The Ethical Barometer

Those at the top, those who do consulting work for those at the top, audit firms, directors, and a holy host of others all chant, “Well, it’s all about the tone at the top.” “It” (meaning culture, ethics, and governance) is indeed a function of the tone at the top. The problem is that those at the top fail to realize that what they do is marked well by employees, especially when those at the top do the kinds of things that would get those on the front line fired. When those at the top are harping about ethics and doing the right thing, they had best be doing the right thing themselves or the mantra does ring hollow.

Peter Lynch, he of Fidelity and portfolio management fame, couldn’t seem to lay down the scratch for getting tickets to events such as the Ryder Golf Classic and U2 and Santana concerts. Putting Lynch’s eclectic tastes aside, a man who was earning between $3 and $10 million per year and who had his own foundation could afford to ante up $15,948 for tickets. Continue reading →

Lest I create a panic among financiers, note the “s” on “Bonds.” There is no market for Barry Bonds. Or for Roger Clemens. Spring training is days away, but Barry Bonds and Roger Clemens twiddle their sizeable thumbs at home. Free agents both, there are no takers for these two baseball players who hold a slew of MVP and Cy Young awards. The age factor (43 and 45 respectively) offers some explanation for their lying fallow. But, major league sports have never let such superficialities get in the way of crowd-draws. The indictment of one and the embarrassing Congressional testimony of the other have turned these two players into untouchables. Professional sports may have finally reached its “ick” level. The Bonds’ and Clemens’ responses to and denials of allegations about their steroid use are right up there with the classic grammar school safety net, “The dog ate my homework.” Continue reading →

There is no such thing as a rogue trader. So I wrote in Corporate Finance Review in 1996 in analyzing the Nick Leeson/Joseph Jett losses and their characterizations as wild cards in financial systems immune to the diabolical and risk management programs that can detect the slightest variation from the norm. But with Societe Generale’s former trader, Jerome Kerviel, racking up $7 billion in losses we are back to the same theory that emerges each time a trader defies internal controls and the brightest minds of the financial world. Continue reading →

“You can’t compete without cutting a few corners.” “I’ll be eaten alive if I don’t compete on their terms.” So go a few of the urban legends that give us comfort even as we cross a few ethical lines here and there.

However, we do see data trickling in to indicate that thinking outside the box, i.e., trying the ethics thing in business, may actually solve a host of problems, problems that do cost money. The no-haggling zone has long been a pipe dream of car dealers and car buyers alike. The urban legend that a dealership could not compete effectively without haggling kept us trapped in an inefficient business model. What we now know is that there were costs associated with haggling: Continue reading →

What happens in Las Vegas stays in Las Vegas. And now you have help to be certain of that retention pledge. The Alibi Network will furnish you with hotel and airline ticket receipts and all other trappings of a business meeting elsewhere whilst you enjoy Las Vegas doing whatever with whomever. Spouses, significant others, and even bosses can be handed incontrovertible proof that you have spent nights and weekends laboring for the good of the job/business in another city even as duplicity takes you to the Bellagio and other destination luxury palaces in the city that never tells. Continue reading →

Columbia School of Journalism has a required ethics course in its graduate program called, “Critical Issues in Journalism.” That’s trouble right there. Any time you cannot use the word “ethics” in a course on ethics, there might be a problem with conviction and content.

Be that as it may, as Ben Bernanke says, the students were given a 48-hour period in which to sign in and take a 90-minute two-question essay exam. A student reported to the deanery and administrators that there had been cheating on the open-book exam. There is something quite untoward about cheating in an ethics class. Continue reading →

My new book, The Seven Signs of Ethical Collapse: How To Spot Moral Meltdowns in Companies Before It’s Too Late is now available. Amazon, Borders, Barnes & Noble, the whole gang, they all have the book.

Over 30 years of work and 3 decades of scandal went into this book. We can all click our tongues and wag our fingers over the backdating of stock options, but we have to ask, “How did this go on for so long in so many companies (80 now under investigation) without anyone raising a hand and asking, “Is there a problem with this? Did we cross a line or two here?” Continue reading →