Ethics within the Public Institutions and the Business Sector. Interview with Christoph Demmke

Ethics & Compliance Magazine | Year 1, 2016, Issue #1 | Author(s): Liviu Stochita (Ministry of Labour, Family, Social Protection and Elderly, Romania)

L.S.: In Romania, we are in a phase in which many anti-corruption laws have been promoted and spectacular cases of corruption are widely mediatized. There are also many norms regarding the conflict of interest, incompatibilities and a consistent number of public institutions are in place in order to assure the enforcement of these laws. In this context, what do you think is the role of the code of ethics in this network of anti-corruption policies?

In Romania, it seems, the number of rules is not the problem, but the implementation and the enforcement of rules. Moreover, many rules are fragmented and there is no consistent approach to the many rules existing. Thus, of course, a codified and integrated code of ethics makes sense.

However, before adopting a more holistic approach, it is important to be clear as regards a number of issues: Positive effects of rules and standards are that they contribute to transforming cultures. One example is the British example of the Seven Principles of Public Life which is one of the few European standards of ethics which is applicable for all Holders of Public Service. The Seven Principles were set out by the Committee on Standards in Public Life and became a well-known standards document – also on the international level.

Mostly, partisans in favour of more or better rules do not pretend that more rules and standards will decrease corruption and conflicts of interest. However, additional standards may deter people from questionable behaviour! More or better-designed rules are also meant to eliminate the sometimes arbitrary practices and privileges inherited from the past.

In addition, the process of elaborating rules and codes of standards may have important educational effects. The process of elaborating rules and codes should be a period of critical self-examination.

Strict rules, standards and management instruments bring other benefits. First and foremost, they represent an opportunity for reducing corruption and other improper conduct. Second, effective policies and procedures for identifying, disclosing and managing conflicts of interest mean that unfounded accusations of bias can be dealt with more easily and efficiently. Third, the organisation can demonstrate its commitment to good governance by addressing an issue that is commonly associated with corruption and misconduct. Fourth, a transparent system, which is observed by everyone in an organisation as a matter of course, will also demonstrate to members of the public and others who deal with the organisation that its proper role is performed in a way that is fair and unaffected by improper considerations.

Critics argue that more rules of ethics do not necessarily provide an efficient response to the decline of public trust and integrity issues but may cause even more cynicism regarding public and political institutions. The problem, critics say, is that the expansion of ethics regulations and more public discussions about the need for more and better rules have not contributed to a rise in public confidence in government. In fact, the calls for more and better ethics have the opposite effect. More ethics regulations have produced more shortcomings in the implementation of rules, and ethics investigations. Most ethics experts are indeed of the opinion that more rules, even if well managed, may not build more trust. Contrary to this, they may decrease public trust by generating a perception that all lawmakers and civil servants are untrustworthy.

Finally, the more the rules are detailed and fragmented, the more it is difficult to know and understand the rules.

Still, despite all limitations, I do not suggest to deregulate, or abolish rules.

The big challenge is the management and the institutionalization of effective anti-corruption and integrity policies. More regulation is not required in those situations or countries where high levels of public trust exist. On the other hand, tough and strict rules are not a necessary condition for low levels of corruption, ethics and conflict of interest. Romania is a low-trust country. I take from this, that rule-based approaches are necessary, but must be complemented
by soft-approaches, ethical leadership and investments in organisational culture.

 

L.S.: Is there any difference in implementing the management of ethics in a public institution than in a private company? Which are the main aspects that should be observed in terms of difference?

Generally, differences between public and private institutions are exaggerated. Often, public institutions act more ethically than private companies until a new public scandal suggest that this is not the case.

The most important difference is public scrutiny and media coverage. Public organisations are also underlying different and more complicated accountability requirements. Today, these accountability requirements have become very bureaucratic, costly and complex.

However, the most important difference is the increased media, together with the citizen’s scrutiny. Public administrations are more easily blamed for malfunctions than private companies, although integrity may be better in the public sector. One reason for this is also that expectations are higher in the public sector – for good reasons.

In both, the public and the private sector, past reform trends were characterized by a move away from the ‘old-fashioned’ compliance model. However, current reforms do not indicate convergence towards a new value-based model.

According to Max Weber, the essence of administrative behaviour is to follow legally given orders. Following this, at a minimal level, administration was considered to be good and ethical if it achieved the implementation and enforcement of the existing laws and policy goals of the government of the day. Moreover, ethically good or acceptable behaviour was also defined in terms of obedience to the law, impartiality and standardization. The purpose of rule-orientation was also to achieve fairness and equity, to implement the merit principle, to allocate rights to citizens and to protect public employees against arbitrary administrative decisions.

Thus, ‘the ethics of neutrality and structure’ (Thompson1) is the cornerstone of the traditional bureaucracy. From the ethical point of view, following the law or the superior’s orders is usually not problematic, as long as obedience and excessive adherence to rules do not become absolute values. However, the problem with the weberian concept is that, as an ethical guideline, it is simply too narrow for today’s multi-level governance. Today, the level of awareness that work
as such is much more complex and no longer dominated by the principle of rationality as Weber predicted, is growing. In reality, work is more individual, value-laden, emotional, pluralistic, political and more unpredictable than ever. For example, modern managers in the public and private sectors have much more individual decision-making discretion than that predicted by Weber. On the other hand, the rule of law and administrative law as such remain the core principles of all public administrative systems in Europe.

However, with the emergence of NPM euphoria, reform fashions moved in the opposite direction. One reason for this may be that administrative law was mostly seen as a constraint that blocks policy choices and reform policies. Today, more people realise that the rule of law is more important than a pure focus on efficiency.

Academic discussions have turned away from the ‘grand old’ dichotomy: value-based approaches versus compliance-based approaches. This can best be seen in the field of conflicts of interest, where countries have started to realise that the management of conflicts of interest does not work without clear rules, formal procedures, and strong enforcement mechanisms but also not without awareness raising, strong leadership, independent ethics committees, registers of interest and more and better management capacity. Most ‘compliance-based’ countries such as Germany no longer focus entirely on rules and trust in the effectiveness of sanctions. However, the focus on both concepts has lost much of its appeal, since the focus on NPM theories (and an excessive focus on rational choice theories and soft-instruments) as much as on classical bureaucratic approaches is in both cases also revealing many negative effects.

This also means that the circle of new ideas and concepts has started again.

 

L.S.: Some of the public institutions are coordinated by politicians while the personnel is constituted by the public servants, the values and objectives of these two categories of people are not always congruent. to what extent could a functional code of ethics which comprises both types of values be designed?

There is no one set of values. In fact, values differ from organisation to organisation. Political and administrative values overlap, but are not the same. Next, values are changing. Value changes are also linked to societal changes.

Therefore, a functional code that compromises both categories (politicians and public officials) should, necessarily, be broad and clear at the same time.

However, adopting a code of conduct is not sufficient. In most countries, too much time and energy is usually spent in designing, formulating, and adopting a code but many institutions stop here. The code remains a ‘paper tiger’ and it is never implemented or monitored.

The future challenge should be to “utilise the dynamics which have emerged from the formulation of the code. This will support a continuous process of reflection on the central values and standards contained in the code. Thus, it would be important, if politicians and public servants meet on a regular basis and discuss (and update) the existing code(s).

Because of the different roles, powers, functions and obligations of politicians and the different institutions as well as the fact that public organisations are also too diverse, it is advisable that each institution/group/category also adopts its own specific codes.

 

L.S.: The code of ethics is considered a core element that sets the organisational culture and contributes to the organisation identity. If we define different codes of ethics for different categories of personnel who work in the institution, don’t we diminish the symbolic power of the institution’s code of ethics? If a politician, for example, has to follow two different codes of ethics, one of his “profession” and the other one of the organisation would that be a problem in terms of empowering the institution’s code of ethics? Could these different codes of ethics be competing against each other?

Yes, I understand your concerns. I have no objection to a unique COMMON code, however, I believe it would also be good to have various codes for different categories for Holders of Public Office and Civil Servants.

The crucial issue is NOT whether you have a code, but whether/ how do you keep the content of the code in the minds of the People. This is what I want to say. A code must be a living document. Thus, the process of how to is formulated and created is crucial.

 

L.S.: Within an organisation there are already many types of regulation such as internal regulations, laws imposed, standards etc., all these take effects in the management of the organisation. In this context, is there any more room for ethics and what is its role compared to other regulations?

Similar to the value issue, there is no ideal type of integrity system: the need for different systems as well as conditions for their successes and failures depends to a large extent on the particular socio-cultural environment.

Ethics should not be a ‘plug-in policy’ that fills the gaps that other policies and other governance logic produce. It is time to acknowledge that ethics is not only a normative question. It is a practical, daily-life issue that is everywhere. It is, therefore, ‘our mission to relate the significance of our topics to power and power politics, to organisation and management logics, and to other logics and rationalities of governance’ (Huberts, 2014: 200).

For many years, international research on ethics and integrity has focused on the characteristics and prevalence of high performance ethics infrastructures that are applicable in both the public and in the private sector. This research was originally initiated by Transparency International (Pope, 1996).

Much of this literature assumes that high performance ethics infrastructures constitute ‘best practice’ and universally applicable management, although a distinction can be drawn between those arguing for a contextual best-fit approach and those arguing for more of a best practice approach, based on a belief in the more universal advantages of these systems. The best-practice approach is based on the belief that ethics infrastructures can be used in any organisation and the view that all organisations can improve performance if they identify and implement best practices.

In the meantime, there is considerable consensus on what constitutes bad practices, for example, the absence of codes of ethics, poor leadership, unfair HR policies, lack of training, unprofessional performance measurement etc. However, it is much more difficult to identity institutional best practices, although the search for benchmarks is becoming ever more popular.

Still, the search for best ethics infrastructures is confronted with a context and institution-based, fragmented and pragmatic reality. Overall, institutional differences – notably the levels of budgetary resources, social legitimacy, work systems, labour markets, education and training systems, work organisation and the collective organisation of employers and employees – mediate the impact of converging processes.

Consequently, the proposition for implementing institutional and organisational models such as ethics infrastructures is ambiguous. In fact, according to neo-institutional theories, the political and institutional world is currently moving away from universal or even European best practice institutional configurations towards more specific best-fit context-related models. New developments lean more towards the testing of new organisational models and work systems that fit into the national, regional, local or even organisational and leader-follower context.

I also claim that the performance of an ethics infrastructure always depends on the management of multiple and conflicting goals. Furthermore, in the future, ethics management strategies will not be associated with any particular philosophy or style of management. Working conditions, leadership styles and work organisations continue to differ, ranging from traditional taylorist models to high-involvement or high-job autonomy models with low hierarchies and high levels of job autonomy. Also, the role of employees varies from very paternalistic to very communicative and partnership-oriented forms of social dialogue. Consequently, there will be multiple forms of organisational structures, ranging from traditional and bureaucratic working systems to innovative workplaces and learning organisations within different governmental organisations and even within the same organisations.

Still, it is important to continue the work on ‘common elements’, ‘best practices as regards the effectiveness of instruments’ and ‘suggestions for ethics infrastructures that really work’ in the field of ethics.

In Romania, some issues may deserve more attention and better rules and standards than other issues, policies and instruments. Most important is to have a credible monitoring and control mechanism in place, the crucial issues being transparency and accessibility of information, monitoring and enforcement. Overall, little evidence exists as to the effectiveness of (independent) ethic committees. However, existing evidence suggests that it may be advisable to establish an independent ethics commission and/or independent compliance officers with sanctioning powers and sufficient resources.

In the future, the public increasingly tends to question practices where public institutions and/or politicians regulate their own ethical conduct. Any form of self-regulation will continue to cause suspicion.

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