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Does Higher Education Make the Grade in Institution-Wide Ethics?

September 22, 2004

Bentley's Center for Business Ethics has conducted a first-of-its-kind national survey of how four-year colleges and universities manage ethics and compliance across their institutions - uncovering surprising trends. With over 450 schools responding, the survey found that only 43 percent had an institution-wide ethics or compliance program, yet 79 percent thought they should have such a program.

 

The survey comes at a time when organizations are galvanized by corporate scandals, the Sarbanes-Oxley Act (SOA), and proposed amendments to the U.S. Federal Sentencing Guidelines, causing many to assess their ethics and compliance programs with renewed focus on corporate governance and accountability. Higher education may not have garnered headlines for fraud, self-dealing or other signs of moral meltdown, but it has come under greater government scrutiny regarding ethical conduct and compliance in sponsored research. Over the past five years a number of government investigations have resulted in suspension of federal research funding at several schools. Against this backdrop, the Center for Business Ethics (CBE) at Bentley College in Waltham, Massachusetts, conducted this in-depth survey sent to 2,399 college and university Presidents and Chancellors. The research principals were W. Michael Hoffman, CBE's founding Executive Director, and Tina S. Sheldon, CBE Research Fellow and Senior Compliance Officer at Harvard University. The survey was sponsored by PricewaterhouseCoopers and administered by Walker Information.

 

Hoffman and Sheldon believe that the survey provides important benchmarking information for institutes of higher education. While over the past ten years there have been a number of surveys examining the state of ethics and compliance programs in other industries (health care, telecommunications, banking and defense), Hoffman and Sheldon are not aware of any that have looked exclusively at higher education.

 

"At a time when society is looking to those who value integrity and demonstrate ethical leadership, I believe institutions of higher learning have a special role to play," says Bentley College President, Joseph Morone. "We, as educators, can and do promote the sort of cultures that inspire commitment to such values and behavior, across our campuses and in the wider world."

CBE's survey asked colleges and universities whether they had established an institution-wide ethics or compliance program. Hoffman and Sheldon were surprised to find that 48 percent of those schools with a program have had one for six or more years, nearly a third (31 percent) having established their programs 11 or more years ago. This is significant, Sheldon said, when one looks at the history of compliance programs in the United States.

 

In 1991 Congress enacted the Federal Sentencing Guidelines for Organizations (FSGO), setting forth parameters for sentencing organizations convicted of criminal offenses. The FSGO also outlines seven elements of a compliance program to prevent and detect violations of law. Many thought the guidelines only applied to large, for-profit organizations; however, in 1995 the government sent a strong message indicating otherwise. In a settlement of disputed Medicare claims, the University of Pennsylvania was required to pay the federal government $30 million in financial penalties and enter into a five-year corporate integrity agreement, a government compliance program.

 

Survey respondents with an institution-wide ethics or compliance program applied it to administration and faculty in 88 percent and 85 percent of cases respectively. However, only 65 percent of schools with a program reported that it applied to their governing board or trustees. Although the SOA does not apply directly to non-profit organizations, Hoffman and Sheldon found this result noteworthy given that the new regulatory landscape is stressing greater controls, financial stewardship and accountability. This apparent inconsistency may be explained by the survey's finding that 36 percent of schools with an institution-wide ethics or compliance program did not think the SOA affected their business practices and 32 percent did not know if it affected their business practices

 

In addition, the important issue of academic freedom - the freedom of faculty to teach and conduct research without censorship - was considered to affect institution-wide programs in 21 percent of cases. In those cases, over one-third of respondents (38 percent) felt that professional values conflict with the institution's values and 24 percent reported that academic freedom makes it difficult to hold people accountable.

 

Focusing on the seven elements of a compliance program identified in the FSGO, the survey asked a number of questions about oversight, governance, standards, training and monitoring:

 

Oversight is necessary for driving and maintaining any ethics or compliance program. The FSGO recommends that a high-level individual(s) provide such a role.
 

· 56 percent of schools with an institution-wide ethics or compliance program have an ethics or compliance officer, with over half (53 percent) having taken that initiative six or more years ago.

· Over three-fourths (79 percent) of those schools with an ethics or compliance officer have one or more full-time employees responsible for ethics and compliance.

o While this sounds encouraging, it should be noted that 84 percent of schools with an ethics and compliance officer require the incumbent to perform other job responsibilities or hold another position.

o Furthermore, nearly two-thirds (65 percent) of ethics or compliance officers with other responsibilities or positions allocate 30 percent or less of their time to ethics and compliance matters.

 

· While approximately half of the schools with a program have an ethics or compliance officer and less than half (42 percent) have an ethics or compliance committee, 62 percent of schools think that colleges and universities should have an ethics or compliance officer and/or committee.

 

Communication and training are also vital in sustaining an effective ethics and compliance program, not only in making people aware of the standards of conduct, but in helping them to achieve those standards.

 

  • 92 percent of schools with a program have a written statement of the institution's core principles or values and 91 percent have a code of ethics or code of conduct.
  • However, only 60 percent of institutions with a program offered ethics or compliance training to their employees.

     

    In addition, monitoring and auditing are an essential component of any ethics and compliance program for reporting and detecting misconduct.

     

    • Only one-third (33 percent) of the schools with an institution-wide ethics or compliance program had a helpline or hotline for reporting misconduct or seeking advice.
    • This may appear to be a small proportion, but the survey found that schools have instituted other forums or mechanisms for reporting potential misconduct.
    • 63 percent use e-mail
    • 24 percent use a private post office box
        • Only 80 percent of schools with an institution-wide program monitor ethics or compliance issues. Of those schools,

          § 81 percent perform routine monitoring

          § 72 percent conduct reactive reviews

          § 56 percent conduct proactive reviews

           

          The survey findings were presented this week in greater detail at the Association of College and University Auditors Annual Conference, and a full report of the survey findings will be completed later this year.

           

          The Center for Business Ethics at Bentley College has been under the direction of W. Michael Hoffman since its founding in 1976. A nonprofit educational and consulting organization, its vision is a world in which all businesses contribute positively to society through their ethically sound and responsible operations. The Center has sponsored ten major conferences on business ethics, the first in spring 1977, attracting hundreds of national and international leaders and scholars from a variety of constituencies. The Center also provides a variety of publications, research and teaching materials, as well as consulting services. Its board of advisers is comprised of senior corporate executives.

          BENTLEY UNIVERSITY is one of the nation’s leading business schools, dedicated to preparing a new kind of business leader – one with the deep technical skills, broad global perspective, and high ethical standards required to make a difference in an ever-changing world. Our rich, diverse arts and sciences program, combined with an advanced business curriculum, prepares informed professionals who make an impact in their chosen fields. Located on a classic New England campus minutes from Boston, Bentley is a dynamic community of leaders, scholars and creative thinkers. The Graduate School emphasizes the impact of technology on business practice, in offerings that include MBA and Master of Science programs, PhD programs in accountancy and in business, and customized executive education programs. The university enrolls approximately 4,100 full-time undergraduate, 140 adult part-time undergraduate, 1,430 graduate, and 43 doctoral students. Bentley is accredited by the New England Association of Schools and Colleges; AACSB International – The Association to Advance Collegiate Schools of Business; and the European Quality Improvement System, which benchmarks quality in management and business education. For more information, please visit www.bentley.edu

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