The Leaders Role in Building an Ethical Culture

1. The Leaders Role in Building an Ethical Culture California Municipal Treasurers Association May 4, 2007 Jan Perkins, ICMA Senior Advisor Partner, Management Partners, Inc.

2. 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

3. What are Ethics? • It’s about choices and our use of discretion. • Applying the appropriate public service values to achieve the right outcome in the right way. • It’s about leadership.

4. Ethical and legal actions are not the same Can you think of something that is legal but unethical?

5. CMTA Code of Ethics • To protect the community’s 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

6. International City/County Management Association • Code of Ethics at the core of good government • Self-policing of ICMA members

7. Professional Fouls • City Manager sent an email to a colleague’s mayor describing the colleague’s plans as “ completely bonkers” • City Manager had an affair with the town clerk • Assistant City Manager falsifyied educational credentials on resume and ICMA application

9. 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

11. 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 4…less than moderate confidence in us.

12. 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

13. 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

14. “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

15. Core Principles of Public Service #1. No Personal Financial Gain Public officials are to make decisions solely on the basis of public interest

16. 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

17. “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 TIMESNovember 18, 2005

18. 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

19. “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

20. 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.

21. “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

23. Preserving the Intangibles “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that you’ll do things differently.” Warren Buffett

24. What would you do? Three cases

25. A good deal A local developer is about to put up a new housing development in your city where you are the Treasurer. It’s 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?

26. A free trip The governing body has just approved a staff recommendation to refurbish the playgrounds in the community’s 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?

27. 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?

28. 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

29. Ethical Warning Signs • “Don’t tell me, I don’t want to know...” • “It’s okay if I don’t gain personally...” • “Technically, it’s legal...” • “Everybody does it...” • “Yes, but...” • “This won’t affect my work...”

30. 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.

31. Good News: Ethical Leaders Make a Difference! People want to trust their local governments Most people want to do the right thing

32. Leaders • Are always being “watched” • Set the “organizational tone” • Take action to champion ethical behavior • Understand the consequences to the organization

33. Tip 2: Be a Leader

34. 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 • Don’t accept or solicit gifts • Tell the truth

35. Resources for Fostering an Ethical Culture • Institute of Local Government/League of California Cities • California Municipal Treasurers Association • International City/County Management Association

36. 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

37. “Courage is being scared to death – and saddling up anyway.” John Wayne

38. Final Word…. Do the right thing!