Ethics Pedestal Assures Some Hard Falls

A question that will be played out in ethics classes at business schools for years to come is whether Boeing, one of the largest government contractors, struggling to get out from under an ethics cloud, should have fired its married 68-year-old chief executive for carrying on with one of the company's Washington area employees.

Perhaps the best line of the week goes to the Wall Street Journal's editorial page, which noted wryly that if something like this had happened at rival Airbus, the French would have put the fellow up for a bonus.

Funny, but as it turns out, also rather profound. Because in its way, it points up two truths about this episode:

First, given the political and legal environment in which the company finds itself, and the prevailing business culture in the United States, the board probably made the "right" decision in demanding Harry Stonecipher's resignation.

And, second, it's a ridiculous outcome that leaves nobody better off and raises serious questions about that environment and that business culture.

Let's consider the tortured logic used by the board in explaining its unanimous decision to ask for Stonecipher's resignation.

It wasn't, they said, the fact that the married executive was having an consensual affair, or that the woman was a Boeing employee. The board knew full well that Stonecipher and his wife had been living apart for some time. And investigation revealed that the woman did not report to Stonecipher or receive special treatment because of the affair.

Rather, according to people familiar with board deliberations, the biggest problem was that Stonecipher and his new friend had exchanged sexually graphic e-mails on the Boeing system, in direct violation of company policy. And if such e-mails were to come out -- as they almost surely would -- then they could cause embarrassment to the company, call into question the judgment of the chief executive and jeopardize relations with government customers uncomfortable about doing business with notorious philanderers.

Now let's think about all that.

The first bit of silliness concerns our too-easy embrace of "zero-tolerance" policies for all ethical violations. Once Stonecipher had enunciated such a policy for all Boeing employees, of course it made it impossible for the board to make an exception in the case of the chief executive. But where and when was it decided that companies have to mete out the equivalent of capital punishment for every ethical crime from bribery and fraud to sending X-rated e-mails? Whatever happened to deciding these things on a case-by-case basis and letting the punishment fit the crime?

Then there is the dubious argument that while Stonecipher's affair was not, per se, a firing offense, it called into question his judgment. As a matter of empirical evidence, there doesn't seem to be much connection between business judgment and the judgment people bring to affairs of the heart. Any number of businesses, after all, have been run into the ground by devoted family men. And how do we square Jack Welch's brilliant judgments running General Electric with his decision to dump his second wife for a star-struck journalist?

What's most dangerous, however, is the implicit acknowledgment by the board that it is too risky for a company doing business with the government to be run by someone whose personal life might offend the ayatollahs of the religious right. You would have thought we might have learned a lesson from the disastrous campaign to impeach a president on morals charges, only to ensnare a speaker-designate of the House. Instead, this same puritan standard now seems to have been extended to the corporate sector.

One of the mistakes of the '90s is that we all put too much stock in the magic power of chief executives. Along with giving them too much authority, attention and money, we also held them to unrealistically high expectations. Harry Stonecipher now joins the list of those who both benefited from that misplaced importance, and were brought down by it.

Steven Pearlstein will host an online discussion at 11 a.m. today at washingtonpost.com. He can be reached at pearlsteins@washpost.com.