Business Ethics

Society Must Demand Honesty in Business, Say Entrepreneurs

RICHMOND, Ind., Jan. 14 (AScribe Newswire) -- When you begin a career in business should you leave your ethics at the door?

And so do a sampling of other Earlham College alumni who are entrepreneurs or leaders in the business and corporate world. In a year when headlines screamed with stories of outrages in America's corporate suites, they are happy to talk about the overwhelming rule of making it in business, not the lurid exception.

Matthews has been in a position to make some judgments about the basic soundness of American free enterprise. She spent eight years at the Kauffman Center for Entrepreneurial Leadership and has written or co-written six books on management practice.

With spirited titles like "Leading at the Speed of Growth: Journey from Entrepreneur to CEO" and "Building the Awesome Organization: Six Essential Components that Drive Business Growth," or "Growing New Ventures, Creating New Jobs: Principles & Practices of Successful Business Incubation," Matthews describes how to build and lead growth companies.

"After watching WorldCom, Enron, Arthur Anderson and other companies cook the books and artificially inflate profits, I understand the public's skepticism about business," says Matthews. "But I maintain that there are thousands and thousands of companies employing millions and millions of people who operate honestly, with the right values."

Matthews is founder and chief executive of Boulder Quantum Ventures, a Colorado-based consulting firm that helps CEOs, entrepreneurs and their top teams accelerate the growth of their companies. She has founded three companies herself, and in all her years in business she says she has never been approached to do something unethical.

"It has never happened," she affirms. "I think that if you are an ethical person and behave ethically toward others, people will know that you are a straight shooter. On the other hand, if it's clear that you are willing to cut corners and are trying to get the best deal for yourself, then you send signals that you are willing to entertain things that could be considered shady."

Instead, says Matthews, "You need to articulate your company's values and culture and identify the bright white line."

Eric Berg would agree. He founded his first company, Technicomp, in 1979 and served many years in a variety of executive roles. In 1992 he acquired a Seattle-based software firm, which he sold three years ago. Now he is in a position to "take some time off, wander around and get new bearings."

"You face ethical decisions every day in business. Mostly they are small and ordinary things, and you make the right choice because that's the way you operate your business," says Berg.

He points out that ethical standards are often set by the culture and the generally accepted individual behavior at the time. "A century ago when business freely employed children as laborers they were not necessarily doing anything wrong in the context of the society at the time."

"Today, students and others consider it ethical behavior to illegally copy music to use in MP3 players because everyone around them is doing it. In a similar way, some business activity that I would certainly consider unethical is justified because 'everyone around is doing it.'"

For Berg, the solution to this dilemma is to be found in individual behavior not in government regulation. "If individuals don't tolerate unethical behavior and call attention to it when it happens and make it clear that it is unacceptable, then the process becomes self-healing." On the other hand, if malfeasance is left to regulators to discover "it unfortunately may become a game of 'what can I get away with.'"

Berg stresses that as long as people remain silent or timid in the presence of unethical behavior they contribute to the problem.

"Remember during the market run-up of the late 1990s, people thought a stock was a loser if it didn't move 25 percent in a year. We created a culture of runaway expectations. That was the environment. The employees of Enron thought their company was making them rich."

How many people looked the other way as their 401k's and telecom stocks soared during the bubble years? Berg asks. "This in no way justifies the unethical behavior on the part of those executives, but it doesn't absolve those who through their silence or greed may have contributed." Along with CEOs and CFOs, the rogues of the recent scandals have been the investment bankers and brokerage community, most notoriously several Wall Street touts who advised clients to continue throwing good money after bad into failing firms.

Particularly appalled that fellow professionals could do such things are Tom Johnson and Mark Newlin, both investment managers for Harris Investment Management in Chicago. Newlin has been at the job for 19 years, Johnson more than 33.

"The wonderful bull market that we've had over most of the past 20 years has unfortunately attracted some people who are working more to acquire than to become," says Newlin. "By that, I mean the monetary rewards are for them more important than other aspects of the job."

Could the application of tougher government regulation prevent the kinds of abuses that arise when the interests of investor and investment managers conflict?

"The rules and regulations we have to conform to are already mind-boggling," says Johnson. "Even with all the reporting that we have to do, it still can't catch every possibility that could happen in the industry. It's already clearly illegal to say things about stocks that aren't true, so to add another layer of regulation really isn't necessary."

Besides, he adds. "I don't have great confidence in the people in Washington who are doing the reform preaching now fixing this problem. If you watched the Enron investigating committees or any of the other ones, many of the senators or representatives who were so indignant over the Enron event, were the same people who had taken campaign money from the company they were now investigating."

Newlin allows that government has a legitimate role in enforcing the rules of fair investment and disclosure practices, "but finally it's up to society to insist on ethical business dealings."

Newlin believes that in times of notorious corporate banditry it's tempting to imagine everyone in business "as cold, scowling, cigar-chomping megalomaniacs." The characterization is not only vastly unfair, it discourages honest and well-intentioned young people from setting foot on a business career path.

"In reality," Newlin reminds, "most businesses are made up of people like you and me, our neighbors and friends. Most activities of business are the sum total of the efforts of those people."

Jana Matthew is concerned about what she sees as a widespread bias in liberal arts education that dissuades young people from entering business.

"Liberal arts college students, in particular, have a high social service drive and want to make the world a better place. But why is it more noble to go to medical school or graduate school or work in a not-for-profit organization than to start and grow a company?"

Matthews insists that young people can take those passionate desires to make a better world into the world of business, She points out that she majored in English at Earlham and as a student was as concerned about racial equality, the environment, and redistribution of income as today's students. But, she emphasizes, "I found that becoming a businesswoman has helped me achieve my goals of working to make the world a better place."

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