Bad behavior goes back to work

Five years after embarrassing scandals touched off a wave of efforts to clean up corporate America, a new survey finds unethical conduct in the workplace has only gotten worse in the interim. Ethics experts aren't entirely surprised by the results.

"Very few organizations have established strong ethical cultures," says Patricia Harned, president of the Ethics Resource Center, a Washington, D.C., research organization that produced the 2007 National Business Ethics Survey, released last month. "Companies are more likely to focus on ­compliance-related elements in building their programs and less so on the proactive things that help to build a strong culture."

As a result, Ms. Harned says, American firms face an "ethics crisis" that's beckoning more scandals. According to the survey, 56 percent of 1,929 respondents at a broad range of companies said they witnessed ethical misconduct on the job within the past year. That's up from 55 percent in 2000 and 43 percent in 2003, when firms were scrambling to do better. Topping the 2007 list of common infractions were conflicts of interest, lying to employees, and abusive or intimidating behavior. Most kept mum about what they observed, however, because they feared speaking up would either make no difference or lead to retaliation.

The outlook is brightest among the 9 percent of firms with a strong ethical culture. There, leaders and peers regularly encourage fellow workers to abide by a robust code of right and wrong. When such a culture exists, the chances of witnessing misconduct on the job drop by 75 percent.

In an era when companies spend millions on public relations and insurance to protect hard-won reputations, America's dearth of ethical workplaces testifies to the steep challenge at hand. But observers agree that internal systems and incentives could often be improved to reward ethical behavior in settings where it's all too often punished.

"A strong culture is not one that's highly rule-bound [and says] 'off with your head if you do something wrong,' " because that leads employees to cover up mistakes rather than come clean, says Kenneth Goodpaster, a professor of business ethics at the University of St. Thomas in St. Paul, Minn., and author of the 2007 book, "Conscience and Corporate Culture." "A strong culture involves a lot of motivation from the inside out. It's building that kind of culture that takes a long, long time."

Why ethical cultures hard to instill

Ethical cultures are rare, observers say, because they're difficult to create. Ethics in business sometimes requires saying "no" to lucrative opportunities when they threaten the integrity of other relationships and that can be a tough task, according to William Ury, director of the Global Negotiation Project at Harvard University in Cambridge, Mass. Others add it's often easier, especially in settings rife with pressure to deliver near-term results, to establish procedures that suggest to regulators that everything is on the up and up.

"Ethics officers aren't going to make a corporation or a business more ethical," says John Bruhn, an Arizona management consultant with a specialty in ethics. "They're just going to make sure that what you see on the surface is not illegal."

Some firms learn the hard way

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