Many HR pros may hesitate to try building an ethics program in their companies, fearing the process is complex and difficult and will be a tough sell to management. Consultants at Allegiance have created a guide to establishing a good program, and they say it's not tough at all.

Here's how to sell it. No program has a chance of success if it's seen as an HR initiative: The messages and the commitment have to come from top management. And, says Allegiance, you can sell them on the project by pointing out that it will:

• Reduce risk;
• Reduce fraud;
• Reduce litigation; and
• Make for happier employees, who will be more productive.

Here are some convincing facts to bolster up your sales pitch. Research from DePaul University found that "[c]ompanies explicitly committed to an ethics code return shareholder value at twice the rate of other companies." And a white paper from International Survey Research reported that investment records revealed that 17 organizations known to be facing ethics crises lost share price at "four times the rate of the Dow Jones Industrial Average." The second statistic isn't likely to surprise your top management, but the first one might.

In addition, here are some facts from the most recent report of the Association of Certified Fraud Examiners: U.S. companies lose an estimated 5 percent of annual revenues to fraud. Furthermore, because the schemes can be very difficult to detect, the median length of one was 18 months between inception and discovery. Finally, tips (often from colleagues or subordinates) are the most common means of detecting fraud schemes.

Six vital components of a program. Allegiance experts recommend the following key pieces of a successful ethics program.

1. Create a code of conduct that can be enforced. This foundation can also be called a code of ethics, and the basic draft should come from top management--but HR can also be vital to the process. Allegiance warns organizations not to design the code "as a reaction to past missteps," but instead to encompass the organization's mission and activities. Then share the draft with employees, asking them for suggestions and input. When employees are involved in creating the code, they are more likely to take ownership of it.
2. Train--then train some more. Help executives and employees understand what's expected of them and why--that an ethical culture can protect and enhance the organization's reputation and boost profits. Each individual needs to know what the direct impact of his or her ethical or unethical choices will be on the success or failure of the company. Training should begin during new-hire orientation and continue for as long as he or she stays with the organization.
3. Communicate regularly about the company's ethics program. A study in 2007 found that "less than 40 percent of employees are aware of comprehensive ethics and compliance programs at their companies." Bolster a corporate-wide newsletter with small group meetings, and encourage discussion about ethical questions to create an ongoing conversation.
4. Implement an anonymous hotline for reporting breaches of ethical conduct. Employees need a confidential way to blow the whistle, or they're likely to fear retaliation. Allegiance offers a service called SilentWhistle; see its website at www.allegiance.com/silentwhistle/index.php. There, the company offers a 3-minute online tour of the reporting system.
5. Enforce the code, and do so publicly. Employees need to know that violations are taken seriously and that the company will act. The same 2007 study, by the Ethics Resource Center, found that "the rate of misconduct is cut by three-fourths at companies with strong ethical cultures." If management is hesitant to enforce the code, repeating such names as WorldCom and Enron may persuade them.
6. Reward employees who "live the culture." Employees are more likely to follow company policy because of a system that combines positive reinforcement and motivation with punitive measures than a system that uses only punishment. Employees should be publicly praised for adhering to the code of ethics. Bonuses, based on the company's savings or increased revenues, could be awarded. And, specific, constructive suggestions designed to improve compliance should be individually rewarded.