Workplace Ethics

¶ … Business of Ethics The Importance of Ethics in the Global Marketplace At no time in history has the expression, "It's a small world" been more true than it is today. Television, telephone, the Internet, and high-speed air travel have brought the peoples of the world together in a way in which they never have been before.

In an instant, a man in New York can communicate with a colleague in Hong Kong, a woman in Des Moines can watch an unfolding revolution in Southeast Asia, and a student in Seattle can access records at the University of Canberra. Not only have these changes brought us closer together culturally and socially, they have also forged every tighter links among the economies of the world. No longer does an American or a French corporation operate solely within the confines of its own nation.

Corporate executives from one country must take into account the needs, desires, and expectations of their clients, and potential clients, across the globe. And just as technology enables businesses to have greater access to international markets, it also brings them into intimate contact with their individual clients. Customers are no longer simply numbers on a balance sheet, they are educated consumers who can easily follow all the latest actions of almost any business. Companies can be compared to one another, and held accountable for their actions whether good or bad.

A new social conscience has dawned; an informed public demands that all of its concerns - ethical as well as economic - be met. If the businesses of today are to prosper, they must rise to meet this challenge. Sadly, it is the very desire to achieve prosperity that has brought about much of the recent concern over business ethics.

Widely circulated reports of corporate misdeeds and national scandals have created a condition the experts label "Enronitis." (Valenti, p.2) Named for the multi-billion dollar corporation that suffered catastrophic collapse last year, this new "disease" of the workplace underscores the high costs of seeking profits at any price.

For Enron's remarkable fall not only emptied corporate coffers and major league shareholders' pockets, it also devastated the "little man." Thousands of former Enron employees saw their life savings eliminated; the company stock that had formed the major part of their pension fund becoming suddenly worthless. The resulting investigation into Enron's collapse revealed a shocking picture of unbridled corporate greed: false statements to shareholders, crooked accounting, illegal partnerships...and the list goes on.

Public confidence in big business was further shaken as the scandal shed light into the dark corners of many other well-known corporations. The good faith of the public is an often-underrated factor in corporate success. Take the case of Sears Roebuck. Not wishing to go the way of Kmart and other corporate giants who have recently found themselves in Chapter 11, the management of Sears has implemented a program that is dedicated to attaining the highest possible level of corporate ethics.

As with any successful ethics plan, the Sears plan starts at home. Happy employees are as essential to a successful business as satisfied customers. A contented workforce projects a positive corporate image. Upbeat employee attitudes are carried over into their dealings with the public. They provide better service, are more considerate and attentive, and more responsive to their clients' needs. A well-served customer is a loyal customer, returning to the same company time and time again.

But what creates a positive corporate culture? The key, according to executives at Sears and numerous other companies is a clear code of company ethics coupled with an atmosphere of trust. Communication between the different ranks of employees is essential. Upper Management must set an example. It must genuinely adhere to whatever code of ethics is promulgated by the company. Lip service is easily detected by lower level employees, who will do as their superiors do, and not as they say.

According to Tama Starr, President of Artkraft Strauss: Managers and supervisors are becoming more conscious of the examples they set, and this resonates throughout. Quality people would always rather be in a workplace where standards - all standards are high. Then they know they aren't just marking time in life." Seglin, p.3) Employees who believe that their superiors are ethical are far more likely to behave in an ethical manner themselves. Much corporate misconduct derives from the poor example set by management itself.

Workers feel pressured by top executives and supervisors to make up deficiencies in the bottom line by any means available. An unscrupulous CEO, such as Albert Dunlap of Sunbeam, can set a tone of aggressive, anything-goes capitalism that can veer dangerously close to mismanagement and malfeasance.

(Valenti, p.3) Says Linda Trevino, a Professor of Organizational Behavior at Penn State's Smeal College of Business Administration: Most people will try to do what they're being asked to do because they want the company to succeed and they want to feel good about achieving their goals.

Most people do not have the moral development to resist those pressures." Valenti, pp.2-3) If the success or failure of a company's code of ethics is based on its employees' moral fiber, how then can a business ensure appropriate conduct on the part of its personnel? According to Organizational Integrity, a survey released in May 2000 by KPMG, three out of four employees have observed illegal or unethical conduct in the workplace.

This despite the fact that five out of six employees said that their company had an ethics program in place. (Seglin, p.3) Clearly, an ethics program in and of itself is not enough. To return to the example of Sears, a corporation must make clear its goals and be accessible to its employees.

The appointment by Sears Roebuck CEO of William Giffin - a thirty-one-year company veteran who worked his way up the corporate ladder - as head of a department of ethics signaled to employees the importance proper conduct would hold in the corporate culture. (Bresnahan, p.3) Among other innovations, an ethics hotline was established; a direct link to the ethics department that now fields more than 15,000 calls a year. (Bresnahan, p.3) Giffin is readily accessible to all company employees, personally handling the most complex questions of ethical behavior.

His "[Ethics] team has become a part of the [day-to-day] process." (William Giffin - Bresnahan, p.3) But what is ethical behavior? Is it simply the sort of conduct that prevents the commission of illegal acts thus sparing the headache of an expensive lawsuit...or worse? Well, in part, but ethics is much more than that. A proper code of ethics begins with the personal values of individual employees, basic everyday questions of right and wrong.

Is it all right to take home office supplies? To pad expense accounts? To lie about the quality of a product or service? Each one of these decisions represents a moral choice. In each case, the person who commits the act weighs the relative consequences and benefits. Perhaps employee theft is a symptom of a larger issue - the mistreatment of personnel.

Workers who feel they belong to a corporate family are far less likely to see themselves and management as a case of "us and them." Employees who believe that the company values their opinions and respects their advice are not only much more likely to tender that advice, but also much more likely to engage themselves in matters of concern to the company as a whole. Problems can be threshed out at regular personnel meetings, and employees can offer their suggestions for improvement.

Such corporate harmony can reap its rewards both inside and outside of the company. According to KPMG, eighty percent of employees believe that customers will recommend a company whose management they perceive as ethical. (Seglin, p.4) Yet a harmonious business environment is only the starting point for the implementation of a successful ethics program. Says author Alan Weiss in Making it Work: If management is art and science, the study of ethical problems lies solidly in the former.

So, as the need to address ethical challenges has arisen, the "easy answer" has been unavailable. Management has been forced to consider serious, specific, and thoughtful responses." Burke, p.4) According to noted behavioral experts, among them sociologist Max Weber, and human relations consultants Mayo, Fayol, and Maslow, a successful organization is guided by a leadership that values the three qualities of Efficiency, Effectiveness, and Economy.

Each of these attributes contributes in its way to the smooth functioning of any and all human institutions, be they public or private corporations, governments, charitable organizations, etc. (Burke, p.4) An efficiently run business possesses a cogent structure with a clear hierarchy, and parts that contribute usefully to the whole. A clear ethical program can help employees to understand their place in the corporate culture. Noticeable guidelines bring reason out of chaos. A worker understands his place in things. He feels a part of the great corporate family.

A person who feels included will not only likely be a better, more conscientious, and more productive employee, but he will be less likely to commit offense against the company and against other employees. Company property is less likely to "disappear" if a worker thinks of his place of business as "his" company. Rivalries between personnel can be more easily channeled into healthy competition. And of course, the worker who takes pride in his company will deal better with outside clients, as he will take pride in "his" work.

The companies reputation will be enhanced and profits increased. Pride also has other rewards in terms of corporate effectiveness. Pride in his own achievements, and in those of his coworkers and managers, will inspire an employee to work harder. Ethical treatment, fairly and evenly applied, will ensure that all parts of an organization pull their weight, and that the whole operation functions smoothly. Input from personnel can lead to the modification of outdated or cumbersome systems.

An ethical entity respects the suggestions of its employees because they are right and not because they come from certain favored employees, or from managers of a certain rank. An ethical company is a flexible company, and a flexible company is one that can more easily adapt to changing conditions. The market is littered with the carcasses of corporations that had become too hidebound to see the wave of the future either in terms of their product or their internal organization.

According to Mayo, Fayol, and Maslow, Efficiency without Effectiveness is Too rigid, too rigorous, and workers...become too righteous. It was learned that the service delivery systems at that time needed modification. Effectiveness became valued and urged by the human relations practitioners who encouraged more responsive working conditions where the workers would identify with the process and organization." Burke, p.4) In other words, always "going by the book," is not ethical if it leads to calcification and an inability to respond to the demands of the moment.

And the company that is both efficient and effective is also economical. The same strict adherence to high ethical standards that solidifies a business's organization and creates a team, also contributes to a better and more judicious use of resources.

"Economy, the third tool of management, is an element of both efficiency and effectiveness, but stands alone as an important management value because it alone encourages, really urges, the wise and frugal use of resources." (Burke, p.4) Again, the employee who takes pride in his company will be more careful to budget his time and watch his expenditure. The company's success is his success, and so he will manage his resources as if they were his own.

Long lunches when the boss is away may be fine in a corporate environment where the higher-ups spend all afternoon inside a trendy restaurant, but castigate ordinary employees for being five minutes late. However, in an ethically run business; a business in which standards are applied equally and appropriately across the board, even the lowliest of employees will feel that he is doing his duty by adhering to the schedule.

There is no unnecessary waste, no feeling that an employee is just getting his due or that "they're all doing it." The saleswoman who lies to her clients, tricking them into believing that they're getting more than they paid for is no better than the corporate CFO who fudges the books and deceives stockholders when quarterly earnings don't meet expectations. Such conduct has repercussions all around.

While there may be short-term gains in terms of higher stock dividends for the executive, and a larger commission check for the saleswoman, the long-term impact is always negative. Seeing the financial picture only for the moment will lead to fiscal hardship further down the line...as companies such as Enron and Adelphia have discovered to their cost.

But what is most remarkable about the programs currently being implemented by such global powerhouses as Sears Roebuck, Columbia/HCA Healthcare, and the United Technologies Corporations is indeed the broad scope of their endeavors in the world of business ethics. Efficiency, Effectiveness, and Economy may well build a smoothly running and ethical machine, but it is a machine that remains business-oriented nonetheless.

With today's environmental groups, civil rights organizations, anti-child labor crusades, animal rights activism, and so forth, any company that wishes to pursue a position of prominence in the global market must take a stand on the issues. Sears has its own university in Illinois where managers are indoctrinated into the finer points of ethical behavior, and are made to sign annual pledges to demonstrate their full and unending commitment to the company's code.

(Brasnahan, p.4) The evasion of scandal by means of ethical practice is seen as more important, and more productive, than undercover tactics meant to skirt the law and cover up the more unsavory aspects of traditional corporate technique. This strongly moral approach to business ethics is given pride of place at Columbia/HCA, a national healthcare enterprise that was formerly plagued by scandal, and charges of fraud and improper billing practices. (Brasnahan, p.4) In July of 1997, the Board of Directors brought in Alan R.

Yuspeh as its new Senior Vice President of Ethics, Compliance, and Responsibility. Immediately, Yuspeh set about giving meaning to the words in his corporate title. He drafted a code that was distributed to all of Columbia/HCA's 285,000 employees. At the top of the list were compassion, honesty, integrity, fairness, loyalty, respect, and kindness. (Brasnahan, p.5) Good, solid, old-fashioned values, but longtime strangers to the dog-eat-dog corporate world. Yuspeh's program insures that his entire workforce is well-versed.