Escape from an Ethics Swamp

5.8 Escape from an Ethics Swamp

Controversies: 4.10, 4.13, 4.14, 4.16, 5.18, 5.19, 6.15 Key Words: city manager, whistle-blower, loyalty, EPA, values, public inter- est, code of ethics, professionalism Case Complexity → High CD: 3.5 Leading with Integrity CD: 7.2 Strengthening Ethics in Local Government CD: 7.7 Local Governments in Florida

Author’s Note: This case is different than others in that it puts the reader in

a situation that challenges him or her to think through the steps that could

be taken to restore trust and confidence in city government following several ethical lapses.

As the newly appointed city manager of Venice, you are keenly aware of the chal- lenges you face in restoring public trust and confidence in city government. You inherited a government that had waded deeply into an ethics swamp and your job is to get it back on the right track. What should you do to restore integrity in your city government? But first—let’s fill in the background.

The City

Th e city of Venice was incorporated in 1927 with a mayor-commission form of gov- ernment. In 1977, the citizens voted to change the structure to a council-manager government. The seven-member council is elected for staggered three-year terms on

a nonpartisan ballot. The mayor is elected at large. Th e city’s population in 2007 was 21,584, with another estimated 4,000 snow birds (people from cold Northern states) taking up winter residency. The city employs 296 full-time persons, with an operating budget of $24.2 million and an all funds budget of $68 million. The city workforce has been downsizing over the past five years.

Into the Ethics Swamp with Eyes Wide Closed

Th e disposal of treated water from the city’s sewage treatment facility has been a long-standing problem. Consequently, the city has been forced to dispose of this

treated water (also known as reclaimed water) from the city’s facility into a variety of locations as permitted by state and federal regulatory agencies. Alas, the city

Building Organizations of Integrity ◾ 155

manager and the director of utilities decided to save the city money by disposing of the wastewater in violation of these regulatory operating permits. This practice continued several years until an employee blew the whistle (let’s call him Ed), and reported the dumping to the U.S. Environmental Protection Agency (EPA) and the Florida Department of Environmental Regulation (FDEP). The EPA and FDEP launched a joint investigation.

Th e city manager was not pleased with the whistle-blower. Indeed, it can be imagined that he called him into his office and read him the proverbial riot act. “Why would you do such a thing? Where is your loyalty?” As the EPA and FDEP investigation continued, the city manager decided to discipline the whistle-blower. Convinced that he had been wronged, the employee charged the city manager with retribution and sought relief under the state’s whistle-blower protection law. Prior to going to trial, the city settled the lawsuit with the whistle-blower for $40,000.

Th e EPA brought formal charges against the city for illegal spills and the falsifi- cation of documents in violation of the federal Clean Water Act. The evidence was so overwhelming that the city did not fight the EPA, entered a guilty plea in federal court, and paid a $110,000 fine. The settlement reflected a significant reduction in potential multi-million dollar penalties, partly because new city management and philosophies were embraced that included a goal of 100-percent compliance and 100-percent reporting of noncompliance. This new approach included reporting

to the public, media, and regulatory agencies of even the smallest of immeasurable spills.

Wastewater dumping was not the only unethical and illegal act experienced by the city during this period. The city’s director of Information Systems, who owned a software company, decided to do business with the city, always a tricky matter. Sure enough, he bought software from his company with city funds. An ethics complaint was soon filed with the Florida State Ethics Commission which,

after an investigation, found that he was in violation of state ethics laws for doing business with the city. He received a $12,400 fine and was publicly censured and reprimanded. His employment with the city was ultimately terminated.

Discussion Questions

1. Assume it is your first day on the job as the new city manager, how would you use your time?

a. Would you call a meeting of your management team (budget director, assistant city manager, human relations chief, police and fire chiefs, and other department heads) and announce your intention to clean house?

b. Would you appoint a staff member to investigate the ethics culture of the city workforce?

c. Would you call a press conference to lay out a recovery plan for the city?

d. Would you fire the public works director?

156 ◾ Ethics Moments in Government: Cases and Controversies

2. By the end of the second week on the job, you decide that you must transform the culture of the city workforce, changing it from a self-serving, risk adverse culture to one that emphasizes pride and integrity in the workplace. What would be your plan of action?

Outcome

Your organization is facing a values crisis. It is evident that whatever passes for mission is lost on the city workforce. Therefore, you decide that the first thing

you must do is to develop a mission statement that city employees, members of the city council, and the public can understand and, hopefully, take ownership of. You form a ten-member committee composed of a cross section of employees and charge them with the responsibility of soliciting ideas and suggestions. The committee is chaired by the HR director and is to report back to you within the next three months.

Th e committee applies itself diligently and surprises you by concluding its work

a month early. The result is a mission statement that asserts: “The mission of Venice City Government is to provide exceptional municipal services through a finan- cially sustainable city with engaged citizens.” The core values that underpin the mission statement are reflected in the acronym PRIDE—Productive, Responsible,

Innovative, Dedicated, Ethical. Th e committee recommends that a code of ethics be adopted that incorpo-

rates the core values. You wholeheartedly agree and ask the committee to continue its work by developing a code of ethics that strikes a balance between a “gotcha” compliance approach and an integrity approach that encourages each employee to embrace “doing the right thing.” On the one hand, you feel that the code must enable employees to know what is acceptable and unacceptable behavior. On the other hand, you feel strongly that true integrity in the workplace can only

be achieved by employees who celebrate values such as trustworthiness, honesty, impartiality, fairness, and respect for others. Six months pass and a code is finally submitted for your consideration. After carefully reviewing the code, you approve it and present it to city council for approval. Your presentation to council begins with the statement: “Unlike some other codes of conduct or ethics, the city policy emphasizes those activities and approaches that will be valued and encouraged, while also identifying those behav- iors that are not acceptable.”

Central features of the code are:

1. All employees, volunteers, elected and appointed officials shall maintain the highest standards of personal integrity, truthfulness, honesty, and fairness in carrying out their public duties, avoid any improprieties in their roles as public servants, including the appearance of impropriety, and never use their city position or powers for improper personal gain.

Building Organizations of Integrity ◾ 157

2. Identification of appropriate behavior consists of being:

a. Productive—apply knowledge and expertise to assigned responsibilities and activities, and to the interpersonal relationships that are part of pro- viding service to the community in a consistent, confident, competent, and productive manner.

b. Responsible—make decisions after prudent consideration of their financial impact, taking into account the long-term financial needs of the city, espe- cially its financial stability, and demonstrate concern for the proper use of city assets, including personnel, time, property, equipment, and funds.

c. Innovative—display a style that maintains consistent standards, but that is also sensitive to the need for compromise, “thinking outside the box,” and improving existing policies and practices when necessary.

d. Dedicated—convey the city’s care and commitment to its citizens, com- municating in ways that demonstrate being approachable, open-minded, and willing to participate in constructive dialog.

e. Ethical—be trustworthy, acting with the utmost integrity, truthful, and dependable. Make impartial decisions, free of bribes, unlawful gifts, and fi nancial or other personal interests that impair judgment or action and demonstrate respect for all persons.

Productive, responsible, innovative, dedicated, and ethical are high- lighted by the acronym PRIDE.

3. Identification of inappropriate behavior consists of:

a. Benefiting financially from a city contract.

b. Representing a private person at a city proceeding.

c. Engaging in private employment that is incompatible with the proper discharge of one’s official duties.

d. Disclosing confidential, privileged, or proprietary information.

e. Receiving gifts, favors, gratuities, compensation, or rewards that are con- nected or related to individual services with the city.

f. Participating or assisting individuals in city matters after leaving city ser- vice less than two years.

4. Description of a complaint process that preserves due process and ensures confidence in investigations of alleged violations.

5. Identification of penalties for noncompliance, which includes a range of alter- natives from reprimands to termination of employment, with civil penalties up to $10,000.

City council votes unanimously and enthusiastically to adopt the code of ethics. Your next task is to implement it. What steps would you take to implement the code?

1. Would you publish it in the city’s newsletter with the warning “read and obey this code if you want to stay out of trouble”?

2. Initiate a series of departmental meetings to discuss the code?

158 ◾ Ethics Moments in Government: Cases and Controversies

3. Hire a consultant to conduct ethics training?

4. Conduct ethics training yourself to demonstrate to employees just how

important you feel the code is to the well-being of the organization? You conclude that the first suggestion has merit if the “read and obey” lan-

guage is omitted. This language is classic “gotcha” stuff and can lead to a low-road approach to building an ethics culture. Suggestion 2 is also merit worthy but you feel that suggestion 4 is the best because it demonstrates your commitment to restoring integrity in city government.

One more task is necessary, however, before you can become confident that you are on the right road out of the ethics swamp. You ask yourself, “How will I know if we are making progress?” “I know that an organization of integrity can-

not be built overnight,” you muse, “so I must have some way to benchmark the change I am seeking.” Alas, you decide to hire an organizational consultant to conduct an ethics culture survey of employees. The survey results will be a bench- mark that can be revisited in a year or two to determine if the ethics culture has improved.

You meet with the consultant and he asks, “What are the objectives of the ethics culture survey?” You reply that there are three objectives: (1) to establish

a benchmark for tracking the culture over time, (2) to assess the ethics culture of the city workforce, and (3) to strengthen the ethics culture. You tell the con- sultant that you want the survey results to provide information about (1) how strong or weak the ethics culture is, (2) the factors that contribute to a strong culture, and (3) document the relationship between the strength of the ethics culture and workplace values such as efficiency, effectiveness, quality, teamwork, and excellence.

Now assume that you are the consultant. Your task is to develop several items consistent with those below that could be placed on the survey to provide informa- tion about the ethics culture.

1. I am encouraged to speak up about any practices and policies that are ethically questionable.

2. My supervisor encourages employees to act in an ethical manner. You decide that you want at least five items with a five-point scale that ranges

from “strongly disagree” to “strongly agree.” Develop three more items.

Case Assessment

Kevin Duggan, City Manager, Mountain View, California:

Th is case reviews a variety of techniques and strategies to establish and maintain an organization that conducts itself consistent with ethical

Building Organizations of Integrity ◾ 159

principles. One of the significant challenges for the leader of an organiza- tion is the realization that he or she will be judged as much on the ethical performance of the organization as his or her own personal ethical conduct. Th e difficult reality is that even a CEO with the highest personal ethical conduct will be considered a failure if the organization does not perform at an acceptable level ethically. The case points out a number of alternative courses in how to establish and maintain an ethical culture, including:

◾ “Top down” directives versus collaborative development of ethi- cal expectations

◾ External sanctions versus personal responsibility ◾ Measurement/assessment of performance versus “benign neglect” ◾ Punitive enforcement versus education and value development

Among the key factors in establishing and maintaining an ethical culture in an organization are:

◾ While rules and guidelines are important, since rules will not cover all ethical dilemmas, a “value-based” ethical culture needs

to be developed. ◾ Organization members will only “internalize” ethical values if they participate in their development. ◾ Regular education and reinforcement are critical—never “rest on your laurels.” ◾ Th e need for a clearly stated organizational statement of ethi- cal expectations. ◾ Ethics need to be ingrained in key aspects of organizational life, including:

− Th e hiring process (have ethics be a factor in hiring decisions) − Th e performance evaluation and compensation process (it will

be taken seriously—it is either a key area of performance, or it is not) ◾ Regular assessment/monitoring. ◾ Personal modeling of the highest ethical conduct by the organiza- tion’s leadership.

◾ A demonstrated willingness to tackle the hardest ethical chal- lenges even when the consequences in doing so may be quite

negative. In Venice, as is all too often the case, the need for an ethical revival

was born out of a scandal. While even the most effective leaders of orga- nizations cannot guarantee that an organizational ethical lapse will never

be experienced, taking steps to prevent an ethical failure is much more effectiv e than reacting once it occurs (and a lot less painful).

160 ◾ Ethics Moments in Government: Cases and Controversies