Bad behavior goes back to work

Despite reform efforts, ethical infractions on the job are back to pre-Enron levels – with some notable exceptions.

from the December 17, 2007 edition

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In the latter category, aerospace and defense contractor Lockheed Martin Corp., traces its roots to Lockheed Aircraft Corp., which endured a series of foreign bribery scandals that came to light in the mid-1970s. Now Lockheed Martin has hot lines for anonymous reporting of ethical breaches and relies on more than 80 full- and part-time officers commissioned to guide employees when they aren't sure what to do in a given situation. The company wins kudos from Ethics Resource Center's Harned for having invested heavily "in preparing management to recognize and respond to ethics issues."

"It's an unfortunate thing when one incident can cause a problem for all the good work that the company does year after year," says Alice Eldridge, Lockheed Martin's vice president for ethics and business conduct. "We're trying hard not to be in that position."

Fast-food chain Chick-fil-A earns Mr. Bruhn's praise for making ethics a priority since its first in-mall store opened in 1967. By closing stores on Sundays, Bruhn says, Chick-fil-A shows respect for employees by giving them a rest day and also sends a message that some things are more important than maximizing profits. He also commends the company for awarding scholarships to more than 22,000 employees on the basis of such factors as teamwork, work ethic, and leadership potential.

Incentives to encourage behavior

"I would encourage corporations and businesses to look at value incentives – over and above salary and direct benefits – that they might offer employees for engaging in exceptional behavior," Bruhn says. "You could make this a group thing, so it's not a popularity contest," but instead all employees in a division would earn rewards for maintaining benchmarked ethical standards.

Innovations notwithstanding, companies face an uphill battle. Dr. Goodpaster notes that ethical cultures constitute long-term investments, sometimes at the expense of near-term profits, but firms routinely face enormous pressures to put quarterly earnings ahead of other priorities.

What's more, the 2007 Business Ethics Survey found that employees don't like to use hot lines, which corporations rushed to set up after the scandals of 2002 and 2003. Workers say they would rather discuss a situation with someone they already know. And yet 2 in 5 chose not to come forward when they witnessed ethical misconduct because they would have had to report the behavior to the person involved.

Find and close 'hypocrisy gaps'

Within this mix, Goodpaster says wise firms make a point to look for areas where practice doesn't properly reflect an organization's professed values, and to tweak incentives accordingly to close the "hypocrisy gap." When that happens, workers feel better about their organization and the risk of incurring a devastating scandal is reduced.

"This cultural challenge is a much bigger undertaking than just stating a set of corporate values and making sure they get put on public display," Goodpaster says. "It's got to do with how we hire, how we promote, how we take care of succession in moving from one leadership group to another over time. To integrate that kind of moral awareness that deeply in a company is not an easy thing."

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