Commentary: Why has Corporate America Returned to Pre Enron Levels of Unethical Behavior?

Frank C. Bucaro, business ethics expert, explains why unethical behavior in corporate America has reached pre-Enron levels. In reaction to a study just released by The Ethics Resource Center, Frank explores mistrust in leadership, the real truth about ethics training programs and the difference between what is legal and ethical.

If we are to glean anything from new studies and findings on business ethics, it is that we should strive to figure out the reasons why trends are happening and adjust our practices accordingly. If we do not learn from studies like The Ethics Resource Center's recently released '2007 National Business Ethics Survey', certainly we will witness more and more American companies fall to unethical practices. Let's take a look at why it appears that nothing has changed since Enron's fall from grace.

The Ethics Resource Center just released their 2007 National Business Ethics Survey, described as 'the country's most rigorous measurement of trends in workplace ethics and compliance.' (The 2007 National Business Ethics Survey study). This study's findings state that observations of unethical behavior in American businesses are back to pre-Enron Levels. The study also noted that employees' views of corporate social responsibility and ethics has not become any higher priority than it was before the famous collapse of Enron. The report also reveals that American workers are seeing more misconduct but reporting it less. Now let's explore why we are seeing this trend, that takes us back over 5 years!

Three reasons why levels of unethical misconduct are not improving:

1. Corporate America is still viewing ethics training as an expense rather than an investment. Particularly in a slow economy, many companies find themselves in a situation where they need to cut costs. Usually, one of the first things to go is the training budget. And yet, this is the exact time that strengthening the importance of ethics and avoiding and eliminating unethical behavior should be at the forefront of any ethics initiative. This is a 'pay now or pay later' scenario. Either you invest in ethics training to decrease the odds of an ethics violation or you gamble that an ethics violation will not happen and when it does, the price paid is much higher than settlements or fines. Money can not restore damage to reputation, cheapened credibility, and decreased employee morale, just to name a few consequences.
2. Businesses seem to think that if it is legal, it must be ethical...that if we do what the law says, it will be okay. Can you keep the law and still be unethical? Of course. Just because the law says it is okay does not make it ethical. Take the Sarbanes Oxley law for example. This law makes CEOs accountable for the profit and loss statements of their companies. How the profits were made, under what circumstances, who did what, and when to achieve the business goals are not part of the law per se, but are an integral part of their business ethics. Who safeguards the process before it hits the P & L statement?
3. Workers are seeing more unethical conduct and reporting it less. Why? Lack of trust in leadership, belief that nothing will be done, and fear of retaliation, are just a few of the issues. What does this say about corporate cultures, morale, worker productivity, sales, customer service, etc? Morale filters down, not up. Key leaders set the tone at the top. If employees do not trust their leaders, and are afraid of retaliation if they report unethical conduct, this mistrust will affect attitudes and morale. This means that employees will be doing more watching their backs and covering up than anything else. How productive is a company when employees are trying to protect themselves instead of focusing on the job at hand?

It would benefit boards of directors and key leaders to take a serious look at this study, be proactive and supportive. The best results of proactive ethics training would be twofold:

1. It sends the message to all employees that we take ongoing ethics training very seriously.
2. Ethical behavior is everybody's responsibility. The idea that should be communicated and well executed is 'We all have a stake in how this company functions, as well as how our employees behave.'

All employees need to view this as a personal vested interest to ensure that the entire company is clearly focused on doing the right thing at all times. The time is now to invest in ethics training or we will see an influx of American companies and their CEOs in court!

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