Board room, classroom exploring business ethics
In California's Silicon Valley, where competition zips along with electronic speed, ''bad-mouthing'' competitors is sometimes considered a valid business strategy.
But attitudes are changing, says Kirk Hanson, a business administration professor at Stanford University. ''There is growing appreciation for the fact that businesses owe some kind of obligation to competitors and customers. They are realizing they are vulnerable [to each other's] innuendo. They're saying, 'Hey, this doesn't do any of us any good.' ''
It's not atypical, he explains, that one executive might say to another: ''I hear that [such and such] company is having financial problems. I hear they are about to go under.'' Such false rumors can have a devastating effect on the company talked about, says Professor Hanson, who recently spoke at a business ethics conference in the Boston area. They could drive off suppliers and customers, and demoralize the company's work force.
Increasingly, academics and executives are focusing on this sometimes fuzzy concept of business ethics. Since the Watergate years, 322 business ethics courses have been added to the nation's college and university curricula.
Although executives tend to call the subject anything but ''business ethics'' (for example, issues management or the business environment), their renewed attention is legitimate. By whatever name you call it, the moral aspect of business is showing up in more sales training classes, board rooms, and company policy statements. For instance, Chemical Bank in New York is including ethics in a new management training program. ''We're trying to improve critical thinking, our understanding of the impact of our decisions,'' says Marie Lee, vice-president and director of corporate social policy.
The recent emphasis on corporate culture, and the recognition that successful companies are the ones with ''good values,'' have helped push ethics further into the corporate spotlight. And the deregulation trend is relieving government of many monitoring duties and transferring that responsibility to the shoulders of business leaders. These leaders have to answer to mounting pressure from the public and the press.
Not only are businesses facing some of the same old ethics concerns (bribery, kickbacks, product quality), but some are preparing for new issues as the nature of business changes - from a national economy to a global economy; from heavy industry to the ''information industry.''
Last year the manager of public policy at the Aluminum Company of America sent out questionnaires to Alcoa's staff managers. It asked them to identify public concerns that will be important to the company in the next few years. The feedback ''is intended to substantially improve our ability to anticipate and act early,'' the company memo stated.
The time seems ripe for more attention in this area. Just last week, the former prime minister of Japan was convicted of taking bribes from the Lockheed Corporation. A federal judge released a document showing that General Motors officials knew of brake problems with their X-car before it came to market. And on Friday, three former officials of a major chemical-testing lab were convicted of falsifying results on the safety of some chemicals.
How do these situations arise? One factor is pressure on managers to boost profits. This pressure increases in a recession, in an extremely competitive industry, or an industry undergoing a lot of change. Sometimes it comes from the very nature of a business. ''There are more hazards in an industry where what is sold is a large, single item,'' says Professor Hanson. ''On the decision of one or two people, millions of dollars could be won or lost.
''New [ethics] issues are emerging all the time,'' Hanson comments. He says this happens as new rights for a company's shareholders, employees, customers, and communities get defined. As various experts see it, here are some of the issues that will be most important in the next decade. Many of them add new twists to old questions:
* Workers' rights. One question now is whether companies owe anything to laid-off workers. Do they owe them training? New jobs?
And as industrial robots weld, move, and assemble pieces, what implications will this have for the work force? Workers are wondering whether automation will further shrink the labor force and whether it will dehumanize the factory.
''One whole issue that will not go away is hiring and the quality of work life,'' says Dr. W.Michael Hoffman, director of the Bentley College Center for Business Ethics in Waltham, Mass. ''Japan and Europe have a lead on us with human relations.'' Other issues that won't go away soon: company responsibility to the families of working women; sexual harassment; and minority hiring.
* The rights of citizens in other countries. ''There is a globalization of business,'' says Kenneth Goodpaster, the professor at Harvard Business School who teaches business ethics. As companies get more world-oriented, they will have to ''look at their values from a transcultural'' point of view.
* The rights of companies and the public as technology advances. ''In the technical-based industries, we are concered about people stealing trade secrets, '' says Howard Aibel, general counsel at International Telephone & Telegraph Company. ''We're concerned about start-up companies beginning with a base of technical information that we funded.'' Now these companies not only have to watchdog their own ethical behavior, but keep tabs on ''the business ethics of others.'' And, he adds, with the switch to an information society come worries about information privacy.
* The rights of the environment. ''These issues were all raised in the '70s to some extent,'' says Harvard's Professor Goodpaster. But now, he explains, we're beginning to see the delayed effects of acid rain and improper toxic waste dumping. ''The part that's never been adequately expressed is who bears the responsibility for something that happened 20 years ago?'' One company, Dow Corning Corporation, a maker of silicones, has answered this question. Its code of ethics states: ''Dow Corning will be responsible for the impact of its technology upon the environment.''
Ethics issues will continue to change. ''Ten years from now, the list [of issues] will look quite different,'' says Goodpaster.
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