HomeMy WebLinkAboutResearch paper on Ethics in Municipal Government by Betsy Webb Running head: WHAT IS GOOD AND WHAT IS RIGHT: ETHICS IN MONTANA
MUNICIPAL GOVERNMENT
What is Good and What is Right:
Ethics in Montana Municipal Government
by
Elizabeth J. Webb
Montana State University
Completed in partial fulfillment of the requirements for EDCI 607
Quantitative Educational Research
Dr. Arthur Bangert
November 30, 2011
Table of Contents
Page
List of Tables 3
Abstract 4
Chapter One 5-13
Background, Problem Statement, Research Questions
Chapter Two 14-20
Literature Review
Chapter Three 21-25
Methods
Chapter Four 26-33
Results
Chapter Five 34-42
Discussion
References 43-47
Appendices 48-53
Appendix 1. Ethics and compliance program components 48
Appendix 2. Table of specifications 49
Appendix 3. Perceptions of Ethical Climate assessment 50-51
Appendix 4. Survey used with two First Class cities for this pilot study 52-53
2
List of Tables
Table Page
1. Cronbach's alpha 27
2. Observations of misconduct in the past six months 28
3. Reporting of observed misconduct in the past six months 29
4. Descriptive Statistics for the ethics program effectiveness cohort, items 30
935, 36, 37, 38
5. Ethics cohorts in study; ethics code awareness, perceptions of ethical 31
decision-making process, perceptions of ethical resources scales,
perceptions of informal ethical norms, perceptions of ethical leadership
3
Abstract
To determine the effects of a formal ethics program on observations of misconduct, reporting of
misconduct, and perception of ethical culture, two Montana First Class cities were selected to
study. A 38-item survey was utilized and independent-samples t tests were calculated. Three
years after implementation, a formal ethics program made a significant difference in Ethics Code
Awareness, Perceptions of Ethics Program Effectiveness and Perceptions of Access to Ethics
Information. No significant differences were found between employee groups on Ethical
Decision-Making, Perceptions of Ethical Resources Scale—Time and Money, Perceptions of
Informal Ethical Norms, and Perceptions of Ethical Leadership. There were no significant
differences in observations of misconduct or reporting of misconduct among the employee
groups.
Keywords: ethics, ethics program, ethical culture, misconduct
4
Chapter I
Background
In today's polarized political environment, it is commonplace to open a newspaper and
discover a story highlighting the ethical violations of an elected official or government
employee. Ethics news stories quickly gain national, and occasionally, international attention.
Examples have included ethics investigations into campaign practices, public employee's use of
personnel to perform manual labor on private property during work hours, accepting gifts, and
using public office for private gain. Public mistrust of government is at a record high, the tea
party is demanding a smaller and more efficient government, and procedure hawks are
challenging government decisions through litigation. The perception of compromised ethics is a
significant obstacle to small municipal governments in delivering essential services effectively.
And it is not getting any easier. Issues facing local government will continue to grow more
complex as a result of a devolving federal system, changing demographics, economic hard times,
and declining resources and revenues.
A Pew Research Center (20 10) study reported that Americans are less positive and more
critical of government than in the past. Paralyzing partisan politics, public discontent, an on-
going economic recession, and criticism of Congress and elected officials are all contributing to
distrust in government. The study revealed that just 22% say they can trust the government in
Washington D.C. and 51% now see the impact of their local government as positive, down from
64% in 1997 (Pew Research Center for the People & the Press, 2010).
The 2007 National Government Ethics Survey, along with supplemental research reports
completed by the Ethics Resource Center in 2010, introduced areas for risk management in the
5
ethics arena. Research has shown that well-implemented ethics and compliance programs double
reporting and lower the rate of misconduct (ERC, 2008). A strong ethical culture also increases
reporting and cuts misconduct in half(ERC, 2010). When both a well-implemented ethics and
compliance program and a strong ethical culture are in place, misconduct drops by 60% and
reporting rises by 40% (ERC, 2008). Additional research shows a connection between lawful,
ethical conduct and productivity in the workplace. In times of scarce and limited resources,
productivity is increasingly important in providing effective government services (LRN, 2007).
With historically low rates of trust in government at federal, state, and local levels, the present
time is ripe to research the effectiveness of ethics programs and their impact on municipal
government.
A study of an ethics initiative in City of Denver (Jovanic, 2007) was conducted to
determine how talking about ethics contributes to an ethical culture. The Denver study points to
the need to include a variety of interventions to address ethical culture from a systems and
communications perspective. The ERC (2008) defines a comprehensive ethics and compliance
program as one that includes a code of conduct, a way to report observed violations
anonymously, a mechanism for employees to seek advice on ethical matters,training for all
employees on code of conduct and ethics policies, a mechanism to discipline employees that
violate the code or ethics policies, and evaluation of ethical behavior as a part of regular
performance appraisals. All six of these factors must be present for a comprehensive approach.
An additional study of ethics training (Frisque & Kolb, 2008) documented that ethics training
had a significant effect on employee's attitudes and knowledge, but that the training was not
significantly effective over a period of time (after ninety days in this study). These results bring
into consideration the frequency of ethics trainings for changes in attitudes, knowledge and skills
6
to remain significant. Pelletier& Bligh's study (2006) researched preconditions for ethics
program effectiveness. The study examined the importance of ethical leadership, formal ethics
codes, and informal ethics norms in influencing employee perceptions. Results suggested that
employee perceptions of the organization, ethical leadership, and informal norms were related to
their perceptions of ethics program effectiveness. The authors recommended that organizations
take steps to ensure that the organization's leaders model the espoused values to enhance
perceptions of effective ethics programs.
It may not be sufficient for employees to simply perceive that ethics programs are
effective; this study is interested in whether a municipal government translates the
implementation of ethics programs into behavior (observations of misconduct and reporting
misconduct) and strength of ethical culture.
Problem Statement
It is unfortunate that within the current climate of mistrust in government,the National
Government Ethics Survey (ERC, 2008) demonstrated that misconduct in government is very
high. One in four government employees works in an environment conducive to misconduct.
Strength of ethical culture in government is declining while pressure to commit misconduct is
growing (ERC, 2008). Local governments across the USA provide essential services to the
public which include water and sewer systems, police, fire, and libraries. When the public lacks
trust in their local elected officials, it is difficult to provide these services effectively. Raising
rates to cover costs becomes suspect, and a pro-active approach to planning in municipal
government is challenging when officials' motives are questioned at every step. Effective ethics
and compliance programs that reduce misconduct, along with the establishment of strong ethical
7
culture, may be part of the solution to the rift between public perceptions of mistrust and
providing essential government services.
In Montana, elected officials, appointed officials, and government employees are bound
by the Montana State Code of Ethics (MCA 2-2-101 —2-2-144). However, most are not supplied
with a copy of the Code or training regarding the Code. An informal survey of municipal clerks
in Montana revealed that 75% of municipalities do not give new employees a copy of the
Montana State Code of Ethics upon hire and 93% of municipalities provide no training on ethics
to their employees (survey initiated by this researcher, conducted by Survey Monkey, October
2011, emailed by list serve to 129 Montana municipalities, 45 responses or 35%).
Where national ethics surveys have contributed to research findings collectively among
local, state and federal governments (ERC, 2008), little has been done to study individual units
of government and the effectiveness of local ethics programs. Three studies previously
mentioned (Jovanic, 2007; Frisque & Kolb, 2008; Pelletier& Bligh, 2006)recommended
additional research into the effectiveness and impact of ethics trainings on employees and ethical
culture.
The purpose of this research study is to determine the effects of a comprehensive ethics
and compliance program on observations of misconduct, reporting of misconduct, and the
perception among employees of a strong ethical culture. The current pilot study will add to the
knowledge base of local ethics programs and their effectiveness in creating a strong ethical
culture in municipal government.
In the state of Montana, there are 129 incorporated cities and towns, and 56 counties.
The results of this study may serve to guide the development and/or improvement of ethics and
8
compliance programs in municipalities and counties across the state. Research suggests that
municipal governments, taking active steps in implementing ethics training programs and
strengthening ethical culture, can make a significant difference in ethics risk management and
restoring public trust (ERC, 2008).
Research Questions
A review of the literature and research studies, along with an interest in the effects of
comprehensive ethics and compliance programs on municipal government, leads the researcher
to the following questions:
1. Do employees of municipal governments with ethics and compliance programs observe a
significantly lower rate of misconduct than municipal governments who do not have such
programs in place?
2. Do employees of municipal governments with ethics and compliance programs
demonstrate a significantly higher rate of reporting misconduct than municipal
governments who do not have such programs in place?
3. Do employees of a municipal government with an ethics and compliance program in
place perceive the ethics program as effective?
4. Do employees of municipal governments with ethics and compliance programs perceive
a stronger ethical culture in their work environment than employees of municipal
governments who do not have a formal ethics program in place? This question includes
the variables of perceptions of ethical code awareness, ethical decision-making processes,
perceptions of ethical resources scale (information, time and financial resources),
9
perceptions of informal ethical norms, and perceptions of ethical leadership (all factors in
the Pelletier & Bligh Perceptions of Ethical Climate assessment, 2006).
Limitations and Delimitations
This research study will be conducted as a pilot study selecting a random sample of
employees in two Montana First Class municipalities. If the random sample is not representative
of all layers of employees (top, middle, direct service), the results may not be generalized to the
employee population at large (Delimitation).
The following limitations have been considered for this pilot study. The "cultures" of the
two communities may differ. If one town's population differs in terms of educational levels, in
their demands for ethical behavior from their public servants, or if ethics has been in the
forefront of politics in the community, these climate differences may affect responses on the
survey.
One of the municipalities in the study has been surveyed in the past year which may impact
the selected participants' willingness to complete another survey.
It is unknown if the method of surveying will preclude the participation of any of the
randomly selected city employees. Varying comfort levels with computers and on-line surveys
may have an impact on completing the electronic survey. The consent form explains that an
electronic survey cannot guarantee complete confidentiality. It is unknown if this will be a factor
in any employee's decision to participate or if it will affect any responses in the survey.
To assure confidentiality, demographics on the respondents are not being collected in this
pilot study. Pelletier& Bligh (2006) did find that the age of the participant contributed
10
significantly to the prediction of ethics program effectiveness. Older employees perceived the
ethics program as more effective than younger employees. Length of employment also had a
positive correlation to ethics program effectiveness. Not collecting demographics may be a
limitation to this study.
The effect of simply being in an ethics survey could affect results. If a respondent has pride
in their city and wants to appear positive, this may affect results. Similarly, if a respondent does
not want ethics training, they may answer items in a way that demonstrates that the city does not
need ethics training.
If a relationship is shown between a comprehensive ethics and compliance program and
employee's perception of a strong ethical culture, it is unknown if other factors may have
contributed to the relationship beyond the factors studied.
Definition of Terms
Comprehensive ethics and compliance program.
According to the ERC (2008), a comprehensive ethics and compliance program includes
all six of the following: a code of conduct, a way to report observed violations anonymously, a
mechanism for employees to seek advice on ethical matters, training for all employees on code
of conduct and ethics policies, a mechanism to discipline employees that violate the code or
ethics policies, and evaluation of ethical behavior as a part of regular performance appraisals.
11
Ethics.
From the Greek word, "ethiko," ethics are the science of morals; the department of study
concerned with the principles of human duty (OED online, 2011). Other common definitions of
ethics include standards of conduct on two dimensions; what is right and what is good. Ethics
can be defined as good and bad, moral duty and obligation, standards of right and wrong,
principles of conduct, fairness and equity, based on values.
ERC.
Ethics Resource Center, found at http://www.ethics.org. ERC is a nonprofit, nonpartisan
research organization, dedicated to independent research that advances high ethical standards and
practices in public and private institutions.
Misconduct.
For the purposes of this research, misconduct includes conflicts of interest, abusive or
intimidating behavior, lying to employees, discrimination, alteration of documents, alteration of
financial records, misreporting hours worked, stealing, bribes, sexual harassment, lying to
customers/vendors/public, putting own interests ahead of the organization (ERC, 2008).
Significance of the Study
Little research exists regarding the effectiveness of ethics and compliance programs and
their lasting impact on ethical culture in municipal government. With increasing scrutiny and
demand for transparency in all government transactions, every employee's commitment to
ethical behavior matters. This pilot study will be looking at the existence of an ethics and
compliance program and observations of misconduct, reporting of misconduct, and the
12
perception of the strength of ethical culture in municipal government. One of the municipalities
has implemented a formal ethics and compliance program, where the other municipality has not.
The results of this study may serve to guide the development and/or improvement of ethics and
compliance programs in municipalities across the state and in other states.
Summary
Patricia J. Harped, Ph.D., President of the Ethics Resource Center is quoted, "The
American economy's dislocation has been so severe, and the government's strategy so massive
and sweeping, that we are witnessing ethics issues never seen before here in the nation's capital"
(retrieved October 1, 2011 from http://www.ethics.org_/page/about-erc ). Ethics issues are not
limited to the federal government. Across our nation we are witnessing appeals for transparency
and ethical behavior in our state and local governments, demanded by a skeptical citizenry who
are pressing for accountability and wise use of resources.
Positive steps are being taken in educating and training employees, elected and appointed
officials about ethical conduct. Governmental units are taking ethical matters seriously.
However, little is known about the effectiveness or impact of trainings and compliance programs
at the local level. To restore the public trust and to manage ethical risks, expanding our
knowledge of effective means to achieve ethical behavior is critical. Research studies, such as
the pilot study embarked on here, will provide new data and understanding of the impact ethics
and compliance programs may have on ethical behavior and ethical culture in local government.
13
Chapter 2
Literature Review
The Pew Research Center (2010) conducts extensive studies of public attitudes toward
the federal government (and state and local governments). Results are based on interviews from
telephone surveys of nationwide samples of adults living in the United States. The Pew
Research Center reports help to set the background for studying ethics and trust in government.
A clearing house for ethics research and national surveys on ethics is found within the
Ethics Resource Center, at http://www.ethics.org/. Every two years, the Ethics Resource Center
(ERC) conducts a National Business Ethics Survey (NBES). The last national study was
conducted in 2009 and the 2011 survey is underway. Beginning in 2003, the ERC reported
ethics outcomes associated with ethical behaviors of different employee groups such as
supervisors. In 2007, the ERC developed scales for ethical culture and its components; the
ethical actions of top management, supervisors, and coworkers. All scales exceeded a
Cronbach's alpha value of.85, indicating high reliability. Factor analysis reveals that the
questions consistently cluster together. The ERC also produces supplemental research briefs that
identify issues from the NBES that warrant further exploration and discussion. In 2010,the ERC
released six supplemental briefs which are included here. (1) Saving the company comes at a
cost: The relationship between belt-tightening tactics and increased employee misconduct (ERC,
February 20 10) revealed that belt-tightening tactics are related to significant increases in the
number of employees observing misconduct. (2)Millenials, gen X and baby boomers: Who's
working at your company and what do they think about ethics (ERC, June 20 10) demonstrated
that American workers between the ages of 18 and 29 have more in common with older co-
14
workers when it comes to workplace ethics than often thought, but they also hold to some values
that set them apart from their Baby Boomer counterparts. (3) The importance of ethical culture:
Increasing trust and driving down risks (ERC, June 20 10) documented that organizations with
strong ethical values experience less misconduct, more frequent reporting of misbehavior and
less retaliation on the job. (4) Ethics and employee engagement (ERC, July 2010) indicated that
employees tend to respond to an ethical culture with improved company loyalty and a
willingness to go the extra mile for their employer. (5) Retaliation: The cost to your company
and its employees (ERC, August 20 10) showed that fear of retaliation for speaking up about
ethical violations in the workplace not only affects whether workers are willing to report
wrongdoing to management, it drives the level of misconduct itself, and (6) Reporting: Who's
telling you what you need to know, who isn't, and what you can do about it (ERC, September
20 10) demonstrated that women and nonunion workers are more likely to report misconduct on
the job (an important measure of an ethical workplace culture) and that an immediate supervisor,
not a hotline, is likely to be the go-to point of contact.
The LRN (2007) research group conducts annual surveys of senior ethics, compliance,
risk and audit professionals. The 2007 research report points to the need for a strong corporate
culture to manage ethics and compliance risks. The report discusses a variety of ways that
corporations teach ethics and compliance. Fear of retaliation and detection of violations presents
a significant challenge for companies. A second 2007 study by the LRN focused on workplace
productivity. Findings suggest that ethical lapses and questionable behaviors distract U.S.
workers from their jobs. Nearly three in four of the surveyed Americans working full time said
they encountered ethical lapses in the workplace. This study also suggested the need to develop
corporate culture that values responsible conduct and defines appropriate behaviors for workers.
15
Measuring Ethics—Two Instruments
McDaniel (1997) developed the Ethics Environment Questionnaire (EEQ), a 20-item
survey designed to measure opinions of health-care providers about ethics in their clinical work.
Internal consistency of the instrument using Cronbach's alpha is .93 and the test-retest is .88.
The EEQ looks at ethics as a single factor. Later, Pelletier and Bligh (2006) drew from the EEQ
and added additional factors to the study of ethics. They looked at formal ethics codes, decision-
making processes, informal ethics norms, availability of organizational resources, and ethical
leadership. The Perceptions of Ethical Climate survey contains 37 items and utilized 7 of the
questions from the EEQ.
Ethical Culture and Ethical Leadership
The organizational culture in which behavior takes places is gaining more attention in
ethics discussions. The Ethics and Compliance Officer Association (ECOA, 2011) funded a
research report that reflects the need to create a positive ethical culture, so that the broader
environment does not fill that void in the absence of that direction. The report highlights the
primary role that leaders play in the creation of the culture and climate (through modeling,
coaching, and communication). The leader's ability to promote ethical conduct is critical in
defining doing what is right within the organization. Research demonstrates that organizations
committed to high ethical standards show positive correlations of cost reduction and enhanced
performance to stronger ethical cultures (Waring, 2004). Additional research (Trevino, Weaver,
Gibson& Toffler, 1999; Trevino, Butterfield&McCabe, 2001) connects positive ethical
cultures to lower rates of observed misconduct, higher rates of reporting misconduct to
leadership, reduced pressure to compromise standards, greater satisfaction with management's
16
response to misconduct, greater satisfaction to the organization as a whole, lowered exposure to
situations involving misconduct, and an increased sense of preparedness to handle situations
inviting misconduct. By measuring and managing cultural risks, leading companies not only
reduce internal threats from misconduct, but they also boost productivity and performance
(Griffin & Bradley, 2010). Finally, Wellspring (2006) discusses the relationship between ethical
culture and satisfaction. Employees are more engaged and want to work in organizations that
don't compromise their personal values. Improved ethical culture can enhance retention rates of
valued employees.
Ethical Decision-Making
Values drive decision-making (Lockwood, 2009). When confronted with ethical
dilemmas, guidelines about ethical decision-making are valuable tools for employees. The
guidelines provide a framework for learning and help to reinforce corporate values. Based on a
solid foundation of clear values for ethical behavior, right decisions can be made which will lead
to trust, fairness, transparency and compliance. Berman and West (2007) examined values
management in municipal governments as it relates to minimizing ethical wrong-doing and
enhancing responsiveness to customers, citizens, and fellow employees. Values management
involves building and sustaining a shared set of beliefs among employees, formed through
communication and education processes that supplement compliance functions. In practice,
organizations often fail to specify right behavior, instead focusing on wrong conduct and the
laws with which they must be in compliance.
17
Codes of Ethics
Duggan and Woodhouse (2011) note that codes of ethics are often created in response to
an ethical lapse. Their article, "A Code of Ethics That Packs a Punch" outlines a case study
where a code of ethics was written from a bottom-up approach, involving employees at all levels
of an organization. The authors note that no amount of training or guiding principles will
guarantee the prevention of ethical violations. However, preventative efforts (training and
communication of organizational expectations) will increase the odds of ethical conduct by
employees. In its research on the impact of codes of conduct on corporate culture (LRN, 2006)
the report finds that managers and employees make countless decisions that are based on the
code. Three out of four people who work at an organization with a written code say that their
code helps them understand the behaviors that are valued by the organization. More than eight
out of ten employees apply their understanding of the code frequently on the job. Another study
(Eivens, 2000) analyzed codes of ethics from 31 municipal governments. Eivens found
enormous variation in the construction and quality of codes with regard to content. Montana
municipalities are bound by the Code of Ethics found in the Montana Code Annotated(2-2-101 —
2-2-144). Although all government employees are bound by the Code of Ethics, few are given a
copy at the time of hire.
Ethics Training Programs
Trevino, et al(2001) discusses that if employees are aware of ethical and legal issues,
they will be more likely to ask the right questions and do the right thing when faced with an
ethical dilemma. Employees can do the wrong thing simply because they are unaware or do not
know where to go for assistance on difficult matters. Maesschalck(2004) notes a continuum
18
between compliance and integrity which should guide ethics training development in the public
sector. Compliance involves external controls on the behavior of public servants and often
involves rules that employees choose to follow (right) or not (wrong). The integrity approach
involves internal controls including moral judgment and moral character. This continuum points
to the need to develop training programs that educate on codes of ethics and rules, as well as
interactive training sessions to stimulate moral character and improve ethical decision-making.
Berman &West (1994)had a similar perspective to Maesschalck. Training is shifting from
minimizing wrong doing to building trust among employees and customers of public services.
Additional research (Klugman et al, 2006; Frisque &Kolb, 2008) indicates that training does not
change employee's values, but increases critical thinking and appreciating others' viewpoints,
and heightens awareness of ethical issues and increases mindfulness of an employee's own
behavior. Weber (2006) discusses what Duquesne University learned about their ethics
initiative; that a commitment to ethics must be deeply embedded into the culture, that there must
be widespread communication about the ethics initiative, that the training and leadership be
centralized, that there is ownership among faculty and students, and that the program must be
continually improved and updated. Jovanic& Wood(2008) assert that ethics training cannot
take place just once in a training room, but needs on-going support at all levels of the
organization. The training should include what ethics is, along with actual examples of relevant
situations, and how to explore an ethical dilemma through interacting with others. The best
ethics program will not create an ethical culture if management implemented the program to
protect themselves from blame (Wah, 1999). Employees need to hear supervisors talk about
ethics and act in ways that model ethical behavior. Frisque &Kolb (2008) underscore the
importance of post-training support as a critical step in maintaining learned behaviors.
19
Highlighting Yahoo and their ethics training package, Finkel(20 10) offers training as a form of
risk reduction (in terms of litigation settlement) when employees inevitably do something they
shouldn't have. With code of conduct training and ethics discussions, penalties imposed on the
company may be greatly reduced. The authors noted that few ethics programs have been able to
demonstrate that their programs achieved expected results. The Ethics Resource Center offers
advice on next steps; designing an outcomes-based ethics and compliance program evaluation.
Chapter 2 Summary
While extensive research exists on the topic of ethics, less information is available about
ethics in the public sector and whether ethics training programs are effective in impacting
behavior. A review of the literature points to the need for specific research on local governments
for increased understanding in this area. Studying ethics in the business sector does not
necessarily translate to the public sector. The organizational life cycle for a business differs from
that of a local government. Where a company founder's leadership initially drives the
organization and is highly influential, the company culture evolves as the organization grows and
additional personnel and new leaders gain influence (ECOA, 2009). In government, leadership
can change every two to four years, or remain the same for 30 years or more (in the absence of
term limits). The personality of the leader can have a strong impact on a municipality or
government arm. To avoid an ethics "pendulum," the formalization of an ethics program and
communicating expectations for ethical employee behavior may assist in promoting transparency
and consistent ethical decision-making for a local government.
20
Chapter 3
Methods
To determine the effects of a comprehensive ethics and compliance program on the
ethical behavior of municipal employees, two First Class cities in Montana (a municipality with
a population over 10,000 people) were selected for this pilot study. One of the cities, Bozeman,
implemented an ethics program in 2008. The second city, Kalispell, does not have a formal
ethics and compliance program in place (Appendix 1 lists each city's components of their ethics
and compliance programs). A previously tested ethics survey, Perceptions of Ethical Climate,
(Pelletier & Bligh, 2006) was used to measure the effects of the ethics program in one city in
relation to another city where none exists. In addition, this research study was interested in
determining the perceptions of employees about the ethical culture in their city, and whether
ethical culture is a factor in employee behavior within the municipality.
Research Design
The research design consisted of a 38-item survey that addressed the variables in the
research questions. Specifically, a previously tested ethics survey, Perceptions of Ethical
Climate, (Pelletier& Bligh, 2006) was used to measure the effects of the ethics program in one
city in relation to another city where none exists. A Table of Specifications (Appendix 2) aligns
the variables studied with the survey questions and research questions. The list of employees in
two First Class cities in Montana was made available to the researcher to allow for the
confidentiality of respondents and random selection for inclusion in the pilot.
21
Participants
The participants for this study were the employees of two First Class cities in Montana.
The City of Bozeman has 346 employees and the City of Kalispell has 181 employees (N=527).
A sample size of 132 employees from both cities responded to the survey (n1=77 [Bozeman],
n2=55 [Kalispell]). Employees were randomly selected from the total pool of city employees.
The sample size of 132 allows for a 95% confidence level and a+/-7.4% confidence interval.
Instruments/Data Collection
The instrument for this research study was an electronic survey (Survey Monkey)
consisting of 38 items, requiring a yes/no response (3 items) or a Likert scale response (35
items). The Perceptions of Ethical Climate assessment (Pelletier& Bligh, 2006) consisted of
items in eight scales and was developed to measure perceptions of ethics program effectiveness.
The Pelletier& Bligh (2006) questionnaire is located in Appendix 3. The complete survey used
for this pilot study is located in Appendix 4; some language changes were made to the survey to
address specific city terminology. The survey was estimated to take 10 minutes to complete. To
maximize confidentiality, there were no identifying demographics on the survey (such as gender,
age, race, or city department). 35 items were presented on a seven-point Likert scale (7 =
strongly agree, 1 = strongly disagree) with higher numbers representing higher levels of
agreement.
Participation in the survey was voluntary and randomly selected employees could opt out
of the survey by clicking on a button that reflected their option to not participate. In the case of a
randomly selected employee choosing not to participate, a new randomly selected employee was
22
chosen from the pool. The survey began with an informed consent description that explained to
employees the voluntary nature of the study and the study's purpose.
The Perceptions of Ethical Climate(Pelletier& Bligh, 2006) questionnaire was utilized
for the survey, with an additional three items added to this pilot study. Pelletier & Bligh (2006)
constructed this survey based on the work of McDaniel (1997) who earlier constructed the Ethics
Environment Questionnaire. McDaniel's survey focused on a single factor of ethics, where
Pelletier& Bligh's survey divides the concept of ethics into separate factors. Cronbach's (195 1)
coefficient alpha was calculated on each of the eight scales as an index of the internal
consistency of scale items, as an estimate of reliability. The Ethics Code Awareness Scale
consisted of six items (a= .82),Perceptions of Ethical Decision Making Processes Scale
contained two items (a= .55). Perceptions of Ethical Resources Scale was divided into three
smaller scales of time (three items, a= .65), financial resources (four items, a= .90) and ethical
information provided by the organization (three items, a= .83). Perceptions of Informal Ethical
Norms consisted of five items (a= .82), Perceptions of Ethical Leadership consisted of ten items
(a= .90), and Perceptions of Ethics Program Effectiveness consisted of four items (a= .79). Full
reporting on reliability measures may be found in Pelletier& Bligh's (2006) article on
perceptions of ethics program effectiveness in a public sector organization. The measurement
scales were originally piloted with 30 employees in the professional, administrative, and exempt
bargaining units of a southern California large government agency. Fifteen managers provided
qualitative comment on the assessment items.
For this study, the survey was reviewed by the staff at the Montana State University
Local Government Center, three city officials from Bozeman, and two city officials from
Kalispell.
23
Procedures
Employees were randomly selected from the City of Bozeman's pool of 346 employees
and from the City of Kalispell's pool of 181 employees. The randomly selected employees were
emailed a link to the electronic survey by the researcher or, in Kalispell; employees without city
email were mailed a paper copy of the survey with a stamped return envelope. Informed consent
information and study purpose information were included. Participation in the survey was
voluntary and employees could choose not to participate. Although the information and link
were emailed directly to employees, employees were given the option to complete the survey on
paper, rather than through electronic means. Employees were given one week to complete the
survey. Additional employees were randomly selected if an employee chose not to participate.
Data Analysis
An independent-samples t test was used to determine if City of Bozeman employees
differed significantly from City of Kalispell employees on the survey items. Specifically the
survey items 1 and 2 were compared by group to answer research questions 1 and 2.
Research question 3 was answered by analyzing the responses of city employees with a
comprehensive ethics and compliance program on item 438 and an independent-samples t test
was calculated on the ethics program effectiveness cohort of items 935, 36, 36 and 38,
comparing the mean score from Bozeman to the mean score of Kalispell. The fourth research
question concerning ethical culture was answered by comparing city employee group responses
from the Perceptions of Ethical Climate survey items that assess ethics code awareness (6 items),
perceptions of ethical decision-making processes (2 items), perceptions of ethical resources scale
(information—3 items, time—3 items and financial resources—2 items), perceptions of informal
24
ethical norms (5 items), and perceptions of ethical leadership (10 items). Refer to Appendix 2,
Table of Specifications.
Chapter 3 Summary
This pilot study consisted of a 38-item survey that was completed by a random sample of
employees in municipal government in two First Class cities in Montana. The purpose was to
determine the effects of a comprehensive ethics and compliance program for one First Class city
who had implemented a formal program in comparison to another First Class city who had not
implemented a comprehensive ethics program.
The survey was distributed to randomly selected employees via an electronic Survey
Monkey (or a paper survey). The research was conducted by Montana State University and all
communications with employees were made directly by the researcher (no involvement by city
staff). A description of the voluntary nature of the research that explained informed consent
prefaced the survey. Employees could decide to withdraw from participation at any time during
the survey process.
The Survey Monkey software was the source for data collection. The researcher had the
only access to the survey monkey data. Employees were contacted directly by the researcher by
city email address or city mail box. Results were analyzed by independent-samples t test scores
for variables that answer the four research questions in the study.
25
Chapter 4
Results
The purpose of this research study was to determine the effects of a comprehensive ethics
and compliance program in one city where an ethics program has been implemented in
comparison to a second city where no formal ethics program exists. Seventy-seven employees
responded to the survey in Bozeman and 55 responded to the survey in Kalispell (25% of the
total study population). The sample size of 132 resulted in a confidence level of 95% and a
confidence interval of+/- 7.4%.
Reliability for the survey was calculated. Cronbach's alpha was .939, indicating high
reliability (Table 1). Variable means and standard deviations were calculated on each survey
item. An independent-samples t test was conducted comparing the mean scores of Bozeman city
employees to the mean scores of Kalispell city employees on each of the 38 items, in addition to
the ethical cohort items clustered in the survey.
26
Table 1.
Cronbach's alpha
Ethics Cohort Cronbach's alpha N of items
Complete survey .939 38
Ethics Program Effectiveness .879 4
Ethics Code Awareness .864 6
Perceptions of ethical decision-making .378 2
processes
Perceptions of ethical resources scale— .921 3
information
Perceptions of ethical resources scale - time .859 3
Perceptions of ethical resources scale— .862 2
financial
Perceptions of informal ethical norms .491 5
Perceptions of ethical leadership .912 10
Research Question 1
Do employees of municipal governments with ethics and compliance programs observe a
significantly lower rate of misconduct than municipal governments who do not have such
programs in place?
An independent-samples t test was calculated comparing the mean score of city
employees of Bozeman to the mean score of city employees of Kalispell(Table 2). No
significant differences were found, t(125) = -.609, p>.05, d= .11. The mean of Bozeman (m=
1.64, sd= .48) was not significantly different from the mean of Kalispell (m= 1.69, sd= .47).
27
The employees of Bozeman do not observe a significantly lower rate of misconduct than the
employees of Kalispell.
Table 2.
Observations of misconduct in the past six months
City N Mean SD t df Sig d
Bozeman 75 1.6400 .48323
Kalispell 52 1.6923 .46604 -.609 125 .544 .11
Research Question 2
Do employees of municipal governments with ethics and compliance programs
demonstrate a significantly higher rate of reporting misconduct than municipal governments who
do not have such programs in place?
An independent-samples t test was calculated comparing the mean score of city
employees of Bozeman to the mean score of city employees of Kalispell(Table 3). No
significant differences were found, t(124) _ -.661,p>.05, J-- .12). The mean of Bozeman(m-
1.86, sd= .34) was not significantly different from the mean of Kalispell (m= 1.90, sd= .30).
The employees of Bozeman do not demonstrate a significantly higher rate of reporting
misconduct than the employees of Kalispell.
28
Table 3.
Reporting of observed misconduct in the past six months
City N Mean SD t df Sig d
Bozeman 75 1.8649 .34420
Kalispell 52 1.9038 .29768 -.661 124 .510 .12
Research Question 3
Do employees of a municipal government with an ethics and compliance program in
place perceive the ethics program as effective?
Looking solely at the Bozeman responses (the city with a formal ethics program in
place), the mean response to item 938, "the ethics program has been effective," m= 4.16. On the
Likert scale of 7 (strongly agree) to 1 (strongly disagree), the numerical value of 4 represented a
neutral response of"neither agree nor disagree." Bozeman city employees indicate a close to
neutral response (slightly positive) in rating the effectiveness of the ethics program(Table 4).
Bozeman employees rate a somewhat higher response to items 935 and 436, "The Board of
Ethics handles concerns and inquiries in a confidential manner" (m= 4.5, sd= 1.0), and"The
City instituted the Board of Ethics because it is truly concerned about ethical standards" (m=
4.26, sd= 1.69). These means reflect a response somewhere between neutral and somewhat
agree. On item 936, "The creation of the Board of Ethics has increased my trust in the City" (m
= 3.69, sd= 1.57) indicates a response between neutral and somewhat disagree. Kalispell does
not have a Board of Ethics, so items 435, 36, 37 are not relevant to Kalispell on an individual
item basis.
29
Table 4.
Descriptive Statistics for the ethics program effectiveness cohort, items 935, 36, 37, 38
Item City N Mean SD
935. The Board of Ethics handles Bozeman 74 4.5000 1.01022
concerns and inquiries in a Kalispell 47 3.7660 1.04700
confidential manner
# 36. The creation of the Board of Bozeman 74 3.6892 1.56962
Ethics has increased my trust in the Kalispell 48 3.3750 1.12278
City
#37. The City instituted the Board Bozeman 74 4.2568 1.68848
of Ethics because it is truly Kalispell 48 3.4583 1.12908
concerned about ethical standards
#38. The Ethics Program is Bozeman 75 4.1600 1.48906
effective Kalispell 47 3.6809 1.19975
An independent-samples t test comparing the mean ethics program effectiveness cohort
scores (items 935, 36, 37, 38—see Table 5) found that the Bozeman group was significantly
higher (m= 4.14 sd= 1.25)than the mean of the Kalispell group (m= 3.60 sd= .91), t(115) _
2.739, p < .05, d= .50). The employees of Bozeman perceive the overall effectiveness of the
ethics program significantly higher than the employees of Kalispell. It is important to note that
Kalispell does not have a formal ethics program in place and does not have a Board of Ethics.
Research Question 4
Do employees of municipal governments with ethics and compliance programs perceive
a stronger ethical culture in their work environment than employees of municipal governments
who do not have a formal ethics program in place?
30
To answer this research question, the survey items were arranged into clusters of ethical
cohorts (Table 5).
Table 5.
Ethics cohorts in study; ethics code awareness,perceptions of ethical decision-making process,
perceptions of ethical resources scales,perceptions of informal ethical norms,perceptions of
ethical leadership
Ethics Cohort City N Mean SD t df Sig d
Ethics Code Bozeman 74 5.7590 .89185
Awareness Kalispell 47 4.7518 1.41672 4.357 69 .000 .87
Perceptions of Bozeman 75 5.6067 1.32617
ethical decision- Kalispell 51 5.3137 1.23272 1.252 124 .213
making process
Perceptions of Bozeman 74 5.2027 1.35689
ethical Kalispell 51 4.3464 1.62749 3.194 123 .002 .57
resources scale
-information
Perceptions of Bozeman 75 5.4133 1.26496
ethical Kalispell 49 5.1973 1.52437 .857 122 .393
resources scale
-time
Perceptions of Bozeman 75 4.1200 1.66409
ethical Kalispell 49 3.6939 1.69502 1.384 122 .169
resources scale
-financial
Perceptions of Bozeman 75 3.8533 .96609
informal ethical Kalispell 50 3.6720 1.06657 .986 123 .326
norms
Perceptions of Bozeman 75 4.9667 1.27728
ethical Kalispell 47 4.8979 1.18147 .298 120 .766
leadership
Ethics program Bozeman 74 4.1453 1.24898
effectiveness Kalispell 46 3.6033 .91223 2.739 115 .007 .50
31
As discussed earlier, a comparison of the mean scores of the Ethics Program
Effectiveness cohort demonstrated a significantly more effective ethics program in Bozeman
than in Kalispell. There were two other significant findings in the ethics cohort analysis; Ethics
Code Awareness and Perceptions of Ethical Resources Scale for Information(Table 5).
An independent-samples t test comparing the mean scores of Bozeman and Kalispell
found a significant difference between the means of the two groups for the cohort of Ethics Code
Awareness, t(69) = 4.357, p< .05, d= .87). The mean Awareness cohort score of the Bozeman
group was significantly higher (m= 5.76, sd=.89) than the mean of the Kalispell group (m=
4.75 sd= 1.42). Bozeman employees responded that they have read the code, understand the
code, understand what the organization expects of them in terms of ethical behavior, know that
policies exist to guide ethical decisions, and use the ethics guides in decision making to a
significantly higher degree than the Kalispell employees.
An independent-samples t test comparing the mean scores of Bozeman and Kalispell
found a significant difference between the means of the two groups for the cohort of Perceptions
of Ethical Resources Scale—Information, 1(123) = 3.194, p< .05 , d= .57). The mean
Perceptions of Information cohort of the Bozeman group was significantly higher (m= 5.20, sd
=136) than the mean of the Kalispell group (m= 4.34 sd= 1.63). In comparison to Kalispell
employees, Bozeman employees demonstrated significantly more favorable perceptions about
access to staff identified for ethics assistance when they want to ask questions about ethics, about
how easy it is to get help from these staff, and about the availability of the staff when needed.
The mean scores for the remaining ethics cohorts, including Perceptions of Ethical
Decision-making Process, Perceptions of Ethical Resources Scales for Time and Money,
32
Perceptions of Informal Ethical Norms, and Perceptions of Ethical Leadership, showed no
significant differences between the mean cohort scores for City of Bozeman employees and City
of Kalispell employees.
Results of each of the 38 survey items, with their means and standard deviations will be
made available to each city in the study (along with the responses from the one open-ended
comment box at the conclusion of the survey). The cities may wish to consider the mean scores
and their interpretation of the scores in planning for ethics related program implementation.
Chapter 4 Summary
The City of Bozeman, with a formal ethics program implemented in 2008, showed
significant differences from the City of Kalispell, with no formal ethics program in place, on 3
measures including Ethics Program Effectiveness, Ethics Code Awareness, and Perceptions of
Ethics Resources Scale—Information. There were no significant differences between the mean
scores of Bozeman employees and Kalispell employees on Ethical Decision-Making, Perceptions
of Ethical Resources Scale—Time and Money, Perceptions of Informal Ethical Norms, and
Perceptions of Ethical Leadership. Independent-samples t tests were calculated to compare the
mean scores of the Bozeman employees to the Kalispell employees on each of 38 items in the
survey, and the cluster of ethics cohorts defined in the pilot study.
The Ethics Resource Center (2008) demonstrates that well-implemented ethics and
compliance programs double reporting and lower the rate of misconduct (ERC, 2008). The
results from this study have not shown a significant difference in observations of misconduct or
reporting of misconduct between a city with a formal ethics program versus a city without a
formal ethics program.
33
Chapter 5
Discussion
In 2008, the citizens of Bozeman, Montana voted on a city charter revision that
prescribed an ethics agenda, resulting largely from publicized ethical violations of city leaders in
preceding years. The 2008 city charter reads, "the city commission shall...establish an
independent board of ethics... (and) provide annual training and education of city officials, city
boards, and employees regarding the state and city ethics codes" (City of Bozeman, 2008).
Following the passage of the 2008 charter, the city of Bozeman established the Board of Ethics
and has provided ethics training to its employees in 2009 and 2010-2011. With the recent
implementation of an ethics program in one city, this pilot research study was designed to
determine if the implemented program is making any difference.
While the city of Bozeman instituted its formal ethics program after the revisions to the
Bozeman city charter were approved by voters in January of 2008, the city of Kalispell does not
have a formal ethics program (Appendix 1 highlights ethics program components that currently
exist in each city). This study surveyed a random sample of city of Bozeman employees and city
of Kalispell employees to determine if any significant differences exist in ethical behavior and
ethical culture in these two First Class cities in Montana. Specifically, observations of
misconduct, reporting misconduct, and perceptions of ethical climate were researched.
Research has shown that well-implemented ethics and compliance programs double
reporting and lower the rate of misconduct (ERC, 2008). A strong ethical culture also increases
reporting and cuts misconduct in half(ERC, 2010). When both a well-implemented ethics and
compliance program and a strong ethical culture are in place, misconduct drops by 60% and
34
reporting rises by 40% (ERC, 2008). In the case of Bozeman and Kalispell, it was hypothesized
that there would be a significant difference in the two cities in these areas. However, no
significant differences were determined between Bozeman and Kalispell regarding observations
of misconduct and reporting of misconduct. This research study cannot determine why there
were no significant differences in observations or reporting of misconduct between one
municipal government with a formal ethics program versus one without a formal ethics program,
but it does set the stage for further research. Previous research (Trevino, Weaver, Gibson&
Toffler, 1999; Trevino, Butterfield&McCabe, 2001) connects positive ethical cultures to lower
rates of observed misconduct, higher rates of reporting misconduct to leadership, reduced
pressure to compromise standards, greater satisfaction with management's response to
misconduct, greater satisfaction to the organization as a whole, lowered exposure to situations
involving misconduct, and an increased sense of preparedness to handle situations inviting
misconduct. Since there were no significant differences between the two cities in this study in
observations of misconduct and reporting of misconduct, the ethical culture in which misconduct
occurs gained increased attention. The formal ethics program implemented by the City of
Bozeman had not translated into behavioral results around observations of misconduct and
reporting of misconduct among city employees.
Beyond the behavioral measurements of observations of misconduct and reporting
misconduct, significant differences between the employees of Bozeman and Kalispell were
discovered through the use of 38-item electronic Survey Monkey (paper surveys were available
to those who did not have city email). Seventy-seven city of Bozeman employees responded to
the survey and 55 city of Kalispell employees responded (n= 132 employees out of a possible
35
population, N= 527, total employees in both cities). Results were reported with a 95%
confidence level and a+/- 7.4% confidence interval.
Bozeman employees rated the ethics program effectiveness very close to neutral,
indicating a weak positive response to the program. Although the Bozeman ratings were close to
neutral, they still demonstrated a significantly more effective ethics program than in Kalispell.
As Kalispell does not have a formal ethics program, these results are not surprising. One
Bozeman employee stated, "The ethics program is important in reinforcing the concepts, but I
am not sure you can change immoral behaviors." One of Kalispell's employees indicated in the
open comment box that they would like to see ethics training and ethics discussions among city
employees there, stating "I have seen ethics policies in another city and watched it work. It was
good to see the council in that City abide to it. It would be great if Kalispell would teach more
about this and then follow the guidelines. It really helps morale in my opinion."
Bozeman employees responded that they have read the code, understand the code,
understand what the organization expects of them in terms of ethical behavior, know that policies
exist to guide ethical decisions, and use the ethics guides in decision making to a significantly
higher degree than the Kalispell employees (Ethics Code Awareness cohort). Duggan&
Woodhouse (2011)noted that preventative efforts (training and communication of organizational
expectations) increase the odds of ethical conduct by employees. The LRN (2006) found that
managers and employees make countless decisions based on the code of ethics. Three out of
four people who work at an organization with a written code say that their code helps them
understand the behaviors that are valued by the organization. More than eight out of ten
employees apply their understanding of the code frequently on the job. Trevino, et al (200 1)
demonstrated that if employees are aware of ethical and legal issues, they will be more likely to
36
ask the right questions and do the right thing when faced with an ethical dilemma. Employees
can do the wrong thing simply because they are unaware or do not know where to go for
assistance on difficult matters. The first two years of ethics training in Bozeman focused
strongly on the State and City ethics codes and defining misconduct. The results of this study
indicate that these trainings have been effective in these areas.
In comparison to Kalispell employees, Bozeman employees demonstrated significantly
more favorable perceptions about access to staff identified for ethics assistance when they want
to ask questions about ethics, about how easy it is to get help from these staff, and about the
availability of the staff when needed (Ethical Resources Scale—Information). This should also
be good news to the city of Bozeman. The creation of the Ethics Handbook and the annual
training provided has effectively instructed employees in this area_
The mean scores for the remaining ethics cohorts, including Perceptions of Ethical
Decision-Making Process, Perceptions of Ethical Resources Scales for Time and Money,
Perceptions of Informal Ethical Norms, and Perceptions of Ethical Leadership, showed no
significant differences between the mean cohort scores for City of Bozeman employees and City
of Kalispell employees. While Bozeman city employees are aware of and understand the state
and city codes of ethics, this has not translated into significant differences in perceptions of
ethical decision-making, informal ethical norms, or ethical leadership demonstrated by top
leadership in the City. A Denver study (Jovanic, 2007) pointed to the need to include a variety
of interventions to address ethical culture from a systems and communications perspective. The
first two years of ethics trainings in Bozeman have largely focused on the code and how to
access staff for assistance in ethical situations. Future trainings may need to move to discussions
of organizational values and scenario-based exercises to broaden the context beyond the code.
37
The ECOA (2011) report highlights the primary role that leaders play in the creation of
the culture and climate (through modeling, coaching, and communication). The leader's ability
to promote ethical conduct is critical in defining doing what is right within the organization.
Wah (1999) noted that the best ethics program will not create an ethical culture if management
implemented the program to protect them from blame. Employees need to hear supervisors talk
about ethics and act in ways that model ethical behavior. One Bozeman employee noted,"City
Administration is supposed to set the standard. If their actions are what is expected of us, we are
in BIG trouble." And, "I feel like our Upper Management are not to be trusted. They take care of
each other but not those of us that do the labor and keep the city literally running." These
examples of employee attitudes as a result of interaction with city leaders must be addressed for
the ethical climate to change.
When interpreting the results from the survey, some trends in the results are worthy of
note. These are areas where the cities were not statistically different. Employees in both cities
showed low concern about retaliation if they did report misconduct. Additionally, they also
demonstrated support for their immediate supervisors, indicating that they can discuss ethical
issues with them, consult with them about ethical dilemmas, and that they believe their
supervisors are good examples of ethical behavior. Employees in both cities rated the top
leadership as concerned with ethical practice. Both sets of employees believe that ethical
concerns are heard in their specific departments.
However, employees from both cities had less favorable impressions about whether the
city is willing to do the right thing no matter the financial costs. They also leaned negative about
whether the city rewards employees for ethical behavior. Employees from both cities were close
to neutral about personnel decisions (hiring and promotions) reflecting ethical principles.
38
Recommendations for Further Research
Future research is recommended for specific content for effective training and how to
best impact ethical behavior. Bozeman ethics trainings have included employees at all levels for
instruction. Additional research may explore whether the training of supervisors and
organizational leaders ought to be done in a separate setting from the direct line employees. The
key role of leaders in the development and maintenance of ethical culture may warrant specific
training to those who supervise and lead. The lack of significant differences in the two city
employee groups may serve as a guide to future training on ethics, where the results were less
favorable in creating an ethical culture (including some personal comments shared in the closing
comment box).
Frisque & Kolb (2008) documented that ethics training had a significant effect on
employee's attitudes and knowledge, but that the training was not significantly effective over a
period of time (after ninety days in their study). Future research could explore the desired
frequency of training and the time from ethics program implementation to behavioral results.
Frisque & Kolb underscore the importance of post-training support as a critical step in
maintaining learned behaviors. Research could also explore what kind of post-training support is
most effective.
Additional research may help to determine the most effective combination of education
on code, discussion of organizational values, and scenario-based training to encompass the larger
picture of ethics in government. Berman& West (1994) stated that organizations often fail to
specify right behavior, instead focusing on wrong conduct and the laws with which they must be
in compliance. Jovanic & Wood(2008) assert that ethics training cannot take place just once in
39
a training room, but needs on-going support at all levels of the organization. The training should
include what ethics is, along with actual examples of relevant situations, and how to explore an
ethical dilemma through interacting with others.
Additional research may also assist in determining other aspects of ethical environment
that need attention, beyond training. What are the specific steps a municipal government should
take in creating and maintaining an ethical environment over time and when can behavioral
results (observations of misconduct and reporting misconduct) be expected after implementation
of such programs?
Limitations
The sample size generated by this study resulted in a+/- 7.4% confidence interval. A
larger sample size would allow for more confidence in generalizing the results to the entire city
staff population. Statements from the comment box provided at the end of the survey indicated a
concern that responses to the survey may be held against them if their opinions could be traced
back to them.
In addition, 5 respondents checked the "no"box at the beginning of the survey
(indicating that they did not wish to participate in the survey), and exited the survey. This may
indicate a concern about confidentiality or retaliation for candid responses to the survey. Fear of
retaliation presents a significant challenge for companies (LRN, 2007).
Conclusions
In their report,Ethical Culture Building:A Modern Business Imperative,the Ethics and
Compliance Officer Association (ECOA, 2007) defines an effective program as one that
40
promotes "an organizational culture that encourages ethical conduct and a commitment to
compliance with the law" (abstract page). Employees must be provided with appropriate tools
and leadership models to align their behavior with the organizational culture and to engage in
ethical behavior.
This small pilot research study demonstrated that the implementation of a formal ethics
program does make a significant difference within a time period of several years, specifically in
the area of ethics code awareness, perceptions of ethics program effectiveness and perceptions of
access to ethics information. However, more needs to be done to ensure the development of the
ethical culture of a municipal government that will lead to increased transparency, trust and
citizen service.
The current pilot study warrants additional research into the effects of ethics programs on
behavior in municipal government. The results from this pilot study may be useful in guiding
ethics programs in municipal governments across Montana, and outside of Montana.
Chapter 5 Summary
Three years after the implementation of a formal ethics program as a result of citizen-led
city charter revisions, the City of Bozeman has demonstrated significant differences in ethics
code awareness, perceptions of ethics program effectiveness, and perception of ethical resource
information in comparison to another first class city in Montana without a formal ethics program.
It is no small feat that City employees have read the code,understand the code,
understand what the organization expects of them in terms of ethical behavior, know that policies
41
exist to guide ethical decisions, and use the ethics guides. The City of Bozeman should
recognize the gains they have made in the area of code awareness and in defining the paths of
access to ethics advice within the City.
Still, there is work to be done on ethical culture building and the role of leaders in
modeling behavior. Future areas for focus in the ethics program may include tying performance
evaluations to ethical behavior, rewarding ethical behavior, training city leaders on their
important role in defining ethical culture, and enhancing ethics discussions and communications
within the City.
42
References
Berman, E. and West, J. (1994). Values management in local government. Review of Public
Personnel Administration, 14(1): 6-23.
City of Bozeman, Montana(2008), Code of Ordinances, Part I, Article VII, Section 7.01 (a) (b),
General Provisions. Retrieved November 25, 2011 from
http://library.municode.com/index.aspx?clientID=14755&stateID=26&statename=Monta
na
Cronbach, L.J. (1951). Coefficient alpha and the internal structure of tests. Psychometrika 16:
297-334.
Duggan, K. and Woodhouse, K(2011). A code of ethics that packs a punch. PMMagazine, 93
(10). Retrieved November 7, 2011 from
http://webapps.icma.org_/pm/9310/public/cover.cfin?author=Kevin%20Duggan%20and%
20Kevin%20 Woodhouse&title=A%20Code%20ofl/o20Ethics%20That%20Packs%20a%
20Punch&subtitle=
Ethics & Compliance Officer Association, the Foundation (2009). Ethical culture building: A
modern business imperative, research report. Retrieved September 24, 2011 from
http://www.ethics.org/files/u5/ECOA-Report-FINAL.pd f
Ethics Resource Center (2010). Ethics and employee engagement. Supplemental Research Brief,
2009 National Business Ethics Survey. Retrieved September 24, 2011 from
http://www.ethics.org/files/u5/NBESResearchBrief2.pd f
43
Ethics Resource Center (2010). The importance of ethical culture: Increasing trust and driving
down risks. Supplemental Research Brief, 2009 National Business Ethics Survey.
Retrieved September 24, 2011 from http://www.ethics.org/files/u5/CultureSup4.pdf
Ethics Resource Center (2010). Millenials, gen X and baby boomers: Who's working at your
company and what do they think about ethics? Supplemental Research Brief, 2009
National Business Ethics Survey. Retrieved September 24, 2011 from
http://ethics.org/files/u5/Gen-Diff.pdf
Ethics Resource Center (2008). National government ethics survey, an inside view of public
sector ethics. Retrieved September 24, 2011 from http://www.ethics.org
Ethics Resource Center (2010). Reporting: Who's telling you what you need to know, who isn't,
and what you can do about it. Supplemental Research Brief, 2009 National Business
Ethics Survey. Retrieved September 24, 2011 from
http://www.ethics.org/files/u5/Reporting.pd f
Ethics Resource Center (2010). Retaliation: The cost to your company and its employees.
Supplemental Research Brief, 2009 National Business Ethics Survey. Retrieved
September 24, 2011 from http://www.ethics.org/files/u5/Retaliation.pdf
Ethics Resource Center (2010). Saving the company comes at a cost: The relationship between
belt-tightening tactics & increased employee misconduct. Supplemental Research Brief,
2009 National Business Ethics Survey. Retrieved September 24, 2011 from
http://www.ethics.org/nbes/files/NBESResearchBrief.pd f
44
Finkel, E. (20 10). Yahoo takes "new road" on ethics training. Workforce Management, July
2010, p. 7.
Frisque, D.A., &Kolb, J.A. (2008). The effects of an ethics training program on attitude,
knowledge, and transfer of training of office professionals: A treatment-and-control-
group design. Human Resources Development Quarterly, 19(1): 35-53.
Griffin, M. and Bradly, T. (2010). Organizational culture: An overlooked internal risk.
Bloomberg Business Week,Retrieved November 1, 2011 from
http://www.businessweek.com/managing/content/oct20l O/ca201 O l O l_023768.htm
Jovanovic, S. and Wood, R. (2006). Communication ethics and ethical culture: A study of the
ethics initiative in Denver city government.Journal of Applied Communication Research,
34(4): 386-405.
Klugman, C. and Stump, B. (2006) The effects of ethics training upon individual choice.Journal
for Further and Higher Education, 30(2): 181-192.
Lockwood,N. (2009). Business ethics: The role of culture and values for an ethical workplace.
SHRMResearch Quarterly, Fourth Quarter 2009.
LRN (2006)_ The impact of codes of conduct on corporate culture: Measuring the immeasurable.
Retrieved September 24, 2011 from http://www.1m.com
LRN (2007). The LRN ethics and compliance risk management practices report. Retrieved
September 24, 2011 from http://www.1m.com
LRN (2007). LRN ethics study: Workplace productivity. Retrieved September 24, 2011 from
http://www.lrn.com
45
Maesschalck, J. (2005). Approaches to ethics management in the public sector: A proposed
extension of the compliance-integrity continuum. Public Integrity, 7(l): 21-41.
McDaniel, C. (1997). Development and psychometric properties of ethics environment
questionnaire. Medical Care, 35(9): 901-914.
Montana Code Annotated (2011). Title 2, Government structure and administration, Chapter 2,
Standards of conduct, Part 1, Code of Ethics, 2-2-101 —2-2-144. Retrieved October 1,
2011 from http://data.opi.mt.gov/bills/mca—toc/2-2—I.htm.
OED Online (September 2011). Oxford University Press. Retrieved October 1, 2011 from
http://www.oed.com/view/Entry/64755?redirectedFrom=ethics.
Pelletier, K. and Bligh, M. (2006). Rebounding from corruption: Perceptions of ethics program
effectiveness in the public sector organization. Journal of Business Ethics, 67: 359-374.
Pew Research Center for the People &the Press (2010). The people and their government:
Distrust, discontent, anger, and partisan rancor. April, 2010. Retrieved November 5, 2011
from http://people-press.org/report/606/trust-in-government
Trevino, Butterfield and McCabe (2001). The ethical context in organizations: Influences on
employee attitudes and behaviors. The Next Phase of Business Ethics, 3: 301-337.
Trevino, Weaver, Gibson and Toffler (1999). Managing ethics and compliance: What works and
what hurts. California Management Review, 41(2).
Wah, L. (1999). Lip-service ethics programs prove ineffective. Management Review, 88(6): 9.
Waring, C. (2004). Measuring ethical climate risk. The Internal Auditor, l: 71-75.
46
Weber, J. (2006). Implementing an organizational ethics program in an academic environment:
The challenges and opportunities for the Duquesne University schools of business,
Journal of Business Ethics, 65: 23-42.
Wellspring Consulting (2006). Building a values-driven organization. Quarterly Newsletter, Fall.
47
Appendix 1.
Ethics and compliance program components
ERC (2008) components Bozeman Kalispell
of a comprehensive ethics
and compliance program
Ethics training for all Annual ethics trainings to all Periodic training as needed
employees employees, elected officials and Group discussions in work areas
appointed officials as impacted
Code of Conduct or Code Code of Ethics— State and City- Code of Ethics - State
of Ethics in place specific
Specific Ethics Handbook Ethics covered in Personnel
distributed to all employees, Handbook
elected officials and appointed
officials
Evaluation of ethical Evaluation of ethical behavior As part of performance
behavior as part of regular (City core values) as part of evaluation if issues are present
performance appraisal performance evaluation
Mechanism to report Whistle-blower policy defined;
misconduct anonymously mechanism to report ethical
violations defined
Mechanism to discipline Mechanism to discipline Mechanism to discipline
employees employees and Independent employees
Board of Ethics established
Mechanism to see advice Ethics resource staff identified
on ethics-related matters for guidance
48
Appendix 2.
Table of specifications
Factors Survey Questions Research Questions
Observations of Misconduct 1 1
Reporting Misconduct 2 2
Perceptions of ethics program effectiveness 35, 36, 37, 38 3
Ethics code awareness 4, 5, 6, 7, 8, 9 4
Perceptions of ethical decision-making processes 10, 11 4
Perceptions of ethical resources scale
Information 12, 13, 14 4
Time 15, 16, 17 4
Financial Resources 18, 19 4
Perceptions of informal ethical norms 20, 21, 22, 23, 24 4
Perceptions of ethical leadership 25, 26, 27, 28, 29, 4
30, 31, 32, 33, 34
49
Appendix 3.
Perceptions of Ethical Climate assessment (Pelletier& Bligh, 2006)
Ethics code awareness
1. When a decision has ethical implications, the organization's ethics policy guides me in my
decision-making process
2. I have read the organization's ethics code
3. I understand what the organization expects of me in terms of ethical behavior
4. I understand the content of the ethics code
5. When I was hired, the ethical expectations of the organization were communicated to me
6. Policies exist that describe how the organization expects its employees to make ethical
decisions
Perceptions of ethical decision-making processes
1. When faced with an ethical conflict at work, I seek guidance to determine possible
consequences of my decision
2. When faced with making a decision that has an ethical implication, I feel I can discuss the
matter with my immediate Supervisor
Perceptions of ethical resources scale
Information
1. There is an Ethics Resources Office available to me if I want to ask questions about ethics
2. It is easy to get help from the Ethics Resources Office
3. The ethics officer is available when I need help
Time
1. In the course of my workday, I have felt time pressures that have led to unethical decision
making (R)
2. In this organization, there are many instances where ethical decision making is sacrificed due
to time constraints (R)
3. Time pressures affect my ability to thoroughly evaluate ethical dilemmas (R)
Money
1. This organization makes ethical decisions even in times of budgetary constraints
2. This organization is willing to do the right thing even if it costs more money
3. This organization makes ethical decisions even if it might result in reduced funding
4. This organization will do the right thing no matter the financial costs
Perceptions of informal ethical norms
1. The organization rewards employees who exhibit ethical behavior
2. Personnel decisions (hiring and promotion) in this organization reflect ethical principles
3. In my opinion, employee concerns about ethical issues are not "heard" in my department (R)
4. If I reported a colleague for an ethical violation, there would be retaliation against me (R)
5. If I were to have an ethical concern, I know I would be supported in this organization
50
Perceptions of ethical leadership
1. The top leadership of this organization is concerned with ethical practice
2. I feel comfortable consulting with my immediate supervisor when I have to make a tough
ethical decision
3. Top leadership places an equal value on productivity, quality, and ethical practice
4. Moral concerns are given top priority by the organization's top leaders
5. My immediate supervisor sets a good example of ethical behavior
6. Top leadership works quickly to resolve ethical issues
7. My immediate supervisor looks the other way when employees make unethical decisions (R)
8. Top leadership provides employees with ethical guidance when it is needed
9. The organization's top leadership routinely strives to make decisions that are ethical
10. If I reported one of my fellow employees for an ethics violation, my immediate supervisor
would support me
Perceptions of ethics program effectiveness
1. The Ethics Resources Office handles concerns and inquiries in a confidential manner
2. The creation of an Ethics Resources Office has increased my trust in the organization
3. The organization instituted the Ethics Resources Office because it is truly concerned about
ethical standards
4. The Ethics Program is effective
Note: Respondents indicated their level of agreement with all items on the following Likert
scale: "1" = Strongly disagree, "2" = Disagree, "3" = Somewhat disagree, "4" =Neither
agree or disagree, "5" = Somewhat agree, "6" = Agree, and "7" = Strongly agree.
Items designated with (R) were reverse coded.
51
Appendix 4.
Survey used with two First Class cities for this pilot study
Survey items used for pilot study:
1. In the past 6 months, I have observed misconduct on the job YES/NO
2. In the past 6 months, I have reported misconduct I observed on the job YES/NO
3. I have received training on the Code of Ethics for my work with the City YES/NO
4. When a decision has ethical implications, the City's ethics policy guides me in my decision-
making process
5. I have read the City's ethics code
6. I understand what the City expects of me in terms of ethical behavior
7. I understand the content of the ethics code
8. When I was hired, the ethical expectations of the City were communicated to me
9. Policies exist that describe how the City expects its employees to make ethical decision
10. When faced with an ethical conflict at work, I seek guidance to determine possible
consequences of my decision
11. When faced with making a decision that has an ethical implication, I feel I can discuss the
matter with my immediate Supervisor
12. There are Ethics Resources available to me if I want to ask questions about ethics
13. It is easy to get help from the Ethics Resources that exist
14. The staff identified for ethics assistance is available when I need help
15. In the course of my workday, I have felt time pressures that have led to unethical decision
making (R)
16. In the City, there are many instances where ethical decision making is sacrificed due to time
constraints (R)
17. Time pressures affect my ability to thoroughly evaluate ethical dilemmas (R)
18. The City makes ethical decisions even in times of budgetary constraints
19. The City will do the right thing no matter the financial costs
20. The City rewards employees who exhibit ethical behavior
21. Personnel decisions (hiring and promotion) in the City reflect ethical principles
22. In my opinion, employee concerns about ethical issues are not "heard" in my department
(R)
23. If I reported a colleague for an ethical violation, there would be retaliation against me (R)
24. If I were to have an ethical concern, I know I would be supported by the City
25. The top leadership of the City is concerned with ethical practice
26. I feel comfortable consulting with my immediate supervisor when I have to make a tough
ethical decision
27. Top leadership places an equal value on productivity, quality, and ethical practice
28. Moral concerns are given top priority by the City's top leaders
29. My immediate supervisor sets a good example of ethical behavior
30. Top leadership works quickly to resolve ethical issues
31. My immediate supervisor looks the other way when employees make unethical decisions (R)
32. Top leadership provides employees with ethical guidance when it is needed
52
33. The organization's top leadership routinely strives to make decisions that are ethical
34. If I reported one of my fellow employees for an ethics violation, my immediate supervisor
would support me
35. The Board of Ethics handles concerns and inquiries in a confidential manner
36. The creation of the Board of Ethics has increased my trust in the City
37. The City instituted the Board of Ethics because it is truly concerned about ethical standards
38. The Ethics Program is effective
Note: Respondents indicated their level of agreement with items 4-38 on the following Likert
scale: "1" = Strongly disagree, "2" = Disagree, "3" = Somewhat disagree, "4" =Neither
agree or disagree, "5" = Somewhat agree, "6" =Agree, and "7" = Strongly agree
Items designated with (R) were reverse coded
Items 4-38 are taken from Pelletier &Bligh (2006)Perceptions of Ethical Climate survey
53