Operational Best Practicesin Business Ethics:

A Practical and SystematicBenchmarking Tool

DENIS COLLINS

ABSTRACT

This article describes a benchmarking tool managers canuse to determine operational policies and processes thatcould enhance an organization’s social and ethical per-formance. The benchmarking tool consists of a13-dimension, 110-item survey based on an OptimalEthics Systems Model. These best practices in businessethics are derived from an analysis and assessment ofseven institutional infrastructures and accountabilitystandards developed to help managers improve organi-zational social and ethical performance.

INTRODUCTION: THE “GOOD SOCIETY”AND ORGANIZATIONS

History has been evolving toward a “good society,” albeitwith many missteps along the way. This trajectory isdriven by social change activists and theorists who

believe attaining “the good” is a goal worth pursuing. As Aristotle

Denis Collins is a Professor of Management, School of Business, Edgewood College, Madison,WI. E-mail: dcollins@edgewood.edu.

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Business and Society Review 120:2 303–327

© 2015 Center for Business Ethics at Bentley University. Published by Wiley Periodicals, Inc.,350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

noted, the end goals of political and individual well-being arejustice and happiness; both are loosely understood concepts thatpropel the evolution of human history.1 What constitutes a goodsociety is endlessly debated among moral theorists, political theo-rists, business leaders, and many others, including parents andtheir children. Despite uncertainty as to the details, the compul-sion to create a good society remains timeless.

Organizations, and those who manage them, play a central rolein the creation of a good society because people spend a significantamount of time working for, and interacting with, them, be theybusinesses, nonprofits, or government bureaucracies. Over thepast two decades, a wide range of new institutional infrastructuresand accountability standards for corporate social responsibilityhas been created in response to the plethora of political, social,economic, and environmental harms generated by organizations.2

Within this framework, managers who want to maximize theirorganization’s ethical performance and minimize the potential forunethical performance need a practical and systematic bench-marking tool to guide them in designing organizational policies andprocedures.3

This article describes a practical and systematic benchmarkingtool created to meet this need. This 13-dimension, 110-itemOptimal Ethics Systems Model benchmarking tool evolved from aseries of three analytical cycles examining institutional infrastruc-tures, accountability standards, and relevant best practices litera-ture in the area of corporate social responsibility. Managers canbenchmark their organization by using the Optimal Ethics SystemsModel survey, which appears in the appendix, and use the resultsto guide their efforts to enhance ethical and social performance.

EARLY DEVELOPMENT OF THE BENCHMARKING TOOL

I have been teaching business ethics and social responsibility inbusiness courses and workshops for MBA students and executivesfor nearly 25 years, preceded by more than a decade of workingwithin organizations. Students and workshop participants oftenask how I would design organizational operations to generateethical outcomes in a manner that also benefitted, rather thanrestrained, financial performance. These discussions led to the

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realization that managers needed a practical and systematicbenchmarking tool, with identified best practices for policiesand processes to help them increase the likelihood of ethicalorganizational performance.

I began conceptualizing the benchmarking tool by reviewing the1991 Federal Sentencing Guidelines for Organizations, which pro-vides a list of best practices for effective Compliance and EthicsPrograms.4 I expanded this list to include additional operationalareas that directly impact an organization’s ethical performance,such as environmental management, employee empowerment,and corporate citizenship, for which best practices were addressedby other corporate social responsibility institutional infrastruc-tures and accountability standards.

My trade book Essentials of Business Ethics, published in 2009by John Wiley & Sons, is the outcome of that research.5 An11-dimension, 76-item benchmarking tool was made availableonline as a book supplement. When the trade book was adaptedfor a 2012 textbook, Business Ethics,6 a second analytical reviewof policies and processes recommended by corporate socialresponsibility institutional infrastructures, accountability stan-dards, and other relevant literatures resulted in an expansion ofthe supplemental online benchmarking tool to 90 items.

Corporate social responsibility institutional infrastructures andaccountability standards continue to be developed, modified, andexpanded. For this article, I reviewed the institutional infrastruc-tures and accountability standards literature a third time with theintent to develop an even more robust Optimal Ethics SystemsModel benchmarking tool. This meant searching for any new orunintentionally overlooked operational areas, policies, and pro-cesses. The next section summarizes the seven institutional infra-structures and accountability standards that serve as thefoundation for the latest evolution of the Optimal Ethics SystemsModel benchmarking tool, followed by a discussion of theenhanced model and benchmarking tool.

INSTITUTIONAL INFRASTRUCTURES ANDACCOUNTABILITY STANDARDS

The scope of best practices included in the Optimal Ethics SystemsModel encompasses seven social performance institutional

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infrastructures and accountability standards frameworks. Theseframeworks include principle-based standards that establish foun-dational values; process standards that offer operational mecha-nisms; reporting standards that measure impacts; and certificationstandards for third-party verification.7 The seven selected frame-works were chosen because they provide either a very broad opera-tional overview or a narrow focus in one area of operations, such asenvironmental performance. Each framework has shown evidenceof adoption by a growing number of leading businesses. A widerange of stakeholders, including a practical business perspective,was involved in their creation. The seven best practices frameworksare as follows:

• Federal Sentencing Guidelines: A legislative effort that hashad significant impact on best practices implementation

• United Nations Global Compact Principles: A principles-basedstandard that has attracted significant corporate attention

• Global Reporting Initiative (GRI): A global reporting standardthat is gaining momentum

• Calvert SRI Mutual Funds: A popular socially responsibleinvesting standard

• ISO 26000, Walmart Supplier Certification, and the B Corpo-ration: Three broad certification standards increasingly beingdiscussed and used.

Each framework is summarized below in terms of origin, intent,scope, and business involvement.

Federal Sentencing Guidelines

The two primary intentions of the 1991 Federal Sentencing Guide-lines are to provide incentives to detect and prevent crime andpunish organizations based on the degree of blameworthiness.The guidelines encourage, but do not require, managers to imple-ment policies and procedures that reinforce ethical behaviors.8

Organizations are criminally liable when an employee commitsa crime while performing work tasks. The guidelines apply toindividuals and organizations convicted by a federal court offelonies and Class A misdemeanors. The most common crimes inthese categories are fraud, environmental waste discharge, taxoffenses, antitrust offenses, and food and drug violations.

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Following public hearings, the guidelines were developed bythe United States Sentencing Commission, a permanent indepen-dent agency of the federal judiciary consisting of seven votingmembers appointed by the President and confirmed by theSenate. Criminal deterrence is framed around adopting the bestpractices for effective Compliance and Ethics Programs. Theapproximately 20 best practices suggested by the Federal Sen-tencing Guidelines cover the following six categories: oversight byhigh-level personnel; due dare in delegating substantial discre-tionary authority; effective communication to all levels of employ-ees; reasonable steps to achieve compliance, which includesystems for monitoring, auditing, and reporting suspected wrong-doing without fear of reprisal; consistent enforcement of compli-ance standards including disciplinary mechanisms; andreasonable steps to respond to and prevent further similaroffenses upon detection of a violation.

The guidelines are applicable to nonprofits, unions, partner-ships, trusts, pension funds, and government units, as well asbusinesses. Revisions have been made over time to clarify defini-tions and responsibilities.

United Nations Global Compact

The United Nations (UN) has developed guiding principles forconducting business throughout the world. UN Secretary-GeneralKofi Annan, the first Secretary-General with a business degree(MS, MIT Sloan School of Management), presented the UN GlobalCompact Principles to business leaders who attended the WorldEconomic Forum in Davos, Switzerland, in 1999. By 2014, morethan 10,000 businesses from more than 145 countries had offi-cially committed to these principles.9

The development of standards for the Global Compact was amultistakeholder effort that included UN, business, and NGOleaders. Participants examined international agreements such asthe Universal Declaration of Human Rights (1948), the Rio Dec-laration on Environment and Development (1992), the Interna-tional Labor Organization’s Fundamental Principles and Rights atWork (1998), and the U.N. Convention against Corruption(2003).10 The 10 Global Compact principles are categorized in fourareas: human rights, labor, environment, and anticorruption.11

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Global Compact signatories agree to meet several requirements,including making the principles an integral part of business strat-egy and day-to-day operations, CEO and Board of Directorsendorsement, annually communicating progress, and advocatingthe use of these principles to peers, partners, clients, consumers,and the public. Signatories are delisted if they do not file a“Communication on Progress Report” for 2 consecutive years.

GRI

Global Reporting Initiative (GRI), an international multistake-holder coalition, provides general guidelines for economic,environmental, and social reporting that allow for social andenvironmental performance comparisons across organizations.12

The GRI reporting framework was developed and continues to berevised with input from business representatives, investors,accountants, and activists.

The initial GRI guidelines were released in 2000.13 The fourthgeneration of GRI reporting guidelines was released in May 2013and is available online.14 The 91 GRI indicators are categorized insix areas: economic, environmental, labor, human rights, society,and product responsibility.15

As of 2014, the GRI guidelines have been used by more than4,000 organizations in 60 countries, including large corporations,small businesses, NGOs, and public agencies. GRI’s Sustain-ability Disclosure Database contains more than 14,500 reports.16

Calvert Socially Responsible Investing Mutual Fund

The Socially Responsible Investing (SRI) financial market screenscompanies for financial performance (meets financial goals, solidreturn on investment) and social performance. Social performanceis operationalized in terms of environmental, social, and corporategovernance (ESG) metrics. In 2012, the SRI market totaled $3.31trillion in assets in the U.S. investment market, representing 11percent of the total market.17 The number of investment funds thatincorporate ESG factors has risen from 55 in 1995 to 720 in 2012;this includes a 46 percent increase since 2010.

The largest grouping of SRI mutual funds is managed byCalvert, which serves as a benchmark for other SRI funds.18

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Calvert Investments was founded in 1976 and initiated a SocialInvestment Fund in 1982. The fund evaluates publically tradedfirms based on 21 indicators categorized in seven areas:19 gover-nance and ethics, environment, workplace, product safety andimpact, international operations and human rights, indigenouspeoples’ rights, and community relations.

Calvert Investments also created the Calvert Social Index as amethod for benchmarking large companies considered to besocially responsible or ethical.20 In 2014, the index consisted of680 companies, weighted by market capitalization, selected fromthe 1,000 largest publicly traded companies in the United States.Only companies that satisfy all of Calvert’s ESG criteria areincluded in the index.

ISO 26000

In November 2010, the International Organization for Standard-ization (ISO) launched ISO 26000, which provides organizationswith guidelines for integrating social responsibility best practicesinto management processes.21 Unlike the ISO 14000 series forenvironmental management, ISO 26000 is not intended to beused as a certification process; rather, it was developed to providea common understanding of what it means to be socially respon-sible. The term “social responsibility” was specifically chosen,rather than “corporate social responsibility,” because the guide-lines are applicable to all organizations, not just publically orprivately held companies.

The need to develop standards for social responsibility was firstidentified in 2001 by an ISO committee on consumer policy. Amultistakeholder committee was then formed and developedworking groups co-chaired by a representative from a developingnation and an industrialized nation. A wide range of expert stake-holders, including those representing government, industry, labor,NGOs, and consumers, were invited to share their knowledge anddraft the principles. The social responsibility working group wasISO’s largest working group ever, with 450 participating expertsand 210 observers representing 99 ISO member nations and 42liaison organizations.

ISO 26000 emphasizes the importance of organizations recog-nizing their social responsibilities and the need for identifying and

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engaging with stakeholders in the process. ISO 26000 consists of36 indicators in six core social responsibility areas: human rights,labor practices, environment, fair operating practices, consumerissues, and community involvement and development.22 The ISO26000 topic areas can be mapped onto the fourth version of theGRI guidelines.23

Walmart Supplier Certification

Walmart, long disparaged by consumer and community activistsfor being socially irresponsible, has taken a leadership role inensuring that their suppliers meet basic standards in the ethicaltreatment of employees and environmental sustainability.

Walmart has more than 50,000 suppliers. In response to indus-try problems with the mistreatment of employees and other issuesin the global supply chain, Walmart developed 13 minimum stan-dards with more than 300 indicators in the areas of compliancewith laws, voluntary labor, labor hours, hiring and employmentpractices, compensation, freedom of association and collectivebargaining, health and safety, dormitories and canteen, environ-ment, gifts and entertainment, conflicts of interest, anticorrup-tion, and financial integrity.24 A supplier that fails to meet thesestandards must implement a correction action plan to remain aWalmart supplier. An independent auditing firm conducts facilitysocial audits every 6–24 months, unannounced, based on theprevious audit findings. In 2013, more than 20,000 social auditswere conducted at 15,027 factories.25

Walmart has also established its own ambitious environmentalgoals, including total reliance on renewable energy, creating zerowaste, and selling products that sustain people and the environ-ment.26 The latter issue led to the development of a SustainabilityIndex assessment tool for its suppliers. Walmart surveyed morethan 100,000 global suppliers about their sustainability efforts.The company sponsored The Sustainability Consortium, com-posed of more than 100 suppliers, retailers, nongovernmentalorganizations, and government officials, to research and developthe supplier assessment tool.27 Walmart’s Sustainability Indexsurveys are customized to fit particular product types.28

In its initial attempt to create a Supplier Sustainability Index,Walmart developed measures for four performance categories:

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energy and climate, material efficiency, natural resources, andpeople and community. Each category has multiple assessmentquestions.29 Walmart pushes best practices further down thesupply chain by giving suppliers credit for applying similar envi-ronmental standards to their suppliers. Beginning 2013, Walmartbegan using this tool with 1,000 suppliers in its 200 largestmerchandising categories, and is adding an additional 500 cat-egories and 6,000 suppliers in 2014.30 Walmart’s goal for 2017 isto have 70 percent of goods sold in the United States fromsuppliers who use the Sustainability Index scorecard.31

B Corporation

In 2007, B Lab, a nonprofit organization, initiated a third-partyBenefit Corporation (B Corporation) certification process for brand-ing a business as being ethical, sustainable, and socially respon-sible.32 The goal of B Lab’s cofounders is to create a new legal entityrecognized by federal, state, and municipal governments thatpermits managers to consider not only owner interests in decisionmaking, but also the interests of employees, communities, and theenvironment. They envision the IRS eventually creating a class oftax benefits for B Corporations, such as taxing them at a 20percent rate, a midpoint between that of a typical profit maximizingC Corporation (taxed at 40 percent) and nonprofits (not taxed).33

This would provide businesses with a strong fiscal incentive toadopt best practices in the treatment of employees, customers,communities, and the natural environment.

In 2009, Philadelphia established the first B Corporation legis-lation, providing B Corporations with an annual $4,000 taxdeduction. A year later, Maryland became the first state to pass BCorporation legislation. Several other states have since passedsimilar legislation, including Delaware and New Jersey, wheremany companies incorporate.

As of May 2014, there were 990 B Corporations in 60 industriesand 32 countries.34 B Corporations are typically small- ormedium-sized companies; many of them, such as Seventh Gen-eration and Numi Organic Tea, cater to socially concerned con-sumers. More than 15,000 businesses use the B ImpactAssessment to benchmark their performance and set goals forcontinuous improvement.35

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B Lab staff members, business leaders, and other experts havedeveloped a 160-question “B Impact Assessment” survey, gradedon a 200-point scale, to assess organizations in four areas: gov-ernance, workers, community, and environment.36 Assessmentquestions are customized based on a company’s size, sector, andgeography. Applicants who obtain at least 80 points and amendgovernance documents to include stakeholder interests aregranted a 2-year B Corporation certification. Eight to 12 questionsanswered affirmatively are randomly chosen for detailed docu-mentation.37

B Corporations are required to publish an annual benefit reportof its social and environmental performance against a thirdparty standard, such as GRI or ISO 26000.38 Every year, B Labstaff randomly audit 10 percent of the certified companies. Recer-tification occurs every 2 years and follows the same process.Organizations found to intentionally misrepresent operations havecertification publicly revoked.

ENHANCED MODEL AND BENCHMARKING TOOL

As noted earlier, the original 2009 Optimal Ethics Systems Modelconsisted of eleven dimensions, which remained in the 2012model.39 The model was systematic, beginning with best practicesfor hiring ethical employees. The new employee is then introducedto the organization’s code of ethics, code of conduct, and ethicaldecision-making framework. Ethical behavior is further reinforcedthrough a variety of ethics training programs. Other operationalprocesses include mechanisms for respecting employee diversity,ethics reporting systems, developing ethical leadership throughwork goals and performance appraisals, engaging and empower-ing ethical employees, environmental management, and commu-nity outreach and respect. Lastly, all best practices are assessedfor continuous improvement.

The 2009 benchmarking tool contained 76 best practice itemswithin the 11-dimension framework. In the expanded 2012benchmarking tool, 14 survey items were added within thesedimensions. The analysis described in the previous sectionexposed several gaps in the 2012 model. In response, two newdimensions have been added to the previous model: governance

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and product/service accountability. The revised 13-dimensionmodel appears in Figure 1.

The 2012 benchmarking tool has also been revised based ongaps revealed in the previous section’s analysis. The expandedbenchmarking tool, which appears in the appendix, is a13-dimension 110-item operational best practices survey. Thenew benchmarking tool contains seven governance items, such asindependent Board members, and six product/service items, suchas truthful marketing communications and customer satisfactioninformation. In addition, individual survey items have been addedto three areas in the original benchmark: four items for engag-ing and empowering employees (such as employee wages andbenefits are above average for the labor market), one item forenvironmental management (using recycled content in products

FIGURE 1 Revised Optimal Ethics Systems Model.

Governance Mechanisms

Code of Ethics &Conduct

Orientation

Hiring

Job ApplicantEthics Ethics Training

Training

Operations

RespectEmployeeDiversity

Ethics Repor�ng System

Leadership, WorkGoals, Appraisals

Par�cipatoryEmpowerment

Product/ServiceAccountability

Environmental Management

Community Outreach

Best Prac�ces Assessment

Evaluation

Ethical Decision Making

Framework

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and services), and two items for community outreach (purchasingfrom local suppliers and participating in community developmentdiscussions).

For simplicity, each best practice could be assessed using a3-point scale: “yes” (the practice is formally in place), “sometimes”(the practice is occasionally implemented), and “no” (the practiceis not implemented). For instance, highlighting the importance ofethics in job listings is a hiring best practice. This practice may beroutinely implemented, sometimes implemented or implementedin some work units but not others, or not implemented at all.

Managers can benchmark their organizations to these 110 bestpractices, and drive continuous improvement efforts by address-ing those best practices not yet implemented or only occasionallyimplemented. Three evaluative cutoffs provide general referencepoints, with 60 percent (67 or more best practices) representing asignificant progress benchmark, 30 percent (34 to 66 best prac-tices) representing a reasonable progress benchmark, and below30 percent (33 or fewer best practices) representing a minimalprogress benchmark.

LIMITATIONS AND CONCLUDING COMMENTS

The world is slowly evolving toward a “good society.” While thespecific aspects of a good society remain highly debated, anessential component consists of organizations with managers whorespect the rights and well-being of multiple stakeholders. Thenew institutional infrastructures and accountability standards,typically developed by multistakeholder panels to ensure that thecriteria are reasonable and inclusive, provide a rich source ofoperational best practices in business ethics applicable to varioustypes of organizations, including for-profits, nonprofits, and gov-ernment agencies.

Some managers may prefer one particular institutional infra-structure or accountability standard to guide their organization’sethical performance evolution. This article provides an OptimalEthics Systems Model that incorporates operational best practicesin business ethics within a single framework. A benchmarkingtool, derived from a review of the best practices literature, wasdesigned based on this model. The benchmarking tool consists of

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a 13-dimensional, 110-item survey that managers can use toenhance ethical behaviors and socially responsible outcomes.

Five topics deserve further consideration:

1. Optimal Ethics Systems Model dimensions. The model con-sists of 13 dimensions. Are additions, subtractions, oramendments needed to the 13 best practices dimensions?

2. Survey items. The benchmarking tool consists of a 110-itemsurvey. Are additions, subtractions, or amendments neededto the 110-item survey?

3. Measurement scale. A 3-point measurement scale (yes, some-times, no) is used for ease of application. Is a differentmeasurement scale, such as a 5-point Likert scale, moreappropriate?

4. Firm size. The model was designed based on best practicesdeveloped primarily for medium and large organizations.What, if any, changes are needed to make the model andbenchmarking tool more useful for small organizations?

5. Certification. This analysis focused on the development of abenchmarking tool to help managers. Is it possible to trans-form the benchmarking tool into a certification process, inthe spirit of the B Corporation initiative?

Until these discussions occur, the 110-item best practices surveyprovides managers with a useful benchmarking tool for enhancingethical behaviors and improving social performance that can beapplied now.

NOTES

1. For the classic philosophical treatises on these topics, see Aristotle,Politics, translated by Ernest Barker (New York: Oxford University Press,2009), and Aristotle, Nicomachean Ethics, translated by Robert C. Bartlettand Susan D. Collins (Chicago, IL: University of Chicago Press, 2012).

2. Two articles provide an extensive review of this literature. See DirkUlrich Gilbert, Andreas Rasche, and Sandra Waddock, “Accountability ina Global Economy: The Emergence of International Accountability Stan-dards,” Business Ethics Quarterly 21, 1(2011), 23–44; Sandra Waddock,“Building a New Institutional Infrastructure for Corporate Responsibility,”Academy of Management Perspectives, 22, 3(2008), 87–108.

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3. I will be using the terms “ethical performance,” “social performance,”and “social responsibility” interchangeably. They overlap in both commonusage and in the business ethics and social responsibility literature.

4. The list appears in 2013 United States Sentencing Commission

Guidelines Manual, “Chapter Eight—Sentencing of Organization,” “Effec-tive Compliance and Ethics Program,” available at http://www.ussc.gov/guidelines-manual/2013/2013-8b21, retrieved June 13, 2014.

5. Denis Collins, Essentials of Business Ethics: Creating an Organiza-

tion of High Integrity and Superior Performance (Hoboken, NJ: John Wiley& Sons, 2009).

6. Denis Collins, Business Ethics: How to Design and Manage Ethical

Organizations (Hoboken, NJ: John Wiley & Sons, 2012).7. See Gilbert, Rasche, and Waddock (2011).8. United States Sentencing Commission, “An Overview of the Orga-

nizational Guidelines,” available at http://www.ussc.gov/sites/default/files/pdf/training/organizational-guidelines/ORGOVERVIEW.pdf,retrieved June 13, 2014.

9. United Nations Global Compact, “Business Participation,” avail-able at http://www.unglobalcompact.org/howtoparticipate/Business_Participation/, retrieved June 13, 2014.

10. Oliver F. Williams, “The UN Global Compact: The Challenge andthe Promise,” Business Ethics Quarterly, 14, 4(2004), 774–775.

11. United Nations Global Compact, About Us, The Ten Principles,available at http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html, retrieved June 13, 2014.

12. Global Reporting Initiative, “About GRI,” available at https://www.globalreporting.org/information/about-gri/Pages/default.aspx, retrievedJune 13, 2014.

13. Global Reporting Initiative, “About GRI,” “What is GRI,” “History,”available at https://www.globalreporting.org/information/about-gri/what-is-GRI/Pages/default.aspx, retrieved June 13, 2014.

14. “G4 Sustainability Reporting Guidelines,” available at https://www.globalreporting.org/reporting/g4/Pages/default.aspx, retrieved June 13,2014.

15. “G4 Sustainability Reporting Guidelines,” pages 48–83,https://www.globalreporting.org/resourcelibrary/GRIG4-Part1-Reporting-Principles-and-Standard-Disclosures.pdf, retrieved June 13, 2014.

16. Global Reporting Initiative, “Sustainability Disclosure Database,”available at http://database.globalreporting.org/, retrieved June 13,2014.

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17. US-SIF Foundation, 2012, Report on Sustainable and Responsible

Investment Trends in the United States, available at http://www.ussif.org/files/publications/12_trends_exec_summary.pdf, retrieved June 13,2014.

18. Calvert Investments, “Sustainable and Responsible Investing,”http://www.calvert.com/sri.html, retrieved June 13, 2014.

19. Calvert Investments, “Sustainability Investment Criteria: CalvertSignature Strategies,” available at http://www.calvert.com/NRC/literature/documents/TL10035.pdf, retrieved June 13, 2014.

20. Calvert Investments, “Calvert Social Index,” http://www.calvert.com/sri-index.html, retrieved June 13, 2014.

21. ISO, Standards, “ISO 26000—Social Responsibility,” available athttp://www.iso.org/iso/home/standards/iso26000.htm, retrieved June13, 2014.

22. ISO 26000 Social Responsibility, “Discovering ISO 26000,” avail-able at http://www.iso.org/iso/discovering_iso_26000.pdf, retrievedJune 13, 2014. See also Ecologia, 2011, Handbook for Implementers of

ISO 26000, Global Guidance Standard on Social Responsibility, availableat http://www.ecologia.org/isosr/ISO26000Handbook.pdf, retrievedJune 13, 2014.

23. Global Reporting Initiative—ISO,GRI G4 Guidelines and ISO26000:2010 How to use the GRI G4 Guidelines and ISO 26000 inconjunction, available at http://www.iso.org/iso/iso-gri-26000_2014-01-28.pdf, retrieved June 13, 2014.

24. Walmart, “Standards for Suppliers,” available at http://corporate.walmart.com/global-responsibility/ethical-sourcing/standards-for-suppliers. See also Walmart, Responsible Sourcing: Sustainability for

Suppliers Manual, available at: http://cdn.corporate.walmart.com/d1/7e/ee6f5c8942f69ad4183bc0683771/standards-for-suppliers-manual.pdf, retrieved June 13, 2014.

25. Walmart, “Audit Process,” available at http://corporate.walmart.com/global-responsibility/ethical-sourcing/audit-process, retrievedJune 13, 2014.

26. Walmart, “Sustainability Hub,” available at http://www.walmartsustainabilityhub.com/, retrieved June 13, 2014.

27. The Sustainability Consortium, “About the Consortium,” availableat http://www.sustainabilityconsortium.org/who-we-are/, retrieved June13, 2014.

28. Walmart, Sustainability Hub, Sustainability Index, “FAQ Over-view,” available at http://www.walmartsustainabilityhub.com/app/

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answers/detail/a_id/243/session/L3RpbWUvMTM5ODk2MjE2MS9zaWQvc3NrWlVhVGw%3D, retrieved June 13, 2014.

29. Walmart, “Walmart Sustainability Index Product Overview,” avail-able at http://customers.icix.com/?wpfb_dl=34, retrieved June 13, 2014.

30. Walmart, Sustainability Hub, “Index Overview,” available athttp://www.walmartsustainabilityhub.com/app/answers/detail/a_id/268/session/L3RpbWUvMTM5ODk2MjE2MS9zaWQvc3NrWlVhVGw%3D,retrieved June 13, 2014.

31. Walmart, 2014 Global Responsibility Report: Executive Summary,p. 19, available at http://cdn.corporate.walmart.com/4e/d8/20cd64374e13ad75ce91b94bcd59/2014-global-responsibility-report-executive-summary.pdf, retrieved June 13, 2014. Walmart, “Sustainability IndexOverview and Vision,” available at http://www.walmartsustainabilityhub.com/ci/fattach/get/3305/1389352069/redirect/1/filename/Sustainability%20Index%20Overview%20and%20Vision.pdf#Sustainability%20Index%20Overview%20and%20Vision, retrieved June 13, 2014.

32. B Corporation, available at: http://www.bcorporation.net/,retrieved June 13, 2014. B Corporation, Impact Assessment, FAQ, avail-able at: http://bimpactassessment.net/how-it-works/frequently-asked-questions, retrieved June 13, 2014.

33. Rae Andre’, “Assessing the Accountability of the Benefit Corpora-tion: Will this New Gray Sector Organization Enhance Corporate SocialResponsibility?” Journal of Business Ethics, 110(2012), 133–150; StevenJ. Haymore, “Public(ly Oriented) Companies: B Corporations and theDelaware Stakeholder Provision Dilemma,” Vanderbilt Law Review, 64,4(2011), 1311–1346.

34. B Corporation, available at http://www.bcorporation.net,retrieved June 13, 2014.

35. B Corporation, “Benchmark Performance,” available at http://www.bcorporation.net/become-a-b-corp/why-become-a-b-corp/benchmark-performance, retrieved June 13, 2014.

36. To preview an assessment, go to http://b-lab.force.com/bcorp/impactassessmentdemo, retrieved June 13, 2014, and then type in acountry, sector, and number of employees. The number of sections maydiffer based on size or industry.

37. B Corporation, “Performance Requirements,” available at http://www.bcorporation.net/become-a-b-corp/how-to-become-a-b-corp/performance-requirements, retrieved June 13, 2014.

38. B Corporation, Third Party Standards, available at: http://benefitcorp.net/third-party-standards. For a report example, see Greystone

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Bakery 2012 Annual Report, available at http://benefitcorp.net/storage/documents/greyston_annual_2012_ks_05.pdf, retrieved June 13, 2014.

39. For a more in-depth explanation of the model, see Denis Collins,“Designing Ethical Organizations for Spiritual Growth and Superior Per-formance: An Organization Systems Approach,” Journal of Management,

Spirituality & Religion, 7, 2(2010), 95–117.

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APPENDIX

Optimal Ethics Systems Model Benchmarking Tool

Benchmark the health of your organization’s ethics systems. Rateyour organization against the following best practices in ethicsmanagement. Mark either “yes,” “sometimes,” or “no,” accordingto your current situation. At the end, count your total “yes”answers.

Governance Mechanisms Yes Sometimes No

1. Our mission statement explicitly mentionscommitment to social and environmental issues.

2. Our Board or governing body reviews socialand environmental impacts.

3. Our Board includes independent members.4. Our Board includes an employee or community

representative.5. We have independent board members on our

audit and compensation committees.6. Board members fill out a conflict of interest

questionnaire.7. Financial statements are verified annually by

an independent source.Subtotal for Governance Mechanisms, items 1

through 7

Hiring Ethical Job Candidates Yes Sometimes No

8. The importance of ethics is highlighted in ourjob listings.

9. Information is gathered and used in a waythat does not discriminate based on a person’srace, color, religion, gender, national origin, age,or disability.

10. Reference checks are conducted with apotential employee’s former employer orsupervisor.

11. Background checks, integrity tests, andpersonality tests are conducted with potentialemployees.

12. Job finalists are asked to respond orally topotential ethical dilemmas.

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Hiring Ethical Job Candidates Yes Sometimes No

13. Managers take into consideration a potentialemployee’s ethics when making a final hiringdecision.

14. When appropriate, alcohol, drug andpolygraph tests are conducted.

Subtotal for Hiring Ethical Job Candidates, items8 through 14

Codes of Ethics and Conduct Yes Sometimes No

15. We have a short Code of Ethics, or ValuesStatement, that articulates ethical expectationsat work.

16. We have an extensive Code of Conduct thatprovides specific examples of acceptable andunacceptable behaviors.

17. The Code of Ethics is mentioned in ourorganization’s strategic plan.

18. The Codes of Ethics and Conduct are publiclydisplayed and available.

19. Managers vocally support our Codes of Ethicsand Conduct.

20. All employees are trained to implement ourCodes of Ethics and Conduct.

21. All employees participate in an annual ethicscode survey to determine how well ourorganization is living up to the code.

Subtotal for Codes of Ethics and Conduct, items15 through 21

Ethical Decision-Making Yes Sometimes No

22. Ethics is an important consideration in ourdecision-making process.

23. Employees are trained to use an ethicaldecision-making framework to help them derivemoral answers when issues arise.

24. Employees are comfortable engaging eachother in an ethics discussion when contentiousissues arise.

Subtotal for Ethical Decision-Making, items 22through 24

321DENIS COLLINS

Ethics Training Yes Sometimes No

25. All employees receive ethics training annuallyas part of an ongoing continuous improvementeffort.

26. The ethics workshops are facilitated bysomeone our employees trust.

27. The workshops examine real-life work-relatedsituations that are linked back to the Code ofEthics or Code of Conduct.

28. Employees share their real feelings with eachother during our ethics workshop.

29. Employees are comfortable engaging eachother in an ethics discussion when contentiousissues arise during our workshops.

30. Employees understand the competitiveadvantages of being ethical and how beingethical impacts organizational performance.

31. Training sessions are assessed at theirconclusion to ensure that workshop goals andobjectives have been accomplished.

Subtotal for Ethics Training, items 25 through 31

Respecting Employee Diversity Yes Sometimes No

32. A specific person, such as a diversity officer,is accountable for diversity issues.

33. Our employees reflect the gender, ethnic,racial, and religious diversity of qualified jobapplicants in the community.

34. Managers support our diversity initiatives.35. Flexible work schedules and cafeteria-style

benefit plans meet the needs of our diverseworkforce.

36. Our promotion, performance appraisal, anddownsizing criteria do not discriminate againstdiverse employee groups.

37. Diversity training workshops addressself-awareness, employee differences, andemployee commonalities.

38. Achieving diversity goals are part of amanager’s performance evaluation.

Subtotal for Employee Diversity, items 32 through38

322 BUSINESS AND SOCIETY REVIEW

Ethics Reporting Systems Yes Sometimes No

39. Managers welcome employee discussionsabout ethical issues.

40. Managers welcome input from employeesabout ethical misconduct.

41. A specific person, such as an Ethics &Compliance Officer (ECO) or an Ombudsman, isaccountable for managing our organization’sethics program.

42. Our organization’s ethical reporting policy isclearly communicated to employees.

43. An internal reporting system exists for ouremployees to confidentially raise ethical issuesand receive ethical clarification.

44. An internal system exists for our employeesto anonymously report potential ethicalwrongdoing.

45. Employee requests for confidentiality arehonored.

46. Employees who purposely submit a falseaccusation are disciplined.

47. There is zero tolerance for retaliation againstwhistleblowers.

Subtotal for Ethics Reporting Systems, items 39through 47

Ethical Leadership, Work Goals, andPerformance Appraisals Yes Sometimes No

48. Our organization’s commitment to ethics isreflected in specific managerial actions, and notjust rhetoric.

49. Our managers exhibit ethical traits in theirprivate lives outside work.

50. At work, our managers are honest, credible,respectful, and fair.

51. Our managers encourage others at work tobehave ethically.

52. Managers take appropriate actions afteremployees share their ethical concerns.

53. Employees are surveyed about the extent towhich they believe managers behave ethically atwork.

323DENIS COLLINS

Ethical Leadership, Work Goals, andPerformance Appraisals Yes Sometimes No

54. Our work goals are jointly determined bymanagers and their subordinates, and linked toorganizational objectives (i.e., Management-By-Objectives).

55. Our work goals are specific, measurable,challenging, and attainable.

56. We use 360-degree performance evaluationsto obtain a holistic perspective of an employee.

57. Performance appraisals measure ethicalbehaviors and attitudes.

58. Employees engaged in unethical behaviorsare warned and disciplined.

59. Punishments for unethical behavior reflectthe magnitude of the violation.

60. Ethical integrity is a critical factor whenconsidering promotions.

Subtotal for Ethical Leadership, Work Goals, andPerformance Appraisal, items 48 through 60

Engaging and Empowering Employees Yes Sometimes No

61. Employee satisfaction surveys are conductedand results used to inform continuousimprovement efforts.

62. Employees are passionate about their workand the organization.

63. Our managers request employee input ondecisions that directly impact their work andwork-life.

64. Our go-getters are provided autonomy andleadership opportunities.

65. Our managers continually increase workexpectations for fence-sitters.

66. Our adversarial employees are confronted bymanagers and plans are developed for changingbehaviors.

67. Team members are trained in groupdynamics and collective problem-solvingtechniques.

68. Our employees are provided with key data,including financial information, relevant toimproving work unit performance (i.e., OpenBook Management).

324 BUSINESS AND SOCIETY REVIEW

Engaging and Empowering Employees Yes Sometimes No

69. Appreciative Inquiry techniques are used toaddress organizational issues.

70. At the end of the day, our employees reflecton their daily performance and develop plansfor the following day.

71. Our employees elicit and review suggestionsfor improved work unit performance, and havethe authority, within reason, to make changesas needed (Scanlon-type gainsharing plan).

72. Our employees share in the profits they helpto generate (i.e., profit sharing, stock options,ESOPs, or worker cooperatives).

73. Legal rights of employees are upheld.74. Employee wages and benefits are above

average for the labor market.75. A specific person is responsible for

overseeing employee health & safety issues.76. Employees receive training to improve their

social and technical skills.Subtotal for Empowering Ethical Employees,

items 61 through 76

Product and Service Accountability Yes Sometimes No

77. We have quality control mechanisms in placefor our products and services.

78. We measure and assess customersatisfaction.

79. We provide product labels that informcustomers about its content.

80. Information gathered about consumersremains private and not unnecessarily sharedwith others.

81. Our marketing communications are honestand truthful.

82. Our suppliers sign statements ensuring thatthey are in compliance with relevant laws andregulations.

Subtotal for Product and Service Accountability,items 77 through 82

Environmental Management Yes Sometimes No

83. A specific person, such as an EnvironmentalHealth & Safety Director, is accountable forenvironmental management.

325DENIS COLLINS

Environmental Management Yes Sometimes No

84. We have a cross-functional “green team” thataddresses environmental issues.

85. Our organization has an EnvironmentalManagement System (EMS) plan.

86. Our managers consider the impactorganizational operations have on the naturalenvironment (environmental risk assessment).

87. Environmental goals and objectives, such asenergy consumption and greenhouse gasemissions, are established, monitored,measured, and assessed annually.

88. Product, or service, packaging is minimal.89. We operate in a “green” building.90. We share our environmental expectations

with our suppliers and consider theirenvironmental record when making purchasingdecisions.

91. We use recycled content in our products andservices.

Subtotal for Environmental Management, items83 through 91

Community Outreach Yes Sometimes No

92. A specific person, or employee team, isresponsible for developing and monitoring ourorganization’s community outreach activities.

93. Upper management encourages input from,and dialogue with, stakeholder groups forissues that affect community members.

94. Our organization donates money tocommunity organizations.

95. Our organization donates products or servicesto community organizations.

96. Our employees volunteer their time, oncompany time, with community organizations.

97. Our organization uses community service asan opportunity for employees to develop projectmanagement, leadership, and team buildingskills.

98. Our organization provides job opportunitiesfor nontraditional employees, such as peoplewith disabilities or ex-convicts.

99. Our organization has developed a strategicpartnership with a community organization.

326 BUSINESS AND SOCIETY REVIEW

Community Outreach Yes Sometimes No

100. Our managers participate in local businessassociations such as a rotary or the chamber ofcommerce.

101. Our organization measures and assesses itscommunity impacts and shares the informationwith the community.

102. Whenever possible, we purchase from localsuppliers.

103. We participate in community developmentdiscussions.

Subtotal for Community Outreach Items, 92through 103

Organizational Assessment Yes Sometimes No

104. Our organization systematically examines itsethical performance on an annual basis.

105. Our organization benchmarks itself to theindustry’s best ethical practices.

106. Our organization benchmarks itself to theOptimal Ethics Systems Model.

107. Our organization collects information fromsuppliers and customers about our ethicalperformance.

108. Unethical behaviors are tracked to theirsystematic cause (hiring problem, ethicstraining problem, role model problem, work goalproblem, performance appraisal problem, etc.).

109. Corrective actions are taken when unethicalbehaviors occur, and managers are heldaccountable for implementing appropriatechanges and achieving improved results.

110. Relevant information about theorganization’s ethical performance is sharedwith the CEO.

Subtotal for Organizational Assessment, items104 through 110

327DENIS COLLINS

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