Abstract
In this paper, we examine whether ethics officers are able to perform their assigned duties independently of organizational management. Specifically, we investigate whether inherent conflicts of interest with company management potentially hinder the ability of ethics officers to serve as an effective monitor and deterrent of unethical activity throughout the organization. As part of our analysis, we conducted 10 detailed phone interviews with current and retired ethics officers in order to determine whether practicing ethics officers feel the need for additional independence protection from management. We propose that the current system in which ethics officers report to management must be changed in order for ethics officers to effectively perform their jobs. Specifically, we maintain that ethics officers should (1) be hired by, (2) be fired by, and (3) report directly to the corporate board of directors rather than company management. Such a change in the reporting environment would greatly enhance the independence of ethics officers.
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W. Michael Hoffman, Ph.D., is the founding Executive Director of the Center for Business Ethics at Bentley College. He received his Ph.D. in Philosophy at the University of Massachusetts/Amherst, has authored or edited 16 books, and has published over 70 articles. In addition, Dr. Hoffman was the first Executive Director of the Ethics Officer Association and currently is the advisor to its board of directors.
John D. Neill, Ph.D., CPA, is a professor of accounting at Abilene Christian University and has previously published articles in numerous journals including the Journal of Business Ethics, Journal of Accounting Literature, Accounting Horizons, Journal of Applied Business Research, the Financial Analysts Journal, and the Journal of Accounting, Ethics, and Public Policy.
O. Scott Stovall, Ph.D., is an assistant professor of accounting at Abilene Christian University and has published articles in the Journal of Business Ethics, Journal of Applied Business Research, Management Accounting Quarterly, and The Journal of Accounting Case Research.
Appendix I
Appendix I
Ethics Officer interview questions
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1.
What is (was) your official title within the organization and how long have (had) you been in your EO position?
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2.
What are (were) your primary duties (please discuss your formal job description and any informal/implied duties)?
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3.
Who determines (determined) your duties or role within the organization in which you work (worked)?
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4.
To whom do (did) you report?
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5.
Who hired you?
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6.
Who in the organization sets (set) your compensation level?
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7.
Who has (had) the authority to fire you?
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8.
How important is it for ethics/compliance officers to be independent (i.e., operate without significant conflicts of interest and/or undue pressure from management)? Please discuss briefly.
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9.
Do (did) you feel that your reporting relationship in any way hinders (hindered) your ability to carry out your duties independently, objectively, and free from conflicts of interest and pressures from management? Please discuss briefly.
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10.
If you report (reported) to a member of management, do (did) you feel that you could do your job more effectively (or with less pressure from management) if you reported directly to the board? Please discuss briefly.
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11.
Do you think that ethics officers can only operate independently if: (a) they report directly to the board? (b) they are hired by the board? (c) they can only be fired by the board? Please discuss briefly.
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12.
What tradeoffs (downside, difficulties) do you think that ethics officers would experience if they reported to, were hired by, and could only be fired by the board of directors? Please discuss briefly.
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Hoffman, W.M., Neill, J.D. & Stovall, O.S. An Investigation of Ethics Officer Independence. J Bus Ethics 78, 87–95 (2008). https://doi.org/10.1007/s10551-006-9312-1
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DOI: https://doi.org/10.1007/s10551-006-9312-1