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Comply with the new ethics-training rules in 7 easy steps

by on
in Human Resources

Issue: New federal guidelines require all organizations to establish an ethics-training program.

Benefit: By taking the lead on this issue, you'll cut the organization's liability risk and impress the brass.

Action: Make sure your ethics program covers the seven basics listed below.

Get moving if your organization is among the many that put off establishing an ethics-training program, as required by updated federal sentencing guidelines that took effect Nov. 1, 2004.

Why the need? The guidelines, a product of the 2002 Sarbanes-Oxley Act on corporate accountability, require you to periodically provide ethics training to all employees. The rules apply to organizations, public or private, large or small.

The guidelines make clear that employers can face big fines for their employees' criminal actions, such as bilking customer accounts. The good news: Employers can reduce such fines by up to 95 percent if they can prove that they had an effective ethics-training program and that the criminal action was an "aberration."

Employers with fewer than 200 employees can train through informal staff meetings, but those with 200 or more must provide formal training. The guidelines provide few specifics on what your ethics programs should include. Here are the seven basic requirements cited in the guidelines, plus our advice on how to satisfy each.

1. Take "reasonable steps" to teach ethics standards and procedures to employees. Cover areas that employees have been known to violate, such as handling confidential information; conflicts of interest with clients and competitors; private use of company property; and accepting gifts, meals and favors from vendors.

2. Provide periodic updates. After the first training session, hold regular meetings to reinforce core ethics principles and provide updates on laws and policies. Include lots of hands-on discussion about ambiguous ethical problems and case studies.

"Hire an ethics trainer or do it yourself. Don't let lawyers do the training because they make everything about legal compliance, and ethics is more than that," advises Kenneth Goodman, co-director of the ethics program at the University of Miami.

3. Establish procedures to unearth criminal conduct. Based on your organization's size, industry and how it's organized, decide whether it needs an ethics compliance officer, an internal or external complaint hotline or both. Should HR, the legal department or a compliance officer handle complaints (or a combination)?

4. Top execs are responsible to ensure the ethics program's effectiveness. Ask the CEO to demonstrate commitment to ethics training by introducing each session.

5. Keep people who have acted illegally or unethically out of high-ranking positions and discipline violators. Maintain a zero-tolerance ethics policy.

6. Evaluate and audit the program. Keep records of people who come forward with issues, participate in training and make phone calls to hotlines.

7. Offer incentives for employees to act ethically. Hold a yearly Ethics Recommitment Day, during which employees re-read and re-sign the company's policy. Publicly praise examples of ethical conduct.

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