Ethical management is top priority
In 2006, the German company Siemens, which has a long history and reputation as one of the world’s most important technology brands, brought enormous shame on itself through a highly-publicized corruption scandal. Its executives were charged with allocating 460 million euro ($576 million) in slush funds to bribe politicians and public institutions in the countries it did business in. The damage was colossal. It lost billions in stock prices and fines and damaged its good name. Most of all, it was shunned by people in its own country.
Its new CEO Peter Loscher promised a “cultural revolution.” New corporate standards to prevent corruption were carried out. Employees willingly participated in and obliged with restructuring endeavors. Their determination and sincerity touched German people, and consumers began to place faith in the company and brand again. Siemens today continues with its anti-corruption campaign and is deemed as one of the cleanest companies around.
Its turnaround underscores the importance of ethical management. A successful company can easily lose public confidence and fall from grace if it is found to have unethical practices. Ethics have become key for corporate sustainability and viability.
I have been contributing to the enforcement of ethical management through acting as a cleanliness ombudsman activities at Korea Midland Power, one of the state’s power operators. The role of a cleanliness ombudsman is to offer supervision and evaluation in major projects and corruption-prone areas. My job is also to recommend improvements to the system, practices and operations. The corporation, with a goal to build its name as an “global ethical company,” has revised its ethics code, improved its website to offer easier accessibility, and has strengthened ethics education for employees.
Participation from employees is crucial. Ethics must be practiced in everyday life. The company must have the patience to draw continuous and lasting attention and practice from employees. Ethics should be valued as much as the corporate name. Investment guru Warren Buffett once has said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that you’ll do things differently.” It is a thought to ponder on.
Heo Shik, Economics professor at Chung-Ang University