ARCHIVES :: SEPTEMBER 2002 :: CAREERS

Background Checks
To Protect Their Careers, Job Applicants Should Screen Employers' Ethics First

By KRIS MAHER
Staff Reporter of The Wall Street Journal

The current wave of corporate scandals is leading more job seekers to check into their would-be employers' ethical standards and practices. They are poring over Internet message boards looking for staffers' appraisals of management, checking financial histories and seeking meetings with present and past employees. The downside: It's impossible to uncover everything about a corporation's moral weak spots in advance.

Nervous candidates fear that joining an unethical employer could endanger their tenure, retirement savings and self-esteem. As many Arthur Andersen staffers are discovering, working for a business with a bad reputation can also hurt future job prospects by leaving a black mark on a resume.

Many companies have begun to notice heightened concerns about ethical standards among job seekers and recent hires. Among recent hires, "I've had seven to nine who've said to me that one of the reasons they came to UTC is that they had researched our ethics program," says Patrick Gnazzo, vice president of business practices for United Technologies, a manufacturing company whose products include elevators amd aircraft engines. "I haven't noticed that before in any great degree."

Red Flags

Mr. Gnazzo anticipates a further increase in ethics-related inquiries when United Technologies recruits at business schools this fall. Describing the company's dedication to high ethical standards "is a great recruiting tool," he says. In 1986, United Technologies started an "ombudsman/dialog" program that lets employees inquire anonymously about ethics issues. It has received nearly 56,000 inquiries.

Some job seekers figure out how well a company puts its values into practice from clues they collect during job interviews. A red flag should go up, for instance, if a hiring manager promises an excessive severance package following a layoff without first consulting a higher-level executive. "That tips you off about a lack of controls," says Richard Bayer, chief operating officer of the Five O'Clock Club, a national career-counseling organization.

Despite their more extensive checks, some new hires don't discover corporate ethics shortcomings until after they arrive. Mark Tremont says he thought he had thoroughly investigated a West Coast start-up before he became its chief financial officer several months ago. He consulted his personal network to learn about the company's finances and business practices. He also spent about two weeks in face-to-face discussions with top managers there.

Once he started work, however, Mr. Tremont says that he grew uncomfortable with how the chief executive had handled several past financial transactions. The CEO "didn't lie, he didn't do anything illegal," Mr. Tremont says. "He just dealt in a gray area I didn't want to deal in."

Mr. Tremont says he quit three weeks after he arrived. "My personal reputation was worth more than anything," he says. Now, the Bellevue, Wash., resident says he is doing volunteer work part-time while he searches for another position.

Other applicants putting would-be employers under a microscope feel frustrated by how little information they can glean in advance. "From the outside, it's really hard to tell," says a former television producer for a public-relations agency in New York.

She says questionable billing practices and "an accumulation of inappropriate behavior" led her to quit the agency in April 2001 without lining up another position. The 34-year-old producer says she is now seeking a corporate-communications position at a pharmaceutical company in part because the drug industry is considered to be highly regulated.

Some businesses resist prospects' inquiries about their less-than-comprehensive ethics programs, though. Job hunters should view such hesitation as another reason to look elsewhere, experts suggest. "If an organization is uncomfortable with you asking questions, then I would say that that's a sign right there," says Linda K. Trevino, a business professor at Penn State.

Ms. Trevino gives her business students a list of questions to help clarify a company's culture and the effectiveness of its ethics program. She believes it's more important than ever to conduct this "ethical culture audit." The list includes: "Is integrity emphasized to recruits and new employees?" and "Are people of integrity promoted? Are means as well as ends important?"

Easy to Check

At the nation's biggest companies, it's relatively simple for applicants to find out official ethics policies. Most have adopted ethics codes and describe their ethics programs on corporate Web sites.

But job seekers shouldn't be overly impressed simply because a company has a code, cautions Edward Petry, executive director of the Ethics Officer Association, a professional group with 805 members. According to Mr. Petry, it's more important to find out how easily employees can get guidance on ethics issues and what kind of ethics training a company offers.

Mr. Petry also urges candidates to ask whether an employer has an ethics officer -- and whether that person reports to the CEO. Another thing to watch for is whether a company integrates its purported values into performance appraisals and compensation plans. "You'll find that very few do," Mr. Petry reports.