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Grist: The New Lust for Integrity

Ethical accountability now shapes the way companies are judged and valued. This isn't ethics as ornament, as the accessory of the moment. It is a lasting change.
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Like art, hemlines, and marriages, corporations go through cycles. These periodic but powerful historical chapters redefine what companies value as essential to their success and cultural identity. And, in parallel, what their finicky audiences demand from them. One such cycle started with the civil rights movement and elongated itself all the way through women's issues and diversity. Another cycle started as 1980s environmentalism and has remained relevant as postmillennial sustainability. In the 1990s it was aggressive entrepreneurship and the rate of technology adoption.

We are now entering a cycle where ethical accountability will shape the way companies will be judged and valued. This isn't ethics as ornament, as the accessory of the moment, but as a new systemic force and reality. There is no need to recount the litany of abuses that have brought us to this point, from czarlike shower curtain extravagances to showering hedge funds with mutual fund favors. Far more interesting is what we might expect the full and complete shape of the reaction to be. I say that because there is neither a valid nor proven ethical infrastructure in place to track and monitor business ethics. Our putative watchdogs--auditors, corporate boards--have shown themselves to be easily fooled at best and part of the problem at worst.

At the same time, anyone dealing with a corporation--whether a consumer or another business that buys its products and services--will be seeking evidence of ethics, an affirmation that what's going on in the kitchen isn't going to disgust them. To fill the void, here are some ideas for quantifying and validating this new lust for integrity, often by creating a crisper and more illuminating transparency. Some of these might sound a bit aggressive or unrealistic. But a few years ago, was it realistic to predict the bankruptcy of Enron and the disappearance of Arthur Andersen?

A New Privacy Standard: The traditional insulation that nonpublic status bestows is becoming too thick of a wadding. Privately held businesses have a responsibility to their customers and clients, too. But exactly how should these private companies be guided into a new era of transparency? The most enlightened of them should be making their audited financial data public.

The Tax Return Release Program: Why should politicians be the only ones to release their tax returns? CEOs are just as important to our lives and futures. They should do the same.

Fair Profit Code: How much should a company be entitled to make? This is an issue the pharmaceutical industry is struggling to answer, but the question goes far deeper, plunging into the question of whether the free market might be, well, too free. Of course, what's "fair" is complex and involves elements of risk capital, R&D time, and other business realities. An objective third-party group should formulate a Fair Profit Code. A compliance logo would be an effective advertising and marketing tool.

Televised Board Meetings: It's time to start. (Where is C-SPAN when you really need it?) After all, what goes on in the mahogany sanctity of the corporate boardroom is often as important--if not more so--as what goes on in Congress. Not every company is going to have the guts, but imagine the public relations benefits that will accrue to the companies that choose to invite the cameras in.

Commission Disclosure: Commission or salary? This simple distinction tells buyers and customers a lot about the companies they deal with. Don't you feel better knowing that the person pitching you something--whether a complex software package or office furniture--can lead you to the right decision based on what's best for you, rather than what enriches him or her? And why couldn't companies publish a "commission free" message as part of their transparency initiative?

On one hand, we are at the threshold of this kind of radical business reinvention. On the other, CEOs are still cosseted by the notion that this too will pass, and they will rebound to the safe mantle of opacity. But companies--both public and private--that believe that any aspects of their business practices are off-limits will eventually be in the same position as those who thought that they could continue to hold back the tide of other inevitabilities.

Contributor Adam Hanft is president of Hanft Byrne Raboy, a Manhattan-based advertising and marketing firm.




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