The good news is that the construction industry is recovering across the globe. The bad news is that ethics and compliance (E&C) issues are keeping it from soaring.
Last year, the Construction Sector Transparency Initiative (CoST) estimated that $4 trillion is being lost annually through mismanagement, inefficiency and corruption in public construction alone (on average 10 percent to 30 percent of a project’s value). Transparency International, a global anti-corruption watchdog, recently published a Global Bribe Payers Index ranking the “Public Works Contracts and Construction” sector as one of the most likely to use bribes. Corruption scandals in various large, high-profile construction projects, such as this summer’s Brazil World Cup and Canadian firm SNC-Lavalin’s 10-year World Bank debarment, also have damaged the industry’s reputation.
Both the public and private sectors of the industry can more effectively address E&C issues if they simply take a page from their own playbooks. Construction engineers and employees tend to be adept at thinking in terms of “structural integrity.” While there may be different definitions of this concept, all evoke images of structures that are sound, meet quality and safety standards, and endure the test of time. This mindset is a strong basis for emphasizing the importance of not only building with structural integrity, but also functioning with personal integrity.
In fact, a corporate culture that fosters personal integrity contains many of the same elements as a building.
- Foundation. All companies must accept that integrity is the real foundation for success and must make the foundation as strong as possible. This can be achieved with well-established and highly visible communications and training programs that address E&C issues and highlight positive examples of employees and managers making wise decisions based on integrity. Training in E&C should be company-wide and should integrate positive case studies from the construction industry. This makes the training relevant to employees.
- Plumbing. Every company should have an understandable code of conduct and key policies that clearly delineate what is and is not acceptable behavior. The code must be widely and publicly disseminated. Also, the E&C organizational structure should map the company’s specific E&C risk profile in order to effectively and efficiently mitigate risks. This enables the right information to reach the right audiences at the right time throughout the organization.
- Beams. Employees look up to their immediate managers to see if they are supporting the company’s values. Ensure managers are sending the right messages by including E&C objectives in their performance goals, providing specific training on how to lead by example and encouraging them to address E&C topics during staff meetings. Publicly recognize and reward managers who accomplish their business objectives while leading with integrity.
- Ventilation. In order to learn about compliance risks and address them at the earliest possible time, the company must have good ventilation–in other words, an open culture in which employees are comfortable speaking up without fear of retaliation. Make channels of communication available and encourage employees to use them to raise concerns and seek advice. A company “helpline” is a good place to start. Train managers to be effective first responders whom employees trust to listen and act when they raise concerns.
- Roofing. While buildings have diverse rooms serving multiple functions, only one roof covers them all. Similarly, employees must understand that despite the different functions, business lines and locations of the company, everyone operates under the same roof and shares the same risks and rewards. Senior management should consistently ensure that E&C successes and stories are shared globally and locally. This sense of unity and shared destiny is key to building a culture of integrity.
- Inspection. Just as a company maintains equipment and regularly assesses a construction project’s progress, companies need to constantly monitor and refresh their E&C programs. Set performance metrics and then regularly audit the company’s E&C program against these metrics. Also, audit third-party suppliers and subcontractors to determine their level of commitment to E&C. A third party that discourages transparency and encourages dangerous cost-cutting can become a major risk for the company and its reputation.
Finally, be vocal about the culture of integrity beyond the company’s four walls. As much as a company touts the structural integrity of its projects, let customers–and the communities in which the company operates–know that a strong culture of ethics also underscores them. In this way, construction companies will not only enhance their images and those of the entire industry, but their business prospects and their profitability as well.