Outsourcing the Ethics Office?
By Ed | November 24, 2008
By Ed Petry, Vice President of Ethical Leadership Group, a Global Compliance company
It hasn’t happened yet. I don’t know of any company that has completely outsourced its Ethics and Compliance function, but there are certainly signs indicating that it is becoming a viable option. Now is a good time for the all of us to give it some serious thought, to weigh the pros and cons and to prepare.
Before you dismiss the idea as preposterous, remember originally the job of Ethics Officer was not thought of as a permanent position. Many of the original Ethics Officers in the late 1980s thought of their positions as a temporary stop to be filled on a rotating basis by up and coming managers. It was only later that an emphasis was placed on the benefits of long-term Ethics Officers who would bring continuity and institutional memory to the job. But, especially in difficult economic times, it wouldn’t be surprising for companies to reconsider the value of what amounts to “tenured” positions. Change, flexibility and cost reductions are powerful arguments against the status quo.
In an earlier blog we also discussed the weight that is often given to independence. One could easily imagine the “independence argument” being used in this context: “It is critical for our employees, regulators and all of our stakeholders to trust that we are objectively assessing our own internal business conduct. For this reason, effective immediately, the Board has agreed to hire the firm of Arms, Length and Howe to oversee and manage our Ethics and Compliance function.”
The ground work has already been laid. Not too many years ago the wisdom of outsourcing a helpline was hotly debated. On the one side, there were those who argued that only an in-house helpline could have the expertise to handle calls and probe for details. Outsourcing, they claimed, would be an admission that employees were correct not to trust management. On the other hand, the outsourced helpline was clearly more cost effective, translation and 24/7 services could be provided, professional intake specialists could offset the advantage that might come from being in-house and “knowing the business,” and third parties could guarantee confidentiality and independence to a degree that would be otherwise impossible. Today, the argument is over. While some companies still choose to handle calls in-house, few argue that outsourcing the helpline is a mistake.
It’s also important to note that over the last decade or so, expertise has migrated outside the organization. Today there are plenty of knowledgeable individuals, many with years of hands-on experience running ethics programs, who are consultants. This wasn’t the case in the early nineties.
The outsourcing of the Ethics and Compliance function is already well underway in the area of communications and training. In some companies computer-based training has relegated the Ethics Officer to the role of a coordinator who provides some content but is largely responsible only for designating who is required to take specificed courses, and following up to assure attendance. At the other and of the spectrum, in many best practice companies, communications and training has been successfully handed off to managers. In either case fewer and fewer Ethics Officers are delivering training. How long before someone wonders if the Ethics Officer role in these matters could be handled by Communications, HR or an external vendor?
The increasing popularity of surveys for monitoring and assessing program effectiveness and employee opinions is another area ripe for outsourcing or at least shifting to other corporate function areas. Surely there is someone in Marketing with survey expertise and Human Resources certainly has the infrastructure to handle the administration of surveys – perhaps they already do administer your Ethics and Compliance surveys.
Of course someone might point out that much of what I’ve mentioned here is simply the fruit of integrating the program into the organization. That’s correct, and it is a move in the right direction. But what of the Ethics Office? Has integration along with outsourcing of Helplines and training already radically changed the nature of the Ethics Officer position? And what changes in this same direction are we likely to see over the next year or so?