Audit Business Ethics

General Motors is a 106-year-old multinational organization with 212,000 employees around the world. It is undoubtedly subject to virtually every business-related ethics and compliance law and regulation on the books.

Its Global Ethics and Compliance Center got its start in the mid-2000s as an effort to eliminate silos created by then separate compliance functions (one for quality, one for safety, and so on.) The leader of its compliance program was recently given the title Chief Compliance Officer, as an indication of the organization’s commitment to compliance. It offers an ethics hotline (Awareline) and a “European Awareline” web page for employees who are uncomfortable making reports through established channels. It promotes Speak Up!, a non-retaliation policy. It offers training on ethics and compliance issues. (GM Code of Conduct, 2014)

In short, GM appears to engage in all the right ethics and compliance actions, yet it is currently in a big, growing, and costly debacle, leading to questions like the following:

“Why would engineers at General Motors go years without notifying consumers that their car possibly had a faulty switch or that they need to have their switches inspected?” That is one of three business-ethics discussion questions posed by the Wall Street Journal’s program. (WSJ, 2014)

How and why did the GM board of directors, fail to notice or take immediate action on the problem? What happened to the board’s “multifaceted role as watchdog, ethical center, and independent thinker?” (Marcus, 2014)

Or, did existing and previously well-functioning procedures simply fail in this instance?

No one knows the answers to any of these questions yet, although GM is facing a number of lawsuits, inquiries, investigations, and requests for information related to its faulty ignition switch from multiple sources. There may be answers at some point in the future, but meanwhile we can all learn from this situation.

Regardless of how well you may think your organization’s ethics and compliance program is functioning, it is essential to conduct an annual audit or assessment.

Remind the board of directors and/or leadership of their ethical duty as well as their fiduciary responsibility and other obligations, perhaps through an annual off-site meeting and discussion.

Review reports of ethics hotline calls; look for outliers as well as trends and review the response procedures.  Use the hotline trends as an input to annual internal audits.  Ask if the investigation procedures work to quickly surface and address potential problems or if instead they serve to hide them.

Review all existing ethics and compliance-related policies and procedures to determine if they are accurate, understandable, and up-to-date.

Conduct third-party-hosted focus groups of employees to elicit their opinions about ethics, compliance, and related issues. Include questions in the internal audit that gather this information from employees during the audit process.

Take other purposeful steps to assess the actual status of ethics and compliance in your organization, and respond as quickly as possible with changes, if needed.  By doing so, you may be able to avoid terrible consequences.

Ethical Advocate provides comprehensive ethics and compliance solutions, including ethics and compliance training and confidential and anonymous hotlines.


General Motors. Winning with Integrity, company code of conduct, January 2014.

Marcus, Lucy P. “How GM Can Recover,”, April 1, 2014.

Wall Street Journal. The Weekly Review: Ethics discussion topic based on “GM CEO Apologized for Recall Delay, Vows Changes”, March 18, 2014.