Transparency starts at the top: a panel of executives discusses what their companies are doing to address the intense focus on corporate ethics.

What are leading companies doing to try to re-formulate and re-emphasize standards of ethical conduct, and make sure that they are enforced from top to bottom? Marc Holland, CEO of Sky Radio Network, recently asked a panel of four corporate executives--uests on Sky Radio--about just what steps they've taken along these lines.

The panel members were: Thomas Nies, founder and CEO of Cincom Systems Inc., a Cincinnati-based software provider; Andrea Bonime-Blanc, Senior Vice President and Chief Ethics and Compliance Officer at Bertelsmann Inc.; Gloria Santona, Executive Vice President, General Counsel and Corporate Secretary for McDonald's Corp.; and George Herrmann, Vice President and Chief Financial Officer at Jefferson Wells International.

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Many of you have a history of developing relationships and trust through programs that reach and influence your stakeholders. Let's start with a sort of history and then move into what you are doing today to build and nurture trust.

Bonime-Blanc: Historically, Bertelsmann has been known as a company that values good governance practices and corporate social responsibility. Reinhard Mohn, who built Bertelsmann into a global media company in the post-war period, is well known for his dedication to the cause of corporate social responsibility. The Bertelsmann Foundation, founded in 1977, is one of the leading foundations in Europe, with a broad array of economic, social, political, educational and health-oriented programs. In 2002, for example, the Foundation awarded the annual Carl Bertelsmann Prize to Transparency International for its outstanding anti-corruption work around the world.

In mid-2001, before Enron and the other scandals hit the headlines, and despite the fact it is not a publicly traded company, Bertelsmann adopted a U.S. Code of Business Conduct for all of its U.S.-based businesses. In conjunction with the launch of this code, the company created a new office--that of chief ethics and compliance officer--which I filled in early 2002. Since then, we have also launched a Canadian Code of Business Conduct and are developing additional international initiatives.

The Ethics and Compliance Department has launched a number of initiatives, including task force hotlines, in cooperation with Bertelsmann's U.S. businesses, which include Random House, BMG Music, G+G USA Publishing, FremantleMedia BeMusic, Bookspan and a number of printing and CD manufacturing businesses.

Nies: Even though Cincom is a private company, we recognize that we have a variety of constituencies or "stakeholders." We ground stakeholder relationships upon three key principles: competence, character and commitment. These constitute Cincom's corporate values and guide our approach to corporate governance and managing the diversity of interests among various constituencies. You'll see these three Cs on our doors, as we constantly reinforce them to all employees.

Our philosophy revolves around open, frequent communications. I insist that as CEO and president, I am always accessible--via email, phone or in person. It's not rare for a programmer, developer, product manager, stakeholder or shareholder to stop by my office to chat about a specific issue. Moreover, I communicate almost daily with all Cincom stakeholders via our company intranet.

Cincom views our "stakeholders" as family and friends. That's not to say there are no disagreements. But trust, open communication and accessibility ensure that disagreements are flushed out quickly and resolved.

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Hermann: A few years ago, corporate governance was not a bedrock principle that drove organizations. Today, companies are spending more time communicating precisely what corporate governance means as a primary part of their organization.

I see a lot of granularity about the actual components of the corporate governance structure: what we are doing, how often we meet with management and with the board, how far down in the organizations the sign-offs are with the financial directors of the business units. It's not as theoretical.

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Santona: McDonald's has a long history of developing relationships and trust in thousands of local communities. McDonald's was built on a heritage of values, which began with our founder, Ray Kroc. He really put a high priority on building trust with our customers and also with the communities that we do business with.

So, for us, this means upholding high standards in our restaurant operations and product safety and taking a leadership role on issues that are important to our customers, in particular the Ronald McDonald House charities. And we also get involved in any number of local and regional, as well as national, types of charity initiatives.

Do your board members view their role as being caretakers of this trust relationship?

Nies: As a privately held company, Cincom has succeeded and intends to continue to succeed by following one simple rule: Help our customers more successfully grow their businesses faster and more profitably--with far less upfront investment, much less risk and much greater and quicker ROI.

That said, Cincom's board of directors does not act as a controlling or governing organization. Rather, it performs support and oversight to ensure that Cincom faithfully fulfills its duties to its customers, staff, allies, providers and associates, consistent with its charter and ideals.

Hermann: Genuine trust with a company's stakeholders--be they investors, employees or customers--is built over time through consistent, honest communication and integrity in action. It's no different than building trust between two individuals.

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The problem is that too many companies fall into a "check-the-box" mentality regarding corporate governance and internal controls. In other words, there is a lot of focus on the externals, such as board composition, and [Sarbanes-Oxley Section] 404 compliance, at the exclusion of whether honesty, integrity and respect for the stakeholders are actually alive in an organization.

The role of any board of directors is to oversee management. As representatives of the shareholders, they need to play the important role of continually challenging management to make sure that the tone from management is an appropriate one.

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Bonime-Blanc: Bertelsmann's executive board played a key role in approving the U.S. Code of Business Conduct in 2001. The U.S. Code Task Force involved representatives from all of Bertelsmann's U.S. businesses, who spent a year developing and finalizing the code. In addition, the task force recommended creation of a chief ethics & compliance officer position. The idea was to ensure that the code wouldn't be a piece of corporate "wallpaper," but a living and breathing document that was referred to and implemented consistently throughout our businesses.

Among our original initiatives was an extensive training program to [introduce] the U.S. code to all employees. We've also formed an ongoing "ethics network" comprised of top legal, human resources and financial representatives from our North American businesses that meets three to four times a year to share best practices and learn about the latest ethics and compliance developments. We've also created a number of ethics and compliance communications, including an intranet business ethics column and senior management newsletter. I work closely with the corporate headquarters in Germany on several global initiatives, including a corporate social responsibility task force and a cyber-compliance task force.

Santona: The commitment has to come from the top, and it starts with the chairman of the board. There has been [much] talk recently about how boards operate and what should be expected of them. We have adhered to corporate governance principles for nearly a decade; those principles are deeply rooted in our company's values.

Our board members [see themselves] as caretakers of the trust relationship. But more than that, a lot of them view themselves as spokespeople and leaders in the effort. There is a huge participation at the board level, particularly involving the Ronald McDonald's House charities.

We are upfront about how our board is governed, in part because we've published summary principles in our policy statement since 1994. We review and refresh our governance practices on an ongoing basis, which encourages everyone to look closely at what they are doing in their boardrooms. We recently adopted a code of conduct for our board of directors and created a Web site to make extensive information about our board and governance practices publicly available.

There is an intricate relationship between how companies operate and the trust they inspire. How does that affect your efforts in areas of ethical behavior and corporate transparency?

Nies: I believe that ethical behavior relies on a set of ideal principles and practices that must become habituated. But, human nature being what it is, it is almost axiomatic that "the higher the stakes, the lower the ethics," which unhappily suggests that in the world of business and finance, ethics too often fall to low levels.

One reason I've chosen to keep Cincom private is that I believe companies should put their customers first, and the people serving those customers a very close second. The undisciplined, unprincipled organization is a grave danger to all of its constituencies.

An unprincipled organization damages everyone with whom it is involved. For example, we were involved in a reverse-merger opportunity. Our partner was arrested by overseas authorities for giving bribes and was later released. We chose not to partner with him after this, even though all the filings for the merger had been completed and we'd paid out quite a bit of money.

Hermann: Make no mistake: an organization's stakeholders generally have a pretty good idea how honest and open an organization is. Clients see it as it actually is in the marketplace; employees see how it is in the workplace, and investors can hear it in conference calls and sense it in press releases and financial statements.

Management in an organization, especially senior management, sets the "tone at the top" as to how processes and procedures are executed, and also how deviations are dealt with.

Santona: McDonald's realizes that trust is a valuable asset and something we must earn every day. To this end, we lay out expectations of how we want our officers and employees to behave and give them a basis for making sound ethical business decisions. Our code of ethics covers all our employees, and we have a special code of ethics just for our senior executives and financial officers. Everyone knows exactly what's expected of him or her.

There's a lot of talk today about building investor trust, confidence and getting investors--particularly individual investors--back into the market. A lot of it seems to be a public relations tactic. How does your company, and your whole investors communication strategy, assist in meaningfully building investor trust?

Nies: As a private company, we don't have an investor communications strategy. Still, we measure ourselves against publicly traded software companies through financial performance metrics. Our goal is to equal or exceed--in earnings-per-share growth, ROI, return on assets, productivity growth and other similar measures--the top-performing firms in our industry.

Even though we're not required to, we want our stakeholders to see how Cincom is doing. We publish comprehensive corporate performance data on our Web site and regularly provide comparative results to the media. Because honest communications, in good times and bad, has always been our hallmark, we're honest about our performance. This applied to challenging times during the recession, and also when fiscal 2002 profits were at all-time record levels, and later, when we more than doubled profits from those records levels in fiscal 2003.

Hermann: Companies gain investor trust by promoting practices that illustrate good corporate governance. This means moving beyond mere compliance with the Sarbanes-Oxley Act and using it as a guide to make organizations more transparent and credible.

Many of our clients have improved their quarterly and annual report certification practices. They pay attention to their audit committee credentials and use professionals not affiliated with the company. This sets the right tone and sends a message about a company's integrity, while avoiding potential conflicts of interest.

Many of our clients communicate directly with investors at investor conferences. They address their governance structure and communicate the particulars of their internal control environment. Moreover, they have a robust system to assure that governance is happening and [is] held to high corporate standards.

Santona: McDonald's investor communications strategy is designed to build investor trust. We regularly communicate with investors through institutional investor conferences, quarterly earnings releases and meaningful annual reports and policy statements. We participate in individual investor fairs and make a variety of information about our businesses and financial results available on our Web site.

We're as transparent as possible in our investor communications, and strive to [make it] as convenient and easy for investors as we do our customers to get the strategic, operating and financial information they need to make informed investing decisions.