I have had the honor of directing The Conference Board's annual Business Ethics and Compliance Conference for the past five years. (Truth be told, the last few years my colleagues Carrie Penman and Ed Petry have done 98% of the work.)

This Conference has been held (almost) annually in New York City since 1988. This year, for the first time, we are holding two conferences: one in La Jolla ended today, and one in New York starts May 10.

At the session today, we surveyed 50 ethics officers about the trial of Jeff Skilling and Ken Lay.

94% predicted that Jeff Skilling would be convicted on at least one count, and 96% predicted that Ken Lay would be. 51% predicted a sentence for Skilling of over five years, while 68% predicted that Lay’s sentence will be over five years.

Given the mixed record in corporate prosecutions, and the complexity of the case presented to the jury, I am surprised by the high numbers. I wonder if the Ethics Officers were voting their beliefs as much as their forecasts.

98% believed that Skilling deserves to be convicted, and 100% of the 50 ethics officers surveyed believed that Lay merits conviction. We never have 100% agreeing on any issue--so this is remarkable unanimity.

The fact is, the ethics and compliance community are incredibly pissed off at Lay, Skilling, Ebbers and the other rogue business leaders of the past few years. On the one hand they have made it much easier for ethics officers to get the resources they need to do their jobs. However they have dramatically heightened the cynicisim of employees and the public about business integrity, making the task of the ethics officer almost Sisyphian in difficulty.

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Last night 400 people braved a steaming 95 degree evening to show up at the first annual San Antonio Business in Ethics Awards. Inspired by similar events in Denver, Albuquerque and elsewhere, the Ecumenical Center for Religion and Health received over 40 nominations of organizations and individuals for this award, and selected five recipients.

The stories of the recipients were terrific—real businesses like scrap dealers and food distributors who have been recognized by the community for doing the right thing. This is bad news for speakers like me who are supposed to provide the inspiration and instead must follow these great role models. But this is great news for San Antonio, and particularly for the students from University of Texas-San Antonio involved in the process.

I got to meet with a handful of juniors and seniors who researched the nominees, and asked them if they were interested in working for an ethical company when they graduated. What a softball question. Of course they all said yes. But what I was (and am) really curious about is how they will know whether their prospective employer is ethical.

Several said they would see if they were on lists of “great companies to work for,” “ethical companies,” and so on. But when I pointed out that usually only a few big companies make these lists, they pressed further. Several students said they would talk to current employees to find out if the company was ethical, and a good place to work. Several more said they would look to see how the company contributed to the community in making their judgment.

Those of us consulting and practicing in the fields of compliance, ethics and corporate responsibility spend a lot of time drawing distinctions about what it is we do. Our present and future employees do no such thing. They want to know if we do the right thing for employees, customers, shareholders and the community. If we really want to leverage our investments in compliance, this is a message we will take to heart.

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100 roubles. There’s no price list, but everybody knows that if a police officer pulls you over in Moscow, that is what you pay to be allowed to proceed without hassles or tickets. Maybe a little more if you are drunk instead of speeding. 100 roubles is about $4 US Dollars.

Everybody in Moscow has a story of corruption. Traffic tickets, permits, customs. The stories are delivered with resignation “That’s Russia,” I heard more than once. So how do you teach business ethics here? How do I and my client convince their employees that they really are required to do ethically and legally when they have grown up and live in this environment?

The good news is that many of the people who choose to work for a multinational specifically do so because they embrace emerging standards of ethics and corporate responsibility. Codes of Conduct and training help reinforce the choice these key employees who represent the future of the business have made. Well publicized firings of those who don’t live up to expectations is the “stick.”

One of my contacts was given a choice to live up to standards or down to demands right before I arrived. He could have paid 3000 roubles ($100) to quickly get clearance for my wireless voting equipment. Or he could make several trips to the airport and fill out multiple forms. He chose the latter.

What do you think most people would do?

Moscow travel ideas:
Take the subways. They are clean, often beautiful, and the trains run every two minutes. Memorize the first three letters of your destination, unless your knowledge of the Russian alphabet is better than mine. If you are not on a strict budget, two restaurants run by the same person offer Russia only experiences. Café Pushkin was the first, serving upscale Russian in an “old apothecary” environment. Next door is Turandot. The owner reputedly spent $50 Million USD creating this indescribable space. A little Versailles, a little Shanghai opium den, and a lot of new Russian money. The centerpiece is a two story rotunda with beautiful molding twisting its way up to the center of the domed ceiling. The food may not be worth the money, but the experience is.

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Yesterday I teamed with several executives of a multinational to conduct training for their high level employees and important suppliers in Budapest. Many companies have been doing ethics training with employees for years now. Training suppliers is a newer phenomenon, and is fraught with issues: Who are we (the buyer) to teach ethics to other companies? Which suppliers do we train? What happens if they say no?

All interesting questions. I won’t answer any of them here. Rather, what fascinates me is the response of this diverse group of suppliers to the question “Does ethics pay?” In this group of 51 employees of Hungarian companies from the fields of advertising, logistics, packaging, travel, recruitment and a few others, 67% opined that companies in Hungary that do business legally and ethically are more successful than other companies in the long term, but may be less successful in the short term.

This percentage in itself is not intuitively surprising. When I think about how I would answer the question in the U.S., I think I would choose the same option. In the long run the reputational gains from doing the right thing outweigh any perceived gains from lying, cheating and stealing. However even our consulting firm has lost contracts to competitors who have under-scoped a project, knowing it is hard to kick an incumbent out midstream. Despite the fact that many businesspeople have encountered rogue behavior by competitors, only 6% of the Hungarian companies surveyed believe that sleazy companies win in the long term.

What fascinates me about this Hungarian perception that crime doesn’t pay, at least in the long term, is how consistent their perception is to that in other countries where we have asked the question in similar sessions.

% agreeing that “Companies that are ethical and law abiding will do better in the long run, and may suffer in the short run”
Sri Lanka 66%
India 62%
China 65%
Thailand 65%
Poland 77%
Philippines 71%

We’re going to start asking this question closer to home, and will let update you on what we find. What do you think? Does ethics pay? Short term or long?

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