Lessons From Corporate Scandals
Corporate scandal. These are the two words anyone thinking about ethics in business is grieved to string together. Yet the evidence is so compelling that corporate leaders lied about the financial standing of their enterprises. Enron was only the beginning of the scandal sheet, now populated by Nicor, Qwest, WorldCom, Adelphia, and Tyco.
From Wall Street to Main Street, the question on the minds of business people, policymakers, and investors is, “Who’s next?” There’s a profound sense of mistrust and betrayal because people who were supposed to work magic in corporate America turned out to be greedy, selfish, venal, and in some cases, felonious in their behavior.
We could wring our hands and become angry over the wreckage of promising companies with sizable payrolls. Just as we looked to one person, the CEO, to work the magic and bring us abundant wealth through increased shareholder value, now we take this opportunity to ask, How could we let this scandal happen? Are we, as some of them believe, simply empty-headed fools hookwinked by well-dressed, well-heeled money people? Or have we created an ethical climate in which greed and selfishness are the norm? After all, few of us complained when our investments increased in value at unheard of rates. Nor did we say, “Hold on with those stock options and personal loans.”
We need to take a hard look at our own ethical standards in business dealings and change our expectations of money and of people directing it. Here are three points that can help change the ethical culture of business and return a measure of sanity and strength to it:
From Wall Street to Main Street, the question on the minds of business people, policymakers, and investors is, “Who’s next?” There’s a profound sense of mistrust and betrayal because people who were supposed to work magic in corporate America turned out to be greedy, selfish, venal, and in some cases, felonious in their behavior.
We could wring our hands and become angry over the wreckage of promising companies with sizable payrolls. Just as we looked to one person, the CEO, to work the magic and bring us abundant wealth through increased shareholder value, now we take this opportunity to ask, How could we let this scandal happen? Are we, as some of them believe, simply empty-headed fools hookwinked by well-dressed, well-heeled money people? Or have we created an ethical climate in which greed and selfishness are the norm? After all, few of us complained when our investments increased in value at unheard of rates. Nor did we say, “Hold on with those stock options and personal loans.”
We need to take a hard look at our own ethical standards in business dealings and change our expectations of money and of people directing it. Here are three points that can help change the ethical culture of business and return a measure of sanity and strength to it:
- Focus on we—not me. The soul of any good company is people working together to create real value. A wise leader in a company won’t look at financial reserves as a personal bank account, but as a corporate resource to be shared with those hard at work making the product or delivering the service. Leading doesn’t mean getting as much as one can as long as one can get it, but rather sacrificing so others can join together to create wealth for everyone. A wise leader says “we” far more than “me.” It’s a long haul.
- Remember the go-go years of the 1980s? That’s when investors and brokers alike clamored for immediate returns and demanded continuously improving quarterly performance. It’s been getting worse ever since. The profound problem with this short-term view is it forces us to focus on money and not value. The moment we focus on money, we lose our soul. That’s what the Good Book says, and we can plainly see money exerts a strong force when it comes to taking shortcuts, doing the expedient thing rather than the right thing, and “making the numbers” rather than doing something of significance.
- Tell the truth—there are better consequences. One of the lessons any of us learn again and again in life is that, when we don’t tell the truth, it will come out anyway. Then we have to deal with our lie, as well as the results of delayed truth-telling, and a sense of betrayal and anger in those affected by the lie. Wouldn’t it be something if someone at WorldCom actually could have stood up and said, “We’re not being truthful with our investors and our customers”?
One little thing we learned recently about WorldCom says it all. Typically, when a customer asked that a service be canceled, it wasn’t. They continued to be charged for the service they no longer wanted and were no longer getting. They got the run-around when they called, and some gave up in frustration. This wasn’t simply a blending of incompatible billing and accounting systems, but systematic defrauding of customers. The responsibility for this practice, in the end, goes right to the top, as we ultimately found out.
We have a tremendous opportunity in front of us to examine our own ethical stance towards business practice—nationally, and in our own enterprises. The financial damage eventually will be repaired. Will ethical practices return as well? IBI