Managing for
Organizational Integrity
by Lynn Sharp Paine
Reprint 94207
By supporting ethically sound behavior, managers can strengthen the
relationships and reputations their companies depend on.
Managing for
Organizational Integrity
by Lynn Sharp Paine
Many managers think of ethics as a question of
personal scruples, a confidential matter between
individuals and their consciences. These executives are quick to describe any wrongdoing as an
isolated incident, the work of a rogue employee.
The thought that the company could bear any responsibility for an individual‟s misdeeds never enters their minds. Ethics, after all, has nothing to do
with management.
In fact, ethics has everything to do with manage- ment.
Rarely do the character flaws of a lone actor fully explain
corporate misconduct. More typically, unethical business
practice involves the tacit, if not explicit, cooperation of
others and reflects the val- ues, attitudes, beliefs,
language, and behavioral pat- terns that define an
organization‟s operating cul- ture. Ethics, then, is as m
uch an organizational as a personal issue. Managers who
fail to provide proper
leadership and to institute systems that facilitate ethical
conduct share responsibility with those who conceive,
execute, and knowingly benefit from corporate
Managers m ust acknowledge their role in shap- ing
organizational ethics and seize this opportunity to create
a climate that can strengthen the relation- ships and
reputations on which their companies‟ success depends.
Executives who ignore ethics run the risk of personal and
corporate liability in today‟s increasingly tough legal environ ment. In addition, they deprive their organizations of the benefits available under new federal guidelines for sentencing organizations convicted of wrongdoing.
These sentencing guidelines recognize for the first
time the organizational and managerial roots of unlawful conduct and base fines partly on the extent
to which companies have taken steps to prevent
that misconduct.
Prompted by the prospect of leniency, many companies are rushing to implement compliance-based ethics
progra m s. Designed by corporate counsel, the goal of
these programs is to prevent, detect, and punish legal
violations. But organizational ethics means more than
avoiding illegal practice; and pro- viding employees with
a rule book will do little to address the problems
underlying unlawful conduct. To foster a climate that
encourages exemplary be- havior, corporations need a co
m prehensive ap- proach that goes beyond the often
punitive legal compliance stance.
An integrity-based approach to ethics manage- ment
combines a concern for the law with an em- phasis on
managerial responsibility for ethical beLynn Sharp Paine is associate professor at the Harvard
Business School, specializing in management ethics. Her
current research focuses on leadership and organization- al
integrity in a global environ ment.
Copyright © 1994 by the President and Fellows of Harvard College. All rights reserved. HARVARD BUSINESS REVIEW March-April 1994
havior. Though integrity strategies may vary in de- sign
and scope, all strive to define companies‟ guid- ing
values, aspirations, and patterns of thought and conduct.
When integrated into the day-to-day oper- ations of an
organization, such strategies can help prevent damaging
ethical lapses while tapping into powerful hu man
impulses for moral thought and action. Then an ethical
fra m ework beco m es no longer a burdensome
constraint within which com- panies m ust operate, but
the governing ethos of an organization.
How Organizations Shape
Individuals’ Behavior
The once familiar picture of ethics as individualistic, unchanging, and impervious to organizational influences has not stood up to scrutiny in
recent years. Sears Auto Centers‟ and Beech- N ut
N utrition Corporation‟s experiences illustrate the
role organizations play in shaping individuals‟ behavior – and how even sound moral fiber can fray when
stretched too thin.
In 1992, Sears, Roebuck & Company was inun- dated
with complaints about its automotive service business.
Consu mers and attorneys general in more than 40 states
had accused the company of misleading customers and selling them unnecessary parts and
services, fro m brake jobs to front-end align- ments. It
would be a mistake, however, to see this situation
exclusively in terms of any one individu- al‟s moral
failings. Nor did management set out to defraud Sears
customers. Instead, a nu mber of orga- nizational factors
contributed to the problematic sales practices.
In the face of declining revenues, shrinking market share, and an increasingly competitive market
for undercar services, Sears management attempted to spur th e perfor man ce of its aut o ce nt ers
by introducing new goals and incentives for employees. The company increased minim u m work
quotas and introduced productivity incentives for
mechanics. The automotive service advisers were
given product-specific sales quotas – sell so many
springs, shock absorbers, align ments, or brake jobs
per shift – and paid a commission based on sales.
According to advisers, failure to meet quotas could
lead to a transfer or a reduction in work hours.
Some employees spoke of the “pressure, pressure,
pressure” to bring in sales.
Under this new set of organizational pressures and
incentives, with few options for meeting their sales goals
legitimately, some employees‟ judgment understandably
suffered. Management‟s failure to
At Sears Auto
failure to clarify the
line betw een
unnecessa ry service
and legitimate
maintenance cost
the company an
estimated $60
clarify the line between unnecessary service and legiti m ate preve nt ive m ai nt e n a n ce, co u pled
with co n s u m er ign ora n ce, left
e m ployees t o c h ar t th eir o wn
courses through a vast gray area,
subject to a wide range of interpretations. Without active m anagement support for ethical practice
a n d mec h a n is ms t o de t ec t a n d
check questionable sales methods
and poor work, it is not surprising
that so m e e m ployees m ay have
reacted to contextual forces by resorting to exaggeration, carelessness, or even m isrepresentation.
Sh ort ly aft er th e allega t io n s
against Sears became public, CEO
Edward Brenn a n ac kn owledged
m anage m ent‟s responsibility for
p utt i ng i n place co m pe n sa t io n
and goal-setting systems that “crea t ed a n e n viro n m e nt i n wh ic h
m is t a k es did occ u r. ” Al th o ugh
the co m pany denied any intent
t o deceive co n s u m ers, se n ior
executives eli m inated co mm issions for service advisers and discontinued sales quotas for specific parts. They also i nstituted a
system of unannounced shopping
audits and made plans to expand
the internal monitoring of service.
In settling the pending lawsuits,
Sears offered co u po n s t o c u sto m ers who had bought certain
auto services between 1990 and
1992. The total cost of the settlem e nt, i n cl u di ng po t e nt ial c u stomer refunds, was an estimated
$60 million.
Contextual forces can also influence the behavior of top manage m e nt , as a for m er C E O of
Beech-N ut N utrition Corporation
discovered. In the early 1980s, only two years after joining the compa n y, th e CEO fo un d evide n ce
s ugges ti ng th a t th e apple ju ice
concentrate, supplied by the company‟s vendors for use in BeechN ut‟s “ 100 % pure” apple juice,
contained nothing more than sugar water and chemicals. The CEO
could have destroyed the bogus inventory and withdrawn the juice from
grocers‟ shelves, but he was under
extraordinary pressure to turn the
ailing company around. Eliminating
the inventory would have killed any
hope of turning even the meager
$700,000 profit promised to Beech-N
ut‟s then par- ent, Nestlé.
A nu mber of people in the corporation, it turned out, had doubted the purity of the juice for several years before the CEO arrived.
But the 25 % price advantage offered by the supplier of the bogus
concentrate allowed the operations head to m eet cost-control
goals. Furthermore, the company
lacked an effective quality control
system, and a conclusive lab test
for juice purity did not yet exist.
When a m e m ber of the research
depart ment voiced concerns about
th e ju ice to opera ting ma n agement, he was accused of not being a tea m player and of acting
like “Chicken Little.” His judgment, his supervisor wrote in an
annual performance review, was
“colored by naïveté and impractical ideals.” No one else seemed to
have considered the co m pany‟s
obligations to its customers or to
have thought about the potential
harm of disclosure. No one considered the fact that the sale of
adulterated or misbranded juice is
a legal offense, putting the company and its top management at risk
of criminal liability.
An FDA investigation t aught
Beech-N ut the hard way. In 1987,
th e co mpa n y pleaded gu il t y t o
selling adulterated and misbranded juice. Two years and two criminal trials later, the CEO pleaded
guilty to ten counts of mislabeling. The total cost to the company – including fines, legal expenses,
and lost sales – was an estimated
$25 million.
Such errors of judgment rarely
reflect an organizational culture and
management philosophy that sets out
to harm or deceive. More
often, they reveal a culture that is insensitive or indifferent to ethical considerations or one that lacks
effective organizational systems. By the same to- ken,
exemplary conduct usually reflects an organi- zational
culture and philosophy that is infused with a sense of
For example, Johnson & Johnson‟s handling of
the Tylenol crisis is sometimes attributed to the
si ngu lar perso n ali t y of th e n-CEO James Burke. However, the decision
grams to detect and prevent violations of the law. The
1991 Federal Sentencing Guidelines offer a compelling
rationale. Sanctions such as fines and probation for
organizations convicted of wrongdo- ing can vary
dramatically depending both on the de- gree of
management cooperation in reporting and investigating
corporate misdeeds and on whether or not the company
has implemented a legal complito do a nationwide recall of Tylenol
capsules in order to avoid further
loss of life from product tampering
was in reality not one decision but
thousands of decisions made by individuals at all levels of the organization. The “Tylenol decision,” then,
is best understood not as an isolated
incident, the achievement of a lone
Acknowledging the importance
of organizationalcontext in
ethics does not imply forgiving
individual wrongdoers.
individual, but as the reflection of an organization‟s
culture. Without a shared set of values and guiding
principles deeply ingrained throughout the organi- zation,
it is doubtful that Johnson & Johnson‟s re- sponse would
have been as rapid, cohesive, and eth- ically sound.
Many people resist acknowledging the influence of
organizational factors on individual behavior – especially
on misconduct – for fear of diluting peo- ple‟s sense of
personal moral responsibility. But this fear is based on a
false dichotomy between holding individual
transgressors accountable and holding “the system ”
accountable. Acknowledging the im- portance of
organizational context need not imply exculpating
individual wrongdoers. To understand all is not to
forgive all.
The Limits of a Legal
Compliance Program
The consequences of an ethical lapse can be seri- ous
and far-reaching. Organizations can quickly be- come
entangled in an all-consu ming web of legal proceedings.
The risk of litigation and liability has increased in the
past decade as law makers have leg- islated new civil and
criminal offenses, stepped up penalties, and improved
support for law enforce- ment. Equally – if not more –
important is the dam- age an ethical lapse can do to an
organization‟s reputation and relationships. Both Sears
and Beech- N ut, for instance, s t ruggled to regain consu
m er trust and market share long after legal proceedings
had ended.
As more managers have become alerted to the
i m portance of organizational ethics, m any have
asked their lawyers to develop corporate ethics proance program. (See the insert “Corporate Fines Un- der
the Federal Sentencing Guidelines.”)
Such programs tend to emphasize the prevention
of unlawful conduct, primarily by increasing surveillance and control and by imposing penalties for
wrongdoers. While plans vary, the basic framework
is outlined in the sentencing guidelines. Managers
must establish compliance standards and procedures;
designate high-level personnel to oversee compliance; avoid delegating discretionary authority to
those likely to act unlawfully; effectively comm unicate the co m pany‟s s t andards and procedures
through training or publications; take reasonable
steps to achieve compliance through audits, moni toring processes, and a system for employees to
report criminal misconduct without fear of retribution; consistently enforce standards through appropriate disciplinary measures; respond appropriately when offenses are detected; and, finally, take
reasonable steps to prevent the occurrence of similar offenses in the future.
There is no question of the necessity of a sound, wellarticulated strategy for legal compliance in an
organization. After all, employees can be frustrated and
frightened by the complexity of today‟s legal environ
ment. And even managers who claim to use the law as a
guide to ethical behavior often lack more than a
rudimentary understanding of com- plex legal issues.
Managers would be mistaken, however, to regard legal
compliance as an adequate means for address- ing the full
range of ethical issues that arise every day. “If it‟s legal,
it‟s ethical,” is a frequently heard slogan. But conduct
that is lawful may be highly problematic from an ethical
point of view. Consider the sale in some countries of
hazardous products
Corporate Fines Under the Federal Sentencing Guidelines
What size fine is a corporation likely to pay if convicted of a crime? It depends on a nu mber of factors,
some of which are beyond a CEO‟s control, such as the
existence of a prior record of similar misconduct. But
it also depends on more controllable factors. The most
important of these are reporting and accepting responsibility for the crime, cooperating with authorities,
and having an effective program in place to prevent
and detect unlawful behavior.
The following example, based on a case studied by the
United States Sentencing Co mm ission, shows how the
1991 Federal Sentencing Guidelines have af- fected overall
fine levels and how managers‟ actions influence
organizational fines.
Acme Corporation was charged
a n d co n vic t ed of m ail fra u d.
Th e co m pa n y sys t e m a t ically
charged custo m ers who da maged rented automobiles more
than the actual cost of repairs.
Ac m e also billed so m e c u stomers for the cost of repairs to
vehicles for which they were
n o t respo n sible. Prior t o th e
cri mi n al adju dica tio n , Ac me
paid $13.7 million in restitution
to the customers who had been
D ecidi ng before th e e n ac t –
m ent of the sentencing guidelines, the judge in the criminal case
i m posed a fi n e of $6. 85 million,
roughly half the pecu- niary loss
suffered by Ac m e‟s
customers. Under the sentencing guidelines, however,
the results could have been dra m atically different.
Acme could have been fined anywhere from 5 % to
200 % the loss suffered by customers, depending on
whether or not it had an effective program to prevent
and detect violations of law and on whether or not it
reported the crime, cooperated with authorities, and
accepted responsibility for the unlawful conduct. If a
high ranking official at Acme were found to have been
involved, the maxim u m fine could have been as large
as $54,800,000 or four t imes the loss to Acme customers. The following chart shows a possible range of
fines for each situation:
without appropriate warnings or the purchase of goods
from suppliers who operate inhu mane sweat- shops in
developing countries. Companies engaged in
international business often discover that con- duct that
infringes on recognized standards of hu- man rights and
decency is legally permissible in some jurisdictions.
Legal clearance does not certify the absence of ethical
problems in the United States either, as a 1991 case at
Salomon Brothers illustrates. Four top- level executives
failed to take appropriate action when learning of
unlawful activities on the govern- ment trading desk.
Company lawyers found no law obligating the executives
to disclose the impropri- eties. Nevertheless, the
executives‟ delay in dis- closing and failure to reveal
their prior knowledge
prompted a serious crisis of confidence among employees, creditors, shareholders, and custo m ers.
The executives were forced to resign, having lost
the m oral authority to lead. Their ethical lapse
compounded the trading desk‟s legal offenses, and
the company ended up suffering losses – including
legal costs, increased funding costs, and lost business – estimated at nearly $1 billion.
A compliance approach to ethics also overemphasizes the threat of detection and punish ment in order
to channel behavior in lawful directions. The underlying
model for this approach is deterrence theory, which
envisions people as rational maxi- mizers of self-interest,
responsive to the personal costs and benefits of their
choices, yet indifferent to the moral legitimacy of those
choices. But a recent
What Fine Can Acme Expect?
M a ximum Minimum
Program, reporting,
cooperation, responsibility
$2,740,000 $685,000
Program only 10,960,000 5,480,000
No program, no reporting
no cooperation, no responsibility
27,400,000 13,700,000
No program, no reporting no
cooperation, no
responsibility, involvement
of high-level personnel
54,800,000 27,400,000
Based on Case No.: 88-266, United States Sentencing Commission,
Supplementary Report on Sentencing Guidelines for Organizations.
study reported in W hy People O bey the Law by
Tom R. Tyler shows that obedience to the law is
strongly influenced by a belief in its legitimacy and
i ts m oral correctness. People generally feel that
they have a strong obligation to obey the law. Education about the legal standards and a supportive environ
ment may be all that‟s required to insure compliance.
Discipline is, of course, a necessary part of any
ethical system. Justified penalties for the infringement of legiti ma t e nor ms are fair and appropriate. Some people do need
pect of organizational life, rather than an unwelcome constraint imposed by external authorities.
An integrity strategy is characterized by a conception of ethics as a driving force of an enterprise.
Ethical values shape the search for opportunities,
the design of organizational systems, and the decision- m aking process used by individuals and
groups. They provide a common frame of reference
and serve as a unifying force across different functions, lines of business, and employee groups. Orgathe threat of sanctions. However, an
overemphasis on potential sanctions can
be superfluous and even counter- prod u
c t ive. E m ployees m ay rebel against
programs that stress penal- ties,
particularly if they are designed and
imposed without employee in- volve m
ent or if the s t andards are vague or
unrealistic. Manage m ent
Management may talk ofmutual
trustwhen unveiling a
compliance plan, but employees
often see a warning fromon high.
may talk of m utual trust when unveiling a compli- ance
plan, but employees often receive the message as a
warning from on high. Indeed, the more skepti- cal
among them may view compliance programs as nothing
m ore than liability insurance for senior management.
This is not an unreasonable conclu- sion, considering that
compliance programs rarely address the root causes of
Even in the best cases, legal compliance is un- likely to
unleash m uch moral imagination or com- mit ment. The
law does not generally seek to in- spire hu man
excellence or distinction. It is no guide for exe m plary
behavior – or even good practice. Those managers who
define ethics as legal compli- ance are implicitly
endorsing a code of moral medi- ocrity for their
organizations. As Richard Breeden, former chairman of
the Securities and Exchange Commission, noted, “It is
not an adequate ethical standard to aspire to get through
the day without being indicted.”
Integrity as a Governing Ethic
A strategy based on integrity holds organizations to a
m ore robust s tandard. While co m pliance is rooted in
avoiding legal sanctions, organizational integrity is based
on the concept of self-governance in accordance with a
set of guiding principles. From the perspective of
integrity, the task of ethics man- agement is to define and
give life to an organiza- tion‟s guiding values, to create
an environ ment that supports ethically sound behavior,
and to instill a sense of shared accountability among
employees. The need to obey the law is viewed as a
positive asnizational ethics helps define what a company is and
what it stands for.
Many integrity initiatives have structural fea- tures
common to compliance-based initiatives: a code of
conduct, training in relevant areas of law, mechanisms
for reporting and investigating poten- tial misconduct,
and audits and controls to insure that laws and company
standards are being met. In addition, if suitably designed,
an integrity-based initiative can establish a foundation for
seeking the legal benefits that are available under the
sentenc- ing guidelines should criminal wrongdoing
occur. (See the insert “The Hallmarks of an Effective Integrity Strategy.”)
But an integrity strategy is broader, deeper, and more
demanding than a legal compliance initiative. Broader in
that it seeks to enable responsible con- duct. Deeper in
that it cuts to the ethos and operat- ing systems of the
organization and its members, their guiding values and
patterns of thought and ac- tion. And more demanding in
that i t requires an active effort to define the
responsibilities and aspi- rations that constitute an
organization‟s ethical compass. Above all, organizational
ethics is seen as the work of management. Corporate
counsel may play a role in the design and implementation
of in- tegrity strategies, but m anagers at all levels and
across all functions are involved in the process. (See the
chart, “Strategies for Ethics Management.”)
During the past decade, a nu mber of companies have
undertaken integrity initiatives. They vary ac- cording to
the ethical values focused on and the im- ple m entation
approaches used. So m e co m panies focus on the core
values of integrity that reflect baHARVARD BUSINESS REVIEW March-April 1994 111
The Hallmarks of an Effective Integrity Strategy
There is no one right integrity strategy. Factors such as
management personality, company history, culture, lines of
business, and industry regulations m ust be taken into
account when shaping an appropriate set of values and
designing an i m ple m entation progra m. Still, several
features are common to efforts that have achieved some
# The guiding values and commit ments make sense and are
clearly comm unicated. They reflect impor- tant
organizational obligations and widely shared as- pirations
that appeal to the organization‟s members. Employees at all
levels take them seriously, feel com- fortable discussing
them, and have a concrete under- standing of their practical
importance. This does not signal the absence of ambiguity
and conflict but a will- ingness to seek solutions compatible
with the frame- work of values.
# Company leaders are personally committed, credible, and willing to take action on the values they espouse. They are not mere mouthpieces. They are willing to scrutinize their own decisions. Consistency on
the part of leadership is key. Waffling on values will
lead to employee cynicism and a rejection of the program. At the same time, managers m ust assu me responsibility for making tough calls when ethical obligations conflict.
# The espoused values are integrated into the normal
channels of management decision making and are re- flected
in the organization’s critical activities: the development of plans, the setting of goals, the search for
opportunities, the allocation of resources, the gather- ing
and comm unication of information, the measure- ment of
performance, and the promotion and advance- ment of
# The company’s systems and structures support and
reinforce its values. Information systems, for example, are designed to provide timely and accurate inform a tion. Reporting relationships are s t ructured to
build in checks and balances to pro m ote objective
judgment. Performance appraisal is sensitive to means
as well as ends.
# Managers throughout the company have the deci- sion- m
aking s k ills, k nowledge, and co m petencies needed to
make ethically sound decisions on a day- to-day basis.
Ethical thinking and awareness m ust be part of every
managers‟ mental equipment. Ethics ed- ucation is usually
part of the process.
Success in creating a climate for responsible and
ethically sound behavior requires continuing effort
and a considerable invest ment of time and resources.
A glossy code of conduct, a high-ranking ethics officer,
a training program, an annual ethics audit – these trappings of an ethics program do not necessarily add up
to a responsible, law-abiding organization whose espoused values match its actions. A formal ethics program can serve as a catalyst and a support system, but
organizational integrity depends on the integration of
the company‟s values into its driving systems.
sic social obligations, such as respect for the rights
of others, honesty, fair dealing, and obedience to the
law. Other companies emphasize aspirations – values that are ethically desirable but not necessarily
m orally obligatory – such as good service to customers, a commit ment to diversity, and involvement in the comm unity.
When it comes to implementation, some companies begin with behavior. Following Aristotle‟s
view that one becomes courageous by acting as a
courageous person, such companies develop codes
of conduct specifying appropriate behavior, along
with a system of incentives, audits, and controls.
Other companies focus less on specific actions and
m ore on developing attitudes, decision- m aking
processes, and ways of thinking that reflect their
values. The assu mption is that personal commitment and appropriate decision processes will lead
to right action.
Martin Marietta, NovaCare, and Wetherill Asso- ciates
have implemented and lived with quite different integrity strategies. In each case, manage- ment
has found that the initiative has made impor- tant and
often unexpected contributions to compet- itiveness,
work environ ment, and key relationships on which the
company depends.
Martin Marietta: Emphasizing
Core Values
Martin Marietta Corporation, the U.S. aerospace and
defense contractor, opted for an integrity-based ethics
program in 1985. At the time, the defense in- dustry was
under attack for fraud and mismanage- ment, and Martin
Marietta was under investigation for improper travel
billings. Managers knew they needed a better form of
self-governance but were skeptical that an ethics program
could influence behavior. “Back then people asked, „Do
you really need an ethics program to be ethical?‟” recalls
cur- rent President Thomas Young. “Ethics was something personal. Either you had it, or you didn‟t.”
The corporate general counsel played a pivotal
role in promoting the program, and legal compliance was a critical objective. But it was conceived
of and implemented from the start as a companywide management initiative aimed at creating and
maintaining a “do-it-right” climate. In its original
conception, the program emphasized core values,
such as honesty and fair play. Over time, it expanded to encompass quality and environ mental responsibility as well.
Today the initiative consists of a code of conduct, an
ethics training program, and procedures for re- porting
and investigating ethical concerns within the company. It
also includes a system for disclosing violations of federal procure m ent law to the govern
ment. A corporate ethics office manages the program,
and ethics representatives are stationed at m ajor
facilities. An ethics s teering co mm i ttee, made up of
Martin Marietta‟s president, senior ex- ecutives, and two
rotating members selected from field operations,
oversees the ethics office. The au- dit and ethics
committee of the board of directors oversees the steering
The ethics office is responsible for responding to
questions and concerns from the company‟s em- ployees.
Its network of representatives serves as a sounding board,
a source of guidance, and a channel for raising a range of
issues, fro m allegations of
Strategies for Ethics M anagement
Characteristics of Compliance Strategy Characteristics of Integrity Strategy
Ethos conformity with externally
imposed standards
Objective prevent criminal misconduct
Leadership la w yer driven
Methods education, reduced discretion,
auditing and controls, penalties
Behavioral autonomous beings guided by
Assumptions material self-interest
Ethos self-governance according
to chosen standards
Objective enable responsible conduct
Leadership management driven with
aid of la w yers, HR, others
Methods education, leadership,
accounta bility, organizational
systems and decision processes,
auditing and controls, penalties
Behavioral social beings guided by material
Assumptions self-interest, values, ideals, peers
Implementation of Compliance Strategy Implementation of Integrity Strategy
Standards criminal and regulatory la w
Staffing la w yers
Activities develop compliance standards
train and communicate
handle reports of misconduct
conduct investigations
oversee compliance audits
enforce standards
Education compliance standards and system
Standards company values and aspirations
social obligations, including la w
Staffing executives and managers
with la w yers, others
Activities lead development of company
values and standards
train and communicate
integrate into company systems
provide guidance and consultation
assess values performance
identify and resolve problems
oversee compliance activities
Education decision making and values
compliance standards and system
wrongdoing to co m plaints about poor m anage

ment, unfair supervision, and company policies and
practices. Martin Marietta‟s ethics network, which
accepts anonymous complaints, logged over 9,000
calls in 1991, when the company had about 60,000
employees. In 1992, it investigated 684 cases. The
ethics office also works closely with the hu man re

sources, legal, audit, comm unications, and security
functions to respond to employee concerns.
Shortly after establishing the program, the com

pany began its first round of ethics training for the
entire workforce, starting with the CEO and senior
executives. Now in its third round, training for se

nior executives focuses on decision m aking, the
challenges of balancing m ultiple responsibilities,
and compliance with laws and regulations critical
to the company. The incentive compensation plan
for executives makes responsibility for promoting
ethical conduct an explicit requirement for reward
eligibility and requires that business and personal
goals be achieved in accordance with the compa

ny‟s policy on ethics. Ethical conduct and support
for the ethics program are also criteria in regular
performance reviews.
Today top
-level managers say the ethics program
has helped the co m pany avoid serious proble m s a n d beco m e m ore respo n sive t o i t s m ore th a n
m ployees. Th
e th ics
e tw or k, wh ic h
tracks the nu m ber and types of cases and co

plaints, has served as an early warning system for
poor management, quality and safety defects, racial
and gender discri m ination, environ m ental con

cerns, inaccurate and false records, and personnel
grievances regarding salaries, promotions, and lay

offs. By providing an alternative channel for raising
such concerns, Martin Marietta is able to take cor

rective action more quickly and with a lot less pain.
In many cases, potentially embarrassing problems
have been identified and dealt with before becom

ing a management crisis, a lawsuit, or a criminal
investigation. Among employees who brought com

plaints in 1993, 75 % were satisfied with the results.
Company executives are also convinced that the
program has helped reduce the incidence of mis
– conduct.
When allegations of misconduct do sur
– face, the
company says i t deals with them more openly. On
several occasions, for instance, Martin Marietta has
voluntarily disclosed and made resti

tution to the govern ment for misconduct involving
potential violations of federal procurement laws. In
addition, when an employee alleged that the com

pany had retaliated against him for voicing safety
concerns about his plant on CBS news, top manage

ment commissioned an investigation by an outside
law firm. Although failing to support the allega

-April 1994
M artin M arietta ’s
ethics training
program teaches
senior executives
ho w to balance
tions, the investigation found that employees at the plant
feared retaliation when raising health, safety, or environ
mental complaints. The company redou- bled its efforts
to identify and discipline those em- ployees taking
retaliatory action and stressed the desirability of an open
work environ m ent in i ts ethics training and company
comm unications.
Although the ethics program helps Martin Mari- etta
avoid certain types of litigation, it has occa- sionally led
to other kinds of legal action. In a few cases, employees
dismissed for violating the code of ethics sued Martin
Marietta, arguing that the com- pany had violated its own
code by imposing unfair and excessive discipline. Still, the company believes that its
t ime to take advantage of the expanding market
for therapeutic services. However, in 1988, the viability of the company was in question. Turnover
among its frontline employees – the clinicians and
therapists who care for patients in nursing homes
and hospitals – escalated to 57 % per year. The company‟s inability to retain therapists caused customers to defect and the stock price to languish in
an extended slu mp.
After months of soul-searching, InSpeech executives realized that the turnover rate was a symptom
of a more basic problem: the lack of a common set
of values and aspirations. There was, as one execuattention to ethics has been worth it. The
ethics program has led to better
relationships with the govern ment, as
well as to new business oppor- tunities.
Along with prices and tech- nology,
Martin Marietta‟s record of integrity,
quality, and reliability of estimates plays
a role in the award- ing of defense
contracts, which acAt NovaCare, executives defined
organizational values and
introduced structural changes
to support thosevalues.
count for some 75 % of the company‟s revenues. Executives believe that the reputation they‟ve earned
through their ethics program has helped them build trust
with govern ment auditors, as well. By open- ing up
comm unications, the company has reduced the time
spent on redundant audits.
The program has also helped change employees‟
perceptions and priorities. Some managers compare their
new ways of thinking about ethics to the way they
understand quality. They consider more care- fully how
situations will be perceived by others, the possible longter m consequences of short- ter m thinking, and the need
for continuous i m prove- ment. CEO Norman Augustine
notes, “Ten years ago, people would have said that there
were no ethi- cal issues in business. Today employees
think their nu mber-one objective is to be thought of as
decent people doing quality work.”
NovaCare: Building
Shared Aspirations
N ova Care Inc., one of the largest providers of
rehabilitation services to nursing homes and hospitals in the United States, has oriented its ethics
effort toward building a co mm on core of shared
aspirations. But in 1988, when the company was
called InSpeech, the only senti m ent shared was
m utual mistrust.
Senior executives built the company from a se- ries of
aggressive acquisitions over a brief period of
tive put it, a “huge disconnect” between the values
of the therapists and clinicians and those of the
managers who ran the company. The therapists and
cli n icia n s eval u a t ed th e co m pa n y‟s s u ccess i n
terms of its delivery of high-quality health care. InSpeech management, led by executives with financial services and venture capital backgrounds, measured the company‟s worth exclusively in terms of
financial success. Manage m ent‟s single- m inded
emphasis on increasing hours of reimbursable care
turned clinicians off. They took management‟s perfor m ance orientation for indifference to patient
care and left the company in droves.
CEO John Foster recognized the need for a common frame of reference and a common language to
unify the diverse groups. So he brought in consultants to conduct interviews and focus groups with
the company‟s health care professionals, managers,
and customers. Based on the results, an employee
task force drafted a proposed vision statement for
the company, and another 250 employees suggested
revisions. Then Foster and several senior managers
developed a succinct statement of the company‟s
guiding purpose and fundamental beliefs that could
be used as a framework for making decisions and
setting goals, policies, and practices.
Unlike a code of conduct, which articulates spe- cific
behavioral standards, the statement of vision, purposes,
and beliefs lays out in very simple terms the company‟s
central purpose and core values. The purpose – meeting
the rehabilitation needs of paHARVARD BUSINESS REVIEW March-April 1994 115
tients through clinical leadership – is supported by
four key beliefs: respect for the individual, service
to the customer, pursuit of excellence, and commitment to personal integrity. Each value is discussed
with examples of how it is manifested in the day- today activities and policies of the company, such as
how to measure the quality of care.
To support the newly defined values, the compa- ny
changed its name to NovaCare and introduced a nu mber
of structural and operational changes. Field managers and
clinicians were given greater deci- sion- m aking
authority; clinicians were provided with additional
resources to assist in the delivery of effective therapy;
and a new management structure integrated the various
therapies offered by the com- pany. The hiring of new
corporate personnel with health care backgrounds
reinforced the company‟s new clinical focus.
The introduction of the vision, purpose, and beliefs m et with varied reactions fro m e m ployees,
ranging from cool skepticism to open enthusiasm.
One employee remembered thinking the talk about
values “ m uch ado about nothing.” Another recalled, “It was really wonderful. It gave us a goal
that everyone aspired to, no matter what their place
in the company.” At first, some were baffled about
how the vision, purpose, and beliefs were to be
used. But, over time, managers became more adept
at explaining and using them as a guide. When a
customer tried to hire away a valued employee, for
example, managers considered raiding the customer‟s company for employees. After reviewing the
beliefs, the managers abandoned the idea.
NovaCare managers acknowledge and company
surveys indicate that there is plenty of room for improvement. While the values are used as a firm reference point for decision making and evaluation in some
areas of the company, they are still viewed with
reservation in others. Some managers do not “walk the
talk,” employees complain. And recently acquired
companies have yet to be fully integrated into the
program. Nevertheless, many Nova Care employees say
the values initiative played a critical role in the
company‟s 1990 turnaround.
The values reorientation also helped the co mpany deal with its most serious problem: turnover
among health care providers. In 1990, the turnover
rate stood at 32 %, still above target but a significant improvement over the 1988 rate of 57 %. By
1993, turnover had dropped to 27 %. Moreover, recruiting new clinicians became easier. Barely able
to hire 25 new clinicians each month in 1988, the
company added 776 in 1990 and 2,546 in 1993. Indeed, one employee who left during the 1988 tur116 HARVARD BUSINESS REVIEW March-April 1994
At NovaCare,
clinicians took
orientation for
indifference to
patient care and left
the company in
moil said that her decision to return in 1990 hinged on
the company‟s adoption of the vision, purpose, and
Wetherill Associates:
Defining Right Action
Wetherill Associates, Inc. – a s m all, privately
held supplier of electrical parts to the automotive
market – has neither a conventional code of conduct nor a statement of values. Instead, WAI has a
Quality Assurance Manual – a combination of philosophy text, conduct guide, technical manual, and
co m pany profile – that describes the co m pany‟s
commit ment to honesty and its guiding principle
of right action.
WAI doesn‟t have a corporate eth- ics
officer who reports to top manone recruit described her response to being told that lying
was not allowed, “What do you mean? No ly- ing? I‟m a
buyer. I lie for a living!” Today she is per- suaded that
the policy makes sound business sense. WAI is known
for informing suppliers of overship- ments as well as
undershipments and for scrupu- lous honesty in the sale
of parts, even when decep- tion cannot be readily
Since its entry into the distribution business 13 years
ago, WAI has seen its revenues climb steadily from just
under $1 million to nearly $98 million in 1993, and this
in an industry with little growth. Once seen as an upstart
beset by naysayers and in- dustry skeptics, WAI is now
credited with entering and professionalizing an industry
in which kick- backs, bribes, and “gratuities” were
agement, because at WAI, the company‟s corporate ethics officer is top
m anage m ent. Marie Bothe, WAI‟s
c h ief exec ut ive officer, sees h er
m ain function as keeping the 350-
e m ployee co m pany on the path of
right action and looking for opportunities to help the comm unity. She
delegates the “technical” aspects of
Creating an organizationthat
encourages exemplary conduct
may be the best way to prevent
the business – marketing, finance, personnel, operations – to other members of the organization.
Right action, the basis for all of WAI‟s decisions,
is a well-developed approach that challenges most
conventional management thinking. The company
explicitly rejects the usual conceptual boundaries
that separate m orality and self-interest. Instead,
they define right behavior as logically, expediently,
and morally right. Managers teach employees to
look at the needs of the customers, suppliers, and
the comm unity – in addition to those of the company and its employees – when making decisions.
WAI also has a unique approach to competition.
One employee explains, “We are not „in competition‟ with anybody. We just do what we have to do
to serve the customer.” Indeed, when occasionally
unable to fill orders, WAI salespeople refer customers to competitors. Artificial incentives, such
as sales contests, are never used to spur individual
performance. Nor are sales results used in determ i n i ng co m pensation. Instead, the focus is on
team work and customer service. Managers tell all
new recruits that absolute honesty, m utual courtesy, and respect are standard operating procedure.
Newcomers generally react positively to company philosophy, but not all are prepared for such a
radical departure fro m the practices they have
known elsewhere. Recalling her initial interview,
Em ployees – equal nu m bers of m en and wo m en
ranging in age from 17 to 92 – praise the work envi- ron
ment as both productive and supportive.
WAI‟s approach could be difficult to introduce in
a larger, m ore traditional organization. WAI is a
small company founded by 34 people who shared a
belief in right action; its ethical values were naturally built into the organization fro m the s tart.
Those values are so deeply ingrained in the company‟s culture and operating systems that they have
been largely self-sustaining. Still, the company has
developed its own training program and takes special care to hire people willing to support right action. Ethics and job skills are considered equally
important in determining an individual‟s competence and suitability for employment. For WAI, the
challenge will be to sustain its vision as the company grows and taps into markets overseas.
At WAI, as at Martin Marietta and N ova Care,
a management-led commit ment to ethical values
has contributed to competitiveness, positive workforce morale, as well as solid sustainable relationships with the company‟s key constituencies. In
the end, creating a climate that encourages exemplary conduct may be the best way to discourage
damaging misconduct. Only in such an environment do rogues really act alone.
Reprint 94207
Harvard Business Review
HBR Subscriptions Harvard Business Review
U.S. and Canada
Subscription Service
P.O. Box 52623
Boulder, CO 80322-2623
Telephone: (800) 274-3214
Fax: (617) 496-8145
Outside U.S. and Canada
Tower House
Sovereign Park
Lathkill Street
Market Harborough
Leicestershire LE16 9EF
Telephone: 44-85-846-8888
Fax: 44-85-843-4958
HBR Article Reprints
HBR Index and Other Catalogs
HBS Cases
HBS Press Books
HBS M anagement Productions
HBR Custom Reprints
American Express, MasterCard, VISA accepted. Billing available.
Harvard Business School Publishing
Customer Service – Box 230-5
60 Harvard Way
Boston, MA 02163
Telephone: U.S. and Canada (800) 545-7685
Outside U.S. and Canada: (617) 495-6117 or 495-6192 Fax:
(617) 495-6985
Internet address: [email protected]
Harvard Business School Manage m ent Productions videos are produced
by award winning docu mentary filmmakers. You‟ll find them lively,
engaging, and informative.
Please inquire about HBR‟s custom service and quantity discounts. We will
print your company‟s logo on the cover of reprints, collec- tions, or books
in black and white, two color, or four color. The pro- cess is easy, cost
effective, and quick.
Telephone: (617) 495-6198 or Fax: (617) 496-8866
For permission to quote or reprint on a one-time basis:
Telephone: (800) 545-7685 or Fax: (617) 495-6985
For permission to re-publish please write or call:
Permissions Editor
Harvard Business School Publishing
Box 230-5
60 Harvard Way
Boston, MA 02163
Telephone: (617) 495-6849

Get Professional Assignment Help Cheaply

Buy Custom Essay

Don't use plagiarized sources. Get Your Custom Essay on
Managing for Organizational Integrity by Lynn Sharp Paine
Just from $9/Page
Order Essay

Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?

Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.

Why Choose Our Academic Writing Service?

  • Plagiarism free papers
  • Timely delivery
  • Any deadline
  • Skilled, Experienced Native English Writers
  • Subject-relevant academic writer
  • Adherence to paper instructions
  • Ability to tackle bulk assignments
  • Reasonable prices
  • 24/7 Customer Support
  • Get superb grades consistently

Online Academic Help With Different Subjects


Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.


Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.

Computer science

Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!


While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.


Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.


In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.


Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.


We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!


We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.


Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.

What discipline/subjects do you deal in?

We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.

Are your writers competent enough to handle my paper?

Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.

What if I don’t like the paper?

There is a very low likelihood that you won’t like the paper.

Reasons being:

  • When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
  • We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.

In the event that you don’t like your paper:

  • The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
  • We will have a different writer write the paper from scratch.
  • Last resort, if the above does not work, we will refund your money.

Will the professor find out I didn’t write the paper myself?

Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.

What if the paper is plagiarized?

We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.

When will I get my paper?

You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.

Will anyone find out that I used your services?

We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.

How our Assignment Help Service Works

1. Place an order

You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.

2. Pay for the order

Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.

3. Track the progress

You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.

4. Download the paper

The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.

smile and order essay GET A PERFECT SCORE!!! smile and order essay Buy Custom Essay