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Showing posts with label Ethics. Show all posts
Showing posts with label Ethics. Show all posts

Tuesday, May 6, 2014

Published CommPro.biz 2014.05.06

Walking the Edge of the Razor Blade

It would be hard to find anything gone farther astray from its intended purpose in our society than our capital markets. The New York Stock Exchange and all other such entities in the world of finance as played in the United States have forgotten their purpose, to create a source of capital for Capitalism. Instead they have succumbed to enriching the players. Those who manage the markets have allowed the investment banks and the traders to run the show. The exchanges’ purpose is to support the companies listed, not the bankers and traders.

The investment banks have strayed far from their purpose to aid in the creation of capital and to “make a market” for those “going public.” They have wandered off into the world of legalized gambling, having convinced the Congress that laws against gambling should not apply to them. It was a easy step from there into the toxic derivative instruments that plunged the world into the recession where we little folk still struggle. Traders serve little or no purpose except to generate fees for the markets and their middlemen. This is especially true of the latest breed, those rigging the markets with penny skimming high-speed trading.

These ills are just the latest in the distortions that have increasingly plagued the markets. The whole crazy focus on “Playing the Market” instead of investing has corporate management aiming for short-term goals instead of long-term growth. All it takes to unseat an otherwise great CEO is an unexpected-could-happen-to-any-company event. Take Target’s CEO Gregg Steinhafel, who joined the giant retailer right out of college and worked himself up the ladder. Since moving into the top job he has been walking the razor sharp edge between upscale department stores and grungy discounters.

Steinhafel has moved Target deftly along, playing the quarterly results game and introducing new merchandise lines without losing the chain’s flair for quality and value. His foray into Canada has not gone as well as hoped, but it’s not altogether bad and it’s far from a bad idea. Then came the massive waiting-to-happen-to-someone breech of Target’s credit card systems. While the chain lost volume, it’s a testament to Steinhafel’s solid management style that Target did not lose more. And truth be known, the fault lies more with our banking sector’s refusal to move to a more secure RFID based credit card system a generation ago with the rest of the world.

We understand that in the current climate Gregg Steinhafel had to pay the price for what happened under his watch. But there is a lesson to be learned here, and every publicly held corporate CEO has to be thanking their lucky stars that they aren’t in his shoes. They should take the ethical and moral high ground and use their clout with the Congress to focus on long-term financial health. The Wall Street anything goes Wild West financial world is bad news for everyone, for the people, for investors, for corporate America.

Tuesday, April 29, 2014



Published CommPro.biz 2014.04.29

Ethics, Easy, Right? Wrong!!

Nothing to it, ethics is simple. All you have to do, is do “The Right Thing.” The problem comes when “The Right Thing” is not all that simple. It isn’t easy to speak up when your job is on the line. It isn’t even easy to speak up when a friend drops an inappropriate “F-Bomb” or worse makes an always inappropriate racist joke. A lot has to do with personality. Some are gifted with the ability to speak up in such situations. Others, who would never behave unethically, are just not able to speak out against unethical behavior. Some don’t want to alienate anyone.

And while the day-to-day situations we face are important, there are other cases where we must act; especially in the workplace. We have to act if a fellow worker is taking shortcuts that could endanger others, or just not providing service at the level promised. We have to act when we know the company is cooking the books as they did at Enron, or in the Libor scandal. When millions are being ripped off as they were when Enron manipulated energy costs. Even worse, hundreds of millions were hurt when a handful of traders manipulated Libor, impacting every entity and every person paying interest in every corner of the globe.

Some of these examples are illegal, others are unethical. Too often people fail to understand that the ethical line is drawn far from the legal line. Compliance and ethics get mashed together; corporate responsibility for ethics is given to legal counsel. Bad move, attorneys are trained to stay inside legal bounds. Some companies never learn. Hewlett Packard hired another lawyer to oversee ethics replacing Kevin Hunsaker, a lawyer who narrowly escaped jail time when he advised that a witch hunt for a Board of Directors leak was legal. It wasn’t legal and it was miles from ethical. If Hunsaker had based his advice on ethics, it would have saved all those involved worlds of trouble.

High speed trading, the practice of literally manipulating the stock markets could not be more unethical. Its practitioners dart in and out in milliseconds seeking those about to buy a stock, beating them to it and jacking up the price the buyer ultimately pays. Grandma’s pension fund and others lose. These buccaneers of our capital seas cry out that what they do is legal. At the moment so it is, however, it is far from ethical.

It is not always easy to see the ethical line and sometimes it is not easy to hew to that line. It takes practice and sometimes courage. It takes a willingness to risk everything from the loss of a friend to the loss of a career. You will likely find other friends, but you may not find another job. However, if you remain silent to keep a job, you will forever wish you had spoken out. And that job will grow heavy and seem sour every day when you cross over the threshold to your workplace.

Wednesday, January 29, 2014



Published CommPro.biz 2014.01.28

Surprise Surprise

The Great Place to Work® Institute has been creating Fortune magazine’s 100 Best Places to Work list for nearly twenty years. The new list is just out and it’s interesting to note that the 100 companies that make the list share another trait: they make more money than most other companies. Having happy, engaged workers propelled these 100 companies into a growth rate close to five times that of businesses in general over the last two years. Those are the Federal Bureau of Labor Statistics figures. The companies that make their revenue figures public jumped more than 20% in the last two years. 

That may come as a surprise to some; it’s no surprise to us. Happy workers are those who are treated better than their peers in similar jobs. Workers who feel valued are more productive. They stay in their jobs long term. Cut turnover and you build an experienced workforce. It’s a pillar of the ethical business model that marks the firms that stand out even further, firms focused on all the stakeholders that can make or break a company. 

Firms focused on their workers, their customers, their vendors, their community, and on the environment, generate the profits to keep their lenders and investors happy. In their 2007 book, Firms of Endearment, the authors identified a group of companies that met those standards. They earned eight times the S&P Average over the ten years leading up to the research. The levels of growth and revenues gained by the Fortune 100 Best Places companies is impressive, but not close to the earnings of those that made the Firms of Endearment list. It’s no coincidence that companies demonstrating good behavior make more money than their peers. 

However, the ethical business model is not a guarantee. You can treat your workers well, you can follow to the letter the ethical business model and still fail. Any successful enterprise has to have a bit of luck in addition to a lot of hard work and doing the right thing. What we can guarantee is that all things being equal, you are more likely to succeed or to succeed on a larger scale than those who follow a less savory business approach. It’s too bad the bad guys make all the headlines. It’s too bad that sometimes the minority -those bad guys- are seen as the norm.

So it’s no surprise that firms on Fortune magazine’s 100 Best Places to Work list are doing well. As it happens so are most all of the companies on all the lists that document some aspect of good behavior. Surprising to us are the companies that continue to follow the low road in business. While they are a minority, they still are a massive cancer on our economy. Here’s a surprise for those greed centered Wall Street Bankers and corporate executives. They would do better by doing the right thing for all their stakeholders. 

"Am I wrong?"--"Am I crazy?"
"What do you think?"--"Do you agree?"

Monday, January 6, 2014



Published CommPRO.biz 2014.01.06


Who Cares What You Think?

We like to kick off the New Year responding to the remark we have heard so often over the decades that we have been writing opinion pieces: “Who cares what you think?” Good question. Our response is always the same: “Hopefully, no one.” 

A friend owned the only newspaper and radio station in a small town. He ran editorials in the paper and personally voiced them on his station. His newspaper would take one side of an issue and he would dispense the opposite on the radio; he wrote both. He believed a good opinion writer should be able to see both sides of an issue, or they shouldn’t be writing opinion. 

While we make every effort to look at both sides, we are not sure we can follow that ideal in every issue we address. We do not write to convince anyone to take up our position. We do the research; often we will have as many as fifty pages of research for a five-hundred-word OP-ED. Ethics rarely has two acceptable sides. On the other hand, it isn’t always a simple matter of right and wrong either. Like it or not, Situational Ethics are called for at times; the situation can change the ethical call. There are times when one has to think about the impact of hard-line adherence to what seems the right thing at the moment. Or as our friend Saul Alinsky once defined truth, “You don’t have to cross the street to tell someone how ugly they are.”  

So if we don’t write to change your mind, or help you make up your mind, and if we don’t expect people to care what we think, why do we write? We write because the ethical issues we raise seem important to us and we hope you will think about them. We want you to sort through the facts. We want you to search the internet, to read and find a position. If you toss a brick at your computer every time one of our OP-EDs turns up, that’s OK. At least you are thinking about the issues. 

Beware those who dispense opinion for other reasons.  Beware the manipulators.

Friday, October 11, 2013



Published CommPRO.biz 2013.10.11

Reputation – A Road to Profitability
 
In the run up to its 2013 COMMIT!Forum this week (2013.10.8-9), CR Magazine released the results of a piece of research it commissioned on the effect corporate responsibility and reputation have on recruiting. They had a pollster ask people if reputation would impact their thinking before they took a job. These days you wouldn’t think it would be a big deal. Surprise! 69% said they would pass up a job offer from a smarmy company. This was true of those who have a job and those who are unemployed.

When asked what it would take to get them to take a job with a less than top rate company, the answer was a huge raise, at least 50%, more and in some cases they would not move unless their pay was doubled. On the other hand, 84% would move to a more reputable company if offered as little as 1% to 10% more pay. It seems pretty clear that a quality workforce is easier to hire and less costly for reputable companies. And your best people are at risk if your reputation is shaky.

More than their workforce is at risk for financial organizations with a less than stellar reputation, according to the 2013 Makovsky Wall Street Reputation Study. Communications firm Makovsky commissioned this study to measure the impact of reputation on financial companys’ revenues. We know this segment enjoyed a robust recovery thanks to the bailouts and zero interest FED loans. Their smarmy reputation is costing them revenue, however.

The researchers contacted communications professionals in the sector and asked a range of questions about revenues and what their companies are doing to deal with customers’ negative views. On average, revenues are down 9%, a hefty price to pay. Lost revenues total hundreds of millions. Six in ten companies believe it will take five more years to catch up to where their reputations were before the crash. Only one in four say their firm has already reached that level; obviously that may include wishful thinkers.

Study after study show that firms working to do the right thing see a positive impact on their bottom line. The CR Magazine study shows that most people are focused on working for companies with a reputation for doing the right thing. The Makovsky Reputation Study shows that even Wall Street firms can profit by doing the right thing. Makes you wonder why people like Jamie Dimon at Chase and Lloyd Blankfein at Goldman Sachs keep pushing a culture of profits before any thought about doing the right thing.

Too many business leaders confuse compliance with ethics. Blankfein is a lawyer, trained to see the edge of the law as defining right and wrong; that’s compliance, not ethics. Doing the right thing has nothing to do with compliance. Compliance is what you can get away with, not the right thing. Reputation is about the right thing. Research shows if you strive to do the right thing, profit takes care of itself.

Saturday, October 5, 2013

Published CommPRO.biz 2013.10.03

Wall Street Ethics

Mid-September (2013.09.15) marked five years since Lehman Brothers, one of the largest investment banks ever, filed the largest bankruptcy ever, sending sky rockets up all over the world and marking the beginning of what we’ve come to call the “Great Recession.” Lehman’s implosion triggered a serious of herculean bailouts of the rest of our banking sector by the American taxpayers.

Hank Paulson, who became Treasury Secretary after a career at Goldman Sachs, saw a danger of another depression if the banking sector collapsed. He hurriedly threw together the bailouts. However, he failed to impose the controls needed to keep the banks from abusing these funds, leaving them free to award themselves over the top bonuses. The Federal Reserve kicked in billions more, throwing open the doors to the risky gambling (see London Whale) that caused the collapse.

Lehman wasn’t the only bank gone wild; all of the dozen or so monster banks were behaving badly. Lehman was just pushing the limits of the regulation-free climate the banking lobby created over the preceding two decades. Repo 105 was the accounting gimmick of choice at Lehman. The tricksters there would sell off billions of their really bad stuff before each quarterly reporting period, making their books look as though they were sound when in fact they were anything but. Emails, written just before the bankruptcy, show that senior management pushed their subordinates to cover their tracks.

On May 18, 2008, almost exactly two months before the bankruptcy filing, Senior Vice President Matthew Lee had a letter hand delivered to four of Lehman’s top executives with a copy to their house counsel. In it he detailed these practices and questioned both their legal and ethical grounds. Management responded by firing him. Later, Lee identified Repo 105 as one source of the collapse for the federal investigators. Matthew Lee is still out of a job today; nobody on Wall Street has hired this honest man.

Not so most of the schemers who played fast and loose with the financial facts at Lehman. According to a Huffington Post tally, three quarters of the Lehman folks -47 of 63 involved in the Repo 105 scam- are employed in the financial world and doing just fine thank you. In fact, while most Americans are struggling to recover from the crash and millions are unemployed, the Wall Street banksters are fine.

And why shouldn’t they be –aside from ethics and stuff like that– the banks know if they overplay their hand again, Repo 105 or whatever, a taxpayer bailout is just around the corner. So they gamble with your savings, secure in the knowledge that the FDIC will cover their losses and that we’ll loan them whatever they need to get back on their feet. Just don’t ask them to support the small businesses that create jobs or anything like that. Leave that to the suckers who run the regional and community banks.

Wednesday, September 25, 2013



Published in CommPRO.biz 2013.09.24

The Beat Goes On & On & ON

Remember the scene in a Pirates of the Caribbean movie where Captain Jack is gazing from a crow’s nest soon disclosed to be on the mast of a sinking vessel as it approaches a dock where the never-say-die pirate leader steps off and heads off into another hilarious adventure? That must be how Jamie Dimon, the captain at JP Morgan Chase, is feeling these days. Problem is, there is no dock in sight for this buccaneer; he’s up to his neck in trouble and nobody is laughing.

Dimon just can’t seem to catch a break, or more appropriately dodge a bullet. The slowly unraveling London Whale loss of billions involves at least three Chase minions, two of whom are facing criminal charges. The third has to be bothering the folks in carpetland back at Chase headquarters in New York City. Bruno Iksil has not been charged, apparently because he is supplying information on the two guys who have been charged. Bruno is a Chase Vice President. Nonetheless, since Chase has tens-of-thousands of VPs, Bruno is still a grunt. You know your bank is too big when you count the VPs by the tens-of-thousands.

We all know what’s going to happen when one guy starts pointing fingers, it won’t be long until others join in. That fact, along with reports that all these guys kept pointing up the line when this disaster started to unfurl, has to be unsettling. It played out in London, but the players there pointed to headquarters in New York City time and again when the losses were skyrocketing; at last report well north of six billion dollars. The finger pointing is going to spread up the food chain. The London traders claim they acted on guidance from headquarters. That could get very ugly for all the players right up to Jamie Dimon.

As if all that wasn’t enough, The New York Times broke a story about Chase bank hiring practices in China. The bottom line is that Chase seems to have a history of giving jobs to the off-spring of high ranking individuals in the Communist Party who head state owned businesses. Often businesses that have no relationships with Chase, at least not until they hire somebody’s kid. Reports say the Feds have a spreadsheet showing how hires connect to deals Chase was chasing.

Any one of these could be dismissed –as Chase is depicting them– as the acts of lower level rogue employees. Taken together it seems clear that the employees at JP Morgan Chase are under pressure to maximize profit by any means necessary by a management that knows that the taxpayers are on the hook to bail them out again. A management that reflects its leader’s ethics, Jamie Dimon’s ethics. 

Wednesday, September 18, 2013



Published in CommPRO.biz 2013.09.17

Good News “IS” News, Occasionally

We find ourselves largely focused on a minority. The majority, most of us, are trying to do the right thing everyday. By nature we are an honest hard-working people. And most businesses understand that an ethical model is a roadmap to long-term strong profitability. Take care of your customers, employees, vendors, community, and the environment; and the bottom line takes care of itself.

In our weekly pursuit of ethical issues, we find ourselves largely commenting on players who choose to ignore the ethical model. Those not interested in long-term growth. Then there are those who operate in a non-competitive market. A market that is structurally immune to competition such as healthcare. When was the last time someone struck a deal with a surgeon whilst headed for the operating room?

More disturbing are those made immune to failure through their lobbying efforts. Take the monster banks. They have created a world where they are not only too-big-to-fail; they are permitted to take part in unimaginably outrageous practices. They make huge bets –outright gambling– on anything they can label “investing;” even with depositors’ funds insured by the United States taxpayers. Worse, our Department of Justice is afraid to go after these scumbags; a monumental failure.

So between big pharma, predatory healthcare entities, and smarmy bankers, we have lots of unethical issues. We aren’t forgetting that the scumbags make up a tiny minority. Most folks in healthcare are there for the right reasons, executing herculean efforts everyday. Most bankers focus on depositors and businesses in their community. They guard depositors’ savings; make loans to keep businesses growing, homes building, and dreams evolving.

However, good news rarely makes “The” news. That’s what we like when we find a major story about a newsworthy ethical happening. IBM, a pioneer in personal computers, sold that business in 2005 to Lenovo, a Chinese company most of us never heard of. Since then Lenovo has grown their share of the home computer market, recently surpassing Hewlett-Packard. Ninety days ago Lenovo opened an assembly plant in North Carolina. 

All of that is nice, but the icing on the cake came earlier this month (2013.09.02) when Lenovo CEO, Yang Yuanqing, announced that he was splitting $3.25 million –most of his annual bonus– with his workers. For the workers in North Carolina the $300 bucks they received was a nice surprise. For the vast majority in China the $300 is roughly a month’s pay.

Hats off to Yang. He gave away $3 million of his bonus last year. It wasn’t news here until Lenovo built their plant and Yang announced that he would split his time between two headquarters in Beijing and Morrisville, NC. Those who see this as a marketing ploy may have a point, but the impact on Lenovo workers in twenty countries is still there. Unlike other big players, Lenovo produces their computers, phones, laptops and tablets in their own factories. And we’ll bet they don’t have nets stretched around them to prevent the workers from jumping to their death.

Friday, August 2, 2013



Published CommPRO.biz 2013.08.01

Gaming The Farmer

Farming is no place for rubes. Most who produce our food are sophisticated way beyond anything their forefathers could have imagined. Farmers always had to have a wide range of skills to survive. Sadly that’s about all many did; it took just about everything they had just to survive. Today they are mostly well educated, hard-working folks; and like their forebearers, mixing common sense and a wide range of skills.

We recently read of a resourceful farmer who built a drone and equipped it to fly over his land mapping out the soil and crop conditions and feeding the data into his computer. He put it all together for less than the fee he had been paying for a single trip by a fixed-wing plane to scope out his farm. Better yet, he got instant info instead of waiting days for data from the aerial surveillance service.

It seems a shame that all this ingenuity and skill is being trumped when it comes to what farmers get for their crops. Commodity futures have long been how the producers and users of everything from rare metals to foodstuffs have protected themselves against flux in the market. It’s where the term “hedge” came from. In recent times the commodity markets have been invaded by the monster bankers and algorithmic traders. The combination that made a joke of the stock markets.

The monster banks take the interest-free money we give them to invest in the economy and speculate in commodities, derivatives and anything else where they can turn a quick buck. The algorithmic traders are doing the greatest harm to our farmers and jacking up the price of food we put on our tables. They have turned commodity markets into the same gambling halls stock markets have become.

In every gambling hall there are sure winners and sure losers. In commodities it’s the high-speed algorithmic traders and the monster banks who collect every time. It’s the farmers, the end users and the consumers who lose. A role of government is to act as a referee in situations like this. In a similar situation at the turn of the last century, 1905, a minor commodity scandal triggered a quick response. Teddy Roosevelt ordered a full investigation. The Congress passed laws to jail those who gamed the market. The Secretary of Agriculture declared, “We have no favorites.”

Hardly the case today. The monster banks have bought and paid for the Congress. Anything they want they get. The farmers and other commodity producers get the shaft, as do the end users and the consumers. There is an easy fix for this chaotic nightmare. There is no reason for anyone to be in these markets other than the producers and end users. Return the market structure to fit the needs of those for whom they were created. Boot the speculators. Do what government is there for. Do what’s fair, it’s the right thing to do, it’s “Ethics 101.”

Tuesday, May 14, 2013

Published in CommPRO.BIZ 2013.05.22

Reputation, Reputation, Reputation

A disconnect between public perception and reality when it comes to ethics in business is perhaps the most costly economic factor in America. Companies that follow the highest ethical standards make way more money than those following any other model. Communication professionals are –or should be– guarding the most valuable asset in any business, reputation, the fountainhead of profits.

Surprise! Ethics has always been the road to profits. Reputation Rocks! The ethical business model and the United States share came to be in the same era. The late 1700s were a very trying time for the Brits. They were tied up in nasty military conflicts with France, Spain, the Dutch, and Colonial America. The Industrial Revolution was turning society inside out, snatching work and workers from a home-based production model to machine dominated mass production concepts. Great for a new class of factory owners, not so much for those whose living space was dominated by a spinning wheel and a loom worked to the point of exhaustion to eek out a livelihood.

The lucky ones found work at the “Mill,” jobs that look pretty bleak, and were very bleak. Long hours in windowless buildings (windows were taxed), breathing foul air filled with fabric particles, enduring unending, unbearable noise levels, all the while facing the risk to life-and-limb the clattering machines presented. By 1800 the misery of home-based labor had given way to the despair of the mill and the tenement. Bad as this picture was, strangely it was a tad better than the brain and body numbing efforts of the home-based model it replaced.

However, the ethical business model was growing on the fly. Late in the 1700s a ten-year-old lad, Robert Owen, set off to make his fortune in London. He became a commission salesman at a men’s clothing establishment.  By the time he was eighteen Owen had saved £100, a small fortune in that day. Enough to go into business for himself turning raw cotton into cloth; within a year he tripled his fortune.

At nineteen he made the acquaintance of a large mill owner with a Dickensesque name, Peter Drinkwater.  Drinkwater purchased Robert Owen’s equipment and goods and hired him at £300 a year to manage his mill.  For six weeks Robert changed nothing, he just walked about the mill and got to know the employees. Once he felt he knew what was needed, he began to act.

Owen improved working conditions, visited the workers in their homes offering help and advice.  He set up schools for them and for their children. The first year he quadrupled Drinkwater’s profit.  When the owner came up to his Manchester mill from London to see what this young genius had done, he found his mill clean and tidy, his workers happy and productive.  He gave Owen a £100 bonus and a new contract with a percentage of the profits built in.

Now in his early twenties, Robert Owen kept improving the lot of his workers and Drinkwater’s profits kept soaring.  He added windows and ventilation to the mill. He refused to hire very young children. Not only was the mill well run and extraordinarily profitable, the quality of the goods was the finest in the land. When Drinkwater wanted to buy out his contract, he happily agreed. At twenty-seven Robert Owen had become a “brand.”

On a visit to Scotland, he met the charming daughter of a mill owner and bought her father out for £60,000. Now with a mill of his own and the love of his life at his side Owen was ready to show what the ethical business model could really do. He cut the workday from twelve to ten hours. He put in showers and provided healthy meals, often eating with his workers. He leveled the tenements and built comfortable cottages. He lived among his workers. He gave prizes for the most beautiful gardens grown from flower seeds he provided.

Owen built a combination nursery, kindergarten, and school. It ran day and night caring for the small children of his workers, teaching older children and anyone else who wanted to learn. Teachers could not strike the children; Owen explained that it only taught them violence. He poured money into improving the lot of his workers. He believed that clean water, a sewage system, trees, flowers, and healthy employees were a benefit to everyone and to his bottom line.  A bottom line that made him very wealthy. Owen is just one of many who adopted an early ethical business model. Through the 1800s and into the 1900s this model became the hallmark of many great and highly profitable enterprises. 

Peter Cooper was born in New York City in 1791, the year Owen turned twenty. An extraordinary human being, Cooper’s serendipitous life melded his remarkable intellect and resourcefulness to turn both opportunities and disasters into useful and profitable enterprises. He continued to live a simple life even after he became the richest man in New York. His idol, Benjamin Franklin, died the year before Cooper was born. Like him, Franklin had only one year of formal education. And like Franklin, Cooper felt America’s future lay in education. He was determined to found an institution of higher learning for the poor.

In his sixties, Cooper began to build his school, The Cooper Union.  And to be sure he got the school he wanted, he maintained total control: his money, his plan, his school. He believed education should be “as free as the air we breathe.”  He offered night classes for adults. He encouraged both men and women to attend; devising special classes to be sure young women gained useful skills. His dream endures. Cooper Union continues to serve —as he put it— “the boys and girls of this city, who have had no better opportunity than I enjoyed.”

Peter Cooper was in his mid-forties when Jamie Oliver arrived in America from Scotland. His father had been content to scratch out a living tending another man’s sheep. His mother was determined to come to America.  They finally made it in 1836 and found themselves in Mishawaka, just outside South Bend, Indiana. That state was giving a farm, a rich piece of fertile earth, to anyone willing to live on it and work it. What a far cry from keeping someone else’s sheep in the rocky hills of Scotland.

Jamie loved farming every day of his life. He found it necessary, however, to work at almost any odd job he could find. Along the way he learned how to smelt iron, so when a fellow in South Bend wanted to sell his struggling foundry Jamie came up with $88 to buy it. The plant cast the one-horse plows farmers relied on to turn the soil. Jamie knew from backbreaking personal experience that the plows of the day could stand considerable improvement.  In 1870 he sold his first Oliver “Chilled” Plow – so named for a unique method of cooling white-hot metal as it was formed.  In just a few years his little foundry grew to a 30-acre complex, the
Oliver Chilled Plow Works, capable of producing a half-million plows a year. Jamie’s innovative design reduced by half the effort of both the horse and the man behind the plow.

Through it all Jamie never saw himself as a factory owner or a businessman. He saw himself as a farmer, solving farmers’ problems.  He saw his workers as vital to solving those problems and felt responsible for giving them comfortable lives so they could focus on that task. When financial woes struck the nation, Oliver kept his plant producing, storing the plows he couldn’t sell until better times came.  He never laid off workers and never reduced wages.

To put the importance of Oliver’s ideas in perspective, remember in his time, 60% of Americans lived on farms. He made the lives of the farmers easier and more productive. Jamie played a vital role in the largest sector of America’s economy.  Jamie Oliver considered himself a farmer, a friend of the farmer, a partner of the farmer, and a partner of nature. His success came while seeking to benefit his fellow men, the very essence of the ethical business model.

The Industrial Revolution was in high gear in the late 1800s and no place on earth illustrates the extremes it created more than Pittsburgh, Pennsylvania. Nestled along the Monongahela River on one side of Pittsburgh were Andrew Carnegie’s steel mills. The gutsy little Scot built his enterprise on benevolent principles. But when he needed it most his resolve and moral fiber failed him.

The defining moment in Carnegie’s life came in 1892 at his Homestead Works. He was bent on nipping a tiny union movement in the bud. He saw it as elitist because membership was not open to the vast majority of his workers. A minor dispute spiraled into war. Carnegie locked out all of his workers and called in a private Pinkerton army. A battle ensued resulting in 16 deaths and over 20 seriously wounded, forever tarnishing Carnegie’s legacy.  All the libraries, a great university, and his other numerous charities will never erase this tragedy.

A lesson learned in Homestead was not lost on another Pittsburgh business man, Harry Heinz. He had started out packing horseradish in his parents’ basement. A talented promoter and salesman, he was forced into bankruptcy as a result of (as his competitors saw it) his out-of-touch-with-reality idea that preserving food intended for human beings should be done under sanitary conditions.  Heinz persisted, however, starting over again and even going back and paying off those who lost money when his earlier enterprise went under. He called those “moral debts.”

By 1892 –the year of the violent Homestead strike– Heinz was growing his food packing enterprise a few miles away on the north shore of the Allegheny River across from Pittsburgh. He hoped to create an atmosphere that would make violence unnecessary. His plant was to grow larger and larger in the last decade of the nineteenth century, and as it grew it became a model for enlightened employee working conditions. Like Owen, Cooper, Oliver, and others, Heinz was out of step with some of the conventional thinking of the day.

The H.J. Heinz plant that emerged as the century turned was unique in almost every way. It was bright and sparkling clean.  It preserved and packed a wide range of foods by natural processes under pristine conditions. Workers (mostly women) wore clean blue and white uniforms and were trained in high standards of personal cleanliness. Every employee was given a weekly manicure.

Heinz employees were offered a wide range of educational, recreational, and social opportunities.  A roof garden and reading room were provided for their use; a swimming pool, regular outings and picnics made it an ideal place to work.  Far ahead of its time and not bad even by today’s standards.  Sounds almost like life at the Googleplex.

The ethical business model was supported mostly by anecdotal evidence until two academics and a writer published Firms of Endearment that documented their groundbreaking business ethics research. They set out to find companies with the highest ethical standards. Companies that dealt with all their stakeholders on the highest ethical plane: their customers, their employees, their community, their vendors, and the environment. But how about their bottom line? How about their shareholders?

It turned out that over the ten years prior to the Firms of Endearment study, the public companies that met their ethical bar returned eight times the Standard & Poor’s average. Not eight times the worst, eight times the average return. That’s pretty impressive. It shows that if you take care of everything else your bottom line will take care of itself. It doesn’t mean it’s always easy to follow this path or that everyone who follows it will succeed. Unforeseeable factors such as market trends, economic downturns, competitive issues –even a natural disaster like Super Storm Sandy– come into play.

It takes smarts. It takes hard work. It takes courage to succeed. You have to be lucky and you have to follow the oldest of moral guides, the Golden Rule. That’s what ethics is really all about. Nor is it writ large that cutthroat bad guys don’t succeed. It just means that all things being equal, an ethical business model will dramatically outperform any alternative. Instinctively we know that; it’s why the vast majority of us are out there trying to do the right thing every day, enjoying the great feeling that comes from that effort win or lose.

In the end that’s what it’s all about, the satisfaction we gain from our endeavors. We want to be able to hold our heads up when we head out to work. We want to end the day fulfilled. We don’t want to spend our life looking over our shoulder. Just as nobody wants to do business with a crook, nobody wants to look back on their life and feel like a crook. Crooks can always justify their behavior, but deep down in the dead of the night they know who they are and what they are, they are crooks.

Tuesday, March 19, 2013

Toothless Ethics
 

The PRSA (Public Relations Society of America), the largest membership organization for those engaged in this craft, does many things well. It does not do ethics at all. And that could explain why the public holds its practitioners in the same class as pond scum. Corporate leaders with a few exceptions pretty much agree with that assessment. So much for that treasured “Seat at the table” –never mind the seat at the right hand of the CEO.

Instead of whining about it, we need to examine why we're relegated to grinding out media releases and waiting for the roof to fall in. Crisis management too often sees us called in to fix something that we could have predicted had we been in the room when the idea was broached. Of course there are those among us who are afraid to object when we see a train wreck around the corner; especially when the CEO is pouring on the coal. 

One of the most successful members of our craft, Howard Rubenstein, founder of Rubenstein Associates, has done pretty well coming from an opposite viewpoint: “Feeding the client only what they want to hear is a form of ethical deception—and it happens every day in the agency world. That's too bad, because if a client thinks you're telling the truth—even if it hurts—they will value your opinion far more than if they think you'll say anything that will suit them. So I guess the take away here is that the best client service is being upfront and honest. That includes being aggressive in insisting that the client is accurate and ethical in all its dealings and messaging with the public.”

While few of us operate in the rarefied atmosphere Mr. Rubenstein occupies, we have every reason to follow his lead. That’s how to escape the bottom-feeder pond scum image we suffer from. That’s how to gain and hold the seat at the right hand of the CEO. We have to do our job and protect the most valuable asset any organization enjoys, its reputation.

That job is grounded in ethics. Unfortunately for all the good it does, the PRSA, our national face, does not require ethics, let alone the level Howard Rubenstein suggests. Yes they have a code; they even put out an app so you can look up the right thing to do if in doubt while afield.

Problem is, you have to be hauled before the law for the PRSA to kick you out. They whine about legal expense. Right, let’s visualize that: after several warnings and opportunities to straighten up and fly right, the PRSA quietly kicks some miscreant out. Would anyone in this business risk the damage a public airing of their dirty laundry that a lawsuit would trigger? Not going to happen. So the real scum in our craft continue to flaunt their membership in the PRSA and the credentials awarded by the organization. Unfortunately for those in the reputation trade, the courage to protect our own reputation is sadly lacking.

Tuesday, January 15, 2013

Published 2013.01.15 in CommPRO.biz

‘Big Pharma’s’ C-Suite 

All Money, No Ethics?

Groundbreaking investigative reporting by the Milwaukee Journal Sentinel and MedPage Today has exposed disgusting conflicts of interest in the guidelines doctors follow in treating almost every malady known to mankind. The various branches of medicine convene “panels” of their member doctors to examine the scientific evidence and create clinical practice guidelines for their members.

The Institute of Medicine (IOM), part of the National Academy of Sciences, an independent, nonprofit organization –not an arm of the government– has some pretty straightforward rules on how these panels are to be set up. They are very clear especially when it comes to a panel member’s connections to those peddling medications or other treatment tools. Less than half of the panel is to have a financial relationship with a company connected to the condition. The panel Chair is never to have such a relationship; pretty low ethical bars.

The Journal Sentinel/MedPage Today looked at a cross section of 16 panels that were willing to disclose conflicts. Of those only two met the IOM standard and at least ten panels (62.5%) were chaired by doctors with Big Pharma financial ties. The journalists looked at twenty clinical practice guidelines for conditions that may be treated in the US by blockbuster drugs like Lipitor, Cymbalta, OxyContin, and Nexium. Nine of the guidelines were written by panels with more than 80% of the doctors on Big Pharma payrolls. What do you think they recommend?

Overall, of the panels that even check for conflict of interest, 66% of the docs had connections to Big Pharma. “Some guidelines recommend drugs not scientifically proven to safely treat conditions, leading to inappropriate or over-prescribing, specifically guidelines for anemia, chronic pain, and asthma,” the journalists report. Research funded by drug companies was not counted as a conflict in the Journal Sentinel/MedPage Today investigative report, just fees for speaking, consulting and advising.

Big Pharma and other interested parties, including some docs, contend that all the top people have financial deals. They say it would be impossible to put together expert panels if you disqualify those with conflicts. We wonder how that came to be? Is it possible that those peddling drugs and medical gadgetry from artificial body parts to hi-tech imagery would seek out and sign-up as many of the very top doctors as they can when their bottom line might benefit? Of course they would and they have! How about the docs; how could any doctor consider serving on a panel related to companies they have accepted cash or other goodies from?

The companies have been slapped with massive fines to no avail. “What we’re learning is that money doesn’t deter corporate malfeasance,” says Eliot Spitzer, former New York State Attorney General. “The only thing that will work in my view is CEOs being forced to resign and individual culpability being enforced.” We agree. When there are billions in profits to be gained, fines are just another cost of doing business for these companies.

Wednesday, January 2, 2013

{From CommPRO.Biz 2013.01.02}
http://www.commpro.biz/corporate-communications/who-cares-what-you-think/

“Who cares what you think?”

The ‘How’ and ‘Why’ to Craft a Meaningful Opinion Piece 
–Understanding Both Sides

We like to kick off the New Year responding to the remark we have heard so often over the decades that we have been writing opinion pieces: “Who cares what you think?” Good question. Our response is always the same: “Hopefully, no one.”  However, we keep writing. The goal–to craft a meaningful opinion piece.  Here’s some background to help you get a sense of my ‘how-to’ steps for expressing my passion.

A friend owned the only newspaper and radio station in a small town. He ran editorials in the paper, and personally voiced them on his station. His newspaper would take one side of an issue and he would dispense the opposite on the radio; he wrote both. He believed a good opinion writer should be able to see both sides of an issue, or they shouldn’t be writing the opinion.

While we make every effort to look at both sides, we are not sure we can follow that ideal in every issue we address. We do not write to convince anyone to take up our position. We do the research; often we will have as many as fifty pages of research for a five-hundred-word op-ed. Ethics rarely has two acceptable sides. On the other hand, it isn’t always a simple matter of right and wrong either. Like it or not, Situational Ethics are called for at times; the situation can change the ethical call. There are times when one has to think about the impact of hard-line adherence to what seems the right thing at the moment. Or as our friend Saul Alinsky once defined truth, “You don’t have to cross the street to tell someone how ugly they are.”

So if we don’t write to change your mind, or help you make up your mind, and if we don’t expect people to care what we think, why do we write? We write because the ethical issues we raise seem important to us and we hope you will think about them. We want you to sort through the facts. We want you to search the internet, to read and find a position. If you toss a brick at your computer every time one of our OP-Eds turns up, that’s OK. At least you are thinking about the issues.

Beware those who disperse opinion for other reasons.

Beware the manipulators.

Happy New Year!

Tuesday, December 11, 2012



My 2012 Top Ten 
Business Ethics Milestones

This year as every year almost everyone and almost every business strives and succeeds to maintain the highest ethical standards. It’s our nature and we know that our most precious asset is our reputation. After all, who wants to do business with a crook? It is, however, a struggle; and it’s too easy to take that first little step over the line onto the slippery slope. Of course there are those who seem ethically challenged. They spend a lot of time and treasure scheming and even more trying to cover their tracks. Ultimately they end up at the bottom of the slope, way past ethics into criminal territory. Most of this year’s milestones fall into the latter category, but there are some outstanding rays of sunshine.

#10 Let’s start out with some good news. A nationwide research study by Satmetrix, a West Coast provider of customer experience software, measured the attitudes of 30,000 consumers. Their findings reinforce the ethical business model’s value. It’s no surprise that companies boasting a long history of ethical standards top the list. Wegmans, Costco, Apple, Jet Blue, American Express, Virgin America, Amazon, Lowes, Google, all the usual suspects lead when it comes to doing the right thing. And guess what? They are leaders when you check their bottom line.

#9 There’s no such glow when you look at a few of our wealthiest Americans and biggest financial institutions; you get more of a Greasy Sleazy Feeling. They think nothing of turning our commodity markets into gambling halls, manipulating the price of food and fuel. Markets designed to support commodity producers have become a playpen for those with more money than morals. There’s a cure: limit commodity purchases to end users. Good for producers, good for end users, good for consumers, good for America.

#8 The ethical cesspool at the center of the media colossus Rupert Murdoch spawned on London’s Fleet Street, is beginning to suck him into its vortex. Unfortunately, it’s spread beyond his native Australia and Great Britain; it has spilled onto our shores. Murdoch became an American citizen so he could legally own broadcast properties here. He bought a couple smarmy newspapers like his British rags. He has also taken over and is twisting the once the once well-regarded Wall Street Journal. His big bucks come from broadcast holdings; satellite operations in Asia and Great Britain, cable outlets here. And then there’s his production arm producing television programs and motion pictures. Murdoch lunged over a line that most media tend to avoid, plunging into politics, even attempting to pick out his own presidential candidate. That kind of activity is common in Great Britain, not so much on this side of the pond. It’s especially disturbing when practiced by Scum-Lord Rupert Murdoch.

#7 Big Pharma's Big Con. The real cost of bringing a new drug to market averages $90 million a pop; a lot of money but a fraction of the$1.3 billion dollars they claim. Unless of course you include marketing, that’s where the big bucks go: flooding doctors’ offices with materials and samples, even hiring them to pitch other docs on the newest, latest, slightly updated drug. Add in the avalanche of print and television advertising urging patients to pressure their doc. It all adds up to sky high drug prices. Prices protected by a law prohibiting the government from negotiating lower prices– all courtesy of Big Pharma’s friends in the Congress. It’s enough to make you sick.

# 6 When the lobbyists pushed through “The Commodity Futures Modernization Act” opening up Wall Street to gambling, they unleashed a chain of events that resulted in the collapse of the world economy eight years later. Wall Street began leaping one ethical barrier after another and today everyone but the bankers is suffering. Dodd-Frank is designed to rein in some of the worst of this. The bankers are fighting these sensible controls. Our economic future depends on how it works out.

#5 Foxconn, a Taiwanese company with operations in China and around the world, makes many of the electronic toys that fill our lives. A British newspaper report described the life of a 21-year-old woman working ninety hours a week for less than fifty dollars a month. They calculated that allowing for inflation that fifty bucks comes to, “about half the wage weavers earned in Liverpool and Manchester in 1805.” Ponder that ethical issue the next time you finger the electronic toys in your pocket.

#4 Little did we know that the HSBC slogan, “Bank as easily around the world as you do at home” was to be taken literally. That this British “too-big-to-fail” bank was laundering cash for Mexican Drug Lords, hiding funds from the IRS in far off India for wealthy Americans, providing US currency to a Middle Eastern bank said to be a source of terrorist funding, and generally thumbing their nose at American laws and regulators. The bank has been hit with a record $1.9 billion fine in the US. The $27.5 million Mexico hit them with last summer along with the legal fees they have run up brings the total over $2 billion. That sounds like a lot of cash until you compare it to their 2011 profit, nearly $17 billion, or to a bonus pool of more than $4 billion that the HSBC executives split up. And surprise, it looks like none of those big-wigs are facing jail. The $2 billion amounts to pocket change for HSBC, just another minor cost of doing business.

#3 “Income Inequality” is a really big deal in the minds of Americans. A Pew study found it to be our greatest source of tension. Two thirds of the respondents see the divide between the super rich and those on down the food chain as our major concern. Reinforcing that view, in a Bloomberg Global Poll more than 1,200 investors, analysts and traders say it harms the economy and harms growth. Why is nobody willing to do anything about it?

#2 How can we turn our backs on sexual abuse? The Church, College Athletics, The Boy Scouts, who knows where it will be found next? The abuse of our children by institutions we trust is horrific, to cover it up is unforgivable.

#1 The Gift of Life - 4,800 people died last year waiting for a kidney. There were nearly 100,000 waiting for one a few months ago. The numbers are similar across organ donation programs. How could that happen? Consider that the latest available annual highway death toll (2010) totaled 32,885 individuals, a tragic number. But most with healthy organs, it’s disgraceful that so few remember that should something fatal befall us, our organs could help others live. Every business, everywhere we gather, organ donation should be a primary focus. We can think of no higher moral and ethical goal than assuring that if we give up our lives, we give life to others.