A Matter Of Ethics

Dec. 21, 2004
At United Technologies Corp., the rules are clear:

Patrick Gnazzo collects polar bears. Well, not actual polar bears, of course, but images of them -- paintings, pictures, porcelain figurines. They set the theme for his office on the 22nd floor of the gleaming United Technologies Building in downtown Hartford, Conn. "My wife said I couldn't keep any more of them at home," he explains. "They're all over the house." Here's why: Gnazzo, a former trial lawyer, believes polar bears perfectly represent trial lawyers performing at their peak -- awe-inspiring to watch, but you don't want to get too close. Gnazzo should know. His resum includes service as the U.S. Navy's chief trial lawyer and director of its litigation division, and as associate general counsel of the Dept. of the Navy. Most of his responsibilities at United Technologies Corp. (UTC) -- whose best-known companies include Otis Elevator Co., Pratt & Whitney (aircraft engines), and Carrier Corp. (heating and air conditioning) -- have related to the law. Among other executive positions he has held since joining UTC in 1981, he has served as general counsel, litigation counsel, and vice president for government contracts and compliance. Law has plenty to do with his current position, too. He has been UTC's vice president, business practices, since 1993. That makes him responsible for the corporation's compliance and ethics program, which includes managing more than 160 business-practice officers worldwide. The officers, all of whom are managers whose job descriptions have been broadened to include ethics oversight, help implement the $24 billion corporation's ethics/compliance programs for its 145,000 employees in 183 countries. In one very significant way, however, the polar bear is the last metaphor Gnazzo would choose for his work as ethics chief. He wants and needs his colleagues to regard him not as dangerous, but as eminently approachable. "We say this to our people all the time-call, call, call, call. Send e-mails. Write," he says. "I want to spend the majority of my time giving advice, not investigating [ethical breeches] after the fact." Communication is encouraged at all levels through DIALOG, a worldwide program that allows employees to ask questions, make suggestions, register complaints, and report suspected wrongdoing confidentially. UTC has some 155 DIALOG administrators worldwide. Since its inception in 1986, the program has received more than 50,000 DIALOG correspondences ranging from routine maintenance and benefit questions to concerns about ethical practices. Such emphasis on communication and discussion, along with the extensive network of ethics officers around the globe, is among the keys to the corporation's success as a model of ethical business behavior. Not only are UTC's employees and managers calling Gnazzo, so, too, are leaders of other companies who want advice on how to create and implement similar ethics practices at their own firms. When they talk to Gnazzo, they may be surprised to learn that UTC's Code of Ethics is really rather simple. A concise recitation of corporate principles and standards of conduct, the entire document can be read over a cup of coffee. It covers all of the corporation's constituents -- customers and suppliers, employees, stockholders, worldwide communities, and competitors-but there are only so many ways to restate the Golden Rule. "Don't lie, don't cheat, don't steal," Gnazzo says. "We all were raised with essentially the same values. Ethics means making decisions that represent what you stand for and not just what the laws are." With that underpinning, the code -- originally drafted by a team headed by Howard H. Baker Jr., former senator from Tennessee and chief of staff for President Ronald Reagan -- has not required any change since it was accepted in 1990. Like the U.S. Constitution, it is straightforward and unambiguous on defining principles, but fluid enough to allow for discretion and interpretation when it is applied to individual circumstances. "The code doesn't have to change," Gnazzo says. "Procedures change, but 'Be fair to employees' doesn't change." Cultural differences also can be accommodated. "There is nothing significantly different about cultures around the world that make them more or less honest than others," Gnazzo says. "No culture says to lie, cheat, and steal. One of the responsibilities of the business-practice officers is to look at reasonableness, what seems to be the right thing to do." The ethics officers review situations and make recommendations. Decisions are made at the appropriate management level, often at the location where the question has arisen. With the code as a guide, most questions can be answered easily and a decision made. "But about once a day," Gnazzo says, "I will get a call and say, 'This is a new one on me. Let's think this thing out.'" As an additional aid, several brochure-style documents have been created to amplify specific issues such as what constitutes an improper payment, the giving and receiving of business gifts, e-mail policies, and business ethics involving government contracts. All the principles integrate a strict view of right and wrong. That means "everybody-does-it" practices in some countries -- a payment to a concierge, say, to help expedite an elevator permit-are absolutely forbidden. Gnazzo argues that most business lost as a result will eventually come back, provided the company's product is superior to the competition's. When confronted with an immediate loss of business, he says, companies need to stay focused on the larger issue: "I want people to trust my quality, I want people to trust my work, I want people to trust my word." That approach, he says, ultimately will produce more revenues than cutting corners for the sake of a sale. Gnazzo says Chairman and CEO George David and UTC's board of directors -- on which, incidentally, Howard Baker was a member -- stand squarely behind the ethics program. And because it is institutionalized, Gnazzo says, it now has its own muscle and might. It has the power, one might say, of a polar bear.

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