Abusing Business Ethics

By Hoffman, W. Michael; Petry, Edward S., Jr. | National Forum, Winter 1992 | Go to article overview

Abusing Business Ethics


Hoffman, W. Michael, Petry, Edward S., Jr., National Forum


A growing number of corporations are embracing business ethics. Some are motivated by a sense of Asocial responsibility, while others see business ethics as a new strategy to enhance profits. The reasons for launching a business-ethics program can be decisive. For example, if a company is motivated solely by the idea that ethics will enhance profits, it is likely that the company's ethics program will be uprooted by the first storm. When ethics and profits conflict-and they always do at some point-the only ethics programs left are those that are rooted in the corporate culture and motivated by something in addition to profit. All in all, however, it is better to have an ethics program than not. And so, though the motivations vary, the net result in recent years has been a dramatic increase in the attention given to business ethics, and this is a very positive trend.

We are encouraged by that good news and heartened by some of the specifics revealed in our surveys. In our 1990 survey, for example, of those responding, 94 percent of the Fortune 500 service and Fortune 500 industrial companies reported having a written code of ethics. This is up from 74 percent in a similar survey in 1985. In the 1990 survey, 32 percent reported going beyond a code and taking the additional step of having an ethics committee. This is up from 14 percent in 1985. We also estimate that about 20 percent of America's larger corporations have a full-time ethics officer-someone to oversee the corporation's ethics policies. Recently, the Center for Business Ethics, in conjunction with the Dreiford Group, a Washington, D.C.-based consulting firm, hosted a conference for ethics officers. Forty-two ethics officers representing the defense industry, manufacturing, telecommunications, public utilities, banking, and government participated. We believe this is yet another sign of the positive, concrete steps which are being taken toward institutionalizing ethics.

The growth of the business-ethics movement, however, is not without problems. Ironically, two problems are the unintentioned by-products of good-faith efforts to promote business ethics. First, there are instances in which individual rights are being threatened. Second, too often individual responsibilities are being usurped. The specific threat to individual rights that we have recently noticed occurs when investigations are conducted in the name of ethics without due process and without the rights of the accused being protected. The usurpation of responsibilities is most common in instances in which corporate business-ethics programs are designed without adequate emphasis on the importance of autonomy and self reliance. In particular, in some cases managers are discouraged from ethical reflection and are instead encouraged to adopt an overly rigid type of rule compliance. These problems are illustrated by the following examples.

Unknown to you, an anonymous call has been made on your company's ethics hotline. The caller has accused you of being involved in a kickback scheme. The accusation is false. Nevertheless, the caller gives details, sounds knowledgeable, and appears to be on the level. Based on the telephone call, an investigation is launched. The investigation is headed by your company's ethics officer and involves staff from human resources, the corporate counsel, purchasing, accounting, and security. Your name is never mentioned to your co-workers, but from the questions being asked it is clear to them that you are the suspect. At some point in the process you are called in for questioning. At no time are you directly informed that an investigation is under way. You are not "mirandized" before questioning, nor are you able to face your accuser.

Or you are a purchasing manager, and you are worried that you are heading toward a possible conflict of interest. You have been meeting a potential supplier over lunch. The supplier has paid for the extravagant lunches-three so far-and has offered to pay your expenses to a trade fair at which the supplier's products will be displayed. …

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