Business Ethics: Corporations Gearing Up to Do the Right Thing

Bath Iron Works Corp. was in a quandary.

A major customer asked the boat builder to participate in an under-the-boards investigation of one of its suppliers. Although the customer was key to Bath’s survival, purchasing manager Patrick Thomas wasn’t sure how to handle the request. So he went to the company’s ethics officer, who in turn took the problem to the chief executive.

Within 12 hours the Maine-based company had established its position: It would not participate in the investigation unless the supplier was notified about what was going on. Eventually, the customer accepted Bath’s stand.

Business ethics may sound like an oxymoron, with seemingly endless news reports about bad behavior at a spectrum of companies, most recently the British investment bank Barings.

Wall Street in the 1980s was rife with insider trading scandals. The defense industry has demonstrated some of the most egregious examples of impropriety, with companies including United Technologies Corp. and Loral Corp. pleading guilty to charges from Pentagon procurement scandals.

But partly in response to hefty fines and other government action--and also because it makes business sense--some companies are introducing ethics into their corporate culture in a big way.

They are rethinking or formalizing codes of conduct, establishing hot lines for employees to call for guidance on nebulous issues and training employees in personal responsibility.

“We’re in a once-in-200-years-change,” said Gerald Ross, a top management consultant and author with Michael Kay of the book “Toppling the Pyramids, Redefining the Way Companies Are Run.”

In 1991, Nynex Corp. opened an office of ethics and business conduct, introduced training seminars and set up guidelines for employees, customers and vendors. The company estimates that 75% of management employees have gone through ethics training. Last year, the ethics office received 3,000 calls.

The Washington-based Ethics Resource Center late last year published the results of a national survey that showed a growing percentage of companies now have formal ethics programs in place.

According to the survey, 60% have codes of ethics, 33% have training in business conduct and 33% have an ethics office where employees can receive advice or report questionable business activities.