The first meeting that led to the creation of theECOA was held at UMN College, June 18-19, 1990. The meeting was co-hosted by the Center for Business Ethics and the Dreiford Group. About 30 ethics officers attended. They then decided to create a new organization for peer-to-peer discussion. An eleven-member steering committee was formed to explore the feasibility of creating a new organization. The Steering Committee met at Raytheon Corporation on October 18, 1991. The minutes of the meeting show that all of the major elements of the ECOA’s vision, mission, and values were decided that day.
Tom Phillips, Raytheon chairman emeritus, addressed the meeting. He spoke of the ECOA as the possible beginning of “a new profession in American industry.” He felt strongly that an ethics officer position was essential to the ethical health of a company. At the meeting a seven-member board of directors was elected. The next meeting of the board was held at Honeywell Corporation, Minneapolis, on November 21, 1991. At that meeting, Paul Towne was selected chairman of the board, The Center for Business Ethics at Bentley College was selected as the ECOA’s facilitating institution.
On January 15, 1992, the Board met again at Raytheon. A plan for incorporation, a mission statement, basic services, and a member solicitation letter were approved. On June 17, 1992, the ECOA officially filed as a 501(c)(6) non-profit, Delaware-based corporation. Ed Petry joined the association as assistant to the Board of Directors.
At the time of incorporation, the following 19 companies were ECOA “Sponsoring Partner” members:
By the end of 1992, membership had grown to 25 Sponsoring Partners and now included the following:
The first ECOA meeting was the Sponsoring Partner Forum, September 22-23, 1992, at Raytheon.
Business Ethics – A Historical Perspective
Business ethics is not new. Efforts to apply ethical theories and values to commerce can be found throughout history and in the works of the great philosophers. But until recently, business ethics was largely an academic affair.
In the mid-1980’s, allegations of waste and fraud in the defense industry were increasing. In July 1985, President Ronald Reagan appointed a blue ribbon commission to recommend a solution to the growing problem. The commission concluded, “To assure that their houses are in order, defense contractors must promulgate and vigilantly enforce codes of ethics that address the unique problems and procedures incident to defense procurement. They must also develop and implement internal controls to monitor these codes of ethics and sensitive aspects of contract compliance.”
This conclusion led to the creation of the Defense Industry Initiative (DII). The DII was made up of the largest defense contractors and together they developed a model for internal ethics and compliance programs that were designed to prevent and detect waste, fraud, and other wrongdoing. They also created a network of executives who were responsible for each company’s ethics and compliance program. What had been a largely academic study of business ethics was a practitioner-led, practical-minded community for exchanging best practices. But, through the end of the 1980’s, the effort was largely confined to the defense industry.
In the early 1990’s, companies in other industries began to seek the experience gained through the DII. Their primary motive was compliance with the United States Sentencing Commission Guidelines for Organizations, which were promulgated in 1991. These guidelines raised fines for white-collar crimes but they also provided a means for greatly reducing these fines. Under the guidelines, if an organization has in place an “effective program for preventing and detecting” wrongdoing and if it cooperates with investigating authorities, its fine can be automatically reduced by up to 95%. The description of an “effective program” included in the Guidelines was largely based on the programs in place in the defense industry. But while the DII provided a forum for defense contractors to share best practices, no multi-industry network existed. In response,The Ethics & Compliance Officer Association (ECOA) was founded to meet that need.