Corporate ethics - a culture, not just a policy

There has been a lot of press lately on the final FAR rule (3.1003-3.1004) requiring contractors with $five million-plus of government business to have a written code of ethics. A former colleague used to say that contracting might be the most heavily-regulated business outside of healthcare. I’m not sure if that’s true, but if you manage proposals or accounting at a mid-sized to large company with DoD contracts, you’ll see your fair share of examiners – financial statement auditors, workers comp insurance, bank auditors, sales & use tax, DOL, IRS, DCAA, GSA, OFCCP, etc. Clearly, with this number of stakeholders, a clear set of corporate ethics, rules and policies is vital.

Established ethical policies do exist. One of the strengths of the Washington business community is the depth of talent and knowledge surrounding government procurement and its associated rules and regulations. Many of the professional services organizations in town regularly boil these complex issues down for their clients. Our audit firm, Argy, Wiltse & Robinson, put out a nice synopsis in their “Spring 2008 Business Insights” publication. Obviously, it is vital that contractors know the policies of the offices and agencies with whom they regularly do business and develop their own systems to ensure compliance.

Of the recent articles and guidance I’ve been reading on the subject, the one hit that hit closest to the mark is from Darrell Crapps at Sentel Corporation in Washington Technology:
http://www.washingtontechnology.com/print/23_07/32631-1.html

His core premise is that contractor executives must lead by example when it comes to ethical behavior. For me, that is the heart of the issue – public trust and a responsibility to the US taxpayer is a duty above and beyond the fiduciary responsibilities of most corporate officers. In short, our business needs to embrace the spirit of these rules and not approach them as simply a “check the box” compliance issue.

During my 15 years at Stanley, my bosses, Larry Gallagher and Phil Nolan, exemplified that very spirit, long before there was a formal ethics policy. Whenever I encountered an ethical dilemma, their guidance was always – “What’s the right thing to do?” Not the right thing for the shareholders, me, Stanley or the client – simply, what was the RIGHT thing to do. Once you reduce an issue to this core consideration, the answer becomes straightforward. This culture of integrity - a core guiding principle for Stanley - is a similar priority as we build our culture here at Altron.

Moving forward, we are striving to marry this ethical culture with a policy of transparency in all our dealings. As we continue to grow the business, we need to increase the clarity in all our business dealings. This includes all of our stakeholders - customers, partners, employees and regulators. What is clarity? It means being clear about the challenges and opportunities with your employees, bringing up and talking about the company “warts” with your regulators, and putting more of the “company’s cards” on the table with your business partners. Will this cost me some competitive advantage? Maybe. But when I add up all the experiences I’ve had after nearly 20 years in this business, I think it’s the only way to run a business.