We live in an ethically-challenged world. The every-day pressures of business economics, project deadlines, and client demands conspire against all design professionals every day to drive “professionalism” out of their practices. Design professionals, however, must strive to maintain an ethical practice because quite simply – lives depend on it. 
The National Society of Professional Engineers (NSPE) states as its fundamental Canon of Ethics that all engineers shall “hold paramount the safety, health, and welfare of the public.”
And yet, every day, not infrequently with catastrophic consequences in terms of lives and financial costs, some engineers succumb to a corporate culture that tolerates or even promotes placing project economics ahead of an ethical responsibility to the public.
Strong, corporate ethics programs make sense financially. At least one industry consulting group, FMI, calculates clients lose between $5,000 and $50,000 for each million dollars spent on a project. FMI also acknowledges unethical behavior negatively impacts employee morale, project safety, and long-term company reputation.
Some companies have implemented stringent ethics programs to comply with the Federal Acquisition Regulations (FAR). FAR does not set forth any specific requirements or how a company should best implement its ethics program. Any company contemplating federal work should be aware that FAR requires the following minimum:
Within 30 days of being awarded a contract:
- Prepare a written code of business ethics and expected conduct, if one does not already exist, and provide it to all employees.
- Implement a due diligence program to detect and prevent criminal conduct.
- Promote a corporate culture encouraging employees to exercise ethical conduct and comply with the law.
- Implement an ongoing ethics awareness and compliance program, including ongoing effective ethics training for employees.
- Promote a corporate culture encouraging employees to exercise ethical conduct and comply with the law.
- Implement an ongoing ethics awareness and compliance program, including ongoing effective ethics training for employees.
- Establishment of an employee business ethics and compliance awareness program and internal system of controls if such program does not already exists.
Within 90 days of being awarded the contract:
- Establishment of an employee business ethics and compliance awareness program and internal system of controls if such program does not already exists.
- Implementation of an anonymous hotline for reporting improper conduct and specific instructions to employees, encouraging them to make such reports.
- Implementation of an anonymous hotline for reporting improper conduct and specific instructions to employees, encouraging them to make such reports.
Any company can implement a strong ethics program once leadership has made a commitment to do so.
The NSPE Code of Ethics provides a clear outline to follow to protect the health, safety and welfare of the general public, and preserve the integrity of the profession. The key to every strong ethics programs should be reinforcement of the basic tenants set forth in the NSPE’s Code of Ethics.
In ever corporate ethics policy, public safety trumps everything. All design professionals must be empowered by their corporate ethics policy to take decisive action to protect the public safety free of public pressure or economic concerns related to a project.
The NSPE, for example, directs an engineer to first report his concerns to the building owner, manufacturer, or other professional to take remedial actions. The engineer, however, must take action to report a safety concern to the appropriate authorities if no action is taken to remedy the situation within a reasonable time by the owner, manufacturer, or other professional. To fail to do so, is an abrogation of the professionals’ fundamental responsibility and obligation.
A corporate ethics policy must empower all employees to strictly adhere to the letter and spirit of all applicable federal, state, and local laws and regulations. A strong ethics policy, however, should clearly advise the design professional that no obligation exists for a professional to become a zealot. The NSPE limits the duty to report to appropriate legal authorities where the engineer’s personal safety concerns are not supported by “scientific consensus” or “widely-accepted engineering standards.” The standard for most policy should be one of acting “reasonably.” The NSPE, however, permits the engineer to decline to perform additional services on the project, and a strong ethics policy should reinforce the professional’s same option.
A corporate ethics policy should encourage design professionals to “stick to their guns” and not yield to the economics of business on issues of public safety. The professional should seek to become the voice of reason on the project. An ethics policy should reinforce that everyone involved in the project that some matters can never be compromised despite the potential costs because the potential risk of loss is simply too great.
The NSPE, for example, acknowledges that fire codes are among the most fundamental requirements for the protection of the public health and safety. An engineer can make no concessions where they believe the public safety is at risk in such circumstances, and must continue to report their concerns up the chain of command if the concern is not resolved.
No design professional should ever feel compelled to work outside their area of competency. Clients and employers rarely want to hear from a professional that another yet professional with a particular expertise must be retained on a project. A good corporate policy however, will remind the professional to not try to become “all things to all people” despite the pressures to avoid costs.
This aspect of any corporate policy can be tricky to implement. Most state licensing agencies identify broad categories rather than sub-specialties. For example, a civil engineer may be highly qualified to prepare plans for a public park, but not possess any specific experience with a particular kind of pedestrian bridge called for by a project design. An engineer should never feel compelled to affix her seal to project plans even if they are obtained from or prepared by some else highly qualified in the field.
No one ever wants to become the company “snitch,” but any valid corporate ethics policy must provide clear directions, and equally clear support, for reporting an impaired colleague. In addition to the public safety concerns, every professional and corporation should fully appreciate the legal liability arising from continuing to permit an impaired design professional to work on a project after any suspicion or knowledge of an impair arises. A decision to ignore or failure to intervene can form the basis of a negligence finding against any professional or corporation who fails to act.
In addition to reporting a colleague, a strong ethics policy must also empower the design professional to report impairment or violations by other contractors and professionals working on adjacent job sit not within the reporting engineer’s immediately control. The NSPE requires the engineer to at minimum report to his immediate supervisor.
In the absence of a state “Good Samaritan Law” that imposes a duty under such circumstances, the design professional likely could not be held liable for a failing to report even where an injury or death occurs. But a design professional who reports such a safety concern because the corporate ethics policy supports his decision to do could prove the key to a successful defense or even the key to avoiding litigation altogether.
Professional excellence can only be maintained by a culture of honesty, integrity and fairness. A strong ethics policy must clearly prohibit employees from conflicts of interest, and impose a duty to make a full disclosure of all potential conflicts to the appropriate company personnel and client. In the event of an apparent conflict, the company should obtain a written waiver from the client.
Conflicts of interest may arise from, but are not limited to, some of the following examples:
- Any attempt by employees to use their positions within the company for personal gains.
- A professional owns shares in privately-owned companies, which do business with the company. Typically, this prohibition would not apply to shares held in publicly traded companies
- A professional’s family member possesses a role as director, partner, shareholder or influential employee in companies or businesses which have any form of business dealings with the company.
- A professional accepts gifts from contractors doing business with the company that could place an employee in a position where his independent business judgment may be prejudiced. A strong ethics policy should place clear limits on the types and value of gifts that can be accepted, and require all such gifts to be disclosed.
- Any professional’s acceptance of payments, services, loans or bribes from a supplier, contractor, subcontractor or other third parties should be prohibited.
- A professional’s acquisition of property acquired as a result of company information.
Once a decision to implement a strong corporate ethics policy has been made and drafted, the real hard work begins. Construction companies and design professional firms notoriously suffer from a disconnect between management and the frontline field personnel. Any corporate ethics policy must be handed down from the top, straight from the board room and president’s office. Otherwise, an ethics policy will never become instilled as part of the “corporate culture.”
A successful ethics policy should be simple and concise. A successful policy will set forth clearly defined procedures and guidelines for an employee to follow when confronted with a uniquely challenging situation, but it is the basic principles loudly endorsed by senior management of “do the right thing” that will prove most effect. Some of the most ethical companies have developed their reputations as a result of generations of employees and senior managers who have never known any other way to do business.
The company must provide ongoing, meaningful ethics training at all levels of the company from employees to supervisors to senior management. No corporate ethics policy can succeed until the rank-and-file employees see first-handed the senior company leadership taking an active leadership role in ethics training sessions, policy initiatives, and implementation.
Every truly effective ethics policy requires a champion at the senior leadership level, who becomes the face and voice of the company’s ethics policy. Every company who leaves even a hint of doubt that senior management does not wholeheartedly endorse long-term, top-to-bottom ethical behavior over short-term business financial decisions has doomed the company ethics policy from the start.
The board of directors must publicly embrace the commitment to ethics. FAR guidelines require continuing board interaction with the company ethics program. An effective ethics policy should be announced by a strong, clearly worded board resolution announcing its implementation. Regular reporting to the board and from the board will signal to every level of the company that the ethics policy is more than “lip service,” but rather an established part of the company’s culture.
Just like professional sports programs talk about bringing in “good character” guys to provide leadership in the locker room, a company must endorse character and ethics as an integral part of the hiring and promotion process. The newest generation of graduates place a high emphasis on going to work for companies with strong values and ethical cultures. Companies who promote long-term ethical behavior will create corporate cultures where they find it easier to hire and retain the best and brightest stars within their companies.
The hallmark of any successful ethics program is self-reporting and an open-door policy. The program must include regular risk assessments, confidential evaluations of management level positions by employees, and even outside, independent audits and reviews.
Many times companies implement successful helplines for employees to call when confront with a uniquely challenging situation. Mentoring programs can be very successful to help develop a corporate culture that fosters ethical behavior in the promotion process. Every corporate ethics program should be constantly evaluated and updated, becoming an integral part of the ongoing business strategies.
Finally, no corporate ethics policy can be successfully implemented without adequate resources devoted to taking action when a situation arises. Internally, senior management must be empowered to take decisive action to protect the interest of both the company and the employee who reported unethical or professional misconduct. The consequences of violations of the policy should be clearly articulated, as should any retaliation against the person reporting, including public reprimands, suspension, and termination.
The company must established guidelines that empower the appropriate individuals within the company to determine whether to retain outside legal counsel to investigate reported unethical or professional misconduct. Typically, outside legal counsel should be retained early in the process, including even before a violation of the policy has been confirmed, to should preserve attorney-client confidentiality of such investigations against future litigation.
Corporate ethics policy will become wide-spread in the next decade as the commitment to ethics increasingly becomes an expected part of the bid process. Like the federal commitment to FAR, private owners are increasingly placing a premium on corporate relationships with any other companies who are viewed as ethical.
Design professional companies can not expect to change their corporate cultural overnight. But a long-term commitment to ethical conduct will pay dividends in the future as the company successfully avoids risk, manages loss, and creates an positive climate to do business with other likeminded companies.
ETHICS POLICY CHECKLIST:
- Establish written ethics policy
- Adopt an ethics policy resolution by the board of directors
- Appoint an ethics omnibusman
- Establish a confidential ethics hotline
- Establish a confidential ethics helpline
- Establish an internal ethics committee
- Establish an internal conflicts of interest policy
- Implement regular employee ethics training
- Establish an internal due diligence process to investigate complaints
- Implement an internal ethics compliance program
- Establish a pre-existing relationship with qualified legal counsel
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Timothy B. Soefje is the Managing Member and head of the professional liability section at the boutique firm of Seltzer │Chadwick │Soefje, PLLC based in Dallas, Texas. For regular information about professional liability matters, follow him on Twitter at @TimSoefje and search #ProfessionalLiability. For more information, visit us at www.realclearcounsel.com or contact him at tsoefje@realclearcounsel.com.
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