Long-term readers of Ethisphere Magazine will know that every year around this time we open the World’s Most Ethical Companies® process. Opening the process is always exciting, because it is a culmination of a tremendous amount of work on our side pulling together edits to this year’s Ethics Quotient (EQ) questionnaire. As long-time members of the Ethisphere community know, we review the Ethics Quotient every year to ensure that it reflects the most current expectations in ethics and culture best practices. The EQ changes every year; some years the edits are minor, reflecting our desire to clarify a question or an answer option. Some years the edits are major because of developing best practices or regulatory updates. This year is a year of major edits, and the team here at Ethisphere used their expertise to interpret what the regulators are saying, pull the pragmatic out of the theoretical, and update the EQ accordingly.
For example, there’s a line in the Evaluation of Corporate Compliance Programs about having compliance expertise on your board. But what does that mean? Is it having somebody on your board who is the chair of an audit committee of another publicly traded company? Somebody who has actually been a chief compliance officer? Somebody who has been a CEO? That’s just one example of the ways in which this year’s EQ gets very granular with answer options so that we can get a real sense of the ways in which people are trying to position compliance expertise on the board.
Elsewhere in the EQ, you will see changes to questions around incentivizing ethical behavior, training managers to be strong ethical leaders, evaluating ethics and compliance program leaders, and board diversity, just to name a few. We have also substantially edited the questions around conflicts of interest—which have made an awful lot of headlines, recently, from small companies all the way up to the Supreme Court.
The issue with a conflict of interest is on whose behalf you are acting. Are you serving the mission and the people of the organization that you’re representing? Or are you serving yourself? Conflicts of interest disclosures matter because they are a question of trust, reliability, and servant leadership. The challenge with conflicts is if you don’t disclose them, you lose a little benefit of the doubt. It’s one of those topics where people are trying to figure out what the right process and protocol is, which is why we keep editing those questions to get more information on how companies are doing it today so that the broader public has faith in the organizations and institutions that it needs to trust.
I am so proud of the work we do around the World’s Most Ethical Companies® because at the core of our process is the firm belief that ethical companies outperform their peers. We don’t ask people to make a binary choice between doing the right thing and doing the right thing for the business, because they are the same thing. These practices are not a cost center but a business driver and a value-creator. In the long run, they lead to organizations that are better for themselves, better for their customers and stakeholders…and better for everyone.