7 Ethics Best Practices for Construction Firms

Driven in part by regulatory pressure, ethics programs are gaining prominence within firms whose leadership have made it a priority, and further throughout the industry, supported by associations like the Construction Industry Ethics and Compliance Initiative (CIECI) and the Associated General Contractors of America (AGC).

At FMI, we regularly explore what motivates engineering and construction firms to invest in ethics programs, and how they facilitate awareness and enforcement of ethics policies. Here are seven best practices that we’ve identified through our research:

1. Ethics starts at the top – the leader must champion ethics policies, practices and attitude.

   Mitch Haddon, president and CEO of ColonialWebb, implemented a values system and leadership playbook after a period of company growth. The leadership playbook details the exact behaviors that managers should exhibit throughout the organization, a cue for the entire staff. “Common sense doesn’t appear ‘common’ until you have it written that way,” he explains. “The playbook for leadership behaviors creates the value system at all levels.”

2. Keep your ethics policy clear and tie it back to key values.

   Factors like integrity, honesty, fairness and ethics are often a part of company culture in multi- generational firms, but as a company grows, it becomes more difficult to instill those values into the culture. As one executive of a large North American construction firm explains, “In the dozens of decisions that each person is making each day, there are many that are made on the spur of the moment by people at all levels of the organization. When they are making those decisions, we want the whole notion of ethics – what is right and what is wrong – at the front of their minds.” Most firms use a combination of a code of conduct, ethics and compliance policy, and annual training to communicate the basics of their ethics program to employees.

3. Get buy-in from everyone in the company.

   Mike Futch, former vice president and chief counsel at Granite Construction Inc., emphasizes the importance of driving corporate policy out into the field. “You’re always going to get resistance from people in operations, because they feel it is a soft mandate from management, but you have to convince them that it has everything to do with the project.”Self-report measures, on-site training and field audits are good ways to promote awareness of ethics on the job site. Many companies get employees to sign paperwork to signal that they have read and comprehend the ethics policy or code of conduct.

4. An ethical culture starts with hiring the right people.

   Check references and explore a potential hire’s values on a job application and during the interview. According to one construction CEO, “As you grow and hire and expand, if you bring in people from Company X, maybe they have the same training, but maybe they don’t. You’re the one setting an example.” New hires also offer a company an opportunity to build certain values into a generation. Take the next step by implementing mentoring programs to foster a rich understanding of corporate accountability.

5. Ethics can be taught.

   Many of the games played by various entities on a project can be circumvented if they are addressed upfront on the contract or through a partnering agreement. Setting down specific language around change order expectations can limit the latitude a project partner can take. Likewise, addressing ambiguous situations directly can help employees avoid making the wrong decision in the future. Practical ethical rationalization through scenarios, for example, equips employees with the tools to avoid unethical behavior.

6. Review, monitor and report ethics behavior.

   Regulations give federal contractors responsibility for discovering and reporting unethical practices within their firms. However, for firms choosing to implement ethics programs at their own behest, accountability is still an important component. Build multiple feedback mechanisms into your program – an open door policy, hotline, self-report measures, risk assessments, 360-degree reviews, and internal audits are all good components to incorporate into your ethics policies.

7. Take action on ethical violations.

   If a report comes in through the hotline or any other avenue, ensure that you have the resources to duly investigate and take action. Many firms start the process by interviewing involved parties or asking for written statements to determine the veracity of the claim. If a violation indeed occurred, internal or external legal counsel will typically handle the case to preserve attorney-client privilege. However, many incidents relate to human resources. Repercussions for violations of the ethics policy should be as clear as the policy itself: suspension, reprimand or termination each have their place.While ethics programs can be a stand-alone component of corporate training, it is FMI’s experience that the greatest return on investment is realized where the program is embedded in the corporate strategy. An ethics program that calls attention to company goals, clarifies the company’s direction, and issues clear directives for staff can be galvanizing, especially during times of thin backlog and low morale.

   “This isn’t just an issue of compliance,” says FMI senior consultant Andrew Patron. “The industry is being incentivized to enrich its culture, to maximize operational efficiency and to develop the current generation into the ethical, informed leaders of tomorrow.”

   Now more than ever, with new people entering the industry, it is time to focus on a solid ethics program to protect your company long into the future.