Ethics and Business Conduct
Business Ethics Training
Program
California State University, Long Beach
Pamela Garretson
Director, Office of Ethics and Business Conduct
Boeing Engineering, Operations, & Technology
13 April 2007
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Boeing: What We Do Today
Ethics and Business Conduct
 Design and manufacture commercial jetliners
– Boeing 7-series of airplanes leads the industry
 Produce weapons systems and networking technology
– World’s largest designer and manufacturer of military aircraft
– Provide services and support to governments worldwide
– World’s largest provider of commercial and military satellites;
leading rocket manufacturer; and NASA’s largest contractor
 Integrate large-scale systems; develop network-centric solutions
 Develop advanced technology defining the future of aerospace
As a company we connect and protect people
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Ethics and Business Conduct
The Business Case for Ethics
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Definitions
Ethics and Business Conduct
• Ethics
• Principles of right or good conduct
• A system of moral principles or values
• The study of the general nature of morals and the specific
moral choices to be made by the individual in relationship
with others
• The rules or standards governing the conduct of the
members of a profession
• Integrity
• Rigid adherence to a code or
standards of values
• The quality or condition of being
whole or undivided; completeness
Source: The American Heritage Dictionary, Houghton Mifflin Company, 1982
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Ethics in Business
Ethics and Business Conduct
• In the long-run, business success results from providing highquality products and services that meet market needs
• Required behavior  Fair Dealing
• Threats to “Fair Dealing” in the workplace:
• Business gratuities: offering and accepting
• Marketing practices and customer/supplier relations
• Employment of former employees of competitors and
former government employees
• Personal and business relationships and behaviors
– Retaliation
– Hiring/promotion
• Use of Company assets and resources
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Building the Business Case for Ethics
Ethics and Business Conduct
 Protect and enhance company reputation
 Limit government intervention and avoid litigation, penalties,
and fines
 Increase ability to attract employees to a preferred place to
work
 Enhance employee morale and productivity
 Identify and resolve issues earlier through employees freely
engaging and surfacing ideas resulting in fewer missteps,
less rework, and fewer corrective actions
 Improve customer perceptions, facilitating “trust” as a
contractor selection tie-breaker
 Increase investor confidence
 Achieve positive bottom line impact
Can differentiate from the competition
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Ethics and Business Conduct
Risks to Ethical Conduct
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The Age Factor
Ethics and Business Conduct
Would you cheat on an important exam?
• Elementary school students
• Middle school students
• High school students
• College students
21%
53%
65%
75%
Source: 2000/2001 McCabe/Rutgers Survey
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Moral Uncertainty of Students between 13 and 18
Ethics and Business Conduct
Would you act unethically just to get ahead, even
if you knew you wouldn’t get caught?
• Increased by 40% since 2003
59% No
Have you in fact engaged in unethical behavior in
the last year?
• Lying
69% Yes
• Downloading songs without paying
34% Yes
• Cheating on tests
22% Yes
Source: 2006 Junior Achievement/Deloitte Teen Ethics Survey
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Moral Uncertainty of Students between 13 and 18 [cont’d]
Ethics and Business Conduct
How would you rate the ethics of your peers?
• They behave unethically
•
44% Yes
Peers ranked below doctors, teachers,
professional athletes, and business
leaders
Do you feel that significant pressure to succeed,
no matter the cost, will remain the same or even
get worse when you join the workforce?
81% Yes
How many of you feel only somewhat or not at all
prepared to make ethical decisions?
29% Agree
Source: 2006 Junior Achievement/Deloitte Teen Ethics Survey
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Risks to Proper Ethical Conduct
Ethics and Business Conduct
• Pressures, such as:
• Schedule deadlines
• Sales goals
• Cost reductions
• Desire for career advancement or personal gain
• Fear of “raising a red flag” even when something doesn’t feel
right:
• Not wanting to rock the boat
• Lack of courage or skills needed to speak up
• Fear of retaliation
• Intentional decision / rationalization
• “Everyone does it”
• “No one will be hurt by it”
• “I deserve it”
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Factors That Increase Likelihood of Misconduct
Ethics and Business Conduct
Culture of Retaliation and Fear of Speaking up
Ethical Pressures
Colleagues Willing to Compromise
Ethics for Power & Control
Poor People and Operational Skills of Manager
Poor perception of Organizational Justice
Poor Ethical Leadership
Demonstrated by Senior Executives
Unsafe and Uncomfortable Work Environment
Lack of Empathy by Colleagues
Low Commitment to Company
Discontent with Job
Source: Compliance and Ethics Leadership Council survey 2006/2007
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Ethics and Business Conduct
How Companies Respond
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Elements of a Formal Ethics Program
Ethics and Business Conduct
• Code of Conduct
• Ethics training for employees
• Avenue for employees to seek ethics advice
• Anonymous reporting
• Consequences for misconduct
• Ethical values measured in Performance Management system
Source: National Business Ethics Survey 2005, Ethics Resource Center
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Impact of Formal Programs on Organizational Outcomes
Ethics and Business Conduct
90%
84%
All 6 Elements
Present
Fewer Than 6
Elements
No Elements
Present
80%
70%
60%
50%
66%
53%
43%
44%
40%
28%
30%
30%
19%
16%
20%
15%
12%
10%
5%
0%
Observe misconduct
Pressure to Compromise
Report misconduct
Satis. w/response
Source: National Business Ethics Survey 2005, Ethics Resource Center
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Strengthening Culture Through Actions
Ethics and Business Conduct
• Ethics-related actions …
• Talking about ethics in the workplace
• Keeping promises and commitments
• Modeling good ethical behavior
• Holding each other accountable
… have a significant effect on the organization’s ethical culture
Sources:
2005 Defense Industry Initiative (DII) Survey, Ethics Resource Center
2005 National Business Ethics Survey (NBES), Ethics Resource Center
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Impact of Culture on Outcomes
Ethics and Business Conduct
90%
83%
80%
70%
Strong Culture
60%
Weak Culture
50%
66%
50%
43%
40%
30%
30%
20%
20%
14%
10%
3%
0%
Observe
misconduct
Pressure to
Compromise
Report
misconduct
Satis.
w/response
Source: National Business Ethics Survey 2005, Ethics Resource Center
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Ethics and Business Conduct
Leadership
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Ethical Leadership
Ethics and Business Conduct
• When you think of an ethical leader in your life, in school, or in
the public, who comes to mind . . .?
• How do you recognize ethical leadership in people?
• How do they think?
• What do they do?
• What’s the impact on others?
• What difference does it make?
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Boeing Management Model
Ethics and Business Conduct
CHARTS THE COURSE
SETS HIGH EXPECTATIONS
Initiative Toolkit
Stock
Price
Financial
Objectives
 Move Toward
World-Class:
Margins,
Earnings,
Cash
 Customer
Satisfaction
Productivity
 Competitiveness
Financial
Performance
 Economic
Profit
Stakeholders
Performance
to Plan
 Employee
Accountability




Employees
Customers
Shareholders
Communities
Attaining World-Class Growth and Productivity:
• Committed, performance-driven management
• Maximize learning across the enterprise and from outside
• Adapt and apply learnings in clearly defined businesses
LIVES BOEING VALUES
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FINDS A WAY
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INSPIRES OTHERS
DELIVERS RESULTS
Growth
Provide Leadership
Ethics and Business Conduct
Promote an organizational culture that encourages ethical
conduct and a commitment to compliance with law*
Set the Tone at the Top
How?
•
Set clear expectations of employees
•
Demonstrate leadership action – lead by example
through ethical behavior
•
Promote a culture of openness that prevents “group
think” and pressure to conform
•
Use value-based decision making
•
Support a formal ethics program
•
Focus on ethical culture
*Source: U.S. Sentencing Guidelines
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Open Environment of Transparency and Accountability
Ethics and Business Conduct
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Summary
Ethics and Business Conduct
• Ethics is a business imperative
• Can drive a competitive advantage
• Ethics programs drive organizational outcomes
• Leadership has an impact
• Incoming workers may bring differing viewpoints
• Ethical cultural improvements directly correlate to specific
positive ethical actions
• Each individual makes a difference!
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Ethics and Business Conduct
Questions
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