An editor in a mid-sized publishing company claimed she was on jury duty for four days. In fact, she was skiing at a Lake Tahoe resort. A branch manager for a car rental company worked a second job in the afternoons until her assistant spilled the beans. A salesman for a soda company claimed he met with clients in several states in his region — and padded his expense account accordingly.

Sound familiar? It should. In a recent survey of 1,500 American workers across the nation, 22% reported they had observed unethical behavior, including lying to employees, customers, vendors and the public, withholding needed information, and discrimination. Although the Ethics Resource Center survey showed the first overall drop in observed misconduct in a decade, still 12% of employees in 2000 and again in 2003 said they'd observed stealing, theft or fraud. And nearly a third said their coworkers condoned questionable ethics by showing respect for those who were successful using them.

While none of the above examples are as serious as, say, the alleged criminality of Enron executives charged with conspiracy, fraud and insider trading, they are the kinds of day-to-day, personal, ethical failures that can ultimately sink a company.

"A corporate culture is always moving — it's either developing or it's deteriorating,” said Laura Pincus Hartman, a Professor of Business Ethics at DePaul University in Chicago, citing a study by the Woodstock Center. "If a company fails to integrate ethics and legal compliance throughout its culture, it sends a message to employees that it's just not a priority. That puts the company at risk of some huge fines, bad press, lawsuits and damage to its stakeholders.”

Fortunately, because corporate cultures are always on the move, companies that have put on blinders when it comes to unethical behavior can change. Increasingly, employers are seeking to do just that (See Side Story). The number of firms with ethics training programs has increased from 7 to 40 percent since 1994. Meanwhile, companies with ethics codes have jumped from 13 to 73 percent.

"Now at cocktail parties people don't roll their eyes when I tell them what I do. They say, ‘Oh, wow, we could use you,'” Hartman said. "I'm getting a lot more calls from companies asking for consultations about how to incorporate an ethics program.”

Meanwhile, more employees are blowing the whistle on fellow workers who are dishonest. The ERC Survey showed that more employees are reporting misconduct, up from 48% (1994) to 57% (2000) to 65% (2003). Among the reasons may be a higher sensitivity to the issue of dishonesty in the wake of corporate scandals like Enron's which resulted in innocent employees losing their jobs and in many cases their retirement savings.

"More HR professionals are finding that employees are letting management know of behavior that is dishonest, downright fraudulent or questionable,” said Joe Coute, Westaff Vice President and Director of Human Resources. "Partly it's because people no longer want to have to lie for others or cover up for them. It's just distasteful, especially when it comes to a dishonest manager.”

The U.S. Sentencing Commission's new Federal Sentencing Guidelines are also helping to fuel the trend. The guidelines use a carrot and stick approach to encourage companies to develop programs that emphasize ethics as well as compliance with laws and rules. The stick? The guidelines allow judges to impose significant, even huge, fines on companies for criminal behavior. But dangling before companies is also the carrot: A potential fine can be reduced by as much as 95 percent if a company can show that it had an effective ethics and compliance program in place and that an employee's criminal behavior was an aberration from the company's culture.

Besides avoiding getting into trouble with the government, companies are beginning to realize that there are other benefits to building an ethical culture. The fact is good ethics make for good business.

"The polls have made it very clear that society, including consumers, investors and employees expect more from corporations than ever before,” said Michael Hoffman, Executive Director of the Center for Business Ethics at Bentley College in Waltham, Massachusetts. "Consumers factor in a company's reputation when deciding where they want to buy their goods and services. Investors have made it clear in their investing habits that it also makes a difference to them. And employees in all sorts of polls say they are much more likely to accept jobs and remain loyal to a corporation with a reputation for good ethics and corporate responsibility.”

As United States businesses continue to move in the direction of incorporating ethics into business practices and decision-making at all levels, Hoffman predicts some sectors of the global market will have to adapt.

"Some countries will find they cannot remain indifferent to ethics if they want to be successful because they deal with the U.S.,” he said.

Rather than putting U.S. companies at a disadvantage, the trend may in the long run give U.S. companies a greater advantage.

"Ultimately, other countries or companies will want to do business with us for the same reasons customers want to buy products or investors invest,” Hoffman said. "Because we act ethically.”