A lot of companies are singing the compliance blues these days, as they struggle to cope with the complexities of Sarbanes-Oxley legislation, passed in 2002 in the wake of financial scandals. Complaints about the cost and time involved are common, but there’s another effect of Sarbanes Oxley less remarked upon. Corporations are rushing to learn ethics virtually overnight, and as they do so, a vast new industry of consultants and suppliers has emerged. The ethics industry has been born.
Consider a few examples of recent mushrooming attention to ethics. At Goldman Sachs, CEO Hank Paulson will moderate 20 forums this year on ethics, for the bank’s entire staff of managing directors. Citigroup is adding annual ethics training for all 300,000 employees, and The New York Times Co. doing likewise.
Where do such firms turn for help? The New York Times signed a multi-year agreement with 11-year-old Los Angeles-based firm that helped advise the U.S. Sentencing Commission compliance programs. LRN will provide a legal and ethics education program, including a customized course on the company’s business ethics policy. LRN CEO Dov Seidman says his business has at least doubled in the last two years. Growth is also rapid at EthicsPoint, a five-year-old Portland, Ore. firm that is one of three leading providers of ethics hotline services. Section 301 of Sarbanes (SOX, as it’s often called) requires board audit committees to create a reporting system to receive complaints and tips.
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