practices. On the other hand it could lead some employees to spy on company actions, aggressively trace questionable transactions, and gather evidence of wrongdoing even if it has nothing to do with that employee’s job responsibilities. From an ethical perspective this would be wrong as it violates the loyalty obligation of an employee to the employer, although instances exist where other ethical values trump loyalty as discussed below.

Do the ends of stopping fraud and other wrongdoing justify the means of potentially spying on one’s employer? After all, whistleblowing is a drastic step to take. In certain cases I believe the ends do justify the means if we are to stem the rising tide of corporate fraud that has occurred during the past twenty years and its massive cost to society. Recently adopted laws attempt to level the playing field of corporate wrongdoing and the counter-balancing effect of knowing a company’s actions are under scrutiny by those in the know – employees who are well meaning.

I believe whistle-blowing is an ethical practice when there is clear evidence of significant, preventable harm to the public, and the whistle-blower has exhausted all internal avenues to effect change. Moreover, a whistle-blower who is complicit in the wrong doing has a moral obligation to help right the situation.

It is not the whistle-blowing in itself that creates the deterrent.  The possibility that the whistle will be blown has always been a reality for companies.  In this case the deterrent is created by the knowledge that employees stand to benefit financially from uncovering corporate wrong doing and therefore they may be proactively looking for opportunities to inform outside authorities.

What about loyalty to one’s employer and the organization? Loyalty is an important virtue but it should not be used to justify silence when the public good is at stake such as when public resources are being used for illegal purposes including fraudulent Medicare billings; fraudulent financial statements that lead to manipulated stock values; or when banks and financial institutions knowingly make loans to non-credit-worthy borrowers because the banks can transfer risk to someone else by selling off the loans to third-party investors.

The harm a company does to a community with unlawful practices outweighs the harm an individual does to one’s employer by blowing the whistle after attempting to right the wrong through internal means. If it takes a financial award to bring instances of illegal business practices and financial fraud to the attention of the government, then I believe it is an ethically acceptable practice as long as the whistle-blower, first and foremost, is motivated to act in the public interest and with the intent to right a wrong.

Blog posted by Steven Mintz, aka Ethics Sage, on February 18, 2012