My topic this morning is ethics. Just how far our society has come on business ethics was brought home to me recently in reflecting on this incident about a neighborhood teenager looking for a part-time job. He was asked to take one of those integrity tests before the supermarket would hire him to sack groceries. At dinner he confided to his parents: "I’m kind of worried about that test they had me take today. They had questions like: Have you ever taken drugs? Have you ever cheated in school? Have you ever stolen money from your parents? Have you ever stolen anything from a schoolmate or an employer? When I started answering ‘no’ to all those questions, I started worrying that they’d think I was lying because I sounded too good to be true."
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The student got the job. But where have we gotten to when our teenagers feel uneasy about being too honest to get a job!
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Unfortunately, too many businesses grab today’s headlines for the wrong reasons—their unethical behavior rather than their new technology. Executive extravagance at the expense of shareholders.... Insider trading scandals.... Corporate espionage involving trade secrets.... Overcharges and kickbacks on contracts.... Price-fixing.... Illegal disposal of chemicals.... Patent infringements.... Warranties that aren’t.
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Of course, these are not typical of all businesses—not typical of even the majority of businesses. But the point is—they are typical.
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Allen I. Young, general counsel at Price Waterhouse, points out in their Price Waterhouse Review the fraud and dangers in what is termed "cute accounting" or "loopholing." If caught, the people who lie in these ways can always point out a chapter and verse in accounting literature that, they claim, led them to such erroneous thinking. Their rationalizations, however, rarely wash with the IRS because they know they are following only the letter of the law rather than the substance.
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Why do we have to pass policies and establish procedures on ethics? Isn’t just plain old-fashioned honesty in vogue any more? It hasn’t been for quite some time. According to Winston Churchill, "A lie can run around the world before the truth can get its boots on."
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But besides an inner code of morality, there’s a bottom-line reason for our interest in ethics. In the experience of most CEOs—or at least among those who voice their experience to others—unethical behavior sparks a failure mode that runs throughout the entire company. All the way to the bottom line, given enough time.
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The Greek poet Sophocles admonished: "Rather fail with honor than succeed by fraud." And the Greek sage Chilon put it like this: "Prefer loss to a dishonest gain; the one brings pain at the moment, the other for all time."
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So there are two over-riding reasons for our concern with ethics: A basic moral code that we value and subscribe to. And a common-sense law of business—credibility with our customers and long-term profitability.
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This morning, I want to highlight some of the key areas where we have concerns:
[Insert details about specific policies and procedures that have ethical implications.]
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Speaking of ethics in general, C. J. Silas, CEO of Phillips Petroleum, says, "Improving our corporate credibility is something that merits a strong effort. It will take substantive, structural work—not just a quick paint job."
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In our lifetime, we’ve come to some fuzzy thinking where ethics have been concerned. The philosophy in the highest political offices in the country today seems to be, "Do whatever you have to; just don’t tell me about it." With this message, these leaders have removed themselves from responsibility, should the questionable conduct be discovered.
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Such bury-your-head-in-the-sand management sounds much like the widow who was talked into a shady real estate deal by a fly-by-night developer. After she calculated her losses at over $50,000 from her life savings, she contacted the Better Business Bureau to file a complaint.
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The Bureau representative chastened her a bit: "Well, it sounded fishy right from the start. Why didn’t you come to us before you invested your money? Didn’t you know about our services?"
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"Oh, I did," she answered. "But I was afraid that if I called you, you’d tell me not to do it."
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I assure you that that’s not our thinking here at (company). We don’t want to have our heads in the wastebasket—or in the sand.
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We ask that you make those individual decisions that involve an ethical matter based on our general guidelines. But when you find yourself in a situation that you feel needs clarification, ask. Don’t keep quiet. What we as management don’t know will hurt us—eventually.
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As Andrew Jackson said, "One man with courage is a majority." We want you to be the individual with courage to make the ethical decision. We’re committed to making sure the ethical decision becomes the majority position here at (company).
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Yes, we have tried to write company policies that dictate ethical behavior. For the corporation as a whole, we intend that ethical behavior overshadow profit. And it’s our intention that these policies and procedures I’ve outlined color in those gray situations for you.
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But you as our representative write the final line. You are the company’s signature. To the general public and to our customers, you are (company). And all the policies in the world won’t do much good if you, as our front-line representatives, make the wrong decisions day to day. Our ethics are embodied in you.
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If you want to verify that you’re in step with the organization, honest and integrity are of value here. We want those to be the primary considerations in all personal or professional decisions.
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In short, we don’t want you to bend the rules; we want you to embrace them. Mark Twain once said, "Always do right. This will gratify some people and astonish the rest." Either way, we win.
