Nearly 20 years ago, amid the savings and loan scandals, Viking
Press published "Beyond the Bottom Line: How Business Leaders Are
Turning Principles into Profits," by Tad Tuleja, one of a boatload
of books at the time that addressed business ethics and honesty in
the workplace.
Here we go again.
As the white-collar trials shift into high gear (See PR NEWS,
Jan. 26, 2004) another spate of business management books are
swarming the marketplace, warning that because of the late-1990s
financial scandals -- as well as underlying economic trends --
companies must rethink accountability with their stakeholders.
Along with the flurry of books have been numerous studies showing
that the corporate scandals have started to take a toll on consumer
trust and employee relations.
The major difference between the S&L scandals of the 1980s
and today's scandals, however, is that in the '80s the Federal
government insured depositors of up to $100,000 for each bank
account. In the current scandals, which have had a much more
corrosive effect on corporations, the slew of corporate
bankruptcies has resulted in the total loss of thousands of
employee pension funds.
A recent survey from human resources consulting firm Watson
Wyatt Worldwide, for example, should be cause for concern for
senior PR execs who have to make sure that, when it comes to
business ethics, communications between top management and the
rank-and-file is in the right tone.
The survey of 1,200 U.S. workers, part of Watson Wyatt's ongoing
Works/USA Study, found that 72% of employees believe their
immediate bosses behave with honesty and integrity. But they are
somewhat even less sure about top management - and even their
co-workers. (See charts on page 6.) Asked to elaborate, workers
were far more likely to cite hypocrisy and favoritism (62% for
those who question top management's integrity cite this factor)
than dishonest financial dealings (8%) and insider trading or
Securities and Exchange Commission violations (2%).
Since the advent of Sarbanes-Oxley in 2002, "Most companies are
doing a good job of communicating their ethics policies, which is
good news," says Ilene Gochman, national practice leader of
organizational measurement at Wyatt. The problem lies not in
distribution - but in changing employees' behavior. Depending on
the corporate culture, "many employees feel [the ethics policy] is
just a piece of paper and that if they speak out against senior
management they may get penalized."
Gochman stresses that PR execs can play a pivotal role in
creating an open environment in which employees won't feel cowed if
they want to speak out against what they deem ethical lapses. That
starts, of course, at the top. "PR people have to get their CEO in
forums in which they can show by example," Gochman says. "That may
be a video or an 'Ask the CEO' newsletter. But you have to use a
media format that matches the [CEO's] communications skills
set."
As the economy continues to show signs of life, efforts to
improve business ethics internally take on much more significance.
The reason? With opportunity expanding in the workplace, employees
who think their companies are less than honorable may decide to
vote with their feet.
"Ethics is the foundation for a successful economy. It isn't
optional," says Linnea McCord, an associate professor of business
law at the Graziadio School of Business and Management, Pepperdine
University. On March 18 and 19 McCord will host a national Public
Relations Society of America sponsored seminar titled, "Business
Ethics for the PR Professional: The Good, the Bad and the
Spin."
The program, with an overview of the ethical principles that
underlie the American legal system, will feature several
high-profile PR executives discussing real-world ethical dilemmas
as well as issues focusing on corporate behavior. (Go to www.prsa.org for more information.)
PR execs have to "help the CEO understand the essential
importance of ethics and how ethical conduct impacts the bottom
line, which can quickly go from black to red," McCord adds.
A few of the authors who have contributed to the latest wave of
business books say PR is facing a sea change vis-a-vis the rest of
the enterprise. "PR is at a turning point," says Don Tapscott,
co-author, with David Ticoll, of "The Naked Corporation: How the
Age of Transparency Will Revolutionize Business" (2003, Free
Press.) "As a function it will become either less relevant as
transparency evolves or it will move up the food chain and be much
less about messaging and more about engagement, the values of the
corporation and the business strategy."
Echoing what's fast becoming a mantra among corporate
communications analysts, Tapscott adds: "Spin is dead, and PR
people can't just 'squirt ink' anymore but have to think about
behavior that's appropriate for the company, and that comes with
managing transparency rather than just 'spinning.'"
Shel Horowitz, author of "Principled Profit: Marketing That Puts
People First" (AWM Books, 2003), added that PR professionals need
to spotlight any corporate ethics initiatives into a context of the
company doing the right thing. He says the implosion of accounting
firm Arthur Anderson, which had been Enron's accounting firm and
one of the so-called Big Six Accounting firms, is the worst-case
scenario of what can happen when PR execs fail to speak up when
faced with unethical business practices.
"In a sense, Arthur Anderson was providing PR to Enron," he
says. "If there is an [ethical] problem, PR execs need to push CEOs
to isolate the people who are responsible. If [the problem] goes up
the hierarchy the PR exec needs to take a stand and that's not
always comfortable."
Contacts: Ilene Gochman, 312.890.8241, [email protected];
Shel Horowitz, 413.586.3288, [email protected];
Linnea McCord, 818.501.1624, [email protected]; Don
Tapscott, 416.863.8801, [email protected]