Ethisphere's 2012 World's Most Ethical Companies list recently appeared. Instead of clicking on the link to see what companies made the list, I was more curious to find out how the companies made the cut.
Over the years, I've heard too many off-the-record complaints from corporate managers about the painstaking process (and advertising expectations) involved in making the cut at other well-known "Best Company to X" lists. While I'm not questioning anyone's ethics on this count (and certainly not Ethisphere's), I am skeptical (but not cynical) of what it takes to make the list.
It takes a heck of a lot of paperwork, for starters. And that may be a very good thing from a process improvement perspective, as I'll get to below.
Happily, Ethisphere practices the transparency it preaches. The organization posts the 36-page questionnaire that company representatives must complete for their enterprise to be considered for the annual list and accompanying publicity.
After the form is complete, Ethisphere uses its proprietary rating system, the corporate Ethics Quotient (EQTM), to calculate an initial EQ score via a "proprietary matrix of relationships between answers to given questions and a set of complex formulas based on demographic qualifiers." The EQ results are then used to help Ethisphere narrow the number of entrants to the top percentile of performers in each industry.
That's when additional research -- in the form of independent research, request for documentation supporting select answers and/or interviews with company leadership -- begins. This information combined with the EQ score is "not intended to cover all aspects of corporate governance, risk, sustainability, compliance or ethics," Ethisphere explains, "but rather it is a comprehensive sampling of definitive criteria of core competencies."
(If you have a problem with this process, take it to the company's advisory panel on the EQ framework.)
The EQ framework consists of five core categories (the percentages refer to the weighting each category receives in the evaluation process):
- Ethics and Compliance Program (25 percent);
- Reputation, Leadership and Innovation (20 percent);
- Governance (10 percent);
- Corporate Citizenship and Responsibility (25 percent); and
- Culture of Ethics (20%)
Here is the description of the final category (which most interested me as it is often the most difficult quality to measure): "This category looks at the culture of ethics at the organization concerning widely accepted or unaccepted norms as it pertains to ethical conduct. Starting with adoption of a values-based culture and building on those core guidelines by having the workforce buy into the culture and not only know it, but live it."
While the list of the World's Most Ethical Companies is the immediate attention-grabber here, the way these companies are selected is more instructive. In fact, companies not on this list are well-served by printing out the questionnaire mentioned above and using it as a self-evaluation form.