We Are Not Sweden
We see stories about ethical and integrity failures among the world’s largest companies more often than one might think. The number of cases is growing each year as is the drama surrounding the details once they are released. The U.S. reached a settlement with Sweden’s telecom giant Ericsson Telecom.
The settlement was in two parts where damages in an amount just over $500 million were assessed against the telecom company for bribery, falsifying records, and other misdeeds prohibit by laws such as the Foreign Corrupt Practices Act. In addition, another $500 Million was extracted through “disgorgement”.
Assessing damages for wrongdoing is a well-established legal doctrine, and though the amount agreed as representative of the damages caused, is surprisingly large; it is hard to argue against given the length of time the unethical practices existed.
Forcing the company to cough up an equal amount as punishment raises legal questions that I will leave to those more qualified to talk about. What I can say is that a line can easily be crossed between what is necessary to correct the misdeeds of individuals and companies and extortion. As the details of this settlement become more widely known, the astonishing Billion dollar settlement may be justified.
Yet, I cannot but conclude that you do one or the other. One either can make the case for damages consistent with the laws that were broken, or you are able to determine the specific amounts illegally gained and by force of law demand the individual or company return those ill-gotten gains.
It is all too easy to forget that just as companies can behave in an unethical manner, so can those acting as an agent of the government. Is disgorgement on top of damages unethical? It is a question that needs discussion.
These dramatic events are easy to see and follow once they become known. What is much more difficult to see is the impact of unethical conduct by government bureaucrats in the issuing of regulations. Many times small business owners are the ones that suffer the most from regulations, and often they don’t learn about these pending consequences in time to mitigate the adverse impacts.
I recently read a report in The Wall Street Journal’s about something called the Ultimate Beneficial Ownership (UBO) Registry, and a movement in Congress to make participation compulsory. Apparently, when I created my LLC through the State of Texas and filled out all of the necessary forms, that is no longer enough. Unbeknownst to me, this is an ongoing debate that’s been around for a while, driven by the fact that bad guys create shell companies to hide what they are doing.
On its face, the idea of identifying who benefits from the operations of a shady company is a good thing. Law enforcement agencies in the U.S. and elsewhere have a pressing need more tools to ferret out corruption.
What sounds good in theory or in a carefully worded press release by some mid-level staffer in a government agency is one thing, drilling down into the details in something else. When you do drill down, you find the burden for making this process work will fall on the owners of the companies required to input their data into the registry and maintain its accuracy, and they will suffer legal consequences if they don’t.
So, the small business owner now may have to contend with a database that law-abiding business owners must participate in and provide information already available to law enforcement; where they must bear the costs of maintenance and no assurance of privacy can be offered or guaranteed.
Should this useless exercise come to pass, it will not drive anyone out of business, but it will represent a layer of costs that provide no value to the business owner and will create increased risk across areas not yet defined.
Larger businesses rarely take time to learn about or meet with the owners of small businesses. Yet, opportunities do exist where leaders of large and small companies can meet and understand the many things they have in common.
One of those opportunities is provided each year by the Services Cooperative Association. SCA is a co-operative comprised of business owners that have a purpose that hasn’t varied in 36 years. Through its processes, it assists business owners in Market Expansion, Business Development, Entrepreneurial and Intrapreneurial Education and Professional Growth. It is a set of processes that has led numerous companies to succeed where they might otherwise have failed.
Each year the Services Cooperative Association hosts its Annual Economic Forecast, and on Wednesday, January 8, 2020, the association will host its 37th Economic Forecast. Each year the City Controller, or his or her representative, presents the city’s view of the Houston economy, and Houston Community College provides an overview for the State of Texas.
Mr. Chris Brown, Controller for the city of Houston, has once again accepted the invitation to be SCA’s keynote speaker at this event, and Professor of Economics, Ms. Sophie Haci accepted on behalf of HCC.
As Chairman of the Board for the Services Cooperative Association, I cordially invite those of you reading this who live in the greater Houston Area to mark your calendars and take the time to attend this annual event, meet other small business owners, and gain a fresh perspective on the many issues that impact our fellow Houstonians.
I invite you to visit the website here, and learn more about the event, and while there take a moment to check out some of the other resources available through SCA.
Food for Thought: “We learn to do, we learn by actually doing it; men come to be builders, for instance, by building, and harp players by playing the harp. In the same way, by doing just acts we come to be just; by doing self-controlled acts, we come to be self-controlled; and by doing brave acts, we become brave”. (Aristotle)
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What Did He Say?
Every once in a while, when you are deep into a discussion, you hear something that sounds like “and the eagle flew upside down.” Your first reaction is what? What did he say? If the person was talking to you, your second reaction is, am I losing my hearing? So you ask, what did you say? The person typically will give an answer that removes the initial confusion, but it will not ease the sense of disquiet that the person listening missed an essential clue in the conversation.
It is a common feeling because many times we do miss important clues. During his career, Peter Drucker would tell executives he worked with that in a negotiation the most important thing about that negotiation is what is left unsaid. When saying that, one of the things he was alluding to is that neither side takes the time to learn what is important to the other party in the disagreement.
Whether you are negotiating a contract or helping two parties settle a dispute, the truth underlying Peter Drucker’s admonition is an enduring truth. Too many times I see parties in a negotiation assigning little or no value to the other party’s concerns. Having done this for some years now, I’ve learned to discuss this issue early either in a mediation or when hired to help someone through a negotiation.
When I am brought in to consult, I make it clear that the route to a failed negotiation is taking the position that winning on all your key points is all that matters. Some years ago I assisted in a negotiation that led to an impasse because the person I was helping went into the room convinced he was right and the other side needed to see it his way. Many of you reading this already know that the insistence on being right is rarely a winning strategy.
In this instance when my client successfully painted himself into a corner, I suggested we take a break, which he readily agreed to. During our meeting, I asked him what he wanted to do. His first reaction was that he could not give up his position, that the other party would “run the table on him.” I let him talk for a bit, and then I asked him, what are the two key points the other side raised, and why were those two issues important to them?
After a short conversation, it became clear he could not state clearly why those two issues were essential to the other party. He had not learned that before sitting down to negotiate, and he had not discovered it during the negotiation. I suggested that when they resumed the discussions, that he re-set the tone by asking just one question. What is it you want me to know?
It is a simple question, yet a powerful one. Surprisingly, it is one question both sides forget to ask. I recently attended a dinner where a gentleman with a great deal of experience in this field gave a speech, and it was downright eerie to listen to him talk about solving disagreements and using language very similar to the language I routinely use.
In the example above the two sides eventually resolved the dispute successfully, but it took a bit of effort to get there. (My client was young, successful, and brash). He had good control over his personal and professional life, except for his ego; which is common among very bright people.
I was reminded of this when I read the book, Multipliers, by Dr. Liz Wiseman. A number of the examples in her book resonated with me because of my own experiences in helping others to become better listeners. I urge those reading my letters to buy this book – after buying my latest book. It’s called The Battle for Ethics and Integrity in the Workplace: The Leaders Dilemma.
And this brings me back to the eagle flew upside down. When you experience such a moment, you will find you don’t have a hearing problem; you have a listening problem. There is a growing awareness of this, and more companies are providing training to their employees to become better listeners. Unsurprisingly, I find too many companies offering these classes to the wrong end of the organization chart.
It is hard to convince employees to engage in better listening exercises when those higher up the chain don’t walk the walk. Managers and senior managers have a hundred different ways of saying “make the problem go away, do it quickly, and as cheaply as possible.” We have all heard variations of that theme enough times to know it creates more problems than it solves. Still, it remains an all too common message employees receive.
The gap between agreement and disagreement won’t go away until you take the other side seriously and they perceive you are doing so. It applies equally to disagreements with coworkers as much as it does at the negotiating table.
When something you read raises a question, don’t be bashful. Give us a call. We can be reached at 346-561-0612, 832-452-8537, or at: email@example.com. You can also learn more about CDC Integrated Services by visiting our website at www.cdci-mediation.com
Food for thought: Beyond the precise meaning found in a dictionary, judgment is more than just the ability to make good decisions about what needs doing. It begins by thinking carefully and critically, which are skills that come through practice. You cannot acquire them by going to a conference or a seminar.
After the Shock Wave
This week’s blog can also be called Ethic’s Seismic Fracture, and here is why.
Wells Fargo Corporation opened fake bank accounts and fake credit card accounts, and charged its customers fees for accounts they did not know existed. These actions were both illegal and unethical and will have significant consequences for all those involved. It has all the trappings of a soap opera scandal and everyone is piling on adding his or her opinion wherever they can. But the story is not over and I think there is more to come.
This is an ethical failure of seismic proportions, and I will likely write about it in a future letter, but it is too soon because I don’t believe we know the whole story. It does offer an excellent segue into a related issue that I think is relevant to this story.
An article in the Harvard Business Review discussed the subject of listening and why this is such a critical skill for CEOs and other leaders. The author noted that a recent survey indicated as many as 25 percent of CEOs of major companies were either not good listeners or down right bad at it. The article went on to explain that this deficit at that level of leadership in a company can have severe consequences to the point of damaging the company. I think it’s safe to say the authors of that survey got that one right.
When such a deficit exists at the top level, imagine what the absence of this skill would mean in someone heading up a major business unit who must communicate and receive feedback from other business unit leaders. Information naturally flows up an organization making information transfers across the various organizations difficult at best, but it is made more difficult if the person in charge of one of these organizational structures does not listen well.
Think for a moment about a company much like Wells Fargo where employees at multiple levels in an organization are trying to convey important information up the chain of command; information that signals the train is going too fast and is about to go off the tracks, but that information doesn’t move up the organization. It meet resistance that shows itself in several ways. These can be procedures that require detailed explanations and lengthy reviews for no apparent reason, a set of well-established routines that do not conform to any written procedures or policies and which cannot be bypassed, and a culture that says to the average manager or employee “make your numbers first and save your complaints for later…” The transition from poor listening skills to an un-willingness to listen is a very short step.
One of the most important skills a leader has is the ability to listen. It is one of the ingredients of leadership that separates a leader from the rest of the crowd. Does this mean that you can’t achieve a leadership role without this skill? No, it doesn’t; a person can achieve a leadership role in a company or organization without this skill, but the chances of doing well in that position are significantly diminished without it.
The leaders at Wells Fargo failed in their leadership role. It is not the first company to suffer a severe failure of leadership, and it won’t be the last. As more time passes I think we will find there were ample opportunities to change the work ethic in that company, but the warning signs were ignored. I believe the failure to listen at various levels of the organization was the catalyst that sowed the seeds for disaster.
Successful leaders learn early in their careers that listening is part of a process designed to produce communication with others that works so that misunderstandings are reduced or eliminated. I encourage those who read my letter each month to read, or if you have already, then re-read Stephen R. Covey’s book The 7 Habits of Highly Effective People. He understood that listening, especially empathic listening requires training. Sometimes leaders trained themselves to achieve this level of listening, and sometimes leaders found someone to teach them how to achieve this level of listening.
In chapter 5 of his book Stephen Covey wrote that there are several principles of communication and he begins by saying “seek first to understand then to be understood”. I believe those principles are as valid today as when he wrote his book some 30 years ago.
The idea that you first needed to understand the person you were talking to was a completely foreign concept to the vast majority of people. In the business world of that era it was seen as an impractical point of view, and that view was not hard to understand in that most communication at time was directive in nature where the boss told his employees what to do and when he wanted it done and the employee was expected to figure it out.
I am firmly convinced that empathic listening as he wrote about has a sound ethical foundation and provides the best framework for building listening skills of the scope and reach that will separate you from the crowd, and sustain you in your role as a leader.
A strong ethical culture requires the right kind of action. Listening is an action and so it must be supported by the right kind of action to be successful.
Food for thought: Great readers and great listeners all have great work ethics. They work hard at what they do and they are devout about their reading and listening. (Andy Wilkinson)
CDC Integrated Services believes that small businesses are the foundation of ingenuity and supports the efforts of the Services Cooperative Association in Houston in its efforts to foster and promote entrepreneurship
In an era of information overload from the internet, radio, and television, it is important that people take time to think about what they hear, and what they read. As a result of many reports about misconduct, and improper behavior across many agencies in the federal government, it is important to understand something about Ethics. Being ethical is not the same thing as following the law. Laws can deviate from what is ethical; (examples: tax laws allow variance from equal treatment principle//also, in some countries girls denied the right to an education.)
More than 3,000 years of history teaches us that ethics is not what a society finds acceptable. It is a given that in a society, most people conform to standards that are ethical. Yet societies often confront issues on which there is no consensus. Without getting into the pros and cons, no one living in America can argue that consensus does not exist on the issue of abortion.
No discussion of the subject can sustain itself unless we acknowledge that what we call ethics has evolved over several millennia, and to ignore that is to engage in intellectual dishonesty. We owe our modern day understanding of Ethics principally to philosophers such as Aristotle and Plato. It is Aristotle, however, that wrote one of the first recorded treatise on Ethics under a series of essays we know as the Nicomachean Ethics.
His essays, many of which survived, and can be studied today, provide some of the earliest examination of moral philosophy and he did this by developing a systematic and carefully constructed series of arguments.
At the core of Aristotle’s essays are questions of character or personality — what does it take for an individual human being to be a good person? Every activity has a final cause, the good at which it aims. Therefore true happiness can therefore be attained only through the cultivation of the virtues that make a human life complete.
Ethics is not an academic exercise found within the pages of a textbook. Ethics examines behavior and the values that underpin behavior. Because the central premise of ethics is to examine how humans are disposed to act in certain ways in response to similar situations, the habits of behaving in a certain way. The essential point is that ethics is a practical discipline that encourages individuals to construct good habits by repeated action and correction within a formalized process that can measure and provide constructive feedback.