Ethics topic gets heated response

After six years of writing for this column, I have had few topics evoke more reader response than my last article titled, "Entrepreneurs need to set ethics policy" (March 12).

Those responding were passionate about the topic. One reader, a company founder, told of an ethical dilemma he faced during a company staff meeting at which 120 employees were present. Company sales had been slow during the year. The CEO had announced that the company was close to a deal with a customer that produced pornographic materials. The reader recalled: "He (the CEO) wanted to see if anyone had a problem with that (contract). He asked for a show of hands. Some cheered. Others muttered, but no one raised their hands in opposition. Mine went up, and I said, 'We can do the deal, but I won't be working here anymore if we do.' "

The contract was not signed, and the issue of whether to take the contract was never brought up again around the company. I have empathy for this reader. A company staff meeting is not the place to develop a corporate ethics position.

Many readers requested additional ideas on developing an ethical corporate culture. Gregory Dess, in the book "Strategic Management," suggests that a company needs to make a distinction between a compliance-based approach and an integrity-based approach to developing ethical corporate conduct.

He defines the two as follows: "Compliance-based approaches are externally motivated — that is, based on the fear of punishment for doing something unlawful. On the other hand, integrity-based approaches are driven by a personal and organizational commitment to ethical behavior."

Leadership for the compliance-based approach is lawyer-driven, while management (with the aid of lawyers, human resource professionals and others) drives companies with an integrity-based approach. The objective of compliance is to prevent criminal misconduct, as contrasted with the integrity-based objective of encouraging responsible conduct.

Dess suggests that four elements need to be in place before an organization can become ethical:

• Role models — Ethical behavior must begin in the executive offices. Few people in a company can have a greater impact on ethics than the CEO. Enron's problems came from the most senior people who were responsible for creating an atmosphere of greed and corruption.