YOU ARE HERE: LAT HomeCollections

Era of the 'Credo' : Big Business Puts Ethics in Spotlight

ETHICS AND ENTERPRISE: First of a series.

June 19, 1986|PAUL RICHTER | Times Staff Writer

NEW YORK — A mysterious envelope brimming with a competitor's plans for bidding on a multimillion-dollar jet fighter contract appeared one morning on the desk of aerospace executive Jack Smithfield. Since Smithfield's company planned to submit a bid of its own, he faced an urgent question--should he use the information?

"If the stuff was stolen, there's no question it should go back," ventured Bill Vega.

"What if the competition flubbed it and left it on an airplane seat?" asked Kent Parra. "In football, you don't give the opposing fullback a ball he's fumbled and say, 'Do it over--we don't want to win that way.' "

Smithfield and his problem were parts of a fictional case study that Parra, Vega and 13 other mid-level executives were considering in a day-long seminar on ethics at General Dynamics' Convair division in San Diego.

Company-Wide Program

The seminar was one of several that the No. 1 military contractor is conducting for all 103,000 of its employees. It was also a sign of the new interest on the part of U.S. companies in using formal programs to raise the ethical awareness of their employees.

Companies are conducting training sessions and business-conduct "audits," designating special ombudsmen, installing telephone hot lines and taking other steps intended to heighten employees' ethical sensitivities.

"Corporate ethics work is seeing something of a boom," says Kirk O. Hanson, an ethics consultant and Stanford University lecturer. "It's difficult to judge its staying power, but there's more going on now than ever before."

Of 279 large companies that answered a 1985 survey conducted by the Center for Business Ethics at Bentley College in Waltham, Mass., about 20% said that they were using seminars or workshops to reinforce good ethics. Most of those began their programs in the last four years, the center's director, W. Michael Hoffman, said.

About 8% of the same firms said that they had ombudsmen to hear questions and complaints about ethical issues, and 18% said that they maintained committees to consider policy-making on ethical questions.

These employers' activities are just some of the indications of a growing interest in business ethics. There are now more than 30 centers of research studying business ethics, compared to the handful that existed a decade ago.

College courses in business ethics have proliferated on American campuses; there are 25 college textbooks on the subject, and half a dozen new ones appear each year. Ethics consultants now criss-cross the country advising corporations on how to approach ethical consciousness-raising.

The most visible of the ethics programs have been inaugurated by companies struggling to restore damaged reputations that threaten their businesses.

General Dynamics, reeling from two years of allegations about improper contracting practices, opened its ethics program so that it could remain eligible for Navy contracts. E. F. Hutton is forging an ethics program following last year's conviction on a massive check-kiting scheme.

These "street conversions" are not the only way companies are becoming involved in such programs, however. Efforts have been launched by top executives with a variety of motives at companies such as McDonnell Douglas, American Can, Standard Oil and Chemical Bank.

They see these efforts as useful not only for preventing misconduct that could cause public-relations and legal problems, but also for lifting morale and productivity, and ensuring that managers are alerted to new hazards as they enter competitive, deregulated businesses. Some executives simply want their organizations to behave honestly for honesty's sake.

White-Collar Prosecutions

Experts cite a number of reasons for the increased interest in business ethics. Concern about improper business practices grew after the overseas bribery scandals of the mid-1970s, and this concern has since been heightened by increased press attention to business and white-collar crimes.

The Reagan Administration, in the Pentagon and elsewhere, has also urged businesses to pursue self-policing ethics programs. Managers at companies such as Borg-Warner and McDonnell Douglas see ethics programs as a way to inculcate the sort of group values--apparent in Japanese companies--that seem to minimize friction and improve productivity.

They believe that by identifying common values and goals, they can make employees feel more involved with the company and work harder, says Gary Edwards, executive director of the Ethics Resource Center, a business-supported research center in Washington. About two-thirds of the nation's economic output now comes from service industries, he says, "so if we want to increase productivity, one important way is to change the attitudes of people who deliver those services."

Los Angeles Times Articles