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New Corporate Ethics
After Enron, Ethics Classes are All the Rage
By Jonathan D. Salant
The Associated Press
November 4, 2002
WASHINGTON - In the post-Enron business world, corporations are training
employees how to be ethical just as they teach them about making a sale or
balancing the books.
In the last three months alone, some 100 companies have hired ethics
officers, a response to the rash of corporate scandals that have involved
such former high-fliers as Enron, WorldCom and Global Crossing.
"What we've seen are examples of companies with a culture of, 'I don't see
anything, I don't know anything,' " said Ed Petry, executive director of the
Ethics Officer Association, a group of corporate executives responsible for
ethics at their companies. "People not willing to speak up, people are
willing to go along. That points to a systemic failure."
The association counts 850 members from 500 organizations, including half of
the Fortune 100 corporations, the World Bank and the New York Stock
Exchange.
Also fueling the drive to hire ethics officers: new NYSE rules requiring all
companies listed on the Big Board to have ethics codes.
Ethics officers conduct training courses for employees, such as one on
insider trading. They also respond to accusations of sexual harassment and
discrimination and watch over potential conflicts of interest. And they work
with auditors and boards of directors to make sure the balance sheets are
accurate.
"If you have a reputation for ethical behavior, that in today's marketplace
is a competitive advantage," said Jim Berg, International Paper's director
of ethics and business practice.
At defense contractor Raytheon Co., a training film features Patti Ellis,
vice president for business, ethics and compliance, sharing a theater
balcony with movie critic Roger Ebert. The two flash thumbs-up or
thumbs-down concerning certain practices, such as skimping on required tests
to get a product out more quickly or making sure the company doesn't inflate
the cost of labor.
Like a government agency's inspector general, ethics officers welcome and
investigate anonymous employee allegations of wrongdoing.
To be effective, the ethics officer must be given a senior position, such as
vice president, with visible clout and the ability to go direct to a
company's president, Petry said.
Ethics officers are looking not only at lower-level employees and middle
managers, but also the company's top executives and even its board members.
Among the new topics: salaries and perks given to those at the top.
"The whole nature of executive compensation has changed," said Keith Darcy,
vice chairman of the Center for Values Based Leadership, a nonprofit
organization that focuses on corporate ethics. "You will not see (the
excesses) for a long time."
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