Attracta Lagan is the Director of Corporate Citizenship and Ethics at KPMG in Sydney. Her latest book, 3D Ethics: Implementing Workplace Values provides a guide on building ethical organisations. Here is an excerpt from the chat we had today:

SOX FIRST: How do you construct an ethical corporation?

ATTRACTA LAGAN: It's something that has to happen with the values of the organisation. You see it in companies like Levi Strauss, Johnson & Johnson and Body Shop. It's part of their value system. It should also be part of the performance management system in each organisation. At Body Shop, for example, managers are required to give staff time off for volunteering. But it has to be part of the performance management to make it work. There is an institutional context. When you walk into an organisation there is a culture that was already there before you joined, and it will be there after you leave. The context there is either one that promotes a positive way of doing business and that is responsible to changing societal demands, or it can be a culture that is a closed system like Enron where the context corrupted those people who came in. The sum is always greater than the parts.

SOX FIRST: When you say ethics have to be covered by performance management, do you mean then that ethics has to be part of the remuneration? In other words, do you have to tie manager's pay packets to the way they develop an ethical organisation?

ATTRACTA LAGAN: That's part of the performance management system, yes. Whatever gets rewarded, gets done. But the system has a life of its own and that has to be managed on a daily basis.

SOX FIRST: What you're suggested then is having some manager, some position in the company if you like, that's responsible for ethics and culture, is that right?

ATTRACTA LAGAN: For me, ethics is something that goes from the board room to the back room. The board will set the tone but it's also the back room. It's not one or the other. It has to be a core competency for everyone in the organisation.

SOX FIRST: Since Enron, there have been moves around the world to put in laws protecting whistleblowers. Are whistleblowers safer now?

ATTRACTA LAGAN: That's just treating the disease.

SOX FIRST: Are you saying that the very fact that you have whistleblowers is symptomatic of a disease inside the organisation?

ATTRACTA LAGAN: Whistleblowers are the ultimate symptom of a dysfunctional organisation because there should have been points before where people could have raised issues of concern or taken it up the ladder of escalation where they spoke up or raised the issue with someone in authority or made a formal complaint.