The "new" corporate integrity?

• Author: Blank, Dennis
• Position: Ethics

"It is sad," says Beth Nickels, chief financial officer of Herman Miller Inc. "All of us are going to pay for what a few bad eggs did." Nickels believes that the new federal laws will create more administrative burdens and delay the economic recovery. Congress imposed new regulations (the Sarbanes-Oxley Act of 2002) during the summer following a spate of financial accounting scandals.

And, Nickels is not alone. Now, even those companies that had already set high standards for honesty and ethics--those with a built-in integrity factor--will face even more government scrutiny. However, for those with good integrity records, it will be easier.

"It just crushes us when you see what is out there now," Nickels says. She worries about corporations having trouble finding board members in the future. "Herman Miller has good ethics, [yet] it is going to be extremely difficult to find good board members going forward because the liability exposure is too great. More and more of them are being held accountable." Based in Zeeland, Mich., Herman Miller is a manufacturer of high-end office furniture with nearly $1.5 billion in annual sales.

Within many publicly held companies--like Herman Miller--ethical conduct is as much a part of doing business as selling goods and services. Its importance is paramount to the success of the business bottom line.

So will the new legislated standards spark changes in corporate integrity? CEOs and CFOs from some of America's major companies--Herman Miller, Darden Restaurants Inc., Hughes Supply Inc., Pitney Bowes Inc., Deere & Co. (John Deere). Dell Computer Corp. and Southwest Airlines Co--spoke with Financial Executive about their practices.

They all agreed that to work, standards at the top must be the same for those at the bottom. And, in each of the companies profiled here, none waited for the government to legislate what to do about establishing integrity in their business dealings. Each had already integrated ethics into the everyday life of the company.

In some companies, ethical culture was there from the beginning. For Deere, the big farm machinery manufacturer based in Moline, Ill., it goes back 165 years to the founding of the company, whose motto is, "I will never put my name on a product that does not have the best of me in it."

Robert W. Lane, chairman and CEO of Deere, says truthfulness is imperative. "I am a person of faith," he says, [and] "having observed numerous relationships around the world--whether a marriage or a business, based on both oral and carefully drafted written contracts, I have seen the following: if they are not based on truth, although it may take a while, they will eventually unravel and come apart."

He says the recent financial scandals have forced Deere to look very closely at what it was doing. "We have given ourselves a fiscal...