“You can’t do a good deal with a bad guy. The dishonesty tax is too high and is not something you will factor into your side of the equation.”
Chet Billingsley, 1995
Ethics are the unwritten rules that govern societal interactions in the game of life. Without these guidelines to constrain us, society devolves into anarchy.
Religion and Background:
We have given much thought to these ethical rules. They are often religiously based and have literally become part of our culture over millennia. The religious basis complicates human understanding because completely ethical behavior means different things on different continents. Asian cultures ascribe to “Right thoughts, right actions, right deeds and to be diligent like Buddha”. Euro-American ethics is Judeau-Christian based and could be summed as, “Thou shalt not lie, cheat or steal, and no sexual hanky-panky”. Middle Eastern cultural ethics is an extreme loyalty to concentric circles of influence. This is perhaps summed up by the old Arabic saying, “Better 100 mothers should cry than my mother, better my mother should cry than I.” In any one culture, the one set of rules allows orderly interaction amongst people of a common heritage. However, like a checkers and chess player facing off to play on the same 8×8 board, conflict arises when two sets of ethical rules interact.
In the United States melting pot, legal theory is still fundamentally founded on the ten commandments (Contracts are signed, fraud is punished, and unlawful conversion ends one in jail as a penance). But, the buyer beware attitude of an earlier era is somewhat supplanted by a new requirement for full disclosure and transparency that is a prerequisite of the Buddhist ethic. In that tradition, one must do the right thing if the circumstances are known. Great effort is placed on full disclosure, so that correct action can be taken. The Asian, “I don’t understand” is the American equivalent to our, “I didn’t say that.” There is not much overt Islamic influence in our cultural ethos, but the idea of “Buy American”, “Energy Independence” or economic protectionism are all similar.
Legal as Moral:
Exacerbating the confusion of the mix of ethical doctrines is the temptation of legal bureaucracies to attempt to completely legislate business morality. The detail of daily interaction is so much more diverse than can be put down in legal doctrine that this must fail (but certainly not for the lack of trying). A worse corruption comes from persons who lack any ethical base and ascribe to the doctrine that anything that is legal is moral. Between here and chaos lies only the half-step of “Anything the law doesn’t catch me doing” is moral.
In this global mix of different ethical and legal paths, it interesting to contemplate what does it mean for a person to be ethical? Answering that question may well be the basis for good sized book. For this writing, perhaps it is fair as a start to claim that we have thought about ethics and our understanding is a mature well examined one.
Although we may not be able to define global ethics in a few paragraphs, perhaps what is needed is an understanding of the ethics of your writer, Chet Billingsley, CEO: I am of old fashioned, Midwestern origin, so honesty is core ethic to me. I have learned to tell bad news immediately, if possible. Small day-to-day challenges I just overcome. If small things become large, I’ll say so then. I try to live my life with good intent. If things go badly, well, it wasn’t intentional, so I’ll just say what happened. I much prefer the simplification that is possible in dealing with ethical people, so I try to judge character carefully. Once well screened, this simplifies my ongoing due-diligence. It is a more efficient way of reducing risk for me. I do ascribe somewhat more than the average American to the Asian ideal of doing the right thing. This brings me large gains in trust, and I sometimes lose slightly by doing the correct but unprofitable thing. Even if a contract says we have someone over a barrel, I may release them from their obligation if it is overwhelmingly the right thing to do. I am loyal, which attracts loyal business friends. If a long-time vendor is a nudge down from another supplier, I will stick with my original partner until I just must change.
All this is great theory and background, but, “How does this exactly apply to our business?” you might ask. Here, I have a simple model that guides me: It is your grocery store. I’m just the manager taking care of the property and products for you. You have appointed a few folks (the board) to ensure I am doing a good job. Their role is not to run the business, but rather, to fire me if I don’t do a good enough job. If I do well, well, I expect to be eventually rewarded – such is life. Because the directors represent the owners (you), I believe they should be appointed by you. I think it is unconscionable when boards are non-shareholder cronies of the CEO. I will try to even more fully move in making that a system for us. I also understand that some of the many owners will be selling their ownership to new owners. I owe an equal duty to the old and new owners to let them know, at the same time, information that will let them judge the value of the business, fairly. So, I won’t be giving a special advance release to just people that are already on the inside, to the disadvantage of outside buyers. I will give a uniform flow of information, sufficient to judge the long-term value of the business, but I won’t overburden the business with massive (but immaterial) or overly frequent disclosure. By being consistent in my disclosures, I will ensure fairness. And, when I am not sure, I’ll remind myself that it is your store.