Ethics Officers Roam Halls in More US Workplaces Tough Sentencing Rules Enacted in 1991 Are One Reason for Growing Attention to Honest Behavior Series: Koichi Kunisada, an Official at Daiwa Bank, Talks to Reporters after the Company Was Fined $340 Million in the US District Court in New York for an Illegal Coverup of $1.1 Billion in Bond-Trading Losses, ANDERS KRUSBERG/AP
Kim Campbell, writer of The Christian Science Monitor, The Christian Science Monitor
Attention to ethics is on the rise at American companies. The impetus for this shift toward better behavior, experts say, is financial reality as well as moral awakening.
Today, lapses by a single employee can cost a company millions of dollars in fines. That has driven many corporations to create a new post: the ethics officer.
"Ten years ago they were practically nonexistent," says W. Michael Hoffman, founder and executive director of the Center for Business Ethics at Bentley College in Waltham, Mass. Today, he says, between 35 and 40 percent of major US companies have such officers.
Since 1991, membership in the Ethics Officer Association, based at Bentley, has jumped from 12 to 300, says EOA chairman Bill Redgate. He says the number of ethics officers continues to grow.
A key factor fueling the rise in officers and broader programs devoted to ethics is the 1991 implementation of strict sentencing guidelines for corporations. Companies are now held more accountable for wrongdoing by their employees, and can be slapped with massive fines.
The guidelines are very specific about what punishments go with what crimes. That leaves federal judges little leeway to reduce fines and sentences except in cases where companies have made an effort to support and enforce ethical behavior.
When Japan's Daiwa Bank, for example, was fined an astounding $340 million in February for a US employee's elaborate bond-trading fraud, it became clear how far-reaching the reforms were. The fine was so high because the company had no significant compliance program in place and did not immediately report the crime, among other things. Writing in ethikos, a business-ethics newsletter in Mamaroneck, N.Y., lawyer Jeffrey Kaplan calls the punishment "the largest criminal fine in the history of US law."
But factors other than the sentencing guidelines are influencing companies as well. A desire for a better corporate culture, concern about civil lawsuits, and reaction to industry trends are also bringing ethics to the fore.
"I am extremely pleased and optimistic about how much has happened in building these programs," Dr. Hoffman says. He says the increase shows the commitment of companies to "upholding ethical standards."
Sears, Roebuck & Co. says a combination of factors led it to launch an ethics department and revamp policies three years ago. …