Are Businesses Serious About Ethics?

Last Updated Aug 20, 2007 6:28 PM EDT

Companies seem to be jumping over themselves to adopt business ethics and policies. But the way some companies implement them, one wonders if they're designed to actually affect change or just to improve P.R.

In the current Business Week, Pallavi Gogoi looks at the plight of whistleblowers, the neighborhood watch of ethics enforcement. As in the case of Chalace Epley Lowry, whose whistleblowing experience at Wal-Mart is detailed in the story, many employees who speak up run into difficulty on the job -- or find themselves out of a job -- when their identities aren't kept confidential. This erodes employees' trust in their company and encourages them to keep quiet so they can keep their paycheck. The article cites this data:

A recent survey conducted by LRN, an ethics research and consulting firm, found that 73% of full-time American employees reported encountering ethical lapses on the job. However, the survey also found that of that 73%, only "one in three, or 36%, said that they have reported an incident they believed to be unethical or questionable to management." Most, or 58%, of these respondents said they didn't report it because they were not directly involved in an incident. Fourteen percent said they lacked confidence in how their employer would handle it.
A company can't protect its employees unless managers truly understand their role in the ethics enforcement process. Training is one approach, but Craig Smith, senior fellow in marketing and ethics at London Business School, points out in a recent Wall Street Journal article that ethics should also be part of the recruiting process. "If recruiters more actively expressed a desire for students with training in corporate responsibility, we wouldn't have such a low take-up on the electives," Smith says, describing the low attendance at optional ethics courses. "After all, a lot of students are coming to business school to get into high-paying jobs, and that's their primary concern."

Smith suggests that MBA programs support the overall goal by teaching ethics along with the relevant subjects, rather than ghettoizing the topic in an optional elective. This would further reinforce the idea that ethical behavior isn't an option -- it's a required part of doing business.