IN THE LEAD: CEOs Set the Tone For How to Handle Questions of Ethics

By Carol Hymowitz

12/22/1998

The Wall Street Journal

ASK TOP EXECUTIVES how Bill Clinton would be treated if he were a chief

executive instead of president and they quickly answer: dismissed.

Ask their female and junior male managers and they respond: tolerated and

left alone.

An article on this page recently asked, "What If It Were a Corporate

Executive and an Intern," and quoted a number of CEOs who asserted they

would immediately fire the executive for his misbehavior -- both to preserve

their companies' reputations and their staff's morale.

Many managers of both sexes, however, think CEOs aren't always forthright

about what really happens in the workplace or about how they would be

treated in such a situation.

The truth is, workplace dalliances between bosses and subordinates occur so

frequently that most companies no longer outlaw them. Instead, they prefer

to simply reassign to a new boss an underling who becomes romantically

linked with a superior. And CEOs who keep their affairs secret aren't likely

to ever be investigated, or punished if discovered.

The more successful and well-liked a boss, the more license he has to pursue

whomever he pleases, says Dee Soder, managing partner of CEO Perspective

Group, a New York consultant. Employees invariably gossip when a boss takes

up with a subordinate, but they rarely complain to higher-ups, either

because of indifference or fear that they may jeopardize their own chances

for promotion. Directors, too, typically look the other way, not wanting to

admonish a CEO who also may be a friend.

WHEN THE MARRIED chief executive at a bank began having an affair with a

divorced female manager, employees gossiped incessantly about their many

long lunches and private meetings together, recalls a female marketing

manager. Some staffers also voiced resentment toward the woman manager, who

they assumed was favored when it came to performance reviews and raises.

Eventually, the CEO separated from his wife, and directors learned about his

office romance. The CEO was counseled to keep the affair more private. But

that was as far as any censure went. And when the CEO had a change of heart

about the romance, the woman manager suddenly resigned and took a job in a

distant city.

The CEO, now reunited with his wife, is still on the job, lauded for keeping

his bank strong and independent, the marketing manager says.

At other companies, where the CEO is known as a fun-loving reveler, it can

be imperative to join him in his carousing -- or risk being expelled from

his inner circle. The former CEO of a Midwestern food processor, who

frequently traveled abroad, expected his senior managers to join him in

late-night partying while on global jaunts, according to a former manager

there.

The "tone at the top is critical -- and it's always monkey see, monkey do,"

says Martha Clark Goss, vice president and chief financial officer at Booz

Allen & Hamilton Inc., a New York consulting firm.

That lesson goes way beyond issues of sexual conduct, touching all of the

many ethical problems that crop up in the workplace. Employees take their

cues from superiors on how to behave, rather than from written codes of

conduct.

Ms. Goss says her rule applies to other matters of honesty, such as expense

accounting. At Booz Allen, "we have the sunshine rule, which asks employees

to consider how they would feel if they had to stand in front of partners

and explain a particular business expense. It's a good rule," she says, "but

only a guideline. People almost always follow the example of the senior

partners."

A SURVEY OF 30 recent graduates of Harvard Business School in 1995 found

that most had been pressured by their bosses to do things they felt were

sleazy, unethical or illegal. One management trainee, for instance, was

pressured to inflate a return-on-investment figure, while another was was

told to make up data to support a new-product introduction. "Just do it," he

said his boss told him.

"If you have a CEO who says 'get results no matter how,' you'll promote

fudging numbers," says Michael Metzger, an Indiana University professor of

business law, who teaches ethics. "It's what you do, not say, that counts."

But confronting ethical questions is never without conflict, and involves

"deep consequences" for the accuser as well as the accused, says Mark

Johannson, director of leadership development at Damark International, a

Minneapolis direct-marketing firm.

"There's always a human motivation for why someone breaks the rules," he

says -- anything from a need they must feed to a personal financial debt.

Most managers empathize with such human motivation, and therefore avoid

confronting it.

"We don't want to be the person to pull the trigger, to inflict punishment.

We're too aware of our own imperfections, and we know there will be serious

repercussions. But shoving the problem under the rug will only poison the

organization," he says.

He experienced these conflicts when he realized an employee on his staff was

spilling confidential business information to a third party. "I had to

confront him and take away some of his responsibilities," he says, which has

"made our relationship much more cumbersome."

Over time, "perhaps trust will be re-established," Mr. Johannson hopes, "but

it's a long healing period."

Hal Lancaster is on vacation.