The Leaders Role in Building an Ethical Culture

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The Leaders Role in Building an Ethical Culture

• California Municipal Treasurers Association
• May 4, 2007
• Jan Perkins, ICMA Senior Advisor
• Partner, Management Partners, Inc.

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Goals for Today

• Understand common ethics issues
• Create champions for ethical conduct
• Provide information about resources you can use
  to train staff and build an ethical culture

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What are Ethics?

• Its about choices and our use of discretion.
• Applying the appropriate public service values to
  achieve the right outcome in the right way.
• Its about leadership.

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Ethical and legal actions are not the same

• Can you think of something that is legal but
  unethical?

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CMTA Code of Ethics

• To protect the communitys funds
• To promote principles of good government
• To maintain personal conduct
• To demonstrate honor, integrity, and objectivity
  in all public and professional relationships
• To resist encroachments
• To seek no personal advantage or gain

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International City/County Management Association

• Code of Ethics at the core of good government
• Self-policing of ICMA members

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Professional Fouls

• City Manager sent an email to a colleagues mayor
  describing the colleagues plans as completely
  bonkers
• City Manager had an affair with the town clerk
• Assistant City Manager falsifyied educational
  credentials on resume and ICMA application

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The Widening College Loan Scandal

• A senior official at the Department of Education
  who helped oversee the federal student loan
  program held shares of the parent company of the
  student loan company Student Loan Xpress.
• An official at Columbia, who earned more than
  100,000 on the sale, bought his shares for about
  1 each and sold them for about 10.
• NEW YORK TIMES April 8, 2007

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The Leadership Crisis

• Harvard National Leadership Index 2006
• 70 believe there is a leadership crisis in the
  United States
• Declining confidence in education, religion,
  business, Congress, and the executive branch.
• Moderate confidence in only two sectors
  military and medicine.
• Local government holding 2.83 on a scale of
  4less than moderate confidence in us.

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D.A. targets corruption in Lynwood 5 indicted

• Five current and former Lynwood City Council
  members were indicted Thursday for allegedly
  using hundreds of thousands of dollars in public
  funds to illegally boost their salaries, pay for
  personal expenses and even hire an exotic dancer
  at a "gentleman's club."
• Los Angeles Times
• April 13, 2007

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Consequences of Unethical Actions

• Inefficiency and loss of momentum
• Difficult to gain public support
• Decline in employee morale
• Discourages people to apply for jobs or run for
  office
• Increased cynicism

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State audit details mismanagement at Compton
Community College

• In a scathing audit of Compton Community College
  released Monday, state investigators said they
  found numerous instances of potential financial
  fraud, phony student enrollments, missing
  computer equipment and even the campus auto shop
  being used for private gain.
• LA TIMES
• March 13, 2007

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Core Principles of Public Service

• 1. No Personal Financial Gain
• Public officials are to make decisions solely on
  the basis of public interest

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The Perils of Accepting Gifts

• Apply the reasonable person standard
• Is the gift significant enough that a reasonable
  person would assume it was a reward or intended
  to gain favor?
• There is always free cheese in a mousetrap

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Firms Gave Thousands for Building Dept. Event

• Developers, builders and lobbyists donated as
  much as 3,750 each in food, cash and door prizes
  at a Los Angeles Building and Safety Department
  charity event that was mostly attended by
  department employees.
• LOS ANGELES TIMES November 18, 2005

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Core Principles of Public Service

• 2. No personal advantages or perks
• Central to the concept of public service is that
  public officials receive only the stipends and
  salaries provided to them

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More Dubious Links Found at Capistrano School
District

• The Capistrano Unified School District Board of
  Trustees has approved hundreds of thousands of
  dollars in contracts with a construction
  consultant that employs the school board
  president's daughter.
• Additionally, the district's director of
  construction failed to disclose his wife's income
  from the district's sole plumbing contractor, an
  apparent violation of the state's Political
  Reform Act.
• Los Angeles Times
• August 5, 2006

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Core Principles of Public Service

• 3. Transparency and fairness
• The public expects public agencies to have
  nothing to hide and to be open with their
  processes.

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Culture of secrecy

• With the public shut out of the secret
  deliberations, council members were absolved of
  accountability In this corrosive environment, it
  was not only possible but highly tempting to
  cheat at the margins and, ultimately, engage in
  unlawful acts, as the audit committee report
  documents.
• Editorial August 17, 2006
• San Diego Union Tribune

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Preserving the Intangibles

• It takes 20 years to build a reputation and five
  minutes to ruin it. If you think about that
  youll do things differently.
• Warren Buffett

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What would you do?

• Three cases

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A good deal

• A local developer is about to put up a new
  housing development in your city where you are
  the Treasurer. Its a popular development and
  there is a waiting list. You know the developer
  well because the area is small. He offers to put
  you at the head of the line for a new house. Do
  you accept the offer? Why or why not?

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A free trip

• The governing body has just approved a staff
  recommendation to refurbish the playgrounds in
  the communitys parks with the latest equipment.
  The manufacturer of this equipment has offered to
  pay for staff to take a trip to another city to
  see how the playgrounds there were set up. The
  City Manager asks for your opinion about allowing
  the Recreation staff, who made the recommendation
  to select the vendor, to go on the free trip.
  What is your advice? Why?

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A better benefit than expected

• The management team just finished negotiations
  with the City Manager and HR Director. They
  asked for full retiree medical paid for managers
  with 5 years service with the City. When you
  read the staff report, you were surprised to see
  that the minimum number of years had been reduced
  to 3. Two months later, the City Manager
  announced his retirement. He had been there just
  3 years and was now eligible for the new benefit.
  What do you do? Why?

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Be Proactive

• In any moment of decision the best thing you
  can do is the right thing, the next best thing is
  the wrong thing, and the worst thing you can do
  is nothing.
• Theodore Roosevelt

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Ethical Warning Signs

• Dont tell me, I dont want to know...
• Its okay if I dont gain personally...
• Technically, its legal...
• Everybody does it...
• Yes, but...
• This wont affect my work...

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A way to test it

• Can you live with the headline if your decision
  or action is made public?
• How would I explain my decision to a newspaper
  reporter?
• Will you think well of yourself when you look
  back on this decision in ten years?
  Perspective is the ingredient frequently
  missing from our decisions.

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Good News Ethical Leaders Make a Difference!

• People want to trust their local governments
• Most people want to do the right thing

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Leaders

• Are always being watched
• Set the organizational tone
• Take action to champion ethical behavior
• Understand the consequences to the organization

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Tip 2 Be a Leader
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Steps for Ethical Leadership

• Lead by example
• Hold yourself to a higher standard than is
  required
• Hold your staff accountable
• Train your staff
• Openly share information
• Stay out of politics
• Dont accept or solicit gifts
• Tell the truth

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Resources for Fostering an Ethical Culture

• Institute of Local Government/League of
  California Cities
• California Municipal Treasurers Association
• International City/County Management Association

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Is your organization ethically fit?

• Use the ICMA/Institute of Local Government online
  tool to assess organizational culture
• Employees rate themselves, executives and elected
  officials
• Provides an opportunity to identify possible
  problems
• Good springboard for training

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• Courage is being scared to death and saddling
  up anyway.
• John Wayne

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Final Word.

• Do the right thing!

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