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Corporate ethics under new light

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An attractive title and good pay weren't Kathleen Britton's only priorities during her recent job hunt. She says she was equally keen to find a new employer with a squeaky clean reputation.

Britton, 45, was an assistant vice president at a New York brokerage house and was laid off in December, she says, partly because she raised concerns about certain practices in the investment-banking unit. Regulators later interviewed her for a related investigation.

When Britton joined the firm in 1995, she says she ignored her qualms about a questionable prior dealing, which had been settled with authorities, because the brokerage house enjoyed widespread respect in the industry. She says she expects to accept a position next month at a big financial-services firm, and this time, she says, she checked out her new employer much more thoroughly. "I trusted my ethics and my judgment," she says.

The current wave of corporate scandals is leading more job seekers to go to greater lengths to gauge would-be employers' ethical standards and practices. They are poring over Internet message boards looking for staffers' appraisals of management, checking financial histories and seeking meetings with present and past employees. The downside: It's impossible to uncover everything about a corporation's moral weak spots in advance.

Gun-shy candidates say they fear that joining an unethical employer could endanger their tenure, retirement savings and self-esteem. As countless Arthur Andersen LLP staffers are discovering, working for a business with a damaged reputation can impede future job prospects by leaving a black mark on a resume.

Many companies have begun to notice heightened concerns about ethical standards among job seekers and recent hires. "With respect to new employees that have come in the last few months, I've had seven to nine who've said to me that one of the reasons they came to UTC is that they had researched our ethics program," says Patrick Gnazzo, vice president of business practices for manufacturer United Technologies Corp. in Hartford, Conn. "I haven't noticed that before in any great degree."

Gnazzo anticipates a further increase in ethics-related inquiries when United Technologies recruits at business schools in the fall. Describing the company's dedication to high ethical standards "is a great recruiting tool," he says. In 1986, United Technologies started an "ombudsman-dialog" program that lets employees inquire anonymously about ethics issues. The program has received nearly 56,000 inquiries.

Some job seekers figure out how well a company puts its values into practice from clues they collect during job interviews. A red flag should go up, for instance, if a hiring manager promises an excessive severance package after a layoff without consulting a higher-level executive. "That tips you off about a lack of controls," says Richard Bayer, chief operating officer of the Five O'Clock Club, a New York national career-counseling organization.

Despite their more extensive checks, some new hires don't discover corporate ethics shortcomings until after they arrive. Mark Tremont says he thought he had thoroughly investigated a West Coast startup before he became its chief financial officer several months ago. The 54-year-old executive consulted his personal network to learn about the company's finances and business practices. He also spent about two weeks in face-to-face discussions with top managers there.

Once he started work, however, Tremont says that he grew uncomfortable with how the chief executive had handled several past financial transactions. The CEO "didn't lie, he didn't do anything illegal," Tremont says. "He just dealt in a gray area I didn't want to deal in."

Tremont says he quit three weeks after he arrived. "My personal reputation was worth more than anything," he says. Now, the Bellevue, Wash., resident says he is doing volunteer work part time while he searches for a position.

Other applicants putting would-be employers under a microscope feel frustrated by how little information they can glean in advance. Some businesses resist prospects' inquiries about their less-than-comprehensive ethics programs. Job hunters should view such hesitation as another reason to look elsewhere, experts suggest. "If an organization is uncomfortable with you asking questions, then I would say that that's a sign right there," says Linda Trevino, a professor of organizational behavior at Pennsylvania State University's Smeal College of Business.

Trevino gives her business students questions to help clarify a company's culture and the effectiveness of its ethics program. She believes it's more important than ever to conduct this "ethical culture audit."

The list includes: "Is integrity emphasized to recruits and new employees?" and "Are people of integrity promoted? Are means as well as ends important?"

At the nation's biggest companies, it's relatively simple for applicants to find out official ethics policies. Most have adopted ethics codes and describe their ethics programs on corporate Web sites.

But job seekers shouldn't be overly impressed simply because a company has a code, cautions Edward Petry, executive director of the Ethics Officer Association, a professional group in Belmont, Mass., with 805 members. According to Petry, it's more important to find out how easily employees can get guidance on ethics issues and what kind of ethics training a company offers.