Reading Eagle
Penn State Management Professor Tells Businesses To Create Ethical Culture

By Don Spatz

Dr. Linda K. Trevino had one goal Thursday morning while speaking to business leaders at Penn State Berks-Lehigh Valley College.

"If I do nothing else, I hope to dispel the myth ... that unethical behavior in business is simply the result of bad apples," said Trevino, professor of organizational behavior and chairwoman of the department of management and organization at Penn State University.

Rather, she said, business leaders need to ask themselves: "What's in the culture that's rotting the apple?"

Trevino is the author of "Managing Business Ethics: Straight Talk About How to Do It Right" that many local companies used in corporate training, and has studied the business culture and downfall of the Big Five accounting firm Arthur Andersen.

She believes bad apples and corporate dishonesty are more the result of companies not creating an active culture of ethical business practices, in terms of requiring it, expecting it, rewarding it -- and openly firing those who don't comply. And that, she stressed, must begin at the top, and can be done in several ways:

-- By creating a corporate culture so employees know what's expected, not relying on an ethics office or a written code.

Andersen's ethics office told clients what to do, but that office and its ethics code were ignored by management, she said.

-- By top executives personally sending employees clear and consistent messages about ethical behavior.

Trevino said the message can't just be posters or a banner on a Web site, and must be at least as strong as the boss's message on profits. Andersen began that way, and its founder was followed by a cadre of professionals who felt the same way, she said. But she added that by the late 1990s it was focused solely on earnings, not the quality of its work.

-- By rewarding honesty as well as profits.

Rewarding honesty is hard in the short term, but may be the single most important way of getting the message across, Trevino said. And in the long term, promotions up through the ranks should be on the basis of integrity as well as profits, she said.

-- By not rewarding unethical behavior -- unlike Andersen.

Trevino said when Andersen began its consulting business in addition to auditing companies' books, its employees were rewarded for finding ways to lengthen or expand Andersen's contracts with clients.

"Like that famous roach motel, their consultants were told to check in, but never check out," Trevino said.

But it begins and ends with management, because executives are being harshly judged for their companies' behavior, she stressed.

"You simply can't afford to be tone deaf on these issues," she told the business leaders. "That way you can keep your best customers, and stay out of the headlines."

Copyright 2003 Reading Eagle

To return to Media Coverage click here .

REPORTERS & EDITORS: For more information, please contact Wyatt DuBois in the Smeal College of Business Media Relations Office at 814-863-3798 or wed112@psu.edu .

Penn State's Smeal College of Business offers highly ranked undergraduate, MBA, executive MBA, Ph.D., and executive education opportunities to more than 5,500 students at all levels. Featuring academic departments of accounting, finance, marketing, insurance and real estate, management, and supply chain and information systems, the college is also home to major research centers such as the Center for Supply Chain Research, the Institute for the Study of Business Markets, the eBusiness Research Center, the Farrell Center for Corporate Innovation and Entrepreneurship, the Center for Global Business Studies, and the Center for the Management of Technological and Organizational Change.

Click here for more news.