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Establishing an Ethics Policy |
Drafting a code of ethics can help protect you if you are later accused of favoring a vendor. Whether you hire an ethics consultant or work from a boilerplate, it's best to get input from your company's legal counsel. For best results, keep your code of ethics short and hire the kind of people who are inclined to follow it. And you can add even more oomph to the policy by making parts of it apply to spouses, immediate family members and other relations of the CIO and his staff.
--J.I.R.
A Sample Boilerplate
To ensure that the CIO always acts in the best interests of this company, the CIO and any member of the CIO's staff who has significant input into purchasing decisions should do the following:
- Always make purchasing decisions based on the best business interests of the company and no other factors.
- Not solicit or accept, directly or indirectly, any gifts of any value/more than $x value from current or prospective vendors or their affiliates, either before, during or after the bidding process. This includes food, liquor, discounts, upgrades, favors, preferential treatment and loans of any kind.
- Not hold financial interests that conflict with the conscientious performance of duty. This includes conducting side business with current or prospective vendors or their affiliates and holding "significant" investments, such as individual stock positions in current or prospective vendors.
Significant is defined as more than x% of the portfolio's value. However, such stocks may be held through mutual funds or blind trusts.
- Not engage in personal, nonprofessional relations with current or prospective vendors or their affiliates. If such relationships exist, the person involved shall recuse himself from any purchasing decisions involving those vendors.
- Not give product references in exchange for remuneration of any type, whether for personal or corporate benefit.
- Allow for the following exceptions: _____________________
Source: Drawn from the recommendations of Jack Marshall of ProEthics Ltd. and "Principles of Ethical Conduct for Government Officers and Employees"
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Friendly Faces in the Crowd
Although many vendors' sales representatives switch jobs every few years, a CIO sometimes deals with the same rep over a long period and gets to know him well. The question is, if you're friends with your rep and go to his barbecue party every summer, can you make the tough decision and give the contract to his competitor if that's the best thing for the business?
Marshall says it's extremely difficult to know where to draw the line. On the one hand, "having ethical relationships doesn't mean that you have to make business total drudgery," he says. "Getting to know people and trust people is part of business. The fact that someone has delivered over a period of time has to count." But, he adds, "It is inherently dangerous to build any kind of personal relationship with anyone that you may have to make a tough decision about in the future."
Turner has inherited that difficulty; one of her vendors used to be her boss. "I'm incredibly close to him personally," she says, adding that her business relationship is strictly professional. So every time she gives him business, she does a mental check. If she can truthfully say, "This is definitely based on service and quality and not relationship," she gives him the contract. Once she turned him down for a major contract because his company wasn't strong enough in that area. "He said he didn't agree. But he said he understood," Turner says.
De Brino encourages his staff to build up a good working relationship with vendors. On one big project, for instance, he and the vendor had their staffs collaborate on go-carts. "But the reality is, it has to stop there," De Brino says. He never has vendors over to his house. "You have to maintain a professional distance."
Steve Plut, CIO at Mine Safety Appliances (MSA), an $852-million Pittsburgh maker of gas masks, says he doesn't mind maintaining friendly relationships with longtime vendors. He allows one vendor to take him and his staff out for a few rounds of golf once a year. He also used to go to one Steelers game a year with another vendor.
He says this doesn't impair his ability to make tough decisions. Last year, for instance, right before football season, he told the rep with the Steelers tickets that MSA was cutting back on its business with the vendor. "We have to do what's right for MSA," Plut says. The vendor took it well at the time. But Plut says he didn't get invited to a Steelers game last season. He figures that's because the vendor knows that Plut bought his own season tickets last year.
Customer Councils
Hurley, training vice president at ITSMA, says the vendors in his council want access to CIOs but are finding that it's difficult to get them interested in social situations. One strategy they've come up with is the customer council, where a vendor gathers CIOs to provide input on what they want out of the vendor's future products. This way, the vendor gets useful information, and CIOs get to network with each other.
De Brino says he goes to two or three such meetings a year at a local conference center. He and the other CIOs fill out surveys--which he calls "blatant marketing"--but he doesn't begrudge the vendors this task because he gets plenty in return. "As long as the vendors keep in the back of the room and let us work things out, it's a sponsored opportunity for us CIOs to talk about things," he says. "We would never do that on our own."
At the end of these meetings, one CIO will win a prize, such as an iPod Shuffle. De Brino figures it's not bribery as long as it's random. But just to be safe, if he wins (which he hasn't), he plans to give the prize away to his staff in a random drawing. That's what he does with unsolicited tchotchkes that arrive in the mail. (Plut actually mailed one back at his own expense when it seemed too extravagant.)
Turner, of Greenebaum Doll & McDonald, says she participates in customer councils, but only by phone. She doesn't have time to travel to such events.
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