Volume 7, Issue 4
ă 2005 Hopkins and Company, LLC
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If everybody claims to have integrity, why do so many of us seem to misplace it at times? After all, each of us tells a lie every now and again. What’s so bad about that? Most of the tax return is accurate, and the amount due is high enough as it is. “Everybody” uses up sick days. We ran this by legal and they said everyone in the industry does it this way; outside counsel confirmed that other clients use the same approach. Is there safety in numbers for ethical breaches? What ethical code says, “Majority rules?” When found untrustworthy once, what makes us think we will be extended trust again? By the time we find out that integrity is important, is it already too late? The business press has been full of stories in recent weeks about the consequences of a loss of integrity and pundits have provided lots of commentary on lessons to learn. Odds are you’re not under indictment for malfeasance, or being fired for conduct problems. We’ve selected a few stories for this issue that weren’t in the blaring headlines, and ask that readers consider the degree to which your own adherence to a moral or ethical code has been steadfast. Think about the culture of your organization, and compare what you and your colleagues really do versus what you say you do. A gap means a shortage of integrity. That’s a shortage that can be costly for you and for your organization. Reflect on what others have faced and make a plan to close your own integrity gap, even if it’s one that’s unlikely to make headlines.
Fifteen new books are rated in this issue, beginning on page 5. One book is highly recommended with a four-star rating; nine books are recommended with three stars; and five are mildly recommended with two star ratings. Visit our 2005 bookshelf at http://www.hopkinsandcompany.com/2005books.html and see the rating table explained as well as explore links to all books we’re reading or considering this year. Forty four new books have been added to the “shelf of possibility,” which now has over 200 books in queue. If there’s something missing from the bookshelf that you think we should be considering, or if there’s a book lingering on the “shelf of possibility” that you think we should read and review, let us know at email@example.com. We note that Fortune celebrates its 75th anniversary and in the March 21 issue picked 75 books that the editors say will teach us all we know. Check out their list at http://www.fortune.com/fortune/fortune75/articles/0,15114,1034780,00.html.
The audience of 1,200 securities lawyers for the SEC’s annual conference in early March received an ethics primer from the opening speech (http://www.sec.gov/news/speech/spch030405whd.htm) of SEC Chairman William H. Donaldson. Here are a few excerpts: “Honest markets depend on the integrity of participants and their advisers. Some aggressive participants – and compliant advisers – will continue to test the boundaries of new laws. Some will pursue questionable activity right up to technical conformity with the letter of the law or accounting standards, and some will step over the red line, perhaps with the help of a lawyer or accountant. The success of our mission depends on those of you who do not succumb to those practices. … An important part of your role, then, is to apply your judgment to new situations as they evolve. You will see them before we do. And you have the ability to address questions and issues before they erupt into quagmires. Indeed, it is in your clients’ interests to prevent their issues from becoming our problems. Your job, as the counselors of the actors in our financial markets, is to identify today’s issues and prevent them from blossoming into tomorrow's scandals. … think how much anguish we could have avoided if a few more lawyers had pointed out to their hedge-fund clients that late trading of mutual fund shares is illegal, as are duplicitous market timing and quid pro quo “sticky asset” arrangements. That sort of common-sense advice would have been more effective in keeping the client out of trouble than engaging in rhetorical somersaults to justify the activities the client wanted to pursue. … And most important, you can help corporate leaders to set a personal example, and insist that when a decision is made, no matter how large or small, everyone is obligated to check his or her internal compass and ask whether the course of action is the right thing to do.” The best executives ask for candid advice and useful counsel, and are careful to create an environment in which advisors can say what they want, not just what the executive wants to hear. The best advisors help prevent future problems, and speak with clarity, whether the client likes the message or not.
When we read
recent stories about increases in employee dishonesty, we were reminded of
the late Mike Royko’s
suggested motto for the City of
Have you created an environment in which those who report to you find it easier to lie than to give you a reality check? Given how hard you work, do you feel entitled to the occasional expense report padding to cover something you see as legitimate, but would raise some flags if described accurately? How bright is the line you draw between personal expenses and corporate expenses? When was the last time you had a workplace conversation about lying? Have your policies kept pace with the real lives of those who work in your organization?
Life experiences form our character,
from youth through old age, and all our actions convey messages about who we
are. Even youthful indiscretions carry consequences, and become valuable when
we learn the right lessons. We read about the conduct of 200 business school
applicants who hacked into systems to find out their admission status.
According to Business Week (http://www.businessweek.com/bschools/content/mar2005/bs2005039_7827_bs001.htm),
decided these potential students are not tomorrow's leaders. In a statement, Harvard
Dean Kim B. Clark called the hacking ‘unethical,’ saying Harvard wants to
educate principled leaders with ‘a strong moral compass and intuitive sense
of what is right and wrong.’ … MIT's Sloan School of Business is rejecting
anyone it discovers has attempted to hack into its application files. … some applicants … say they failed to see the ethical issue
presented. Some went so far as to say that these individuals should be
applauded. ‘Exploiting weaknesses is what good business is all about. Why would
they ding you?’” Time will
tell what the hackers or their contemporaries learn from this. A quote stood
out from the March 23 issue of The Wall
Street Journal, (http://online.wsj.com/article/0,,SB111154765127387342,00.html),
likely that nothing spells the end of office innocence for a newly minted
employee as quickly as bad behavior by the boss. At their worst, such rude
awakenings can slap the bushy-tailed idealism right out of an office newbie.
At their best, they just get filed on the trash heap of life's lessons.” When workers find a mentor and emulate
mature and appropriate behavior, the entire workplace benefits. As has been
our annual practice, we pass along selected wisdom from Warren Buffet’s annual report to Berkshire Hathaway shareholders. Here’s a great example of
setting tone at the top by taking personal responsibility, “Last year,
Are you setting an example to emulate in your workplace? What messages do you convey by your behavior? When a worker behaves dishonestly, what do you do? How do you assimilate new workers into your organization? Can you maintain idealism, and benefit from it, or does it evaporate when the humanity of leaders becomes evident? When you don’t do your job well, are you as clear and direct about it as Buffet?
Here are selected updates on stories covered in prior issues of Executive Times:
paid little attention to Jacques
Nasser’s departure from Ford,
and last mentioned him in the in the September
2001 issue of Executive Times
when we noted that he and the company seemed to be getting the Firestone
tire/Explorer fiasco behind it. The March 28 edition of Forbes (http://www.forbes.com/business/forbes/2005/0328/058.html)
gives an update on
Ř When we said in the August 2004
issue of Executive Times that Harry Stonecipher was probably not part of the problems at Boeing
but seemed to be leading solutions, we were dead wrong. On March 7 (http://www.boeing.com/news/releases/2005/q1/nr_050307a.html),
Boeing announced that “its Board of Directors asked for and received the
resignation of President and CEO Harry Stonecipher.
… The Board actions were taken following an investigation by internal and
external legal counsel of the facts and circumstances surrounding a personal
relationship between Stonecipher and a female
executive of the company who did not report directly to him. The Board
determined that his actions were inconsistent with Boeing’s Code of Conduct.
‘The Board concluded that the facts reflected poorly on Harry’s judgment and
would impair his ability to lead the company,’ said (Board Chairman) Platt.”
When I read in
his autobiography, The
Making of a Public Man, that he stood up to personal bullying from
President Lyndon Johnson, I knew
at once that I liked and respected Sol
Linowitz. According to a 1995 interview (http://www.dcbar.org/for_lawyers/resources/legends_in_the_law/linowitz.cfm) in Bar
Report, he became a lawyer because of advice he received while at Hamilton College, from Elihu Root who said, “’Be a lawyer. A
lawyer needs twice as much religion as a minister or a rabbi.’ The point he
was making was that if you really believe in your principles you ought to put
them to use in the real world and not just preach from pulpit. I thought that
was a profound truth.” While at a
(Note: readers of the web version of Executive Times can click on the book covers to order copies directly from amazon.com. When you order through these links, Hopkins & Company receives a small payment from amazon.com. Click on the title to read the review or visit our 2005 bookshelf at http://www.hopkinsandcompany.com/2005books.html).
2005 Hopkins and Company, LLC. Executive
Times is published monthly by Hopkins and Company, LLC at the
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