Ann Andrews delivers common-sense advice around business ethics and values, based on some of the high-profile ‘big business’ mistakes of the past.
Every business is faced with daily moral and ethical decisions. I once worked for a company whose claimed values were ‘customer first’ – yet at the end of the quarter our values suddenly became ‘sell all the crap you can to get our numbers up!’
Being in business isn’t easy. There’ll be countless times when espoused values will be tested. Business leaders and managers will be challenged every time they make a decision. What to do when offered cheap goods off questionable suppliers? Is it OK to do a slightly dodgy deal to make a quick dollar?
Values differ from company to company. The 1994 book Built to Last used the following examples of successful businesses built on completely different credos:
• Johnson & Johnson and Walmart made customers central to their ideology; Sony and Ford did not.
• HP and Marriott made concern for their employees central; Nordstrom and Disney didn’t.
• Ford and Disney made products and services their values; IBM and Citicorp didn’t.
• Sony and Boeing made risk taking their ideology; HP and Nordstrom didn’t.
• Motorola and 3M made innovation their focus; P&G and American Express didn’t.
Have their values stood the test of time?
Johnson & Johnson stuck to their values in 1982 when seven people died from taking their extra-strength pain medication. They immediately recalled 31 million bottles. However, in 2017 they were ordered to pay US$417 million to a woman who developed ovarian cancer as a result of using their talcum powder.
What changed between 1982 and 2017? How many complaints had they ignored? Clearly since Built to Last was written, their values became blurred, forgotten or simply ignored.
The entitlement syndrome
We hear our children saying ‘I’m allowed’. In the workplace, ‘I’m allowed’ can translate into employees arriving late and leaving early. At senior levels this ‘right’ can turn into abusing the company credit card or taking spouses on expensive company-funded trips. Suddenly behaviours move from perks to demands to rights.
In the 1990s an Australian politician took taxis everywhere rather than use the chauffeur-driven Commonwealth cars. What’s worse, he insisted his staff do the same.
CEO’s behaving badly
Consider the CEOs of Ford, Chrysler and General Motors in 2008 flying into Washington in private jets begging for a taxpayer bail-out. One politician likened it to showing up at a soup kitchen in a limousine.
In New Zealand, a disgraced health board CEO was fired in 2017 after discovering he had spent $218K of taxpayer money on holidays and conferences around the world at a time when health services were struggling to meet the health needs of his region.
Banks behaving badly
Did banks learn their lessons after the Global Financial Collapse? Clearly not. From May 2011 to July 2015 staff at Wells Fargo banks in America created two million fake accounts in an attempt to fulfil unrealistic sales targets. The four big banks in Australia have been charging customers for services they were not providing. Yes, they’ve been named and shamed, and yes, they’ve been hit with a A$222 million payback to customers. But given that their profits are around A$30 billion will that really act as a deterrent or will they wait till things quieten down and slip back into old ways?
We seem to have developed a world where the dollar is God and the bottom line comes first and everything else second – which isn’t always a recipe for long term business.
Sadly, you can’t force good ethics on people. Businesses either have a moral compass or they don’t. When greed over-rides even basic ethics, sooner or later, the end really is nigh.
What price loss of reputation?
Nestle, Mars, Cadbury and Hershey are being named and shamed because they are decimating the habitats of endangered species. Is chocolate really more important than the last few precious orangutans, leopards and rhinos? Will the bottom line impress our great-grandchildren when all we can show them are pictures of these beautiful animals?
Delta Airlines, Uber and Ryanair lead the survey of the ten worst businesses of 2018. The survey noted that these three companies fell from grace for a variety of ‘leadership and abuse of trust’ issues.
At what point does a company say ‘this is not OK’? At what point do people in leadership say ‘this doesn’t sit right with me’? At what point do we start thinking about the long term effects of decisions rather than the next quarter?
Leaders behaving courageously
It takes courage to name your values. It’s tough saying ‘no, that isn’t the way we do things around here’, particularly if it means turning away an opportunity to quickly grow the bottom line. There will never be a right way to do a wrong thing.
Take precious time to work out your value system; you’ll never regret it.
Some simple ethical guidelines:
1. The Good to Great companies decided who or what came first in their business (customers, employees, suppliers, community, shareholders?). I believe shareholders should never come first in a company – shock, horror! If we put shareholder ROI at the top of our list we will forever be chasing the dollar. Treat your customers well; look after your employees; care for your suppliers; contribute to your community – then shareholders will queue up to invest. They too want to be part of a business that has a solid reputation.
2. Source or build your products ethically. It’s a great ‘selling feature’ to be able to say ‘ethically made’ or ‘reliably sourced’.
3. Accept customer feedback. Love customer complaints. Encourage voices of concern.
4. Be a valued part of your community. Your reputation starts there. How you treat the environment, how you treat your workers and suppliers will be paramount. Remember, locals talk to locals.
ANN ANDREWS is an author, speaker and profiler (www.annandrews.co.nz).
Lessons in leadership: 50 ways to avoid falling into the ‘Trump’ trap was her first book on US President Donald Trump. Leaders Behaving Badly: What happens when ordinary people show up, stand up and speak up is her second, written after watching the fightback against his behaviours.