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March 16, 2005
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| Former WorldCom executive Bernie Ebbers shown in 2004 while turning himself in to authorities after being charged with masterminding accounting fraud that led to the largest bankruptcy in U.S. history. He was convicted this week. (Getty Images/Stuart Ramson) |
Minneapolis, Minn. — No one could ignore this week's major business headline: The former CEO of WorldCom faces the possibility of spending the rest of his life in prison for fraud and conspiracy.
Minnesota's U.S. Attorney Tom Heffelfinger felt he had to do his duty as keynote speaker of the event. "I was asked how long it would take me to mention Bernie Ebbers," he said near the start of his remarks. "I'm now mentioning it."
Heffelfinger, who sits on a white-collar crime subcommittee for the Department of Justice, reminded the crowd that corporate fraud remains a top priority at the DOJ. He also said even though much of the action on that front has been in New York, his Minnesota office is just as focused on investigating and prosecuting corporate wrong-doing.
But Heffelfinger spent most of his time on the ways companies and executives can avoid ever facing him in a courtroom. "It is a clear part of the policy of DOJ...that healthy, safe and secure markets require that organizations self-police," he said. "We use the carrot and stick approach. When organizations self-police, disclose, etcetera there are carrots available."
Heffelfinger says when a question arises, a company with processes in place to identify and address ethical lapses will be looked upon more kindly.
There are signs corporate America could benefit from a greater emphasis on ethics. One person attending the St. Thomas event was Kyle Lundby, a consultant for the Minneapolis firm Gantz Wiley Research, which conducts a nationwide survey of employees' perceptions of their workplaces.
"If you just take broad brush and look at everyone, you have about two-thirds of people saying their organizations are acting ethically," Lundby said. "So there's obviously a little bit of room for improvment there."
The Best Buy, Target, and Guidant corporations all sent legal department officials to share what their companies do to spread a culture of integrity among employees.
Best Buy General Counsel Joe Joyce gave perhaps the most detailed picture of a company trying to affect its workers' behavior along with their performance. Best Buy recently rolled out a four-hour ethics training course for its officers, which was given in modified form to all employees and the board of directors. Joyce also says the company has followed an emerging corporate trend to tie employee pay to conformity with official company values such as, "learn from challenge and change" and "conduct yourself with humility and integrity."
"When we do performance appraisals, an official part of that performance appraisal is around the values; how we plan to live the values, how we have lived the values," Joyce said. "When we award annual incentive pay, you actually get graded on the values as part of that pay."
While companies certainly spend money inspiring employees to be ethical, it's sometimes less clear if they make any back from the effort. Best Buy's Joyce says for a retailer it's easy to measure. The company surveys store employees regularly, asking whether they trust their fellow employees, whether they have friends at work, and whether their co-workers do a quality job. "There's a direct correlation at Best Buy between stores that have high results in those anonymous surveys, and the individual store profitability," Joyce said.
Joyce also says Best Buy's 40 or so lawyers divide up and specialize in ethical trouble spots that might be pitfalls for a retailing giant. He did not say what those might be.
Kyle Lundby from research firm Gantz Wiley says leadership is vital to preventing ethical troubles. "The people at the top really set the tone. They're the ones that establish the policies and the rules, and clearly they need to walk the talk with regard to ethics because people below them will look up to them as models," he said. "If the leaders of the organization aren't demonstrating ethical behavior then you're more likely to have lapses farther down."
Participants frequently used variations on the phrase, "setting the tone from the top." The conviction of WorldCom CEO Bernie Ebbers this week shows the potential cost of failing to do so.
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