Missing image

Auditing a Subsystem: Ethical Practices

ethical practices
Maintaining high organizational standards for ethics and fairness is a great way to attract and keep customers.

by Russell T. Westcott

Present conditions

As employees perform their work, it is a common assumption that the practices used by and within organizations meet the norms of a “good” business. But, do they? What are those norms? Where would one find the norms? What oversight governs compliance? Are the pertinent norms expressed within the organization’s policies, or are they unwritten guidelines with widely differing interpretations throughout the organization? Does the organization’s reputation and image reflect a generally acceptable norm for ethical practices? Does the mental image of the organization from outside sources closely match the image of the organization as viewed from within? These and a myriad of other questions and concerns face businesspeople, politicians, religious leaders, educators, professionals from all disciplines and practices, and persons of different cultures and geographical locations.

An organization may produce and provide the latest and greatest product or service. However, if its customers perceive the organization and its representatives as being untruthful, conniving, inconsistent, avaricious, uncaring, intolerable, greedy, or otherwise undesirable to do business with they will seek another organization. A poor image and reputation and unethical practices can seriously affect the organization’s well-being and sustainability. Further, unethical practices can result in the responsible persons being fired, fined, jailed or ostracized.

Promulgating effective ethical practices (EEP)

Use the ten tenets outlined in the sidebar at the bottom of this post as a checklist to aid in assessing behavior and for behaving ethically, for both you and your organization. When in doubt take the following short self-examination of your plans and/or actions:

  • Is everything I plan to do or have done legal?
  • Are my plans and actions fair and honest?
  • How do I think my plans and actions will appear over time?
  • If I take my planned action, how will that make me feel about the action after it’s taken?
  • How would my plans or actions look to the public who read or hear about them in news media?
  • Can I truly sleep undisturbed after announcing my plans or taking an action?
  • How would I really feel if my family, friends, colleagues, and neighbors knew about my plans and actions?
  • How would I explain what I have planned, or done, to my children and offer them sound, ethical advice on how they should act? Am I providing the best role model?
  • If I have failed to favorably resolve my pending or actual behavior, do I keep on asking until I’m sure I’ve planned or done the right thing for the right reasons?
  • What will I do to ensure my future behavior complies with the laws, regulations, organization policies and acceptable practices, and overall norms for ethical behavior in my type of organization?

Key issues to address when auditing the organization’s ethical practices include:

  • Are there definitive policy documents covering the major ethical considerations that would apply to the organization?
  • Are these policies made known to all members of the organizations?
  • Are the practices of the organization frequently audited for adherence to the policies, both in terms of specific practices as well as the intent of the policies?
  • Is training and discussion of ethical practices provided for all members of the organization and continually reinforced by periodic examination and evaluation of conformance to both published policies and general acceptable practices for organizations within the same field?
  • Are the organization’s ethics policies and practices and applicable norms reviewed for clarity, content, consistency, and application at least once a year, and changes made as needed?
  • Are the established ethical policies and practices of the organization a topic addressed in all internal management meetings?
  • At any level within the organization, are potential or actual violations of the organization’s ethical policies and practices brought under scrutiny immediately, and necessary corrective and preventive actions taken?
  • Are the situations and actions taken documented and stored in a database for possible access in highlighting deviances to use as lessons learned and as input for modifying training and/or published policies, and for possible use if legal action results?
  • Are the consequences for deviating from the established ethics policies, practices, and acceptable norms pertinent to the organization made known to all members of the organization?
  • Is it clear to all members of the organizations that where there is any doubt in interpreting the organization’s ethics policies, practices and pertinent norms that the doubt should be identified immediately, referred to management, and the situation and resulting decision and action documented?
  • Organizations operating within differing cultures, laws, regulations, and accepted norms will have to be especially diligent in interpreting their ethics policies, practices, and pertinent norms within these differing environments. At times, drastic actions may have to be taken, e.g., refraining from conducting business within a given location.
  • Does the management of the organization, in balancing the needs and wants of its stakeholders (owners, customers, suppliers, employees, general public), believe they have a moral obligation to society beyond just making lots of money? Is an attitude adjustment indicated?
  • Are product recalls or service corrections initiated when the organization gets an early indication that something is wrong, or does the organization hold out until public pressure (physical damage or deaths) begin to affect its public image and sales?
  • When it comes to kickbacks or bribes does the knowledge that other organizations tolerate the practice make it right?
  • When an organization knowingly buys product or services from a supplier that exploits children, women, or certain ethnic or racial groups should the buying organization refuse to do business with the supplier?
  • Should the organization’s management support, encourage, or at least tolerate whistle-blowing or should it initiate punitive action if it occurs?
  • Should the organization seek devious or harmful ways to destroy competitors, e.g., false or subliminal advertising, advertising puffery, starting false rumors, etc.?
  • Should the organization support the caveat emptor approach (let the buyer beware)?
  • Is there evidence that management of the organization tolerates, perhaps even encourages, an adversarial relationship with suppliers and/or employees? This might be a relationship that includes unfair practices, coercion, and behavior that if evaluated by an impartial external source would be deemed unethical?
  • For the organization that outsources design, production, or support functions, does it ignore unfair or exploitive conditions within the organizations to which it has outsourced?
  • Does the organization that buys raw materials from a supplier ignore the fact that the supplier may be severely damaging the environment from which it withdraws material or, as in some cases, nearly or completely wiping out an entire species of animals?
  • Is the organization’s modus operandi one of ignoring appropriate ethical behavior because no laws or regulations exist or are not enforced? This is the “every organization is doing it” syndrome.
  • If the organization produces a product or delivers a service that is so good that it offers an unconditional guarantee to make good if it fails to meet the buyer’s expectations, does it consistently adhere to its guarantee without exceptions or resistance?
  • Is the organization’s contract-writing process designed to be fair to the parties involved, and not contrived to mislead or entrap an unwary party?
  • Is the tiny font and the light-gray ink intended to conceal an intent to deceive or befuddle someone?
  • Does the organization present a document that the other party is incapable of reading or understanding?
  • Is there someone high in the organization that has the responsibility to identify and take action to rectify shortcomings in the organization’s policies, practices, and general industry norms for ethical behavior? How effective are the actions taken by this person?
  • Where an organization is part of a supply chain, who is responsible for ensuring that education, training, and communication activities—including monitoring and auditing of supplier performance—is effectively planned and executed?
  • Has the social and ethical accounting, auditing, and reporting (SEAAR) movement been adopted by the organization and/or its supply chain or is it under consideration? Note: Few U.S. organizations have shown initiative to adopt, or even assess the feasibility of this methodology, to date. Fear of litigation has been cited as one deterrent to adoption. Nonfinancial reporting of corporate social responsibility is looming on the horizon for U.S.-based organizations. It may well become a requirement for doing business in Europe and other continents.
  • Has the organization developed a sound and viable business case for ethical behavior?
  • Employees feel good if they work for a trustworthy, ethical organization. That affects recruitment and retention. What is the economic value of this?
  • Customers feel good if they buy from an ethical, fair, and honest supplier. That affects new sales and retention of loyal customers. What economic value does that have?
  • The community in which the organization operates regards the organization as a reputable, honest, and worthwhile part of the community. That affects favorable consideration for building and sustaining the community, for potential tax considerations, and for collaboration in expanding and enhancing the community. What long-term economic value does that provide the organization?
  • An organization’s social responsibility activities and policies create an aura of excellence surrounding it. That affects the overall environmental perceptions that attract customers, employees, suppliers, and community support groups. What is the collective economic return to the organization?


Perhaps the meaning of ethics is somewhat analogous to the meaning of the term “quality.” We may not always clearly understand what it is or how it is applicable, but we’ll know it when we see it, or when we don’t see it.

It is virtually impossible to state a policy for ethics and ethical practice that covers every conceivable contingency and situation. This means we have to rely on understanding what’s available and the intent. We have to clarify and evaluate ethical dilemmas that have not surfaced before. Again, somewhat like an organization’s quality policy, it’s the intent that bears heavily on our interpretation of what’s ethical and what is not.

As an auditor conducting an audit of the ethical beliefs and practices of the organization, assess your personal ethical behavior. Be absolutely sure your behavior stands up to the usual norms of ethical practices, any organization code of ethics and policies, and is totally devoid of any implication of yielding to temptation. If you can’t maintain clear objectivity, cannot be perceived as having no conflict of interest, and are unable to demonstrate an unswerving dedication to the highest ethical standards, recuse yourself.

About the author

Russell T. Westcott is an ASQ Fellow, certified quality auditor, and certified manager of quality/organizational excellence. He edited The ASQ Certified Manager of Quality/Organizational Excellence Handbook, Third edition (ASQ Quality Press, 2005), and was a co-editor of the ASQ Quality Improvement Handbook. Westcott authored Simplified Project Management for the Quality Professional (ASQ Quality Press, 2005), and Stepping Up to ISO 9004:2000 (Paton Professional, 2003). He is active in ASQ’s quality management division and the Thames Valley, Connecticut section management.

Westcott instructs the ASQ certified manager of quality/organizational excellence refresher course nationwide. He writes for Quality Progress, Quality Digest, The Quality Management Forum, The Auditor, and other publications.

Westcott is president of R.T. Westcott & Associates, founded in 1979 in Old Saybrook, Connecticut. He guides clients in implementing quality management systems, applying the Baldrige criteria, strategic planning, and project management practices.

Sidebar: Ethical excellence: Ten behavioral tenets for the quality professional

As the second decade of the millennium unfolds, opportunity abounds—and so does risk. We are bombarded daily with news about undesirable human behavior. The ratio of bad news to good news weighs heavily on the average, hard-working, law-abiding citizen.

The “everyone is doing it” syndrome influences the weak. Lessons that could be learned about ethical and moral behavior are ignored, and undesirable behavior is often flaunted. Politicians wreck their careers and disappoint their followers with their negative actions. Business leaders of once-respected organizations lapse into deviousness, self-aggrandizement and greed, destroying themselves, their families, workers, business associates, and organizations. Religious leaders turn to moral deviations that harm their followers, taint their organizations, and discredit the beliefs of their calling.

Lying, cheating, and taking unfair advantage of another person are widely practiced among a growing number of the world’s populace. Yet the total of all people behaving thusly is a fraction of the world population—so far.

One small segment of the body of knowledge pertaining to the manager of quality/organizational excellence certification calls for the awareness, study, and practice of adhering to the American Society for Quality (ASQ) Code of Ethics in all we do as quality professionals. Although not much time is taken on this topic, ethics are the guiding light that should show us the best path to follow.

I created the following 10 tenets to serve as a checklist to aid in assessing your behavior and for behaving ethically.

  1. Set high personal standards. Live by the spirit and intent of the law and basic human values. The legal system itself is not always the best and only conscience guide.
  2. Listen to the voice within, but don’t believe all you hear. Beware the conflict between the ethical “shoulds” and your selfish “wants.” Don’t con your conscience.
  3. When in doubt, talk it out. Discuss your ethical quandary with people whose ethics you respect. Avoid the “yes” person.
  4. Accept that being ethical isn’t always fun. Your ethics can aggravate some people and make you unpopular. Your ethics can sometimes cost you money or inhibit your upward mobility.
  5. Ethical “debt” will catch up with you. Trading today’s temptations for a mortgage on the future puts you deeper in the hole. When you defer payment you usually pay more.
  6. Build your character with a lot of the small stuff. It’s the little things you do that often help establish your repertoire of ethical behavior. It’s often the little exceptions you take that signal you do not practice what you preach.
  7. Beware of the snake in the grass. Pay attention to early warning signs. Distance yourself from issues and actions that raise your suspicion or anticipate the potential trouble and prepare to deal with it.
  8. Recognize that many unanticipated and acknowledged mistakes may be worthwhile. Allow yourself and others to make a mistake if it is honest, avoids deception, and opens dialogue for improvement.
  9. The actions you take speak louder than words. Demonstrate your ethics in your everyday behavior. Take pride in your beliefs and take blame for your shortcomings.
  10. Be the place where the buck stops. Unethical behavior is rampant in society today. But, like a disease or a raging forest fire, there must be a place where a stand is taken and it is stopped. Be that place.

If you haven’t done so lately, re-read the ASQ Code of Ethics. Perhaps hang a copy in your workspace within your line of sight, follow it and spread the word, or even create your own comparable code of ethics. ASQ’s Code of Ethics can be found at www.asq.org/about-asq/who-we-are/ethics.html.

Reprinted with permission from ASQ’s Quality Progress (May, 2010).

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.