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Showing posts with label ethical. Show all posts
Showing posts with label ethical. Show all posts

Wednesday, April 30, 2014



Published CommPRO.biz 2014.04.30

Sticky Arena Floor Ethics
 
The Staples Center in Los Angeles may be different from other arenas, but in most such sports palaces the floor is usually a little sticky, scummy if you will. It’s that kind of feeling that this whole Donald Sterling mess leaves us with. Ethically it is so far out of bounds that it’s out of sight. Sterling is still the owner of the LA Clippers, but he has been sent to the woodshed, the door has been slammed and he doesn’t even have a knothole to peek out at his club.

The brand new NBA Commissioner Adam Silver took swift action banning the long time Clipper’s owner from anything to do with his basketball franchise or anything else connected to the NBA, “forever.” And he slapped him with the maximum fine under NBA rules $2.5 million; pocket change for Sterling.

It’s not that Sterling hasn’t been in a woodshed before. He has a history as a bad boy who has managed to buy his way out of one mess after another. When you are a billionaire you can do that sort of thing. In Sterling’s case everything about him and his fortune leaves the bottom of your shoes sticky. He is a lawyer who started out in the Barracuda Bar, suing for a big share of the settlements. But that wasn’t enough. He moved into the landlord business, and that’s how he got into the “Ten Digit Club” – a billion dollars is a thousand million dollars.

Sterling has never been convicted of serious wrongdoing. However, he is certainly not the kind of landlord most of us would choose. He has been hauled into court for refusing to rent to minorities, blacks and Hispanics. All of these actions were settled before the court imposed a penalty; one even eclipsed the NBA fine a discrimination suit that settled for $2.765-million dollars; still pocket change.

Reckless, would describe a lot of Donald Sterling’s public life. His parading the women money buys for him in public. He seems to have left his moral compass in pieces somewhere along the road. You wonder how someone can fall to this level. Surprisingly it is easy. We have no idea how Donald Sterling lost his way. But those who wander from the life most of the rest of us strive to maintain have no intention of ending up like the sticky scum on an arena floor.

It begins easily enough; it’s just a little thing. Any number of emotions can trigger it: fear, jealousy, envy; the emotions we all feel and on occasion have allowed to turn our heads. It’s those who can’t turn back who are in danger of following a path that ends up in the rejection and degradation that Donald Sterling has on his head. It’s our guess that Sterling is so far down that path that he doesn’t care. Be sure that you don’t let that easy first step off the path lead you to a place you never intended to find yourself. 

Wednesday, April 2, 2014



Published CommPro.biz 2014.04.01


High-Speed Trading 
Too Fast To Lose

Let's trim the Buccaneer's sails
 

Financial whiz turned best-selling author Michael Lewis, explains in The Big Short how greed-driven monster banks ran the world economy over the cliff. Why not? They knew that if anything went wrong they had nothing to worry about; they were “Too Big To Fail.” In his new book Flash Boys Lewis explains how high-speed traders make suckers out of large and small investors, rigging the markets in a we-win-you-lose game.



Sunday night (2014.03.30) on CBS 60 Minutes, Lewis explained how these buccaneers of the financial seas fly in and out of the markets in milliseconds, picking up pennies on zillions of trades. By purchasing advance information, they know where you’re headed and are able to buy target stocks split seconds before you do. By the time investors –the funds where your 401K resides, or the pension fund caring for grandma’s life savings– get to the market, the high-speed traders have jacked up the price, sold to the suckers and made off with their plunder.



The 60 Minutes Lewis interview follows tight on the heels of New York State Attorney General Eric Schneiderman’s launch of an investigation into the data sources high-speed traders lay big bucks on to get this jump on investors. Traders are just that, traders with no interest in supporting the markets. Currently all this is legal; it’s what drives the number of daily trades into rarified atmosphere. However, it has nothing to do with the purpose of the markets. In fact high-speed traders serve no social purpose whatsoever. They will tell you that they have reduced the cost of trades. While that is true, any savings long-term investors see are lost to the increased stock prices they pay. High-speed trading is miles beyond unethical and amoral.



The big exchanges, NYSE and Nasdaq, profit mightily; the latter reported tens of millions from selling data last year. That doesn’t include the rent they pocketed for allowing the high-speed traders to locate their computer servers side-by-side with exchange servers giving them another edge. What’s even worse, these high-speed buccaneers play the markets virtually risk free. One firm bragged that they have seen but a single day in the last five years when they lost money. They are literally “Too Fast To Lose.”



Lewis and Schneiderman are shining a light on these slime bags. Now it’s time for the Congress to act. There is a simple way to return the markets to their purpose, “The provision of capital for our economy.” Adjust our tax structure to collect 99% of profits on property held for less than an hour. And 90% on property held less than a week, 80% less than six months, 70% less than a year, 25% less than five years, 15% less than 25 years, and tax free on any property held over 25 years. That would fit in nicely with Warren Buffett’s declaration that “never” is the best time to sell a stock.



It would be good for capitalism; it would be good for Americans, for all of us.


"Am I wrong?"-"Am I crazy?"
"Do you agree?"-"What's your view?"

Thursday, February 20, 2014



 Published CommPro.biz 2014.02.20

A Bribe Is A Bribe Is A Bribe

A recent (2/09) New York Times story detailed the hiring of a young woman at the behest of a family friend. A job was created for her at JP Morgan Chase. Her family friend just happens to hold a powerful position in a Chinese agency that oversees insurers. The bank was looking to snag business deals with a number of the insurers that her benefactor holds sway over. There is nothing unusual about arrangements of this nature. What makes this one stand out is, that the “ask” was in the ear of Jamie Dimon, top dog at Chase. The young woman was not only in the room, she was serving as the official’s translator.

First off, the young woman was an outstanding candidate; Chase was lucky to get her. And Dimon was careful to distance himself from the hire. However, Chase did get a bunch of deals right quick from companies under the regulator’s gaze. It seems clear that in addition to getting a first rate employee, Chase made a ton of money from her family friend’s ”contacts”. Because a government official is at the center of this arrangement, a case might be made that hiring the young woman at his behest constitutes a bribe. That’s a big “No-No” under United States law.

This is not an isolated case. Chase has a history of jobs for deals as do most all of the monster banks; Goldman Sachs, Citi, and all the usual suspects. Legally they are likely inside the safe zone; ethically they are not even close. While Dimon was careful to give himself cover on this hire, it doesn’t change the underlying truth. These deals –especially in light of their frequency– indicate that they are part of the culture of these banks. The culture of any organization reflects the ethical and moral compass of its leader; in this case Jamie Dimon.

These monster banks slithering around making backroom deals to gain the favor of business or government officials are ethically pathetic. A good business leader knows to back away from any deal that is not a good deal for everyone involved. Cash under the table or hiring somebody’s kid, either way it’s a bad deal for the buyer and the seller. It’s an admission by the seller that what they’re selling isn’t worth the price, and/or it means the buyer didn’t get the best deal for their bucks.

These banks are too-big-to-fail and way too-big-to-manage. They’ve created a greed driven culture that does anything to keep the bucks rolling. They’ve trampled the real bankers in our community banks, using ill gotten profits gained by gambling with their depositors’ funds; all insured by the FDIC (that’s us). The solution is to break these monsters up before they trigger another crash. We did it in the 1930s  and set up rules that kept us safe for the better part of a century. Lesson learned? It’s time to repeat; break up the too-big-to-fail banks before they fail again. How hard is that to understand?

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

Friday, January 17, 2014



Published in CommPRO.biz 2014.01.16

The Earnings Culture

Public companies are driven by the need to show earnings. The path they follow to that end determines their corporate culture. Horace Greeley, the dominant editor and publisher of the 19th century, commented, “The darkest hour in any man's life is when he sits down to plan how to get money without earning it.” Problem is, some corporate leaders see any action to increase “earnings” as fully justified. Too many CEOs seek “earnings” by any means. They look at the fines and legal penalties incurred as -“oops”- no more than the cost of doing business.

Investors too often are not concerned how “earnings” are achieved. While the ethical business model is the proven best source of high earnings, some see the concern for employees, communities, vendors, and the environment that model requires as taking money out of their pocket. Some even see a focus on treating customers fair and square as a missed opportunity to increase profits.

We saw this in the run up to the current recession. The monster banks pushed the pipeline to produce more and more mortgages, ignore the details, don’t fret about income verification. Once in hand they threw together these shaky mortgages (“Crap” was the term they used), put a few good ones on top of the pile and sent them off to the rating agencies. The bankers were not hesitant to point out that as paying clients, the rating better be AAA.

These bundles of sure-to-fail “crap” were sold as if the triple A ratings were real. Adding insult to injury these banks placed bets that the “crap” they created and sold would fail. They bet against their own customers. They made money coming and going; money they called “earnings.” The shareholders loved it. J.P. Morgan Chase, Goldman Sachs and a handful of monster banks deliberately created financial products designed to fail.

When they were caught off guard by the collapse of their whole scheme, they turned to the taxpayers for help. While necessary, the bailout was designed by Bush Secretary of the Treasury, Hank Paulson, former CEO of a monster bank. He gave his mates the needed money but failed to attach any conditions. We the taxpayers continue to provide interest free funds to these banks believing that they will lend it to small businesses and create jobs.

Wrong! They are back to gambling with our money, this time boosting prices on basic commodities that folks strapped for cash have enough trouble paying for. As long as the banks’ “earnings” look good, the stock market booms. We are hard pressed to see these “earnings” passing the standard Horace Greeley set. The bank CEOs’ plans are obviously designed to get money without earning it. They set the culture and drove it down through the ranks. The people paid mightily these last five years for the sins of these arrogant banksters. They, however, are above the law. At least the Attorney General of the United States says they are.

Tuesday, December 10, 2013



Published In CommPRO,biz 2013.12.10
 
The Banksters Walk Free

In a breathtakingly clueless comment last month (2013.11.12 SIFMA) at an industry conference, Lloyd Blankfein, Goldman Sachs CEO, is reported to have expressed regret that they were part of the problem leading up to the recession. Not regret that his company’s actions helped to crash the world economy ruining thousands, putting millions out of work and causing unimaginable suffering. He expressed no regret for that at all. He just wishes they hadn’t engaged in “trading practices” that created an image problem for his firm.
Blankfein is reported to have told the conferees, “I wish the organization hadn't done complex CDOs circa '06 and '07." A CDO (collateralized debt obligation) is a fancy name for bundling up a bunch of mortgages and such and hustling them as investments. Goldman sold them to pension plans, banks and the like. After all, what could go wrong? Housing always goes up; even if the mortgage holders fail to make their payments, the property will cover the loss, right? We all know the answer to that now. It seems that Goldman Sachs knew the answer back then. They knew their CDOs were full of “Crap” (their terminology), and at the same time they were hawking them, Goldman was betting they would fail. Worse, when they failed the American taxpayers paid off on that bet. And all Lloyd Blankfein sees in this is a PR problem? 

The SEC saw fraud and brought civil charges against Goldman. The agency settled for a paltry $500 million, with no admission of guilt. For Goldman Sachs that’s pocket change. According to some reports they cleared well north of $10 billion double-dealing CDOs. Poor Lloyd, Goldman Sachs took a public relations hit while their actions destroyed the lives of millions. If there was any justice Blankfein and a flock of other money-changers like him would be in jail. Considering the suffering their fraudulent actions brought down on millions around the world, they should face prosecution. 

Surprisingly, only a few of these modern day money-changers have faced prosecution over the last few decades. A bunch of minor league hustlers were jailed in the 1980s and early 1990s over the Savings & Loan crisis, alongside closing down close to 800 S&Ls with assets in the $400 billion dollar neighborhood. Since then not much has happened to the banksters, mostly because our Justice Department has some illusion that these crooks are too-big-to-jail. In case after case the DOJ has allowed blatant criminal behavior on the part of big league banksters to go unpunished because they believe that jailing the top guys at these banks might rock the boat and cause problems in our economy. 

That shows an unimaginable lack of business knowhow. Nobody is irreplaceable, that’s especially true when it comes to replacing corporate leaders engaged in illegal activities. There are good people, honest people in most organizations ready to move up and do the right thing. If not, there are topnotch folks ready to come in and put them on the straight and narrow. Folks who understand that the ethical business model is not only the right path; it is the surest path to profitability.

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.

Tuesday, June 18, 2013



Wal-Mart, Same-Ol’, Same-Ol


They gathered by the thousands earlier this month (2013.06.06) at the Walton arena on the University of Arkansas campus in Fayetteville. It was the annual meeting of the world’s largest retailer, Wal-Mart. The crowd was largely made up of employees who had earned a trip to Fayetteville from their remote corner of the wonderful world of Wal-Mart through some display of loyalty. There were a few shareholders and high profile performers including Hugh Jackman, who was the meeting’s host. 


Unlike the Wal-Mart employees at the meeting, Jackman and the other celebs were not there at company expense, at least not Wal-Mart’s expense. Given the revenues generated for major motion picture and music companies by Wal-Mart –reportedly as much as 40% of their total income– we’ll guess that the stars were well compensated for their visit to Arkansas by someone.  


The affair was not all glitz, glitter, and company presentations. Time was set aside for participation by the shareholders, fifteen minutes out of the four hours, about 6%. That despite the fact that the shareholders had some serious beefs. Like what have you done about the rampant bribery, the deaths in Bangladesh factories and declining year to year store sales, things like that? Management’s answers? Less than satisfying. Easy for them knowing that the Walton family controls more than half the votes. As long as the family is happy, the management can ignore the rest of the world. 

A shareholder/employee commented on CEO Michael Duke’s nearly $21 million 2012 paycheck: “Times are tough for many Wal-Mart associates. We are stretching our paychecks to support our families.” Considering our low wages, she added, “I don’t think that’s right.” A considerable number of those in the audience cheered and applauded her comment. You can bet those folks won’t get a free ride to next year’s annual meeting, assuming they even keep their jobs.

For his part Duke said, "You operate with integrity, our company was founded on integrity. For Wal-Mart, compliance is an absolute. Make no mistake about it; we will do the right thing." It’s easy to see the disconnect right there. Duke obviously doesn’t understand that the “Right Thing” is not compliance. "The “Right Thing” is the ethical business model. “Compliance” is the letter of the law, working right at the edge of the law; Compliance is what you can get away with.

Compare this annual meeting with one held a month earlier in Omaha, Nebraska, the annual Berkshire Hathaway bash thrown by Warren Buffett. “Buffettpalooza,” as it’s called, attracted more than twice as many people, 35,000, all shareholders, all happily paying their own way. But those are just the surface differences when compared to the Wal-Mart annual meeting. The real difference lies in a culture of transparency at the core of Buffettpalooza, a culture that’s nowhere in sight at Wal-Mart.

Tuesday, May 21, 2013

The Last Domino

They’ve been mining coal in West Virginia for more than 250 years. For most of the last half of the 20th century Massey was a major player in the Court of King Coal. For the last two decades Massey Energy operated under the iron fist of its Chairman & CEO, Donald Blankenship. Don Blankenship hails from Stopover, a speck on the map about as far out as you can get into the eastern tip of Kentucky where it pokes into Virginia and West Virginia.

Those three states were Blankenship’s stomping grounds until 2010 when his reckless management style led to the deaths of 29 miners at Massey’s Upper Big Branch mine. That triggered his golden parachute retirement and the sale of the company the next year. Blankenship is the kind of “Bean Counter” we have all learned to fear. A bean counter whose relentless focus on profits ignores all else, in his case even safety. A bean counter who poured cash into politicians’ pockets to establish a regulatory atmosphere to fit his twisted management style.
 
These political “investments” and hundreds of thousands in fines regularly levied against Massey were seen as a cost of doing business. Still the Upper Big Branch mine was cited for more than a thousand safety violations in the three years prior to the explosion that killed 29 miners. The ventilation system that could have prevented that deadly explosion was not functioning properly, an uncorrected violation.

A tenacious federal prosecutor has been peeling away the cobwebs that surround the Upper Big Branch disaster. One-by-one U.S. Attorney Booth Goodwin is finding clues. One-by-one, individuals who bypassed regulations have fessed-up and pled guilty. It’s like a deadly row of dominos, as each one falls it tips the next in line; or in this case the next up the line.

Earlier this year Massey executive David Hughart admitted that he had tipped off workers when the inspectors were coming. When the judge asked Hughart who told him to alert the workers, he replied, “The Chief Executive Officer.” He, who was so all powerful he could not be named? Don Blankenship. The last domino is teetering at the top. Time will tell if he will face justice for lives lost and justice for families destroyed.

While Massey prospered under Blankenship’s demonic rule, one can’t help but wonder how it would have fared under an ethical leader. Would it have been cost effective to observe the law and avoid all those fines? Would it have been more profitable to have a workforce treated with respect, a more productive workforce perhaps? Would it have been better to consider the communities near their mines? Would it have been less costly to think about how their mines might impact the environment? Would an ethical business model have been better for all, especially for Massey’s shareholders? The answer across the free enterprise system is a resounding “Yes.”

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, 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.

Tuesday, October 16, 2012



Reputation Counts

Corporate Responsibility Magazine released its first corporate reputation study in advance of its annual Commit!Forum (2012.10.02>03) held at the opulent Wall Street venue, Cipriani. The CARAVAN® telephone survey of 1,032 adults in early September came up with some startling results; especially startling in view of the existing job market.

They found that among the unemployed in the study, 75% said they would rather keep looking than take a job with an organization with a bad reputation. Among those currently working, 58% would move to one of the bad guys for more money. How much more? On average they would hold their nose and change jobs if their pay were doubled. On the flip side, among the currently employed, 87% would take an offer from a company with an excellent reputation. More money? Yes, but not all that much, between 1% and 10% added to their paycheck.

“The results of the new survey underscore Americans’ desire to align themselves with organizations that do more for society than increase their bottom-line. Even during a time when Americans face many fiscal challenges, most people would rather continue their search for employment than work for a company that has questionable business practices or ethics,” Elliot Clark, the CEO of Corporate Responsibility Magazine, is quoted in a press release. “The survey demonstrates that there is a cost of bad business behavior, which significantly affects the ability to attract and retain people.”

Great people who stay with an organization are one of the markers not only of a nice place to work; they are makers of a profitable business. Businesses that care for their employees, their customers, their vendors, their community, and the environment get a much better shot at profitability than outfits that focus on the bottom line. The authors of Firms of Endearment found that companies that followed these markers racked up eight times the profits of the S&P 500 average over a ten-year period.

So those who would rather keep looking are wise. Better to keep looking until you find a decent organization to work for than go to work for a bottom-line focused scumbag outfit that’s likely to fail or kick you to the gutter at the first sign that their bottom line is shrinking. That leaves you with another empty spot on your resume to explain when you are back out on the street. Who needs that?

A good place to work attracts good people who stay long-term, who work really hard, who take care of your customers and your suppliers. Employees who are active in your community and alert you to its needs; employees who are alert to environmental issues and keep you caring about those issues. Employees who keep your lenders and your stockholders happy because those employees keep the bucks coming in and the profits piling up. That’s what an ethical business model looks like, what makes it a fun place to work, a great place to work, and a secure place to work.

Tuesday, July 17, 2012


Banks Behaving Badly

“We’re doing what a bank is supposed to do.” That’s JP Morgan Chase CEO Jamie Dimon before a US Senate Committee after a two billion dollar gambling loss that has since grown to nearly six billion and is forecast to hit even higher numbers. Dimon was much harder on himself than were the Senators, or the members of a House Committee in a subsequent hearing. 

No surprise, members of Congress have good reason to be friendly. Dimon has pitched millions into Congressional war chests -more to Republicans, but lots to go around. The committee members understandably tossed softball questions. Dimon was decked out in cuff links with the presidential seal just so everyone would know where he was coming from. 

Unbelievably nobody called him on his, “We’re doing what a bank is supposed to do” line. This from a “Bankster,” as the Economist has labeled the out-of-control leaders of our financial sector. The billions lost on bad bets placed by one of its traders (AKA gamblers) in London are the least of the problems Dimon is facing. 

Chase is ensnared in the evolving Libor scandal that has a group of international banksters fixing interbank lending rates, impacting every loan rate imaginable. 
The incredibly complex Libor rate fixing scheme crosses civil and criminal legal lines. Dimon was fully aware of his bank’s involvement in this racket when he delivered his “What a bank is supposed to do” line; so we must assume that he thinks juggling interest rates worldwide is what banks do. 

That isn’t even the worst it. When Dimon was flaunting his control over those we send to Washington to do our business, he was fully aware that Chase had just shelled out a seventy-five million dollar fine for rigging a bid on a three billion dollar sewer bond deal that pushed Birmingham, Alabama into bankruptcy. A deal they cinched with a three million dollar bribe to Goldman Sachs. Chase and a host of other banksters have been rigging municipal bond auctions for decades.

This all came out when the Feds convicted three minor players from GE Capital they nailed rigging bond auctions. The Feds got their hands on recordings of telephone conversations between banksters making highly illegal deals to pass municipal bond business around among the banks. In addition to the bankster types from GE who are going to jail, scores of others from virtually every major bank in America and many international banks as well have taken a plea deal. 

Let’s be clear about what’s going on here. 

Between the Libor racket and the municipal bond rigging scam- the banksters have ripped off everyone in America to the tune of untold billions. JP Morgan Chase is not alone in these Mafia style rackets, but if that’s what Jamie Dimon thinks “banks do” then he has a different ethical standard than most of us hold.

Tuesday, March 20, 2012

That Greasy Sleazy Feeling
 
As we pull out of the gas station these days, in addition to the empty spot in our wallets there’s a scent of sleaze in the air. It’s not our friendly gas station dude, he’s just trying to get by like a lot of us; it’s more complicated than that. The more we drill down, we discover that it has little to do with the price of oil. But isn’t oil scarce, aren’t we importing more than ever before? No, actually we are producing about 80% of our needs. All that new drilling that fired up over the last few years combined with reductions in usage, has narrowed that gap. Don’t say anything out loud, but America is even exporting oil. What’s the problem then?

There are many factors from the seasonal bump we see this time every year, to the capacity of our refineries, to unrest in the Middle East. While the latter does not seem to be a real factor given how little we need from those folks, there is no doubt that it is a factor. Not in the way you might think, however. No less an authority than Goldman Sachs has found a culprit that adds at least $.56 to the price of every gallon of gasoline. It’s the casino called Wall Street.

The commodities market was designed to stabilize the price of grain, cattle, pork and other things including oil. The idea is to assure the producer’s pricing when the fruits of their labor hits the market. But of course it turns out that you don’t have to be a buyer or seller of these commodities to get into the game. You just have to have the bucks and the free pass that the Congress gave Wall Street, immunity from gambling laws. Add something like instability in the Middle East and give their roulette wheel a spin; we always lose.

Now the commodities market is flooded with all kinds of financial instruments, things like “swaps,” the fun stuff that helped toss the world economy into the dumpster. Speculating on commodities has always been around but until recently the end users and producers controlled over two-thirds of the contracts. Today that number has flipped and two-thirds are in the hands of speculators. Not the players in the oil market that have traditionally dominated this game. Today a frighteningly small number of Wall Street types hold the price of oil in their hands; playing with what we pay at the pump.

You can figure that seven to eight bucks is pocketed by the Wall Street types every time you fill up, ten bucks or more if you drive a bigger vehicle. The average price for a gallon would be a little over three bucks without Wall Street’s “take.” Given the rare peek we got into the wonderful world of Wall Street when one of its own, Greg Smith, laid out his reasons for leaving Goldman Sachs in an OP-ED, you can imagine the nicknames the Wall Street types pin on us. While most businesses, in fact most folks are trying to do the right thing, pond scum like Goldman and their ilk have no concept of the ethical life.

Tuesday, November 8, 2011

Not for Sale

Not for Sale

There are –and always have been– so-called “pay for play” print and broadcast deals. That’s why federal law requires them to be labeled “advertising” or “paid programming”. Unfortunately, there is no such law covering internet content. So it should come as no surprise that web based news sites are being targeted by those looking for a plug for one thing or another.

While we understand legitimate efforts to gain media exposure, when there is money involved the ground rules need to be crystal clear.  Apparently, with no legal firewall, some of the slime that inhabits the fringe of every sector of media and marketing will attempt to slip over the ethical wall that protects most all of the world of commerce.  

Hamilton Nolan, who writes for the popular blog Gawker, recently received an email from a marketer suggesting an easy way to earn a little extra money. All he had to do was drop in a website link for one of their clients, only –of course– if it “fits naturally in the context of the article.” In a series of emails this solicitation was identified as coming from a so-called “marketing agency” specializing in this kind of placement. Payment offered began at $130 and escalated quickly to $175. Not bad, as Nolan noted, for five seconds’ work.  

The “agency” claimed to represent a number of “major” clients, Motorola, Dell, and T-Mobile, all of whom denied any connection. The agency also told Nolan that they had writers taking their bucks from a wide range of top ranked internet sites including The Huffington Post. You can guess Huffington’s response; it was mirrored by the other sites where writers and/or editors were said to be on the “take”.

Who knows how many clients these guys really represent? Or how many writers and/or editors at internet sites have succumbed to this siren call? There is always a certain amount of slime on both sides of the ethical wall. Sadly, one cannot exist without the other.