Association unveils new ethics code for industry.

NDIA's Ethics Committee has developed a benchmark statement of industry ethics for companies to incorporate into their day-to-day business. If the positive consequences of "doing the right thing" are not motivation enough, the negative effects of failing to play by the rules are certainly very real. These negative effects are evident in recent headlines severely penalizing certain executives and casting the industry in a tarnished light.

The profit motive--wherever free market commerce prevails--will always be valid. Indeed, maximizing profits is a fiduciary imperative for officers, boards of directors and employees. But if defense industry members don't put ethical behavior on an at least equal priority footing as the profit motive, the consequence, at least in the context of providing material and services to men and women in uniform, can literally be fatal. Anytime we deliver to war fighters anything less in quality than is specified by contract, we never know who is put at risk. For this reason alone, highest "ethical readiness" must be a corporate imperative.

Further, when ethics receive less weight than the profit motive in a cost/benefit type tradeoff, the profit benefits may be fleeting. Profits invariably are diminished by excesses that result in expensive backlashes such as negative press, and government investigations, proceedings and penalties. No matter how conscientious and vigilant a company is in setting the right ethical tone, deviant employee behavior always can occur. Whenever this happens, investigators and customers, above all else want to know whether the behavior truly was aberrational, or whether it resulted from a corporate climate of arrogance, or disregard for right and wrong.

Every major corporation has ethics rules for very pragmatic business reasons. Untold thousands of hours and hundreds of millions of corporate dollars are consumed attempting to steer dear of the consequences of unethical behavior, such as suspension, debarment and criminal conviction. Cost in time and money for investigations are a very real business threat.

Some provisions are common to every effective code of ethics. NDIA believes, however, that a couple of aspects of the code set forth below may be different, even unique. First, the chief ethical officer of the firm should always be the firm's chief executive officer, who sets the tone for conduct throughout the corporation. Second, it must be made clear, in everything the company does (board meetings, off-site strategy sessions, conspicuous postings, periodic training and scheduled time devoted by senior management) that ethics, as a corporate value, stands on par with profits. Unless this is conveyed in clear, even stark terms, the objective of maximizing both may be lost in favor of short term profiteering.

We also have strived, in this code, for simplicity. The more complicated the rules of corporate conduct, the less likely they will be read and honored.

Finally, we think that repetition and dedicated training to reinforce these values are essential.

--Joe Reeder, chair, NDIA Ethics Committee