Jack Welch, former chairman of GE is a major champion of the supremacy of ethics in business. Whenever an employee's actions have put GE on the wrong side of the law, he has hastened to co-operate with investigators, admit guilt and take prompt corrective action. Such corporate mea culpa has served the company well.



The time-card scandal in 1985 was the first significant ethical challenge of Welch's 25year GE career. GE Re-entry Systems, a GE subsidiary, was making a new nose cone for the Air Force's Minuteman missile. Federal prosecutors in Philadelphia charged it with 108 counts of criminal fraud. The indictment alleged that GE managers had altered worker's time cards with improper charges totaling $800,000. Welch's response and damage control were brilliant, thereby winning the trust of government officials. Welch personally called on Secretary Orr, presenting a comprehensive proposal for cleaning up the mess and preventing such mess from recurring. He created a top-level review board within GE to oversee compliance.

In this time-card case and other similar instances, candor and a determination to ally GE with the forces of law have enabled GE to emerge with more vitality and systematic approaches to ethics. The experiences also underscore the challenge of having to raise employees? awareness of the need for high ethical standards.

"You can't audit integrity into a system any more than you can inspect quality into a machine. Where you can make a difference is by changing the culture, by tireless, forceful leadership that won't tolerate winking, rule-bending or looking the other way." Welch was quoted as saying. His favourite question to GE employees was: "Can you look in the mirror every day and feel proud of what you are doing." According to Welch, "In a global business, you can win without bribes. But you better have technology. That's why we win in business like turbines, because we have the best gas turbine. You have got to be the low-priced supplier, but in almost all cases, if you have quality, price and technology, you win."

Even the comeback kid, Donald Trump has this advice for businessmen: "Be honest, even if there are others around you who are not." In the 1999, he almost wanted to run as a candidate for the Presidential election but eventually did not. Apparently, he had received good support of popular votes in the unofficial poll on his chances of running for Presidency. You can go bankrupt and fail in your business, but as long as your reputation of strong ethics stay intact, people will always remember that and you can make a comeback again.

Companies spend a lot of money in selecting its candidates. This is normally based on competence and achievements, which are easier to measure. However, it is equally important to select candidates with high levels of integrity and ethics. Strong ethical practices should pervade across the whole corporate spectrum. It is important that board members need to be more independent. Analysts too need to provide independent views and assessments in their reports on companies. Shareholders and investors need to focus and do their homework rather than merely relying on earnings per share and short term profits. All of these issues have to do with integrity as it is necessary to do what is right and ethical.