Personal lives of executives under scrutiny

When does an office romance become a breach of ethics?

The details remain murky at Boeing, where Chief Executive Harry Stonecipher, 68, was forced out after admitting to an affair with an unnamed executive.

But as corporate America seeks to purify itself in the wake of financial scandals, Stonecipher's ouster may signal a shift in how we define ethics. Namely, will executives' personal conduct, particularly when it involves a co-worker, be held to the same standards as their job performance?

"The CEO must set a standard for unimpeachable, professional and personal behavior," Boeing Chairman Lewis Platt said yesterday, explaining why Stonecipher, who is married, was asked to resign.

Stonecipher's affair did not violate the company's code of conduct, Platt added. But an internal investigation did reveal examples of poor judgment that the board thought would hamper the CEO's ability to lead the company, he said.

Office dalliances between bosses and subordinates are hardly new. Bill Gates married one of his employees, former project manager Melinda French Gates.

Before rising to the top at Boeing, former CEO Phil Condit married one of his secretaries. He later dated a Boeing receptionist, according to a 2003 story in BusinessWeek.

Although Gates and Condit were single, even married executives have been known to carry on office affairs with relative impunity.

The ethics of such romances would have been likely handled in private, said Dennis Powers, a business professor at Southern Oregon University and author of "The Office Romance."

But this was before the ethics violations that took down Enron, Tyco and WorldCom, and before Boeing's reputation was tarnished by procurement scandals.

"If the board hadn't had their feet to the fire," Powers said, "they might have been more inclined to talk to him informally and say, 'We really feel uncomfortable about this. What are you going to do about it?' "

Just as political figures' personal lives became fair game in the post-Watergate era, the post-Enron climate may bring the same scrutiny to corporate executives' personal conduct.

"We are operating in an environment where ethics do matter," Boeing spokeswoman Anne Eisele said yesterday. "Perhaps they matter more in American business today than they did a few years ago. Clearly they matter a lot at this company."

Boeing does not have a formal policy on interoffice romances, including those involving bosses and subordinates.

But given Boeing's public vow to clean up its reputation, Stonecipher's behavior is an ethical breach nonetheless, said John Dienhart, who heads the Albers Business Ethics Initiative at Seattle University, a position funded by Boeing.

"Did it violate a specific rule? I think you could argue not," Dienhart said. "But did it violate the spirit of the code in that you don't commit actions that would put the company in a bad light? Obviously."

An investigation showed that Stonecipher did not use his position to influence his mistress's career or salary. But even if no favors are granted, a relationship between a boss and a subordinate can lead to conflict and lower morale.

Nearly three-quarters of employees surveyed by the Society for Human Resource Management in 2001 said bosses and subordinates should not have any romantic involvement. About 60 percent thought that workplace romances in general were unprofessional and hampered productivity. About 8 percent of businesses ban office romances entirely.

"I think this is a great teaching moment for Boeing. The system worked as it was supposed to," Dienhart said. "One needs to be loyal to the values of the company, and not to any particular person or office. By forcing his resignation, [Boeing] did that."

Shirleen Holt: 206-464-8316 or sholt@seattletimes.com