Ethics Codes Can Help Businesses Avoid Pitfalls Clear Guidelines Offer Best Protection, Expert Says

Dawn-Marie Driscoll was schooled in ethics while employed as an attorney for a large Boston department store.

The store’s security force, which she oversaw, turned in a huge number of shoplifters, who usually were arrested and prosecuted.

She never questioned the security force’s incredible success rate - until she received a call from a man whose wife was convicted of shoplifting. The caller raised questions about the security force’s actions. When Driscoll looked into it, she uncovered massive fraud.

Security guards, operating in a system that rewarded guards for the number of apprehensions, were levelling charges against innocent people.

“We had built in incentives to lie and cheat. A bad infrastructure caused good people to do bad things,” Driscoll told an audience of 100 Tuesday at the Spokane Club. Driscoll’s address was the sixth annual Gonzaga University Aram Lecture on Business Ethics.

Since her department store experiences, Driscoll has become a scholar and consultant in business ethics. She’s an executive fellow and advisory board member at the Center for Business Ethics at Bentley College in Waltham, Mass., and runs her Florida-based consulting firm, handling ethics issues, corporate governance and career development.

Many businesses didn’t concern themselves with ethics in any official manner until the 1970s, Driscoll said. That’s when the press uncovered a series of scandals, most notably bribery within the defense industry, that made businesses realize they need ethics codes to guide their actions, she said.

The 1970s saw a revolution in attention to ethics codes. By 1979, 75 percent of Fortune 500 companies had codes written into company policies. Today, 90 percent of Fortune 1000 companies have ethics codes and one third of those firms have full-time ethics officers.

One question Driscoll asks herself when tackling an ethical issue is: “Is this the case of a few bad apples or is it the barrel itself?”

Businesspeople frequently must make snap judgments on questionable ethical matters, Driscoll said. With no code in place to guide those decisions, bad choices can be made.

Driscoll cited as examples the ethical crises suffered by Dow Corning, with its silicon breast implants, and United Way of America, with its former president William Aramony, who is serving a seven-year prison sentence for conspiracy, fraud and tax convictions.

United Way of America board members had heard rumors of problems, but ignored them because they liked Aramony, Driscoll said. Dow Corning’s board could have pulled the implants off the market, but instead deferred handling to the legal system, Driscoll said.

The boards of trustees of both companies would have been better guided if they’d followed codes of ethics instead of trying to avoid the problems or allowing attorneys to handle them, Driscoll said.

The reputations of both were damaged by controversy, and Dow Corning filed for bankruptcy due to lawsuits over the breast implants.

“Don’t just listen,” Driscoll urged the audience of businesspeople. “It takes courage to say, ‘What’s the right thing to do?”’

, DataTimes