BUSINESS MANAGEMENT: Good Ethics Equals Good Business Practice

Joseph Catanese

Issues about unethical business practices are often front-page news. For the waste industry, tales of extortion and foul play are further purported in hit dramas like HBO's "The Sopranos." Fortunately, businesses are improving their response to ethical business questions through better management techniques and tools.

Maintaining high ethical standards, particularly in a bottom-line driven business, is challenging. However, keeping these standards is important to help manage risks and to a company's reputation.

These are concepts that Waste Management Inc. (WMI), Houston, is taking seriously. Recently the company appointed William E. Prachar as vice president of Business Ethics and Compliance. Prachar will guide WMI to meet certain conduct standards as well as environmental, health, safety and transportation rules.

Each employee's action can be a potential corporate liability. Let's take a hypothetical look at an engineer who works for a consulting firm and is assessing a site for a client. The site is in an area that was once highly industrialized. The property only is being used as collateral for refinancing a loan, however, the engineer discovers from an area resident that the site was once a creosoting plant.

With this, the engineer delivers a report, recommending soil and groundwater samples. Upon review, the client's law firm requests that the possible creosote contamination and the engineer's recommendation be deleted.

The reason for the deletions, the attorneys assert, is that the information about the creosoting plant is hearsay. Additionally, the property is not being sold, and the owner now is aware of potential contamination. Also, the consulting firm is contractually obligated to meet a deadline for the report. Additional delay could risk the refinancing, jeopardize the project and leave the consulting firm vulnerable to lawsuits.

What are the risks involved? Deleting the information from the report has obvious ethical implications and possible financial consequences. Withholding the information doesn't mean that the lending institution won't find out about the possible contamination. And in the end, what guarantee does the consulting firm have that it will not be held liable for a coverup?

With so much at risk, firms are providing employees with tools and education to assist in good decisions that will equal good business. Likewise, many educational institutions and professional organizations are devising aids to help individuals' thought process. For instance, to assist in the day-to-day decisions that many professionals face, the Professional Engineering Practice Liaison Program at the University of Washington, Seattle, offers tools and assistance with the decision-making process.

This Internet-based program was designed to help members of the industry derive practical solutions to ethical problems encountered in daily work. The site provides visitors with real-life ethical situations to stimulate discussion. To arrive at the most ethical decision, the program advises actions such as:

* Define the ethical problem when it arises;

* Avoid impulse solutions;

* Evaluate the alternatives. How would I feel if the situation were reversed?;

* Seek additional assistance. Look to the experiences of peers;

* Choose the best ethical alternative. Choose an answer that does the most good;

* Implement the best alternative; and

* Monitor and assess the outcome. Commit to continuous improvement. Always look at how the decision-making process can be improved in the future.