Time for good behavior

The spate of corporate accounting scandals and resulting investigations, arrests and trials--all reported in detail by a relentless news media could easily lead one to believe that ethics doesn't amount to much in business today.

Is that perception true? It all depends, according to Gary Weaver, associate professor of management in the Alfred Lerner College of Business and Economics and a specialist in the area of ethical behavior in organizations.

"Businesses are operating in complex social and political environments that often have a global reach," he says. "Ethical questions that once were dealt with internally are now subject to significant public scrutiny. In response, we've seen American companies over the last 10 to 15 years develop new programs aimed at fostering compliance with the law or, more generally, good business behavior within their organizations. But, one might ask, how sincere are these efforts and what, if any, effect do they have?"

Such questions are natural for Weaver, who holds doctoral degrees in both philosophy and business administration. For more than a decade, he has been thinking and writing about how organizational context affects people's ethical behavior, and his research has been cited widely in publications including The Wall Street Journal, Business Ethics Quarterly and the Academy of Management Review.

His class on ethics and social issues in business has received an award from the University's Executive MBA students, and as a fellow in the Washington, D.C., Ethics Resource Center, he plays a vital role in bringing together scholars and experts from academic, business, government and nonprofit organizations to address issues of ethics in business.

"There have been scandals in the business world long before Enron, and there have been pressures on various industry segments to clean up their act," Weaver says, citing the defense contracting scandals of the 1970s and '80s. "More generally, new federal sentencing guidelines adopted in the early '90s gave companies an incentive to foster good behavior. The penalties suffered by a company convicted of wrongdoing can be reduced if the company can demonstrate that it had an effective initiative for legal compliance and ethical behavior in place.

"These changes, coupled with external pressure such as the threat of government regulation or exposure in the news media, have tended to drive organizations to adopt some kind of ethics program. But, the details of such programs and the extent to which the programs are implemented vary considerably according to the commitment of top management."

For example, he explains, a company that is serious about ethics might incorporate some measure that reflects this concern into a manager's performance appraisal. A company that is less committed may give lip service to a program but not integrate it into the corporate culture.

Weaver recounts one visit to a company during which an executive showed a number of company policies on ethical and legal behavior to a group of low- to mid-level managers. No one in the audience could remember having seen the documents, although they all had signed them as a condition of employment.

"Without broad support, the policies can be forgotten," Weaver says.

Although formal initiatives are critical to fostering ethical behavior, he says, just as important are the unwritten norms that make up the corporate culture. His research shows that such factors as the attitudes and actual behavior modeled by executives and supervisors influence the ethical behavior of their employees.

"Does a company discipline people who violate expectations, or does management wink a little bit?" Weaver asks. "The latter can happen, particularly if the behavior in question is tied to the revenue of the company, as in the case of questionable sales or accounting practices. But, when employees go unpunished for such behavior, a signal is sent to everyone else in the organization that negates whatever principles are framed on the wall."

Managers who expect good news and blind obedience at all times also discourage ethical behavior, he says, because "employees start worrying about self-protection more than anything else." In such situations, an employee who sees something wrong may look the other way to avoid being the bearer of bad news.

Recently, Weaver and co-author Linda Klebe Trevino published the book Managing Ethics in Business Organizations: Social Scientific Perspectives (Stanford University Press), which summarizes much of their work in this area. Some of their findings concern role models in the workplace.

"Based on a series of in-depth interviews, we discovered that managers clearly do have ethical role models for the way they act at work, people whom they look up to and emulate," Weaver says. Notably, he adds, the managers interviewed were consistent in asserting that a role model must demonstrate the same ethical standards in both public and private life.

In a new line of research, he is examining organizations in which employees are geographically dispersed, working from home or in the field via the Internet, and how they develop their business ethics.

"If they spend most of their time at a client site, what kinds of pressures do they feel? Who influences them the most? Are they provided enough guidance by their own company? How can a company ensure that remote employees are holding to legal and ethical policies?" Weaver says. "These are all valid and potentially important questions to ask."

--Mary Jane Pahls