- The Washington Times - Friday, November 24, 2000

Ed Petry sees the recent deadly tire failures linked to Bridgestone/Firestone Co. as an opportunity for his organization.
Mr. Petry is spokesman for the Ethics Officer Association, a Belmont, Mass.-based trade group that promotes ethical conduct by organizations. Several corporations in the Washington area are members.
Each time a major corporate scandal is reported, the Ethics Officer Association's membership seems to grow, Mr. Petry said.
"Unfortunately, it sometimes requires a scandal or a large fine before organizations realize they need to take these additional steps of creating an ethics office."
The corporate ethics officer, an almost unknown title a decade ago, is becoming a first line of defense for companies trying to avoid legal and financial catastrophes.
Since a dozen defense contractors united to form the Ethics Officer Association in 1992, its ranks have grown to more than 720. Members include Lockheed Martin Corp., Raytheon, United Technologies, New York Life Insurance and International Paper.
The first defense contractors were spurred by charges of waste and fraud. They were followed by insurance companies trying to reduce their liability and, more recently, health care companies concerned about Medicare abuse.
An ethics officer's role is "to ensure that the company has a serious commitment and a consistent follow-through when it comes to ethical business practices," Mr. Petry said. Typically, they help employers figure out strategies to avoid misconduct that leads to product failures, violations of environmental rules, internal conflicts or even criminal liability.
One of the most active members is Lockheed Martin, a major defense and aerospace contractor. From her office at Bethesda, Md., headquarters, Vice President of Ethics and Business Conduct Nancy Higgins rides herd on the ethics of 131,000 employees nationwide. She describes herself as someone who tries to "make sure Lockheed Martin employees know we have principles they must obey."
Before her first job as an ethics officer with Boeing Co., Mrs. Higgins worked in the company's legal department as a trial lawyer, a job she found frustrating. "It's a lot more rewarding to help people avoid getting into trouble than getting them out of trouble," she said.
Lockheed Martin's ethics officer has reported directly to the chief executive officer since the company was formed in 1995 by Lockheed Corp.'s purchase of Martin Marietta Corp. Mrs. Higgins oversees a network of 45 ethics officers spread throughout Lockheed Martin's network of plants and offices.
Her daily routine consists of advising investigators on how to proceed, conducting employee-training seminars on what she describes as "company values" and meeting with top executives to plan strategies for avoiding problems.
Since the 1995 merger, Lockheed Martin's ethics office has investigated about 10,000 allegations of wrongdoing. About one-third of the reports were confirmed and led to disciplinary action, which included reprimands, suspensions or terminations. Many of the investigations were prompted by anonymous tips to the ethics hot line, an 800 telephone number for employees.
Some of Lockheed Martin's company values are incorporated into a board game the company has used to train employees, called the Ethics Challenge. Teams of employees win points by giving the most ethically correct answer to hypothetical questions. As they earn points, they move game pieces modeled on the comic strip "Dilbert" closer to the center of the board. The first team to reach the center wins.
"The answer is not as important as the discussion," Mrs. Higgins said.
One question says: "In a department meeting, your supervisor takes credit for some excellent work done by a colleague who is absent. What do you do?"
A response that gets no points is: "Put the word out to your fellow workers as to who really did the work."
The response that earns three points says, "Seek a private meeting with the supervisor in order to make sure your colleague gets the proper credit."
The most correct response, which wins five points, says, "Inform your colleague as to what took place, and let him take whatever action he desires."
Lockheed Martin uses similar scenarios in a mock newspaper. Called "Ethics Daily," the newspaper describes ethical problems that ask employees to take action. It also lists company principles that employees must follow.
For some corporate executives, ethics officers could be their best insurance against jail time and bankruptcy. In 1991, the Justice Department issued sentencing guidelines that promised more lenient treatment for convicted executives whose companies maintained ethics programs.
Five years ago, the Delaware Court of Chancery where many companies are incorporated ruled that corporate directors could be personally liable for employees' wrongdoing if they failed to have programs to ensure compliance with the law. By no coincidence, the number of ethics officers has grown with the increased risk of criminal and civil liability.
A 1999 Conference Board report found increasing involvement by directors of 124 companies in 22 countries in setting ethics standards. Only 21 percent participated in setting the standards in 1987, increasing to 41 percent in 1991 and 78 percent in 1999. The Conference Board is a New York-based business research and networking organization.
At the World Bank's Washington headquarters, ethics officer Anita Baker says she must juggle the risk of cultural conflict with the employee training that comes with her job. To avoid communication problems, the World Bank uses about a dozen offices as outlets for employees to voice grievances and to monitor ethics violations.
"We have a system in place that allows our staff to go to a variety of people depending on what their concern is," Miss Baker said. "That's particularly important in a multinational organization. We have more than 180 countries represented."
The other offices get involved with employees when problems arise, Miss Baker said. Her job is to use training and information to prevent problems.
"My job is to be proactive," Miss Baker said. "The legal department is reactive."

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