It has been more than two decades since a Business Roundtable study debunked the myth that there is an inherent contradiction between ethics and profits, emphasizing that sound values, purposes, and practices are the basis for long-range achievement and bottom-line success. Although this finding was deemed somewhat controversial by some advocacy groups seeking financial reforms in the large industrial community, the engineering profession as a whole embraced the Roundtable report, Corporate Ethics: A Prime Business Asset, and continues to do so today.
With information gathered from 100 companies, the Roundtable cited the crucial role of chief executive officers and top managers in establishing a strong commitment to ethical conduct and providing constant leadership in tending and reviewing the values of the organization. Equally important, there should exist a deep conviction among managers that a good reputation for fair and honest business is a vital corporate asset that all employees should nurture with the greatest care.
The study further recognized the need for corporate obligations to extend to a variety of constituencies or stakeholders, and that these responsibilities are key to the ethics of an organization. Customers, shareholders, employees, suppliers, local communities, and the larger society are basic constituencies that must be considered in planning and evaluating ethical policies and actions. Carrying out all corporate obligations requires a comprehensive ethical perspective that is understood and acted upon throughout every sector and all levels of an organization.
"It may come as a surprise to some that corporate ethics programs are not mounted primarily to improve the reputation of business,” the report noted. “Instead, many executives believe that a culture in which ethical concerns permeate the whole organization is necessary to the self-interest of the company. This is required, they feel, if the company is to be able to maintain profitability and develop the necessary competitiveness for effective performance."
While no organizational code or standard can address all potential ethical issues, the following provides a good foundation of ethical areas or topics to consider:
- Fundamental honesty and adherence to basic laws and moral conduct;
- Product safety and quality;
- Health and safety in the workplace;
- Conflicts of interest;
- Employment policies;
- Fairness in selling and marketing practices;
- Financial reporting;
- Supplier relationships;
- Pricing, billing, and contracting;
- Trading in securities and using inside information;
- Payments to obtain domestic or foreign business;
- Acquiring and using information about others;
- Political activities;
- Protection of the environment;
- Intellectual property and security of proprietary information;
- Protection to employees for reporting violations; and
- Disciplinary action for ethical misconduct.
In 2009, the Arthur W. Page Society and the Business Roundtable Institute for Corporate Ethics released a new related report, The Dynamics of Public Trust in Business: Emerging Opportunities for Leaders. As the title suggests, the document examines three core dynamics of trust—mutuality, balance of power, and trust safeguards—and then proceeds to discuss successful trends in conducting responsible businesses, eliminating or reducing mistrust, and engaging public confidence.
The report reviews several fundamentals. First, to build and sustain trust at the most basic level, an organization must manufacture and market quality products or services that are reasonably priced. A business also needs to provide steady jobs in a safe and healthy environment and to support community institutions that serve both employees and customers. Finally, an organization must provide shareholders with a reasonable return on their investments. Beyond these fundamentals, the report recommends specific actions that industry leaders might consider in building mutuality, balancing power, and creating trust safeguards within their organizations:
- Create a set of values that define and clarify what the business enterprise and its stakeholders are at their root or foundation and then work to ensure that these values are adhered to consistently;
- Build and manage strong relationships based on mutual trust with mediating institutions;
- Embrace transparency and open communication;
- Work within a targeted business sector to build trust in that sector; and
- Reinvest in the trustworthiness of the organization by making a commitment to enhance the core contribution that the organization makes to society at large.
It is fact that in changing any standard of living for the better, globally or domestically, risks must be taken, and further responsibilities must be accepted by everyone—engineers, scientists, and the public alike. However, because basic engineering principles are not always consistent with perceived principles of safety and public health, the public must always be informed prior to entering unknown territory, and that discussions of risks vs. potential benefits call for transparency and forthright explanations.
Moreover, ethical conduct is often equated with moral responsibility and professional integrity. William Scheessele, president and CEO of Mastering Business Development Inc., a business consulting services firm based in Charlotte, N.C., says it is evident that some of the underlying errors in thinking, responsibility, and judgment still remain from the “new economy” mentality that tarnished the reputation of solid, old guard industries.
The Sarbanes-Oxley legislation passed in 2002 has not fostered long-term ethical choices, either, according to Scheessele. In an article titled “Ethics in the Energy Industry Revisited,” he notes that the ethics issue goes much deeper into the character of a professional, and that integrity cannot be legislated into adherence at any price. The energy industry requires well-qualified technical professionals with the knowledge base to solve current and future global energy challenges.
Following the Enron scandal, the power industry took a major step forward by looking internally to its people, largely engineers and technical professionals with a higher set of standards for their actions, Scheessele explains. “It is from our experience that the more highly technical an industry is, the better to encourage the technical professionals on staff to be at the forefront of developing business and growing the bottom line,” he contends. “This is true in our opinion because . . . technical professionals know what problems and issues need to be addressed for clients.”
Engineers and scientists look externally to solving client problems, Scheessele points out. Sales people look internally at making quotas. In learning to think like a business person, an engineer can look at the business ramifications of a technical issue and think in an externally focused way from the client’s point of view to find a solution to the problem. “It’s the notion that serving the client should be placed above profit that is inherent in the engineering profession and believing that in the long run, these are not two mutually exclusive concepts,” he emphasizes.