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4/20/2007 – Investor's Business Daily
By Steve Watkins

Ethics questions keep popping up. Hewlett-Packard spied on its board members. Chi-quita Brands paid a terrorist group in Colombia. Walgreen is fighting charges of racism. Once those problems come up, how can firms overcome them?

It takes a lot of time, and just as much effort, experts say. "Americans want companies to act with integrity," said Lynn Lieber, founder and chief executive of Workplace Answers, a San Francisco-based corporate training firm. To do it successfully, they can take a number of steps:

• Bring in a third party. In cases such as Hewlett-Packard's, a person outside the company can come in to find out what the problem is and why it happened, Lieber says. A third party can also monitor the changes that need to be made. "That provides objectivity on the inside and adds credibility to the public," Lieber said.
  
  
• Set up a hot line. That way, Lieber says, employees can call to report ethical problems without fear of repercussions.
  
  
• Take responsibility. "You can't just treat it as a superficial image thing," said Kevin Jackson, a professor of business ethics at Fordham University. Hewlett-Packard could have said right away that it was focused on shoring up secrecy on the board and that it acted in a way the the board regrets. But it took a long time to respond, he says, causing media criticism to surge. In the positive way many experts use as an example, Johnson & Johnson's swift response in the Tylenol tampering case of the 1980 s kept the company humming.
  
  
• Fix the system, not the symptom. "There are things built into the system that need to be fixed," Jackson said. "You need to make a commitment to structural change." That includes the depth of reforms. Responses have to be as systematic as the problem, he adds.
  
  
• Leadership must show no tolerance. "It comes down to communication," Lieber said. "Senior people often think the rules don't apply to them or they apply differently." Leaders have to show that it starts at the top. They won't bend rules and principles, and they won't stand for that from others, no matter their rank. It can be tough to get rid of a high-level person. "But you have to bite the bullet," Lieber said.
  
  
• Deal directly with those you harmed. Some companies will try to divert attention to a problem by being a good citizen in another area, Jackson says. But you can't hide from swindling shareholders out of money by donating to a homeless shelter. "People see right through that," Jackson said.
  
  
• Give it time. "It takes a lot longer than companies want it to take," Jackson said. "Trust takes a long time to rebuild." But it can be done in a matter of months if it's handled right, Lieber says. If Chiquita can show it knows the international laws and its problem won't happen again, it can heal its reputation, Lieber says.

When firms don't do it right, they can lose everything. Just look at Arthur Andersen or Enron.