The Ethical Company - corporate social responsibilities

Workforce, Dec, 2000 by Dayton Fandray

Building a company that does the right thing might not be cheap or easy, but firms that have such a foundation can avert crises, and show real returns: loyal employees and a better bottom line.

Six months ago, it would have been difficult to find more than a handful of Americans who could tell you the brand name of the tires mounted on the family car. Today, it would be equally difficult to find an American who couldn't. Especially if that name happened to be Firestone.

The lawyers, politicians, and federal regulators have yet to fix blame for the Ford/Firestone tire debacle, but whoever ultimately bears the responsibility one thing is painfully clear: the once proud Firestone name has been forever tarnished in the minds of American consumers. The company has taken a public relations hit from which it may never recover.

Compare this to the situation that Johnson & Johnson faced in 1982, when cyanide-laced Tylenol capsules were determined to be the cause of several deaths in the Chicago area. Although the standard procedure in cases like this was to recall only the bottles in the contaminated lot, and although the source of the contamination had yet to be determined, Johnson & Johnson vice chairman David Collins decided to recall the entire product line. It was, he thought, simply the right thing to do.

Johnson & Johnson ultimately was absolved of any blame. The company's reputation was preserved. And to this day, Collins's response is cited as the textbook example of how decisive action, grounded in sound ethical values, can avert a crisis, and even bolster a company's reputation over the long run.

In the wake of the Ford/Firestone tire recall, a lot of managers are beginning to wonder what they would do if faced with a crisis of similar proportions. And according to Tracy Carter Dougherty, director of ethics, communications, and training for the Lockheed Martin Corporation, it's a good thing they are.

"It's bound to happen," she says. "All it takes is one person using bad judgment, not even maliciously, but just using bad judgment. When you're dealing with as many different products and services and people as companies do today, it's just a matter of time until something happens."

When it happened to Johnson & Johnson, the company was, in a sense, prepared. David Collins looked to the company's famous "Credo," a short statement of values written by company founder Robert Wood Johnson in 1943. A simple one-page document, the Credo begins, "We believe our first responsibility is to the doctors, nurses, and patients, to mothers and fathers, and all others who use our products and services," and continues, "We are responsible to the communities in which we live and work and to the world community as well,"

The Credo says nothing specific about corporate policy in a case of product tampering, but it sets up a framework in which the responsible course of action became obvious to Collins.

Such guides to ethical behavior are now common in American business. The Raytheon Company has an "Ethics Quick Test" that asks employees to consider the following questions when faced with ethical dilemmas:

* Is the action legal?

* Is it right?

* Who will be affected?

* Does it fit Raytheon's values?

* How will I feel afterwards?

* How would it look in the newspaper?

* Will it reflect poorly on the company?

Texas Instruments (TI) has a similar test that covers much of the same ground but ultimately exhorts the employee: "If you know it's wrong, don't do it!"

Although TI's ethics handbook dates back to 1961, widespread interest in setting company values down on paper and creating offices to administer them can be traced in large part to the rash of defense industry scandals that surfaced in the mid-1980s. At the time, the emphasis was on compliance with government rules and regulations. This has evolved in recent years to a more fundamental interest in core values and ethical behavior, When TI sold its defense business, for example, it simply changed the emphasis of its ethics program.

"We felt that when we sold the defense business, the types of things that we were concerned about changed," says TI ethics director Jack Swindle. "We were more interested in establishing a values-based program with the rationale that you can't ever write down all the rules. Eventually you get so many rules that they're almost meaningless. We start now by telling people what the values of our company are and we work from that."

Texas Instruments and Raytheon both back up their ethics codes with formal training programs and official channels through which employees can pose questions and voice their concerns.

At Texas Instruments, the ethics course-- "Decision Making at the New TI"--is voluntary. Swindle notes, however, that it is one of the company's most popular courses, and he believes that eventually, most of TI's employees will pass through it. The course generally brings together groups of 25 coworkers, and shows them ways in which the company's values and principles can be used as the basis for making day-to-day decisions.