A matter of ethics: in organizations where honesty and integrity rule, it is easy for employees to resist the many temptations today's business world offers

Internal Auditor, Feb, 2003 by Dennis Blank

MAINTAINING HONESTY AND INTEGRITY

Paul Makosz, chief executive officer at PDK Control Consulting International Ltd. in Calgary, says that integrity and honesty in business have been threatened by the failures of companies such as WorldCom and Enron. "WorldCom is the classic example, stretching and finally breaking the rules to gain an upward rounding of .OOI cents earnings per share, which met the quarterly target," Makosz says, "but in the process, destroyed all honesty and integrity and decimated the retirement savings of millions of shareholders."

Makosz, who is also chairman of The IIA's International Ethics Committee, says he hopes there is a real turnaround in the business community in applying codes of conduct. "Honesty and integrity are essential to our political, economic, and social systems," he says. "Every manager, director, and employee needs to apply effort and intelligence in maintaining these values."

Makosz says he has been actively promoting ethical discussions within PDK and in public presentations to others. "Everyone understands that a firm that promotes good ethics and teaches in this area needs to be squeaky clean itself," he says. "When a dilemma arises, it is usually recognized quickly and brought to me or to a group meeting for discussion and resolution."

It is important to encourage employees to speak up and for top executives to have the humility to listen, Makosz adds. "I believe CEOs are subject to greater pressures and are more aware of far-reaching consequences arising from their decisions," he says. "This makes us more, not less, vulnerable to an ethical breakdown than someone with a more routine occupation."

At Valero Energy Corp., CEO Bill Greehey leads by example. According to Jack Ligon, vice president of internal audit, Greehey has established high company ethics for the 21,000 employees. "We have very high standards," Ligon says.

"Personal character plays a big part in how auditors and chief financial officers (CFOs) conduct themselves," says Ligon, whose company runs 12 refineries and thousands of retail gas station outlets from its corporate headquarters in San Antonio. "I have to be completely above reproach in everything I do.

"My personal values are what my parents taught me, and they are totally aligned with my employer. It is a chance to model those values for the folks who work with me and my peers throughout the organization."

Valero is in the process of establishing a hotline for employees to call if they are ever concerned about an issue. Complaints will be handled by a third-party firm that reports to human resources. "All employees are required to acknowledge that they have read the conflict of interest policy," Ligon says. "Reminders are sent to them so it keeps it on everybody's mind."

At Tellabs, the telecommunications manufacturer based in Naperville, Ill., "the overall theme of doing the right thing is really lived every day," says CFO Joan Ryan. Because the company does business in over 100 countries, communication is critical, Ryan says. Employees also have access to an 800 number that allows them to report any type of illegal behavior.