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Business Ethics Expert Hoffman Comments on Hewlett-Packard Scandal

September 17, 2006

In the wake of a questionable investigation by Hewlett-Packard into boardroom leaks to news reporters, W. Michael Hoffman, executive director of the Center for Business Ethics at Bentley College, has one question: Where was the ethics officer?

Although it appears that embattled HP Chairwoman Patricia C. Dunn, who will step down as chairman in January as a result of the fallout, consulted the company's general counsel when she began a probe into the HP board of directors, the company's chief ethics officer seems to be missing in action in most reports.

"Where was the ethics officer in all of this?" asks Hoffman, the co-founder and first executive director of the Ethics Officer Association (now known as the Ethics and Compliance Officer Association). "Did Dunn contact the chief ethics officer to consult with him or her? And if she did, what was the advice and why didn't she make that person responsible for overseeing the investigation of the possible leaks to the media by one of the board members? Obviously this was sloppily handled."

At issue are Dunn's efforts to identify a board member she believed was leaking company information to reporters. In the process, records appear to have been improperly obtained by an outside company through 'pretexting' -- the practice of posing as board members and reporters so that individual phone records would be made available for examination.

"The outside investigative firm used a tact that was clearly unethical if not illegal in terms of the pretexting," says Hoffman. "Ultimately, this is the responsibility of Dunn - the buck stops with her and with HP. Anyone who outsources services to a third party is responsible for what that third party does in the name of the company, whether they're making apparel in a host country using child labor, or violating the core values of the company in general.

"That's why good business ethics programs need to be certain that the firms to which they're outsourcing have the same values as the company. It seems HP was not properly overseeing the investigation, including getting appropriate reports as to how the vendor company was operating."

If Dunn didn't consult HP's ethics officer, why not?

"The chief ethics officer position within corporations has become emasculated - if it ever had power in the first place," says Hoffman. "One of the reasons for this is the inherent conflict of interest of the ethics officer reporting to the very people he or she is overseeing. This makes their jobs dependent on the very management they're supposed to be policing."

The HP ethics crisis may point the way for ethics officers to be agents of the board rather than employees of management, Hoffman says.

W. Michael Hoffman is the founder and executive director of the Center for Business Ethics at Bentley College. Celebrating its 30th anniversary this year, its mission is to lead in the creation of organizational cultures that align effective business performance with ethical business conduct. The CBE, a part of the Bentley Alliance for Ethics and Social Responsibility, is a nonprofit educational and consulting organization whose vision is a world in which all businesses contribute positively to society through their ethically sound and responsible operations.

 

BENTLEY UNIVERSITY is one of the nation’s leading business schools, dedicated to preparing a new kind of business leader – one with the deep technical skills, broad global perspective, and high ethical standards required to make a difference in an ever-changing world. Our rich, diverse arts and sciences program, combined with an advanced business curriculum, prepares informed professionals who make an impact in their chosen fields. Located on a classic New England campus minutes from Boston, Bentley is a dynamic community of leaders, scholars and creative thinkers. The Graduate School emphasizes the impact of technology on business practice, in offerings that include MBA and Master of Science programs, PhD programs in accountancy and in business, and customized executive education programs. The university enrolls approximately 4,100 full-time undergraduate, 140 adult part-time undergraduate, 1,430 graduate, and 43 doctoral students. Bentley is accredited by the New England Association of Schools and Colleges; AACSB International – The Association to Advance Collegiate Schools of Business; and the European Quality Improvement System, which benchmarks quality in management and business education. For more information, please visit www.bentley.edu

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