Reading the business ethics barometer

``You can't fool around: You get found out.'' Relaxing in the Oriental d'ecor of a small lounge beside his office, James T. Mills is talking about an issue much on his mind these days: corporate ethics. ``Ethics goes along with value, when you're dealing with a customer,'' says Mr. Mills, the former head of Sperry & Hutchinson and now president of the Conference Board, a highly regarded nonprofit business research organization. ``Integrity is a part of the consumer economy,'' he adds; ``almost a business necessity.''

It's a refreshing view. But how widely is it held in the corporate world?

That's the subject probed by the Conference Board in a study released today titled ``Corporate Ethics.'' Months in the making, based on a survey sent to 2,100 United States and non-US companies, and drawing on more than 30 follow-up interviews with corporate heads and senior managers, the report takes a thoughtful reading of the business community's ethical barometer.

It's a much-needed reading. The public, treated to a veritable parade of news stories on everything from defense-industry overcharging to odometer fraud, is growing increasingly concerned. Opinion polls suggest that the slice of the public holding unfavorable views of corporate ethics ranges from 20 percent (according to regular surveys by Gallup Organization) to 50 percent (based on a New York Times survey last year).

Enter the Conference Board and its detailed, 12-page questionnaire. Part of it consists of a list of 27 broad-gauge business issues. For each, the question was the same: ``Is this an ethical issue for business?''

The responses (see chart) ranged all the way from a strong yes (for such issues as employee conflicts of interest, inappropriate gifts, and sexual harassment) to a lukewarm dismissal of such issues as product pricing and the level of executive salaries. When respondents were asked to rank the ethical issues they thought would be most pressing in the next five years, environmental concerns and product safety, along with employee health screening, topped the list. Finally, respondents were asked to comment on four brief case studies involving ethical dilemmas.

What does it all mean?

``We were trying to create a broader context for the discussion of ethics,'' says staff researcher Ronald E. Berenbeim, who conducted the survey and wrote the report.

The problem, he notes, is that such discussions often center on employee theft or the use of insider information. ``We thought those were not really ethical issues,'' he says, explaining that they are simply crimes - for which there are clearly legislated penalties.

The tougher issues are those for which the legal framework provides no solution. When a supplier invites your company's purchasing agents to a four-day ``conference'' in Hawaii in February - with some discussion of the supplier's products, but with lots of free time for recreation - should your firm accept? When one of your engineers discovers that the plant he helps operate is releasing toxic emissions that are annually within federal limits but cumulatively in excess of them - and takes his case to the newspapers when company officials refuse to act - should he be fired, transferred, or left alone? In hypothetical case studies such as these, the respondents faced up to some knotty ethical dilemmas.

How did they respond? What's the reading on the corporate ethical barometer? Three points need making:

Corporations do desire to behave ethically. Many already have corporate codes of ethics. Such codes sometimes meet internal resistance - on the grounds that they can turn employees into overseers, legislators, and even spies on one another. But they often prove useful when corporations face sudden ethical dilemmas.

Individually, the respondents appeared to display a considerable depth of thought. They seemed genuinely willing to do right - and not just to be seen to do right.

Yet large numbers of corporations didn't return their questionnaires. Typical surveys of this type, at the Conference Board and elsewhere, get a 30 percent response. The response to this one: about 15 percent.

Where were the other 15 percent that usually answers? Some, no doubt, were too busy, or couldn't decide who should answer. Some may have worried about tipping their hand to a competitor. But some may have felt downright uncomfortable with the subject.

The barometer? High and rising - in that part of the atmosphere we can measure. But what's going on in the other part where nobody's looking?

A Monday column