An East Coast university recently fired six employees for misappropriating financial aid funds. From 2007 to 2016, the employees awarded themselves phony grants and scholarships, allowing them to skim cash from the university on top of the tuition benefits they were already receiving. The investigation continues but the fraud may have totaled as much as $1 million, according to some reports.
At a state university in the Southeast, two bookstore employees face criminal charges for taking more than $40,000 worth of inventory from the campus store. And a Northwestern state university recently acknowledged that two professors in the Graduate School of Education have been using the personal data of local public school children in their research for the past two years—without informing parents or asking for their permission. The university is investigating to determine whether any laws were broken.
“The public is holding our organizations to high standards, and unethical practices are harmful to our institutions,” says Patti Snopkowski, chief audit executive at Oregon State University, Corvallis. “They can result in unfavorable news reports and social media, and the loss of integrity and damage to the institution’s reputation. Also, ongoing unethical behavior often serves as justification for staff members to make further bad decisions.”
Professionals in campus business offices are tasked with helping their institutions manage risks, and “a lot of the risks that we face deal with ethics,” says Kevin Robinson, associate vice president in the Office of Audit, Compliance and Privacy at Auburn University, Auburn, Ala., and editor of Case in Point, an online newsletter about higher education risk that goes to 1,400 individuals at institutions in the United States and Canada. Rather than dealing with the ramifications of employees’ potentially unethical decisions, business leaders should take steps to help create a campus culture that values and expects ethical choices.
Why You Need a Policy
Instances of fraud or theft on campuses are clearly illegal, but ethical breaches that fall into gray areas—such as the PSU researchers’ use of children’s data without permission—can still be damaging to institutions. “Ethics is about knowing the difference between what you have a right to do and what is right to do,” says Jean Bushong, principal at CliftonLarsonAllen, a public accounting and consulting firm that works with higher education institutions.
For instance, it may not be illegal for a department head to hire a family member, but if that person is making salary decisions for the family member, then the department head is in a situation that is a potential conflict of interest that can lead to unethical decisions. “An unethical environment is a precursor to fraud,” Bushong says. “Creating a culture of ethical decision making can prevent fraud down the road.”
Some institution leaders, believing that they don’t have a problem with unethical behavior, say that they don’t need an ethics policy. But “of the 20 or 30 institutions I’ve worked with, I’m not aware of one that hasn’t had some type of fraud or ethical lapse,” Bushong says. “When there’s no policy in place, the fraud is usually bigger and lasts longer.”
An unethical choice can lead to bad decisions. For instance, a professor might use institutional resources to run a personal business: At one university, a professor was selling lab kits to students made with university supplies. During a salary freeze, a supervisor might add overtime to employees’ paychecks to increase their wages even when they haven’t worked the overtime.
College and university employees regularly face decisions that may not seem to have a black or white answer or could be swayed by a conflict of interest. Because many people don’t interpret gray areas the same way, institutions need to develop a written policy that clearly defines the behaviors that are unacceptable.
To prevent employees from making decisions that could result in negative headlines or consequences, leaders must set an ethical tone—and establishing an ethical behavior and fraud prevention policy shows that they’re serious, Snopkowski says.
Start at the Top
Business office professionals can certainly provide a leadership role in creating a culture focused on ethical decision making, but to be effective, such a culture must be prioritized by top institutional leaders. “The message has to be continually communicated and it needs to come from high up,” Robinson says. “When employees see leaders taking shortcuts, that can corrode a culture and have a big impact on the people watching. Leaders must communicate expectations and live them out.”
Business office professionals, however, can help their leaders emphasize an ethical culture, as they often have “a direct line to the president and the board,” Snopkowski says. Chief business officers can use that access to conduct meaningful conversations about ethics, choices faced by employees, and the need for a policy.
When top leaders aren’t aware of ethical problems at their institutions, it can be difficult to convince them to prioritize an ethics policy and ongoing communication, says Kevin Sisemore, associate vice president and chief audit officer at the University of Colorado, Boulder. “It’s hard to push the benefits because they’re not all that tangible,” he says. “You have to point people to failures of other institutions and things that have happened in places that don’t have an ethical culture. Remind leaders that good people want to feel good about what they’re doing; folks want to know they work for an employer that cares about doing the right thing.”
Make It Official
Many institutional leaders expect that their employees will abide by certain ethical standards—but if those standards are not written down and shared with employees, there’s no guarantee that employees really know what they are. Rather than assuming employees are on the same page, leaders should establish a written code of ethics that explains the types of behavior that are acceptable and unacceptable.
Create those expectations with input from leaders across campus, and consider seeking outside counsel from professionals who have done similar work at other institutions. Include the potential disciplinary actions that will be taken when the policy is violated. “You don’t need to be thinking about how to respond when you’re in the middle of an ethical dilemma,” Snopkowski says. “You need to think about that ahead of time.”
When a written ethics policy is in place, a person or office should be designated to manage that policy. That leader or group of leaders will be responsible for communicating the guidelines and maintaining an ongoing dialogue with employees about ethical behavior.
At Auburn, a professional from the audit and compliance department makes a presentation to every new employee. “Our presentation deals with ethical choices; if someone ever tries to get you to do something you’re not sure about, come to us and we’ll help you,” Robinson says. “We also talk about conflicts of interest. A conflict of interest doesn’t mean you’ve done something wrong; it means you have competing interests. In that case, we need a conflict of interest management plan and we’re better off.”
For instance, if a department leader wants to hire a family member or use a family member’s business as a vendor, that represents a conflict of interest. In some situations, employees have come to the audit and compliance office proactively, and Robinson has helped them develop a conflict of interest management plan to prevent problems later. That plan usually includes involving an independent third party to make decisions, as well as continual monitoring of that plan.
Auburn is currently working on a conflict of interest management system that will allow employees to provide electronic reporting to meet the demand for transparency. “The system will protect faculty, staff, and the institution to make sure that we’re proactively managing potential conflicts,” Robinson says.
In addition to communicating with employees about acceptable behavior, the leader of the ethics program should establish easy ways for employees to report questionable behavior. The University of Colorado uses a case management hotline and online reporting solution. When employees see or hear something questionable, they can call the hotline or report it online, anonymously if they prefer. The reporting software asks the reporter to choose a type of behavior such as research or academic misconduct, theft, or human resources violations.
Sisemore’s team programmed the software to route each type of claim to the appropriate authority. “We see all of them, but some go to the police, some go to academic affairs, and so on,” he says. “We make sure that the claims are handled appropriately and report quarterly to the ethics department.”
Achieving Buy-in
Once the program is in place, leaders must regularly communicate it to make it part of the fabric of the institution’s culture. Because employee reports are the most frequent method of uncovering fraud, it’s vital to remind employees of their role in helping to ensure an ethical environment. At Oregon State, the university president sends out communications about the policy on at least an annual basis, Snopkowski says.
At the University of Colorado, professionals in the audit department regularly offer presentations about the campus code of ethics to employee groups. “We try to emphasize in presentations that we are a resource,” Sisemore says. “We’re not asking you to confront people; just call us after a difficult encounter. Most people don’t expect to get into a conflict with their boss.”
The University of Colorado also distributes knickknacks such as stress balls, Post-it notes, and coasters that are printed with the hotline number and website to remind people how to report unethical behavior. Just seeing the name and number seems to jog employees’ memories about questionable behaviors they’ve witnessed. “We see a spike in the number of reports when we use the coasters,” Sisemore says. “About 75 percent of our reported incidents are HR-related issues.”
In addition to reminding employees how to report ethical violations, fostering an ethical culture includes providing resources for employees to make wise decisions in the first place. Institutions need to have a “safe place” where employees can go to confidentially discuss decisions that may fall into gray areas, Sisemore says. At the University of Colorado, for instance, the ombudsman office is a place to talk through decisions privately, and employees know that they can go there to get guidance in making ethical decisions or discussing things they’ve seen that may concern them.
Even when institutions have cultural ethics programs in place, there will still be employees who make bad decisions. “I don’t think we should completely beat ourselves up if something does go wrong,” Snopkowski says. “But we do need to follow through; when somebody does something against the policy, make sure that you’re following up and holding people accountable.”
As the policy is repeated and communicated year after year, and as employees see consequential actions taken when others break the policy, an ethical culture will be continually enforced. “We’re never going to get perfection,” Robinson says. “But we have to make an effort to make good decisions, and that means trying to create a culture that values good decisions.”
NANCY MANN JACKSON, Huntsville, Ala., covers higher education business issues for Business Officer.