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Operational Best Practices
in Business Ethics:
A Practical and Systematic
Benchmarking Tool
DENIS COLLINS
ABSTRACT
This article describes a benchmarking tool managers can
use to determine operational policies and processes that
could enhance an organization’s social and ethical per-
formance. The benchmarking tool consists of a
13-dimension, 110-item survey based on an Optimal
Ethics Systems Model. These best practices in business
ethics are derived from an analysis and assessment of
seven institutional infrastructures and accountability
standards 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,” albeit
with many missteps along the way. This trajectory is
driven 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.
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 are
justice and happiness; both are loosely understood concepts that
propel the evolution of human history.1What constitutes a good
society is endlessly debated among moral theorists, political theo-
rists, business leaders, and many others, including parents and
their 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 role
in the creation of a good society because people spend a significant
amount of time working for, and interacting with, them, be they
businesses, nonprofits, or government bureaucracies. Over the
past two decades, a wide range of new institutional infrastructures
and accountability standards for corporate social responsibility
has 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 their
organization’s ethical performance and minimize the potential for
unethical performance need a practical and systematic bench-
marking tool to guide them in designing organizational policies and
procedures.3
This article describes a practical and systematic benchmarking
tool created to meet this need. This 13-dimension, 110-item
Optimal Ethics Systems Model benchmarking tool evolved from a
series of three analytical cycles examining institutional infrastruc-
tures, accountability standards, and relevant best practices litera-
ture in the area of corporate social responsibility. Managers can
benchmark their organization by using the Optimal Ethics Systems
Model survey, which appears in the appendix, and use the results
to guide their efforts to enhance ethical and social performance.
EARLY DEVELOPMENT OF THE BENCHMARKING TOOL
I have been teaching business ethics and social responsibility in
business courses and workshops for MBA students and executives
for nearly 25 years, preceded by more than a decade of working
within organizations. Students and workshop participants often
ask how I would design organizational operations to generate
ethical outcomes in a manner that also benefitted, rather than
restrained, financial performance. These discussions led to the
304 BUSINESS AND SOCIETY REVIEW
realization that managers needed a practical and systematic
benchmarking tool, with identified best practices for policies
and processes to help them increase the likelihood of ethical
organizational performance.
I began conceptualizing the benchmarking tool by reviewing the
1991 Federal Sentencing Guidelines for Organizations, which pro-
vides a list of best practices for effective Compliance and Ethics
Programs.4I expanded this list to include additional operational
areas that directly impact an organization’s ethical performance,
such as environmental management, employee empowerment,
and corporate citizenship, for which best practices were addressed
by other corporate social responsibility institutional infrastruc-
tures and accountability standards.
My trade book Essentials of Business Ethics, published in 2009
by John Wiley & Sons, is the outcome of that research.5An
11-dimension, 76-item benchmarking tool was made available
online as a book supplement. When the trade book was adapted
for a 2012 textbook, Business Ethics,6a second analytical review
of policies and processes recommended by corporate social
responsibility institutional infrastructures, accountability stan-
dards, and other relevant literatures resulted in an expansion of
the supplemental online benchmarking tool to 90 items.
Corporate social responsibility institutional infrastructures and
accountability standards continue to be developed, modified, and
expanded. For this article, I reviewed the institutional infrastruc-
tures and accountability standards literature a third time with the
intent to develop an even more robust Optimal Ethics Systems
Model benchmarking tool. This meant searching for any new or
unintentionally overlooked operational areas, policies, and pro-
cesses. The next section summarizes the seven institutional infra-
structures and accountability standards that serve as the
foundation for the latest evolution of the Optimal Ethics Systems
Model benchmarking tool, followed by a discussion of the
enhanced model and benchmarking tool.
INSTITUTIONAL INFRASTRUCTURES AND
ACCOUNTABILITY STANDARDS
The scope of best practices included in the Optimal Ethics
Systems Model encompasses seven social performance institu-
305DENIS COLLINS
tional infrastructures and accountability standards frameworks.
These frameworks include principle-based standards that estab-
lish foundational values; process standards that offer operational
mechanisms; reporting standards that measure impacts; and cer-
tification standards for third-party verification.7The seven
selected frameworks were chosen because they provide either a
very broad operational overview or a narrow focus in one area of
operations, such as environmental performance. Each framework
has shown evidence of adoption by a growing number of leading
businesses. A wide range of stakeholders, including a practical
business perspective, was involved in their creation. The seven
best practices frameworks are as follows:
• Federal Sentencing Guidelines: A legislative effort that has
had significant impact on best practices implementation
• United Nations Global Compact Principles: A principles-based
standard that has attracted significant corporate attention
• Global Reporting Initiative (GRI): A global reporting standard
that is gaining momentum
• Calvert SRI Mutual Funds: A popular socially responsible
investing standard
• ISO 26000, Walmart Supplier Certification, and the B Corpo-
ration: Three broad certification standards increasingly being
discussed 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 and
punish 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 commits
a crime while performing work tasks. The guidelines apply to
individuals and organizations convicted by a federal court of
felonies and Class A misdemeanors. The most common crimes in
these categories are fraud, environmental waste discharge, tax
offenses, antitrust offenses, and food and drug violations.
306 BUSINESS AND SOCIETY REVIEW
Following public hearings, the guidelines were developed by
the United States Sentencing Commission, a permanent indepen-
dent agency of the federal judiciary consisting of seven voting
members appointed by the President and confirmed by the
Senate. Criminal deterrence is framed around adopting the best
practices for effective Compliance and Ethics Programs. The
approximately 20 best practices suggested by the Federal Sen-
tencing Guidelines cover the following six categories: oversight by
high-level personnel; due dare in delegating substantial discre-
tionary authority; effective communication to all levels of employ-
ees; reasonable steps to achieve compliance, which include
systems for monitoring, auditing, and reporting suspected wrong-
doing without fear of reprisal; consistent enforcement of compli-
ance standards including disciplinary mechanisms; and
reasonable steps to respond to and prevent further similar
offenses upon detection of a violation.
The guidelines are applicable to nonprofits, unions, partner-
ships, trusts, pension funds, and government units, as well as
businesses. Revisions have been made over time to clarify defini-
tions and responsibilities.
United Nations Global Compact
The United Nations (UN) has developed guiding principles for
conducting business throughout the world. UN Secretary-General
Kofi Annan, the first Secretary-General with a business degree
(MS, MIT Sloan School of Management), presented the UN Global
Compact Principles to business leaders who attended the World
Economic Forum in Davos, Switzerland, in 1999. By 2014, more
than 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 a
multistakeholder effort that included UN, business, and NGO
leaders. Participants examined international agreements such as
the 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 at
Work (1998), and the U.N. Convention against Corruption
(2003).10 The 10 Global Compact principles are categorized in four
areas: human rights, labor, environment, and anticorruption.11
307DENIS COLLINS
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 Directors
endorsement, annually communicating progress, and advocating
the 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 and
environmental performance comparisons across organizations.12
The GRI reporting framework was developed and continues to be
revised with input from business representatives, investors,
accountants, and activists.
The initial GRI guidelines were released in 2000.13 The fourth
generation of GRI reporting guidelines was released in May 2013
and is available online.14 The 91 GRI indicators are categorized in
six areas: economic, environmental, labor, human rights, society,
and product responsibility.15
As of 2014, the GRI guidelines have been used by more than
4,000 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 screens
companies for financial performance (meets financial goals, solid
return on investment) and social performance. Social performance
is operationalized in terms of environmental, social, and corporate
governance (ESG) metrics. In 2012, the SRI market totaled $3.31
trillion in assets in the U.S. investment market, representing 11
percent of the total market.17 The number of investment funds that
incorporate 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 by
Calvert, which serves as a benchmark for other SRI funds.18
308 BUSINESS AND SOCIETY REVIEW
Calvert Investments was founded in 1976 and initiated a Social
Investment Fund in 1982. The fund evaluates publically traded
firms based on 21 indicators categorized in seven areas:19 gover-
nance and ethics, environment, workplace, product safety and
impact, international operations and human rights, indigenous
peoples’ rights, and community relations.
Calvert Investments also created the Calvert Social Index as a
method for benchmarking large companies considered to be
socially responsible or ethical.20 In 2014, the index consisted of
680 companies, weighted by market capitalization, selected from
the 1,000 largest publicly traded companies in the United States.
Only companies that satisfy all of Calvert’s ESG criteria are
included in the index.
ISO 26000
In November 2010, the International Organization for Standard-
ization (ISO) launched ISO 26000, which provides organizations
with guidelines for integrating social responsibility best practices
into management processes.21 Unlike the ISO 14000 series for
environmental management, ISO 26000 is not intended to be
used as a certification process; rather, it was developed to provide
a 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 or
privately held companies.
The need to develop standards for social responsibility was first
identified in 2001 by an ISO committee on consumer policy. A
multistakeholder committee was then formed and developed
working groups co-chaired by a representative from a developing
nation 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 and
draft the principles. The social responsibility working group was
ISO’s largest working group ever, with 450 participating experts
and 210 observers representing 99 ISO member nations and 42
liaison organizations.
ISO 26000 emphasizes the importance of organizations recog-
nizing their social responsibilities and the need for identifying and
309DENIS COLLINS
engaging with stakeholders in the process. ISO 26000 consists of
36 indicators in six core social responsibility areas: human rights,
labor practices, environment, fair operating practices, consumer
issues, and community involvement and development.22 The ISO
26000 topic areas can be mapped onto the fourth version of the
GRI guidelines.23
Walmart Supplier Certification
Walmart, long disparaged by consumer and community activists
for being socially irresponsible, has taken a leadership role in
ensuring that their suppliers meet basic standards in the ethical
treatment 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 issues
in the global supply chain, Walmart developed 13 minimum stan-
dards with more than 300 indicators in the areas of compliance
with laws, voluntary labor, labor hours, hiring and employment
practices, compensation, freedom of association and collective
bargaining, 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 these
standards must implement a correction action plan to remain a
Walmart supplier. An independent auditing firm conducts facility
social audits every 6–24 months, unannounced, based on the
previous audit findings. In 2013, more than 20,000 social audits
were conducted at 15,027 factories.25
Walmart has also established its own ambitious environmental
goals, including total reliance on renewable energy, creating zero
waste, and selling products that sustain people and the environ-
ment.26 The latter issue led to the development of a Sustainability
Index assessment tool for its suppliers. Walmart surveyed more
than 100,000 global suppliers about their sustainability efforts.
The company sponsored The Sustainability Consortium, com-
posed of more than 100 suppliers, retailers, nongovernmental
organizations, and government officials, to research and develop
the supplier assessment tool.27 Walmart’s Sustainability Index
surveys 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:
310 BUSINESS AND SOCIETY REVIEW
energy and climate, material efficiency, natural resources, and
people and community. Each category has multiple assessment
questions.29 Walmart pushes best practices further down the
supply chain by giving suppliers credit for applying similar envi-
ronmental standards to their suppliers. Beginning 2013, Walmart
began using this tool with 1,000 suppliers in its 200 largest
merchandising categories, and is adding an additional 500 cat-
egories and 6,000 suppliers in 2014.30 Walmart’s goal for 2017 is
to have 70 percent of goods sold in the United States from
suppliers who use the Sustainability Index scorecard.31
B Corporation
In 2007, B Lab, a nonprofit organization, initiated a third-party
Benefit 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 entity
recognized by federal, state, and municipal governments that
permits managers to consider not only owner interests in decision
making, but also the interests of employees, communities, and the
environment. They envision the IRS eventually creating a class of
tax benefits for B Corporations, such as taxing them at a 20
percent rate, a midpoint between that of a typical profit maximizing
C Corporation (taxed at 40 percent) and nonprofits (not taxed).33
This would provide businesses with a strong fiscal incentive to
adopt 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 tax
deduction. A year later, Maryland became the first state to pass B
Corporation legislation. Several other states have since passed
similar legislation, including Delaware and New Jersey, where
many companies incorporate.
As of May 2014, there were 990 B Corporations in 60 industries
and 32 countries.34 B Corporations are typically small- or
medium-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 Impact
Assessment to benchmark their performance and set goals for
continuous improvement.35
311DENIS COLLINS
B Lab staff members, business leaders, and other experts have
developed a 160-question “B Impact Assessment” survey, graded
on a 200-point scale, to assess organizations in four areas: gov-
ernance, workers, community, and environment.36 Assessment
questions are customized based on a company’s size, sector, and
geography. Applicants who obtain at least 80 points and amend
governance documents to include stakeholder interests are
granted a 2-year B Corporation certification. Eight to 12 questions
answered affirmatively are randomly chosen for detailed docu-
mentation.37
B Corporations are required to publish an annual benefit report
of its social and environmental performance against a third
party standard, such as GRI or ISO 26000.38 Every year, B Lab
staff 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 have
certification publicly revoked.
ENHANCED MODEL AND BENCHMARKING TOOL
As noted earlier, the original 2009 Optimal Ethics Systems Model
consisted of eleven dimensions, which remained in the 2012
model.39 The model was systematic, beginning with best practices
for hiring ethical employees. The new employee is then introduced
to the organization’s code of ethics, code of conduct, and ethical
decision-making framework. Ethical behavior is further reinforced
through a variety of ethics training programs. Other operational
processes include mechanisms for respecting employee diversity,
ethics reporting systems, developing ethical leadership through
work goals and performance appraisals, engaging and empower -
ing ethical employees, environmental management, and commu-
nity outreach and respect. Lastly, all best practices are assessed
for continuous improvement.
The 2009 benchmarking tool contained 76 best practice items
within the 11-dimension framework. In the expanded 2012
benchmarking tool, 14 survey items were added within these
dimensions. The analysis described in the previous section
exposed several gaps in the 2012 model. In response, two new
dimensions have been added to the previous model: governance
312 BUSINESS AND SOCIETY REVIEW
and product/service accountability. The revised 13-dimension
model appears in Figure 1.
The 2012 benchmarking tool has also been revised based on
gaps revealed in the previous section’s analysis. The expanded
benchmarking tool, which appears in the appendix, is a
13-dimension 110-item operational best practices survey. The
new benchmarking tool contains seven governance items, such as
independent Board members, and six product/service items, such
as truthful marketing communications and customer satisfaction
information. In addition, individual survey items have been added
to three areas in the original benchmark: four items for engag-
ing and empowering employees (such as employee wages and
benefits are above average for the labor market), one item for
environmental management (using recycled content in products
FIGURE 1 Revised Optimal Ethics Systems Model.
Governance
Mechanisms
Code of Ethics &
Conduct
Orientation
Hiring
Job Applicant
Ethics Ethics Training
Training
Operations
Respect
Employee
Diversity
Ethics Reporng
System
Leadership, Work
Goals, Appraisals
Parcipatory
Empowerment
Product/Service
Accountability
Environmental
Management
Community
Outreach
Best Pracces
Assessment
Evaluation
Ethical Decision
Making
Framework
313DENIS COLLINS
and services), and two items for community outreach (purchasing
from local suppliers and participating in community development
discussions).
For simplicity, each best practice could be assessed using a
3-point scale: “yes” (the practice is formally in place), “sometimes”
(the practice is occasionally implemented), and “no” (the practice
is not implemented). For instance, highlighting the importance of
ethics in job listings is a hiring best practice. This practice may be
routinely implemented, sometimes implemented or implemented
in some work units but not others, or not implemented at all.
Managers can benchmark their organizations to these 110 best
practices, and drive continuous improvement efforts by address-
ing those best practices not yet implemented or only occasionally
implemented. Three evaluative cutoffs provide general reference
points, with 60 percent (67 or more best practices) representing a
significant progress benchmark, 30 percent (34 to 66 best prac-
tices) representing a reasonable progress benchmark, and below
30 percent (33 or fewer best practices) representing a minimal
progress benchmark.
LIMITATIONS AND CONCLUDING COMMENTS
The world is slowly evolving toward a “good society.” While the
specific aspects of a good society remain highly debated, an
essential component consists of organizations with managers who
respect the rights and well-being of multiple stakeholders. The
new institutional infrastructures and accountability standards,
typically developed by multistakeholder panels to ensure that the
criteria are reasonable and inclusive, provide a rich source of
operational best practices in business ethics applicable to various
types 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’s
ethical performance evolution. This article provides an Optimal
Ethics Systems Model that incorporates operational best practices
in business ethics within a single framework. A benchmarking
tool, derived from a review of the best practices literature, was
designed based on this model. The benchmarking tool consists of
314 BUSINESS AND SOCIETY REVIEW
a 13-dimensional, 110-item survey that managers can use to
enhance 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, or
amendments needed to the 13 best practices dimensions?
2. Survey items. The benchmarking tool consists of a 110-item
survey. Are additions, subtractions, or amendments needed
to the 110-item survey?
3. Measurement scale. A 3-point measurement scale (yes, some-
times, no) is used for ease of application. Is a different
measurement scale, such as a 5-point Likert scale, more
appropriate?
4. Firm size. The model was designed based on best practices
developed primarily for medium and large organizations.
What, if any, changes are needed to make the model and
benchmarking tool more useful for small organizations?
5. Certification. This analysis focused on the development of a
benchmarking tool to help managers. Is it possible to trans-
form the benchmarking tool into a certification process, in
the spirit of the B Corporation initiative?
Until these discussions occur, the 110-item best practices survey
provides managers with a useful benchmarking tool for enhancing
ethical behaviors and improving social performance that can be
applied 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. Bartlett
and Susan D. Collins (Chicago, IL: University of Chicago Press, 2012).
2. Two articles provide an extensive review of this literature. See Dirk
Ulrich Gilbert, Andreas Rasche, and Sandra Waddock, “Accountability in
a 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.
315DENIS COLLINS
3. I will be using the terms “ethical performance,” “social performance,”
and “social responsibility” interchangeably. They overlap in both common
usage 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 and
the 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/TheTen
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316 BUSINESS AND SOCIETY REVIEW
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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, retrieved
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27. The Sustainability Consortium, “About the Consortium,” available
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13, 2014.
28. Walmart, Sustainability Hub, Sustainability Index, “FAQ Over-
view,” available at http://www.walmartsustainabilityhub.com/app/
317DENIS COLLINS
answers/detail/a_id/243/session/L3RpbWUvMTM5ODk2MjE2MS9zaW
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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/d8/20cd6
4374e13ad75ce91b94bcd59/2014-global-responsibility-report-executive-
summary.pdf, retrieved June 13, 2014. Walmart, “Sustainability Index
Overview and Vision,” available at http://www.walmartsustainabilityhub
.com/ci/fattach/get/3305/1389352069/redirect/1/filename/Sustain
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Index%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 Social
Responsibility?” Journal of Business Ethics, 110(2012), 133–150; Steven
J. Haymore, “Public(ly Oriented) Companies: B Corporations and the
Delaware 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 a
country, sector, and number of employees. The number of sections may
differ 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://benefit
corp.net/third-party-standards. For a report example, see Greystone
318 BUSINESS AND SOCIETY REVIEW
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.
319DENIS COLLINS
APPENDIX
Optimal Ethics Systems Model Benchmarking Tool
Benchmark the health of your organization’s ethics systems. Rate
your organization against the following best practices in ethics
management. Mark either “yes,” “sometimes,” or “no,” according
to your current situation. At the end, count your total “yes”
answers.
Governance Mechanisms Yes Sometimes No
1. Our mission statement explicitly mentions
commitment to social and environmental issues.
2. Our Board or governing body reviews social
and 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 our
job listings.
9. Information is gathered and used in a way
that does not discriminate based on a person’s
race, color, religion, gender, national origin, age,
or disability.
10. Reference checks are conducted with a
potential employee’s former employer or
supervisor.
11. Background checks, integrity tests, and
personality tests are conducted with potential
employees.
12. Job finalists are asked to respond orally to
potential ethical dilemmas.
320 BUSINESS AND SOCIETY REVIEW
Hiring Ethical Job Candidates Yes Sometimes No
13. Managers take into consideration a potential
employee’s ethics when making a final hiring
decision.
14. When appropriate, alcohol, drug and
polygraph tests are conducted.
Subtotal for Hiring Ethical Job Candidates, items
8 through 14
Codes of Ethics and Conduct Yes Sometimes No
15. We have a short Code of Ethics, or Values
Statement, that articulates ethical expectations
at work.
16. We have an extensive Code of Conduct that
provides specific examples of acceptable and
unacceptable behaviors.
17. The Code of Ethics is mentioned in our
organization’s strategic plan.
18. The Codes of Ethics and Conduct are publicly
displayed and available.
19. Managers vocally support our Codes of Ethics
and Conduct.
20. All employees are trained to implement our
Codes of Ethics and Conduct.
21. All employees participate in an annual ethics
code survey to determine how well our
organization is living up to the code.
Subtotal for Codes of Ethics and Conduct, items
15 through 21
Ethical Decision-Making Yes Sometimes No
22. Ethics is an important consideration in our
decision-making process.
23. Employees are trained to use an ethical
decision-making framework to help them derive
moral answers when issues arise.
24. Employees are comfortable engaging each
other in an ethics discussion when contentious
issues arise.
Subtotal for Ethical Decision-Making, items 22
through 24
321DENIS COLLINS
Ethics Training Yes Sometimes No
25. All employees receive ethics training annually
as part of an ongoing continuous improvement
effort.
26. The ethics workshops are facilitated by
someone our employees trust.
27. The workshops examine real-life work-related
situations that are linked back to the Code of
Ethics or Code of Conduct.
28. Employees share their real feelings with each
other during our ethics workshop.
29. Employees are comfortable engaging each
other in an ethics discussion when contentious
issues arise during our workshops.
30. Employees understand the competitive
advantages of being ethical and how being
ethical impacts organizational performance.
31. Training sessions are assessed at their
conclusion to ensure that workshop goals and
objectives 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 job
applicants in the community.
34. Managers support our diversity initiatives.
35. Flexible work schedules and cafeteria-style
benefit plans meet the needs of our diverse
workforce.
36. Our promotion, performance appraisal, and
downsizing criteria do not discriminate against
diverse employee groups.
37. Diversity training workshops address
self-awareness, employee differences, and
employee commonalities.
38. Achieving diversity goals are part of a
manager’s performance evaluation.
Subtotal for Employee Diversity, items 32 through
38
322 BUSINESS AND SOCIETY REVIEW
Ethics Reporting Systems Yes Sometimes No
39. Managers welcome employee discussions
about ethical issues.
40. Managers welcome input from employees
about ethical misconduct.
41. A specific person, such as an Ethics &
Compliance Officer (ECO) or an Ombudsman, is
accountable for managing our organization’s
ethics program.
42. Our organization’s ethical reporting policy is
clearly communicated to employees.
43. An internal reporting system exists for our
employees to confidentially raise ethical issues
and receive ethical clarification.
44. An internal system exists for our employees
to anonymously report potential ethical
wrongdoing.
45. Employee requests for confidentiality are
honored.
46. Employees who purposely submit a false
accusation are disciplined.
47. There is zero tolerance for retaliation against
whistleblowers.
Subtotal for Ethics Reporting Systems, items 39
through 47
Ethical Leadership, Work Goals, and
Performance Appraisals Yes Sometimes No
48. Our organization’s commitment to ethics is
reflected in specific managerial actions, and not
just rhetoric.
49. Our managers exhibit ethical traits in their
private lives outside work.
50. At work, our managers are honest, credible,
respectful, and fair.
51. Our managers encourage others at work to
behave ethically.
52. Managers take appropriate actions after
employees share their ethical concerns.
53. Employees are surveyed about the extent to
which they believe managers behave ethically at
work.
323DENIS COLLINS
Ethical Leadership, Work Goals, and
Performance Appraisals Yes Sometimes No
54. Our work goals are jointly determined by
managers and their subordinates, and linked to
organizational objectives (i.e., Management-By-
Objectives).
55. Our work goals are specific, measurable,
challenging, and attainable.
56. We use 360-degree performance evaluations
to obtain a holistic perspective of an employee.
57. Performance appraisals measure ethical
behaviors and attitudes.
58. Employees engaged in unethical behaviors
are warned and disciplined.
59. Punishments for unethical behavior reflect
the magnitude of the violation.
60. Ethical integrity is a critical factor when
considering promotions.
Subtotal for Ethical Leadership, Work Goals, and
Performance Appraisal, items 48 through 60
Engaging and Empowering Employees Yes Sometimes No
61. Employee satisfaction surveys are conducted
and results used to inform continuous
improvement efforts.
62. Employees are passionate about their work
and the organization.
63. Our managers request employee input on
decisions that directly impact their work and
work-life.
64. Our go-getters are provided autonomy and
leadership opportunities.
65. Our managers continually increase work
expectations for fence-sitters.
66. Our adversarial employees are confronted by
managers and plans are developed for changing
behaviors.
67. Team members are trained in group
dynamics and collective problem-solving
techniques.
68. Our employees are provided with key data,
including financial information, relevant to
improving work unit performance (i.e., Open
Book Management).
324 BUSINESS AND SOCIETY REVIEW
Engaging and Empowering Employees Yes Sometimes No
69. Appreciative Inquiry techniques are used to
address organizational issues.
70. At the end of the day, our employees reflect
on their daily performance and develop plans
for the following day.
71. Our employees elicit and review suggestions
for improved work unit performance, and have
the authority, within reason, to make changes
as needed (Scanlon-type gainsharing plan).
72. Our employees share in the profits they help
to 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 place
for our products and services.
78. We measure and assess customer
satisfaction.
79. We provide product labels that inform
customers about its content.
80. Information gathered about consumers
remains private and not unnecessarily shared
with others.
81. Our marketing communications are honest
and truthful.
82. Our suppliers sign statements ensuring that
they are in compliance with relevant laws and
regulations.
Subtotal for Product and Service Accountability,
items 77 through 82
Environmental Management Yes Sometimes No
83. A specific person, such as an Environmental
Health & Safety Director, is accountable for
environmental management.
325DENIS COLLINS
Environmental Management Yes Sometimes No
84. We have a cross-functional “green team” that
addresses environmental issues.
85. Our organization has an Environmental
Management System (EMS) plan.
86. Our managers consider the impact
organizational operations have on the natural
environment (environmental risk assessment).
87. Environmental goals and objectives, such as
energy consumption and greenhouse gas
emissions, 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 their
environmental record when making purchasing
decisions.
91. We use recycled content in our products and
services.
Subtotal for Environmental Management, items
83 through 91
Community Outreach Yes Sometimes No
92. A specific person, or employee team, is
responsible for developing and monitoring our
organization’s community outreach activities.
93. Upper management encourages input from,
and dialogue with, stakeholder groups for
issues that affect community members.
94. Our organization donates money to
community organizations.
95. Our organization donates products or services
to community organizations.
96. Our employees volunteer their time, on
company time, with community organizations.
97. Our organization uses community service as
an opportunity for employees to develop project
management, leadership, and team building
skills.
98. Our organization provides job opportunities
for nontraditional employees, such as people
with disabilities or ex-convicts.
99. Our organization has developed a strategic
partnership with a community organization.
326 BUSINESS AND SOCIETY REVIEW
Community Outreach Yes Sometimes No
100. Our managers participate in local business
associations such as a rotary or the chamber of
commerce.
101. Our organization measures and assesses its
community impacts and shares the information
with the community.
102. Whenever possible, we purchase from local
suppliers.
103. We participate in community development
discussions.
Subtotal for Community Outreach Items, 92
through 103
Organizational Assessment Yes Sometimes No
104. Our organization systematically examines its
ethical performance on an annual basis.
105. Our organization benchmarks itself to the
industry’s best ethical practices.
106. Our organization benchmarks itself to the
Optimal Ethics Systems Model.
107. Our organization collects information from
suppliers and customers about our ethical
performance.
108. Unethical behaviors are tracked to their
systematic cause (hiring problem, ethics
training problem, role model problem, work goal
problem, performance appraisal problem, etc.).
109. Corrective actions are taken when unethical
behaviors occur, and managers are held
accountable for implementing appropriate
changes and achieving improved results.
110. Relevant information about the
organization’s ethical performance is shared
with the CEO.
Subtotal for Organizational Assessment, items
104 through 110
327DENIS COLLINS
