How Do You Track Ethics? by Wendy Meyeroff, Ghostwriter Who Grabs Attention

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How Do You Track Ethics? A Web portal offers major impact in alerting Staples execs to questions/complaints. by Wendy Meyeroff

he Sarbanes-Oxley ethics law passed early in the 21st century in the wake of the Enron and Worldcom scandals, which created recognition that public companies needed more than just a code of ethics on paper. “A lot of companies had that code, but no real way to incorporate ethics and compliance into their business culture,” says Nan Stout, a vice president at Staples. Stout isn’t just any VP. She has a fairly unique title: vice president of business ethics. She assumed that title in 2004, after she’d been responsible for labor and employment law at the company for about 10 years. She says after the ethics law was enacted, “a lot of companies had a code of ethics, but no real way to incorporate ethics and compliance into their business culture. We held ourselves to a higher standard.” That’s an admirable goal, but how do you track whether those standards are being upheld — especially in such a large company? Staples’ roster of employees has grown from 15,000 to 91,000 — in 25 countries — in Stout’s decade there. To help her, Stout turned to a vendor called EthicsPoint, a provider of phone and Internet hotlines that allow coordination of business questions/complaints.

Set Clear Standards Before Stout could begin to talk to EthicsPoint, she had to have some standards to follow. Staples has an extensive Code of Ethics, plus “Staples Soul,” a clearly defined mindset. The Staples Soul report (available at www.staples.com/sbd/content/about/soul/reporting.html) details Staples’ attitude on such issues as working with minority- and women-owned businesses, its support of local and national charitable organizations, and where it feels its future responsibilities lie as the company grows. Not only are all employees held to these standards, so are Staples’ suppliers and even its customers (at least the larger ones with which it does business). Regarding the latter, Stout uses this example: “We had a meeting clarifying and reinforcing our ethics 8

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standards for the top 250 leaders in those 25 countries. One manager talked about a time when we were first moving into the printing/copying aspect of Staples’ services and there was a customer who wanted to hire us. There were some concerns about the types of material we were being asked to produce, and we felt this would have a deleterious effect on our associates and on morale in the group. So although in the short term we would have made nice money, it was decided that over the long term it was better to turn down this business opportunity.”

Define What Needs To Be Tracked Any type of harassment or discrimination (e.g. race, gender, sexuality), instances of financial misappropriation or retail theft, and retaliation are just a few of the issues with which a company like hers has to cope. She notes that ethics needn’t always involve some type of malfeasance. “Someone might want an avenue for offering a compliment,” she says, or they might want guidance or reassurance on how to handle an issue, such as a dilemma a Brazilian manager raised in a meeting. “He noted that in his country the mindset is one in which when the boss says ‘Jump,’ the staff asks, ‘How high?’ But that’s not a Staples value; we don’t accept a climate of Yes men,” she says. “Instead, he was reassured that as he hires new people, he can spend time encouraging them to become active employees, bringing in new ideas.” That manager can now easily enter that question, and get an answer, through EthicsPoint, instead of waiting for the annual meeting. And he has an avenue for anonymity if he doesn’t feel comfortable raising the issue face-to-face. Stout had to be able to enter and coordinate questions/complaints despite the numerous avenues through which they can surface. “It could be verbal: someone walking into HR and saying, ‘I’m being denied a promotion.’ Or it could be written, such as an anonymous letter that comes to the CEO,” she says.

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Keep Records In Order Such diverse reporting avenues could make it difficult (maybe, realistically even impossible) to track and respond to all complaints. Rather than just gleaning samples of issues that arise, Stout wanted to find a way for all reports to come through one resource. Initially she chose to establish an internal employee hotline to gather comments/complaints. But Stout quickly realized that there were a couple of benefits to having an outside vendor run what she refers to as a “helpline.” One is that Staples doesn’t have to absorb the costs (e.g. payroll, benefits, training) of having 24/7 staff for the monitoring. “Perhaps even more importantly, using a third-party system improves employee confidence that issues aren’t going to be swept under the rug by internal higher-ups,” Stout says. Stout quickly decided to add the other EthicsPoint option for making company reports: processing complaints/inquiries through a Web portal. “People are increasingly mobile. A lot of our folks are on the road, so they can access the Web portal and enter details of a case from their BlackBerry or a laptop, while it’s fresh in their minds. And once they’re back in the office, that’s one less administrative task that’s waiting on their desk,” Stout says. Other things that make a Web portal a more likely resource for feedback: An employee can enter their issue anonymously through a home computer if that’s more comfortable. Also, if you’re dealing with any significant number of people raised in a digital era, you may find they may feel more at ease texting or emailing a message, instead of picking up a phone or writing a letter. Investment Considerations If you’re going to consider hiring a tracking service like EthicsPoint, you need to make two main decisions. First, there’s your budget. (Stout won’t discuss what she spent, but she did say she chose the “Enterprise” package, which is the highest level of the three service packages EthicsPoint offers.) Second, do you want the Internet access or just a phone helpline? (As noted, Staples started with only the phone line but now utilizes both options.) After that, you need to define a variety of specifics. “There are a lot of logistical issues to settle,

As VP of business ethics at Staples, Nan Stout’s responsibilities cross many departments including HR, store operations, and loss prevention.

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especially with so many suming aspect of getting a units in so many countries,” system like EthicsPoint set she says. “We needed input up. (The vendor says discusfrom HR, our loss prevensions began with Staples in tion group, and other diviApril 2005, and the system sions to find out what are was fully operational by that the issues we want to track. October.) What information did we need on those issues? Who Third-Party was going to be involved in Administration Eases the investigation process? Implementation “We needed input from HR, our loss How do you want the sysTo implement a solution like tem organized so you can prevention group, and other divisions to find this in the old days, you’d track the info down the probably have to buy a softout what are the issues we want to track.” road?” Then her team and Nan Stout, VP of business ethics, Staples ware program that the IT EthicsPoint worked togethdepartment would have to er to make sure that, starting with the landing page understand and install. That’s not the case anymore. (which is clear and easily readable), the system was as easy Staples’ helpline (now called “Staples EthicsLink”) is for employees to understand as possible. accessed through a toll-free number. For website entries, What happens once employees enter data? Stout all that Staples people need is a computer and Internet explains: “Who’s going to have access to this system in access. There was no software to install. “Besides me, your organization? I, for example, have access to every there are about 200 managers who are able to access the single case entered, whereas someone who’s a manager of back end of the system,” says Stout, “but that’s just a ethics investigation in California only has access to cases matter of setting them up with their own codes/passthey need to know about in California.” These and many words.” Aside from that, there’s really not much an IT other decisions, she says, are really the most time-condepartment needs to do. “When an employee makes a

The Practicalities Of Tracking Ethics When Staples chose the Issue and Event Manager (IEM) terns more visible than traditionally filed paper reports, so a from EthicsPoint (based in Oregon), it was looking for help in company could potentially see evidence of stealing (or at least tracking feedback on its business ethics and values from some kind of loss) even without the aforementioned staffer tip. employees, vendors, and even large customers. While the EthicsPoint’s IEM provides three levels of case IEM delivers that, Staples also found it receives management service packages as options: more. Standard, Professional, and Enterprise. Costs Although an ethics program is not software begin at $2,000 and go up, depending on which designed to track theft the way an inventory package a company chooses and also what control package would, a package like IEM can type of personalized service a client seeks (like still offer insights into such a problem, especially the one-on-one support manager that Staples since it allows for anonymous reports. The comchose). The highest level allows integration of pany might receive tips about an employee or a multiple workflows, and offers global consisgroup someone sees stealing in a certain outtency. All levels provide SaaS (Software as a Staples uses technology to monitor let, or it can allow a whistleblower to alert the ethics compliance and improve the Service) delivery, designed to lower costs. To company of a vendor’s overcharging. In con- company’s culture. enhance security, each IEM implements 128trast, Staples can also receive reports on a bit SSL encryption between the EthicsPoint vendor that’s doing outstanding work. site and the client’s Web browser. Having all this data coordinated in one system (which System setup can be almost immediate, although modificaEthicsPoint keeps secure via several off-site backups) pro- tions for higher-level customizations require discussion both vides numerous advantages. It helps Nan Stout, Staples VP of with your staff and vendors. In Staples’ case, it took about six business ethics, generate finely honed reports, like the pre- months between initial discussions and when both the helpline sentation she provides each quarter to the board of directors. and Web portal were fully operational. It also allows for easier data analysis than when questions, praise, or complaints about Staples’ policy were collected via For More Information On EthicsPoint numerous methods (e.g. a snail mail letter to the CEO plus a Go To www.ethicspoint.com face-to-face with an HR manager). It makes trends and pat-

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rest being through the EthicsLink helpline). With all reports Web entry, EthicsPoint sends an email to alert me. ultimately coming through EthicsPoint, instead of scattered Initially those were getting spam filtered,” Stout says. in all sorts of media (e.g. phone calls, HR files, memo pads), That didn’t take long for IT to clear. Stout and her people now can analyze more easily which Instead, EthicsPoint is generally in charge of impleissues are arising and where. menting changes, based on Staples’ Maybe one sexual harassment case feedback. “Because we’re such a “We may ask questions like, ‘Do went unproven in a particular location large client, we have a customer serwe need to do a better job of but, thanks to the EthicsPoint records, vice contact dedicated to Staples. communicating and training?’ or she and her team are able to see it’s With the latest release of the Enterprise version we use, we can ‘Is there someone who has to be part of a pattern occurring there. Stout says, “We may ask questions like, actually go in and, working with our terminated?’ Either way, we EthicsPoint contact, make changes recognize there’s an action that ‘Do we need to do a better job of communicating and training?’ or ‘Is in certain drop-down menus,” Stout needs to be taken, and we’re says. holding ourselves accountable.” there someone who has to be terminated?’ Either way, we recognize When there’s some kind of systhere’s an action that needs to be temic change that’s seen as needed, Nan Stout, VP of business ethics, Staples taken, and we’re holding ourselves Stout has found EthicsPoint is very accountable.” good in making modifications that This central data collection, in one file, also makes it easier help all its clients. One example she offers: “Initially we for multiple investigators in different areas to collaborate. could find a case only via its case number. Now they’ve Someone in New York might be concerned about theft patmade the search viable through the party’s name and terns and wondering if it’s exclusive to her area. A message location, as well as that number, which is much easier.” to her colleagues can discover whether they’ve seen the same Otherwise, the main time IT gets involved is when a pattern. It would have been much harder to find the New new Staples location opens. They have to assign a locaYork pattern, let alone compare notes, when everything was tion number for that new outlet so that even if an in paper files. employee is offering an anonymous entry (which is posTo make sure that collaboration goes smoothly, Stout has a sible) the system indicates which location it refers to. One staff member who helps educate people on what the Ethics area in which stronger IT involvement might be needed, office’s standards are and how to use EthicsPoint to meet she says, is if she decided to integrate all the extensive those expectations. “They monitor compliance with our data from a Human Resource Information System requirements on a weekly basis.” (HRIS). Now when Stout has to present her latest issues to Stout says it’s actually a good thing that IT has limited Staples’ board every quarter, those reports are no longer involvement in a program like hers. “Confidentiality is extrapolations of what issues are arising where, her situaabsolutely critical to these reports, and that’s easier to tion when reports came through so many diverse venues maintain when they’re administered through a third party. (or didn’t come in at all). “Working with EthicsPoint helps No one in IT can see individual cases. They’re seen only me present the board with specific highlights in my area, by people who have a true need to know,” she says. e.g. new issues coming in and where we are seeing them. When there are complaints being substantiated, I have to System Manages, Organizes Ethics Data show they’ve been recognized and what specifically we are Stout chose EthicsPoint because the company is both up doing,” Stout says. on technology and on ethics and compliance. That meant Stout concludes, “We’ve been able to pinpoint the most it could truly advise her on what she needed, perhaps common type of issues and where they’re occurring. We even help define that. definitely have more visibility into what’s happening. The “You need to spend time with a vendor, so they should biggest challenge is vigilance and ongoing management and be accessible to you. Ask for a demo; have them walk you getting everyone growing in the same direction. through it. Get a chance to use the product. Ask a lot of EthicsPoint technology provides excellent solutions to questions; I had a colleague at another company who ■ meet that challenge.” went to EthicsPoint’s call center and talked with them for 7 hours,” she says. Since last year, Stout estimates up to 65% of her departWendy Meyeroff is a Maryland-based freelance business writer. ment’s issues come through the EthicsPoint Web portal (the RetailSolutionsOnline.com

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