A New York woman ordered a set of good kitchenware from a door to door salesman, made a down payment of $250 and signed a contract in which she agreed to pay $25 a month until her total obligation was met. However, the woman was unable to meet the monthly payments and requested a refund of her original investment.
To settle the dispute, the company turned to William Rogal, Washington, D.C., attorney and the outside code of ethics administrator for the Direct Selling Association, a trade association representing 150 corporations, including Avon Products Inc. and Shaklee Corp.
“She was an immigrant and didn’t understand,” says Rogal, who recommended the company cancel her contract and refund the money. “I doubt the company would have done it to their own without the enforcement-code administrator.”
The Direct Selling Association has joined many large corporations, universities, the military, and government agencies in developing codes of ethics. Three out of four of the larger private corporations in the United States have a written code of ethics, most of which were developed or updated in the last two years, according to a survey, conducted by Opinion Research Corp. of Princeton, N.J. Sixteen percent of all graduate schools of business offer courses in ethics.
Ethics is attracting attention as U.S. business becomes more service oriented. Two-thirds of the U.S. gross national product is derived from businesses that produce services (such as carpentry, plumbing, sales, and dry-cleaning) rather than goods – and trust is their key.
The Ethics Resource Center, a nonprofit organization based in Washington, was formed to promote ethical behavior in business, government and other institutions. Last year the center pushed thru Congress a 10 rule code of ethics for U.S. government service, which is displayed in all post offices and other government buildings. Center president Ivan Hill noted that with federal waste estimated at between $25 billion and $60 billion a year, the code “will save $2.5 billion to $6 billion a year” even if it is only 10 per cent effective.
Some businesses, such as the Pillsbury Co., Lockheed Corp., and Cummins Engine Co., Inc., have hired full-time ethicists – corporate responsibility executives with backgrounds in theology – to help make employees more sensitive to issues of integrity and to help them deal with those issues.
Jon Pekel, director of corporate responsibility for Pillsbury, says he acts as a catalyst – not as “the resident gurus who comes up with the social, ethical pronouncements on corporate farming, grain merchandising, or migrant labor.” Pekel plans to continue a task-force program that he began at Green Giant before is 1979 acquisition by Pillsbury. In this program, employees assess individual rights and consumer issues, such as products’ nutritional quality.
“In addition to asking, ‘What’s the Federal Drug Administration doing?’ or ‘What is the right thing and the feasible response?’” Pekel says.
In the Green Giant program, employees offered “a series of the most spectacularly interesting, innovative, articulate, and businesslike suggestions,”says Thomas Wyman, former president of Green Giant and now president and chief executive officer of CBS. The recommendations influenced the company to “change the way we did business in a number of reasonably significant ways.”
A few years ago, following a scandal involving illegal overseas payments, Lockheed established a code of ethics. Today Robert Batchelder, a management development specialist, uses workshops to teach ethics-related skills to Lockheed manager.
“There are no surprising issues,” he says. “They just come clothed in particular context of industrial work.”
The National Institutes of Health employs a full-time ethicist, as does the Nation Center for Health-Care Technology. The health-care center looks beyond the safety and efficacy of technology, examining its social , ethical, legal, and economic implications as well.
Even banks are hiring ethicists.
“When public confidence erodes, or when community environment in which we do business deteriorates, our business suffers, and so does the legitimacy,” says John Morrison, chairman of Northwestern Bank of Minneapolis.
Employees (who are also customers) form task forces to ‘deal’ with issues such as customers’ privacy, the bank’s role in the community, and the truth in lending. The employees then make recommendations to management, and they address small problems before they surface as major public concerns.
Evaluating job performance – when to terminate and when to promote – is another area faced by ethicists in the workplace. Conflict of interest, kickbacks, abuse of benefits, and marking issues, such as bribes and incentives, fall into the ethicist’s lap.
The chemical industry also is faced with environmental issues, such as toxic wast disposal.
“It’s not just conforming to the Environmental Protection Agency regulations, but what the EPA doesn’t cover, sch as safety and costs,” says Donal Jones, a Methodist minister, professor of social ethics at Drew University, and an ethical consultant to Allied Chemical Corp.” There’s now way of testing and ethical theory unless you bring it into the profession, into the real world.
“The philosophers have not been able to get inside the corporations the way people from a religious background have,” he says. “We are more real-world oriented. We’re dealing with people – we’re problem solvers.”
It has to assess the immediate impact of ethical codes, training programs, and staff ethicists. Many corporations are interred in mealy window-dressing. Accusations of irresponsibility and obsession with profits have put big business on the defensive; the result has been the reaction of corporate responsibility departments of the refocusing of public relations divisions.
Corporate attitudes vary, Keith McKennon, Dow Chemicals Co.’s corporate vice president for government and public relations, doesn’t think his company needs a full-time ethicists to deal with questions of environmental health and worker safety. “We should all undertake that burden.” he says.
“I’d rather be working for a company that is right up front in the area of corporate responsibility,” says Kathleen Kaufman of Avon’s consumer affairs department. “I feel good about Avon’s consumer affairs department. “I feel good about Avon so I bring my own spirit into my letters to consumers.”
This focus on applied ethics can benefit both the institution and society as a whole. Hill believes that posting a code of ethics opens a door for truth-tellers from top to bottom.
“Suddenly, being honest and doing a good job doesn’t make you a sucker. Everybody expects it,” he says.
“Society is changing – business is changing. People have to deal with the gap,” says Jones, who thinks the automotive industry is having problems because of the shift in society’s values. “They still are operating under the old market forces way of management, thinking they can manipulate society.”
Jones blames schools and colleges for not training students to think about the ethical side of business decisions.
“As regulation expands, the room for individual ethical values shrinks proportionately,” says Harold Williams, chairman of the Security and Exchange Commission. “To be ethically sound, a person or institution must have the freedom to develop…internal mechanisms consistent with the expectations of society, adn not merely be subject to externally imposed directions.”