But most people don’t know how to evaluate a company. They’ll get some help from new rules designed to shed light on corporate morality, including a new federal law that tightens accounting rules and toughens penalties for white-collar crime. And the New York Stock Exchange now requires listed companies to create written ethics codes for their employees and boards. But you’re the one who goes to work every day, and the final determination may be up to you. Is your company ethical?
Sniff the air. There’s nothing more telling than the intangibles of corporate culture, says Barbara Ley Toffler, an ethics expert hired away from Harvard Business School in 1995 to create a corporate-ethics consulting practice for Arthur Andersen. She noticed that the ethics programs and training she recommended to clients were absent from her company. “There was enormous pressure to make money, sell more services and keep the client happy, no matter what,” she remembers. She quit in 1999, and is writing a tell-all book. (Andersen declined to comment on Toffler’s assertions.)
Question authority. Ethical companies have formal systems–like clear channels for whistle-blowers–to handle troubling questions. Linda Trevino, a Pennsylvania State University business professor, tells workers to ask themselves questions like these: Is integrity rewarded with raises and promotions? Does the top brass get the same ethics training as the rest of the company? Would you know what to do if a client wanted a kickback? And try the Corporate Integrity Checklist, from Crossroads Consulting, a Vancouver firm (crossroads programs.com/corporate.html), and the Fraud Prevention Checkup, from the Association of Certified Fraud Examiners (cfenet.com).
Decode the code. Just about every company has an ethics code, or will soon. But is it worth the acrylic it’s etched on? A serious ethics code spells out company values specifically. Lockheed Martin, for example, prohibits employees from giving clients gifts worth more than $100. If there’s no code, that’s a bad sign, too.
Do some sleuthing. Articles about your company in local and national newspapers can give some insights, as will minutes of board meetings, which are typically available through company investor-relations offices. At Enron, for example, the board twice voted to suspend the ethics code and conflict-of- interest rules. Organizations that focus on socially responsible investing rate companies on issues like environmental protection and workers’ rights, but these aren’t always synonymous with “ethics.” You can check your company’s report card at Coop America, –a consumer group (responsible shopper.com), and the Corporate Social Research Center (social funds.com/csr/index.cgi).
Look at the lists. Several magazines create lists that purport to name the best corporate citizens or employers in America. Among them are Business Ethics (business-ethics.com), Working Mother (working mother.com) and Fortune (fortune.com). But don’t bet your 401(k) on a list alone. After all, Fortune admitted that Enron was a “stalwart” of its Top 100 Companies list.
CORRECTION
In the Sept. 23 Tip Sheet article “Is Your Boss Honest?” we said that Barbara Ley Toffler, an ethics expert, was hired away from Harvard Business School in 1995 to work for Arthur Andersen. In fact, Toffler was working for her own consulting company at the time.
