Prevent Trouble By Improving Ethics
THE failure of so many parents to imbue in their children a strong sense of morals and ethics has given business a new task: teaching employees business ethics. ``Not many kids go to Sunday School,'' says Ronald Berenbeim, an expert on ethics at the Conference Board in New York. ``Business is feeling in some sense they have to pick up the slack.''
By the mid-1970s, after the Watergate affair and some major corporate scandals, about 75 percent of major United States corporations had instituted company codes of ethics. By today, the proportion is probably 80 to 85 percent, Mr. Berenbeim says.
A survey now under way at the Board finds that many of these codes have been amended in the past three years to make them more comprehensive, often to cover environmental issues.
``Corporate efforts to establish ethical accountability and to educate employees with regard to individual and collective responsibility have advanced considerably in sophistication and in the degree of commitment that such programs now appear to enjoy from top management,'' says Berenbeim.
Further, companies are more willing to share information about their ethical codes and training programs. When the Board did a similar survey in 1986, only a few companies gave the business research organization a copy of their codes. Now about a third of those responding to the survey are doing so. ``Companies are very interested in ethics now,'' says Berenbeim.
Several thousand copies of the 1987 ethics report have been sold by the Board, making it a bestseller.
Business executives are acting in the ethics area because slips in ethical behavior can be disastrous. They can cost millions, even billions. They can cost lives if they involve worker safety and environmental damage. They can cost jobs, send people to prison.
``The number one cause of business decline in this nation is unethical behavior of executives - and of younger managers pushing to move up the ranks,'' claims Steven Fink, president of Lexicon Communications Corporation in Los Angeles.
As examples, he cites the commonplace cheating among those who took the test to become nuclear power plant operators, revealed in the investigation into the causes of the Three Mile Island nuclear accident; the false certification of aircraft as safe by Eastern Airlines mechanics, resulting in heavy fines and a loss in consumer confidence for the airline; the substitution of colored sugar-water for real apple juice by Beech-Nut Baby Foods.
Mr. Fink's firm consults with companies faced with or desiring to prevent major corporate crises. ``A lot of clients come to us because of lapses in business ethics,'' he says.
Fink maintains that ethics have weakened in the nation. A study by the Josephson Institute for the Advancement of Ethics, Marina del Rey, Calif., talks about an unwillingness or inability of parents, schools, and political leaders to establish firm ethical standards of conduct and hold youth accountable to them. It speaks of a progressive emphasis on self-aggrandizement, personal gratification, and, ultimately, acquisitiveness. And it notes a remarkable torrent of negative role-modeling by top governmen t, business, sports, and religious leaders.
Berenbeim isn't so sure that ethical behavior is worse than, say, a few decades ago. But there are higher standards of conduct in the US for business today, he says. Child labor, prevalent at the turn of the century, is banned. Manufacturing plants are safer today than 30 years ago. Equal opportunity for people of all races and religions has been institutionalized. Pensions are better protected. Environmental rules are tougher.
Given such new requirements, ethical choices have become more complex for business people, says Berenbeim.
Moreover, during the 1980s, the opportunities for unethical behavior multiplied on Wall Street with all the mergers and buyouts, Berenbeim says. One result was the troubles of Ivan Boesky, Michael Milken, David Levine, and others. But with computers, it became easier to catch inside trading, he says.
Basic honesty remains vital to business productivity. ``Without it, no one can do business and hope to be effective and profitable,'' says Berenbeim. In making deals, businesses have to rely on at least 98 percent of their contacts being trustworthy.