RetailSolutionsOnline.com ● May 20108

Feature Story

A Web portal offers major impact in alerting Staples execs to questions/complaints.

How Do You Track Ethics?

he Sarbanes-Oxley ethics law passed earlyin the 21st century in the wake of theEnron and Worldcom scandals, which cre-ated recognition that public companies

needed more than just a code of ethics on paper. “Alot of companies had that code, but no real way toincorporate ethics and compliance into their businessculture,” says Nan Stout, a vice president at Staples.

Stout isn’t just any VP. She has a fairly unique title:vice president of business ethics. She assumed thattitle in 2004, after she’d been responsible for labor andemployment law at the company for about 10 years.She says after the ethics law was enacted, “a lot ofcompanies had a code of ethics, but no real way toincorporate ethics and compliance into their businessculture. We held ourselves to a higher standard.”

That’s an admirable goal, but how do you trackwhether those standards are being upheld — especial-ly in such a large company? Staples’ roster of employ-ees has grown from 15,000 to 91,000 — in 25 coun-tries — in Stout’s decade there. To help her, Stoutturned to a vendor called EthicsPoint, a provider ofphone and Internet hotlines that allow coordinationof business questions/complaints.

Set Clear StandardsBefore Stout could begin to talk to EthicsPoint, shehad to have some standards to follow. Staples has anextensive Code of Ethics, plus “Staples Soul,” a clear-ly defined mindset. The Staples Soul report (availableat www.staples.com/sbd/content/about/soul/report-ing.html) details Staples’ attitude on such issues asworking with minority- and women-owned business-es, its support of local and national charitable organi-zations, and where it feels its future responsibilities lieas the company grows. Not only are all employeesheld to these standards, so are Staples’ suppliers andeven its customers (at least the larger ones with whichit does business).

Regarding the latter, Stout uses this example: “Wehad a meeting clarifying and reinforcing our ethics

standards for the top 250 leaders in those 25 coun-tries. One manager talked about a time when we werefirst moving into the printing/copying aspect ofStaples’ services and there was a customer who want-ed to hire us. There were some concerns about thetypes of material we were being asked to produce, andwe felt this would have a deleterious effect on ourassociates and on morale in the group. So although inthe short term we would have made nice money, it wasdecided that over the long term it was better to turndown this business opportunity.”

Define What Needs To Be TrackedAny type of harassment or discrimination (e.g. race,gender, sexuality), instances of financial misappro-priation or retail theft, and retaliation are just a fewof the issues with which a company like hers has tocope.

She notes that ethics needn’t always involve sometype of malfeasance. “Someone might want anavenue for offering a compliment,” she says, or theymight want guidance or reassurance on how to han-dle an issue, such as a dilemma a Brazilian managerraised in a meeting. “He noted that in his country themindset is one in which when the boss says ‘Jump,’the staff asks, ‘How high?’ But that’s not a Staplesvalue; we don’t accept a climate of Yes men,” shesays. “Instead, he was reassured that as he hires newpeople, he can spend time encouraging them tobecome active employees, bringing in new ideas.”

That manager can now easily enter that question,and get an answer, through EthicsPoint, instead ofwaiting for the annual meeting. And he has an avenuefor anonymity if he doesn’t feel comfortable raisingthe issue face-to-face.

Stout had to be able to enter and coordinate ques-tions/complaints despite the numerous avenuesthrough which they can surface. “It could be verbal:someone walking into HR and saying, ‘I’m being denieda promotion.’ Or it could be written, such as an anony-mous letter that comes to the CEO,” she says.

by Wendy Meyeroff

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Keep Records In OrderSuch diverse reporting avenues could make itdifficult (maybe, realistically even impossible)to track and respond to all complaints. Ratherthan just gleaning samples of issues that arise,Stout wanted to find a way for all reports tocome through one resource.

Initially she chose to establish an internalemployee hotline to gather comments/com-plaints. But Stout quickly realized that therewere a couple of benefits to having an outsidevendor run what she refers to as a “helpline.”One is that Staples doesn’t have to absorb thecosts (e.g. payroll, benefits, training) of having24/7 staff for the monitoring. “Perhaps evenmore importantly, using a third-party systemimproves employee confidence that issuesaren’t going to be swept under the rug by inter-nal higher-ups,” Stout says.

Stout quickly decided to add the otherEthicsPoint option for making companyreports: processing complaints/inquiriesthrough a Web portal. “People are increasinglymobile. A lot of our folks are on the road, sothey can access the Web portal and enter detailsof a case from their BlackBerry or a laptop,while it’s fresh in their minds. And once they’reback in the office, that’s one less administrativetask that’s waiting on their desk,” Stout says.

Other things that make a Web portal a morelikely resource for feedback: An employee canenter their issue anonymously through a homecomputer if that’s more comfortable. Also, ifyou’re dealing with any significant number ofpeople raised in a digital era, you may find theymay feel more at ease texting or emailing amessage, instead of picking up a phone or writ-ing a letter.

Investment Considerations If you’re going to consider hiring a trackingservice like EthicsPoint, you need to make twomain decisions. First, there’s your budget.(Stout won’t discuss what she spent, but she didsay she chose the “Enterprise” package, whichis the highest level of the three service pack-ages EthicsPoint offers.) Second, do you wantthe Internet access or just a phone helpline?(As noted, Staples started with only the phoneline but now utilizes both options.) After that,you need to define a variety of specifics.

“There are a lot of logistical issues to settle,

As VP of business ethics at Staples,Nan Stout’s responsibilities crossmany departments including HR, storeoperations, and loss prevention.

RetailSolutionsOnline.com ● May 201010

especially with so manyunits in so many countries,”she says. “We needed inputfrom HR, our loss preven-tion group, and other divi-sions to find out what arethe issues we want to track.What information did weneed on those issues? Whowas going to be involved inthe investigation process?How do you want the sys-tem organized so you cantrack the info down theroad?” Then her team andEthicsPoint worked togeth-er to make sure that, starting with the landing page(which is clear and easily readable), the system was as easyfor employees to understand as possible.

What happens once employees enter data? Stoutexplains: “Who’s going to have access to this system inyour organization? I, for example, have access to everysingle case entered, whereas someone who’s a manager ofethics investigation in California only has access to casesthey need to know about in California.” These and manyother decisions, she says, are really the most time-con-

suming aspect of getting asystem like EthicsPoint setup. (The vendor says discus-sions began with Staples inApril 2005, and the systemwas fully operational by thatOctober.)

Third-PartyAdministration EasesImplementationTo implement a solution likethis in the old days, you’dprobably have to buy a soft-ware program that the ITdepartment would have to

understand and install. That’s not the case anymore.Staples’ helpline (now called “Staples EthicsLink”) isaccessed through a toll-free number. For website entries,all that Staples people need is a computer and Internetaccess. There was no software to install. “Besides me,there are about 200 managers who are able to access theback end of the system,” says Stout, “but that’s just amatter of setting them up with their own codes/pass-words.” Aside from that, there’s really not much an ITdepartment needs to do. “When an employee makes a

“We needed input from HR, our loss prevention group, and other divisions to findout what are the issues we want to track.”

Nan Stout, VP of business ethics, Staples

When Staples chose the Issue and Event Manager (IEM)from EthicsPoint (based in Oregon), it was looking for help intracking feedback on its business ethics and values fromemployees, vendors, and even large customers. While theIEM delivers that, Staples also found it receivesmore.

Although an ethics program is not softwaredesigned to track theft the way an inventorycontrol package would, a package like IEM canstill offer insights into such a problem, especiallysince it allows for anonymous reports. The com-pany might receive tips about an employee or agroup someone sees stealing in a certain out-let, or it can allow a whistleblower to alert thecompany of a vendor’s overcharging. In con-trast, Staples can also receive reports on avendor that’s doing outstanding work.

Having all this data coordinated in one system (whichEthicsPoint keeps secure via several off-site backups) pro-vides numerous advantages. It helps Nan Stout, Staples VP ofbusiness ethics, generate finely honed reports, like the pre-sentation she provides each quarter to the board of directors.It also allows for easier data analysis than when questions,praise, or complaints about Staples’ policy were collected vianumerous methods (e.g. a snail mail letter to the CEO plus aface-to-face with an HR manager). It makes trends and pat-

terns more visible than traditionally filed paper reports, so acompany could potentially see evidence of stealing (or at leastsome kind of loss) even without the aforementioned staffer tip.

EthicsPoint’s IEM provides three levels of casemanagement service packages as options:Standard, Professional, and Enterprise. Costsbegin at $2,000 and go up, depending on which

package a company chooses and also whattype of personalized service a client seeks (likethe one-on-one support manager that Stapleschose). The highest level allows integration ofmultiple workflows, and offers global consis-tency. All levels provide SaaS (Software as aService) delivery, designed to lower costs. Toenhance security, each IEM implements 128-bit SSL encryption between the EthicsPoint

site and the client’s Web browser.System setup can be almost immediate, although modifica-

tions for higher-level customizations require discussion bothwith your staff and vendors. In Staples’ case, it took about sixmonths between initial discussions and when both the helplineand Web portal were fully operational.

For More Information On EthicsPoint Go To www.ethicspoint.com

The Practicalities Of Tracking Ethics

Staples uses technology to monitorethics compliance and improve thecompany’s culture.

Web entry, EthicsPoint sends an email to alert me.Initially those were getting spam filtered,” Stout says.That didn’t take long for IT to clear.

Instead, EthicsPoint is generally in charge of imple-menting changes, based on Staples’feedback. “Because we’re such alarge client, we have a customer ser-vice contact dedicated to Staples.With the latest release of theEnterprise version we use, we canactually go in and, working with ourEthicsPoint contact, make changesin certain drop-down menus,” Stoutsays.

When there’s some kind of sys-temic change that’s seen as needed,Stout has found EthicsPoint is verygood in making modifications thathelp all its clients. One example she offers: “Initially wecould find a case only via its case number. Now they’vemade the search viable through the party’s name andlocation, as well as that number, which is much easier.”

Otherwise, the main time IT gets involved is when anew Staples location opens. They have to assign a loca-tion number for that new outlet so that even if anemployee is offering an anonymous entry (which is pos-sible) the system indicates which location it refers to. Onearea in which stronger IT involvement might be needed,she says, is if she decided to integrate all the extensivedata from a Human Resource Information System(HRIS).

Stout says it’s actually a good thing that IT has limitedinvolvement in a program like hers. “Confidentiality isabsolutely critical to these reports, and that’s easier tomaintain when they’re administered through a third party.No one in IT can see individual cases. They’re seen onlyby people who have a true need to know,” she says.

System Manages, Organizes Ethics DataStout chose EthicsPoint because the company is both upon technology and on ethics and compliance. That meantit could truly advise her on what she needed, perhapseven help define that.

“You need to spend time with a vendor, so they shouldbe accessible to you. Ask for a demo; have them walk youthrough it. Get a chance to use the product. Ask a lot ofquestions; I had a colleague at another company whowent to EthicsPoint’s call center and talked with them for7 hours,” she says.

Since last year, Stout estimates up to 65% of her depart-ment’s issues come through the EthicsPoint Web portal (the

rest being through the EthicsLink helpline). With all reportsultimately coming through EthicsPoint, instead of scatteredin all sorts of media (e.g. phone calls, HR files, memo pads),Stout and her people now can analyze more easily which

issues are arising and where.Maybe one sexual harassment case

went unproven in a particular locationbut, thanks to the EthicsPoint records,she and her team are able to see it’spart of a pattern occurring there.Stout says, “We may ask questions like,‘Do we need to do a better job ofcommunicating and training?’ or ‘Isthere someone who has to be termi-nated?’ Either way, we recognizethere’s an action that needs to betaken, and we’re holding ourselvesaccountable.”

This central data collection, in one file, also makes it easierfor multiple investigators in different areas to collaborate.Someone in New York might be concerned about theft pat-terns and wondering if it’s exclusive to her area. A messageto her colleagues can discover whether they’ve seen the samepattern. It would have been much harder to find the NewYork pattern, let alone compare notes, when everything wasin paper files.

To make sure that collaboration goes smoothly, Stout has astaff member who helps educate people on what the Ethicsoffice’s standards are and how to use EthicsPoint to meetthose expectations. “They monitor compliance with ourrequirements on a weekly basis.”

Now when Stout has to present her latest issues toStaples’ board every quarter, those reports are no longerextrapolations of what issues are arising where, her situa-tion when reports came through so many diverse venues(or didn’t come in at all). “Working with EthicsPoint helpsme present the board with specific highlights in my area,e.g. new issues coming in and where we are seeing them.When there are complaints being substantiated, I have toshow they’ve been recognized and what specifically we aredoing,” Stout says.

Stout concludes, “We’ve been able to pinpoint the mostcommon type of issues and where they’re occurring. Wedefinitely have more visibility into what’s happening. Thebiggest challenge is vigilance and ongoing management andgetting everyone growing in the same direction.EthicsPoint technology provides excellent solutions tomeet that challenge.” ■

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“We may ask questions like, ‘Dowe need to do a better job of

communicating and training?’ or‘Is there someone who has to be

terminated?’ Either way, we recognize there’s an action thatneeds to be taken, and we’re

holding ourselves accountable.”

Nan Stout, VP of business ethics, Staples

RetailSolutionsOnline.com ● May 2010

Wendy Meyeroff is a Maryland-based freelance business writer.