What: -Created an open environment where employees are comfortable addressing ethical issues.

Results: -Only about 16 percent of employees who call the company’s Ethics and Compliance Helpline request anonymity.

Top managers at Abbott Laboratories (www.abbott.com) don’t simply stand on a pulpit, espousing high ethical standards to employees; they practice what they preach. "Having management lead by example has a very powerful effect on instilling ethical standards in employees," says Charlie Brock, Abbott’s vice president and chief ethics and compliance officer.

The ethical standards set in the company’s Code of Business Conduct apply to all employees–regardless of their level–and the company encourages all employees to ask questions about the code and to raise any potential violations of it.

"The critical thing underlying all of what we do is encouraging an open environment where people feel comfortable bringing questions and concerns forward and getting help," Brock says. Abbott has accomplished that. Although callers to the company’s Ethics and Compliance Helpline are not required to give their names, only about 16 percent of callers request anonymity. "Most people feel comfortable calling and letting us know who they are," Brock attests.

Background Information

Five years ago, Abbott established its Office of Ethics and Compliance (Office) and formalized its policies and procedures related to ethics. The Office’s primary function is to provide guidance and train employees about the company’s ethical standards and its expectations of employees.

Brock describes the Code of Business Conduct as "a brief statement of principles that guide the conduct of Abbott’s business." The code articulates the company’s core values, key compliance requirements (in summary form), and a framework for ethical decision-making. "It’s the fundamental document from which everything else we do in the Office follows."

Every new hire receives the code, and it is distributed annually to all 60,000-plus Abbott employees worldwide. In the past, the company distributed paper copies, but this year, it will start using a 20-minute CD-ROM program that provides an overview of the code and allows employees to certify electronically that they have read the code, that they understand it, and that they will abide by it, according to Brock.

Abbott also provides both in-person and computer-based ethics and compliance training through its Legal Division, Human Resources, and the Office. Managers above a certain grade level and all sales and marketing personnel in the United States and Puerto Rico must complete certain training modules, including the Web-based Legal and Ethics Resource Network.

All of the computer-based training programs are available to employees 24/7 via Abbott’s intranet site. Employees are given a schedule for completing the training, but they can decide what day and time they’ll take the required courses.

How the Process Works

When employees have a question or want to report possible unethical conduct, they have several channels available to them. They can contact their supervisor, another manager, HR, Abbott’s legal department, or the Office, or they can call the Ethics and Compliance Helpline, which is managed by an internal administrator with the assistance of an outside vendor. The company also offers an online method for employees to ask questions or report possible unethical behavior.

"We feel that it’s important to give employees multiple alternatives," Brock says. "We want employees to ask questions. We want them to come forward when they have an issue they can’t resolve themselves."

No matter how a question or report is submitted, the same procedures are followed for handling the issue. All questions and reports are forwarded to the director of internal investigations in the Office, who logs them into a database and directs them to the appropriate department for handling and resolution, according to Brock.

What You Can Do

Brock offers the following advice to companies that want to strengthen their codes of ethics:

• Benchmark what other companies in your industry are doing.
• Conduct a baseline assessment of your own ethics program to identify areas that need improvement.
• Involve people from different levels of your organization in the planning phase and on an ongoing basis, for example, via surveys, so that you get different perspectives and gain buy-in.
• Remember that there’s no "one-size-fits-all" solution. Customize your ethics program so that it works for your organization.
• Be open to change and make adjustments as required by regulatory developments, through ongoing risk assessment, or as required by business needs.
• Make sure that the structure of your ethics function is aligned with the structure of your business.
• Actively engage management in the design and implementation of the program, and actively engage the board of directors in the exercise of its oversight function.
• Focus continuously on process efficiency and simplification.