Hot Negative: Why the Media Miss the Business Message


"Are there absolute standards for morals and ethics or does everything depend on the situation? Seventy-nine percent of the age 18 to 34 respondents said that standards did not exist and that the situation should always dictate behavior. (Three percent said they were not sure!)"
-Marianne Jennings
Professor of Legal and Ethical Studies
Arizona State University

When all sides of an issue are reported in some kind of non-judgmental fashion, that indicates an implied judgment has been made that the situation is debatable.

The media, in its attempt at story line balance, fails to state the reasons why business is impossible to transact without ethical, trustworthy people agreeing upon a code of conduct on which to base economic relationships. This is uncharted territory for them. They completely miss this vital message.

A values neutral approach to stories means that anything goes. It doesn't! Good people must do good things for each other for business to work.

The crowning event of the twentieth century, both politically and economically, was signaled by the fall of the Berlin Wall. A seventy-year experiment in centrally-controlled economic planning came crashing to earth (along with the government that ran it). The free market system of business was able to expand to large numbers of nations that had only seen consumer goods on television or on the black market. The Russian empire was no longer, and its people now had the opportunity to prosper under capitalism. Unfortunately, something went wrong. Why didn't the new system take? Why didn't the economy boom?

The answer is that for seventy years, to survive the Communist system, you had to cheat the system.You had to do business under the table. You had to get your piece of the action and let everyone else take care of themselves as best they could. Situational ethics was in charge. This endemic culture will be slow to change. What were considered Western rules were not adopted with the influx of Western goods.Economic disaster followed. The capitalistic system will not work without absolute agreement on right and wrong.

Russian economic collapse is reported, but no reasons are stated. The fact that BMW and Mercedes are the biggest selling cars in Moscow is not correlated with the disappearance of foreign investment capital at an alarming rate. The money has not been lost on questionable ventures in the sense that it is in the Western world. It has gone into the pockets of those who feel its availability gives them the personal right to it. If you are smart enough to get away with it, you should have it. In fact, that is one of the rewards of being smart. You can do anything you want.

This is not to say that all Russians are crooks, or that all Western business people are not. It merely recognizes that the proportions are so out of balance that an entire country's economy is in chaos. At what percentage point does the cross-over occur? It depends! Once right and wrong depends on the situation, the system begins to fail. Ethics is not only a moral issue. It is an economic issue.

What about the Asian economic flu? The term "crony capitalism" is used in the press. It sounds almost harmless, but it is, of course, economically deadly. What this euphemism for fraud actually is, doesn't get reported in detail. For example, the fact that all oil companies must market gas for cars through gas stations owned by a company that, in turn, is owned or controlled by the nephew of the Minister of Finance means that everyone who buys gas must pay a higher price for the cronies of the government to get their cut. This is over and above any legal government tax on fuel. Depending upon how much wealth is extracted from the system in this way, the cost of production of all goods and services rises if transportation is involved in their manufacture or delivery. This makes the nation's economy non-competitive in world markets where hidden fraudulent costs are not siphoned from margins and profits.

Where there is large-scale theft, outside investment capital must be substituted for working capital. That adds additional interest costs on top of kick-back costs to goods and services. With unhealthy ethics, the whole system gets sick.

That is the real story behind the Asian economic flu. It is usually reported as the failure of high-risk investments. Much more is at work.

How about Japan? A sweetheart deal for bankers where their losses are cooked in the books and the ethics of dealing fraudulently are not mentioned is enough to bring an economic giant to its knees. The government failed to enforce a code of right and wrong in the banking system. The little situation ethics bug is a powerful organism.

In our country we are seeing the seeds of the 1960's culture corrupt our society. Without business ethics, our economic society cannot function. The media does everyone a disservice by reporting this to be a debatable issue. In fact, it isn't.

In the hot pursuit of hot negative business stories, big business is demonized. When the books are cooked, those in command should go to jail; but few books are cooked. They can't be, or the system wouldn't work. Our system does work, and it works for good reason.

A code of ethical conduct with absolute right and wrong not only exists, but it is rigorously adhered to by almost all successful enterprises. It is a system whose standards far exceed the law, and because its positive aspects are seldom if ever hot negative, it goes unreported, except in unusual cases. Fortunately, white collar crime is relatively rare. When it does come to light, it is well covered, as all negative news stories are. If the bad stuff gets the ink and the good stuff doesn't, the impression is created that there is more bad than good. That cannot be the case. This is not Russia or Asia or Japan. Our system works.

Contracts merely document the spirit of agreements. Most organizations attempt to over-deliver. They routinely go the extra mile. They live by an upgraded golden rule. When something goes wrong, they try to make it right. It is in their best interests to stand by their word.

Saturn adopted this ethic to drive its customer satisfaction rating. Unfortunately, this was one of the excessive costs that went unidentified in the Saturn "experiment." The little car with little or no profits could not sustain the cost of doing business in the big leagues of big time customer satisfaction programs that are the purview of only the most profitable luxury car models.

Doing good with money you don't have is not a complex ethical dilemma. Arithmetic and the marketplace tend to eventually catch up with fuzzy math. Nothing wrong with being extra responsive to customers. You merely have to be sure that it works within your cost structure.

The concept that there is no "free lunch" should be taught in grade school. Unfortunately, lunch is often presented as a government program. Basic economics and ethics should not be beyond either the business media nor grade school children.

A detailed analysis of the problems in the world economic system cannot totally be reduced to a lack of personal ethics, but it should be reported as a very high impact factor. People have to trust each other. They must rely on the other person's word. They must believe that when money is lent or credit extended, payment will occur according to agreed-upon terms. Business cannot be fail-safe, but poor ethics cannot be a part of the risk equation. If people cannot rely on the character of the person they are dealing with, they prudently opt not to do business with them.

When enough people decide not to extend credit or lend money, that is called a recession. A worldwide economic crisis is merely the compilation of multiple transactions gone bad.

The reliance on central banking systems to make good on bad deals sends a signal that the consequences of actions are discounted. If there is risk without loss, the system ratchets risk upward accordingly. Business ethics requires the prudent use of other people's money. "Thou shalt not steal" is a moral absolute. "Thou shalt be careful with money that belongs to others" is a moral imperative, and an essential in effective business dealings.

These may be fine points to expect to discover in the business news, but missing these concepts puts everything else out of context.

When companies profess the need for ethical codes of conduct, they are really talking about rules and regulations to safeguard assets. What real ethics is all about is the promotion of positive action above and beyond the perceived call of duty. It doesn't involve merely not doing wrong, but rather must be expanded to doing good. There are positive economic consequences for ethical operations, but direct connections are usually difficult to link together. None of this can fit into the six o'clock news in any way, shape or manner. When a strong positive ethical business event makes it into the news, it is most likely by accident.

One such story developed locally a few years back. It required a hot negative lead to get picked up, and its ending was reported just as a closure to the piece. No ethical significance of events was mentioned. It happened this way:

A police report came in at 1:16 p.m. that a shot had been fired in a local residential neighborhood, and the responding officers ended up in a standoff situation with a man refusing their entry to his home. The building was surrounded and a day-long vigil began. The phone was off the hook, so it took some time to establish contact with the despondent man who had fired the shot. He was reported to have had an argument with his tenant who was moving out. The headlines the next day read, "Standoff Ends: No One Injured," with the lead in the story subtitled: "Man gives up after six hours." Local and assisting police teams were given high praise for a job well done. An arrest was made of the homeowner, who was identified as an Army Special Forces veteran with service in Vietnam.

The follow-up story ran on page five of local news a day later. It was headed: "Man in standoff freed on bail." It was at this point that a hot negative story turned hot positive and became an outstanding example of a high grade of business ethics in action.

The defendant was arraigned in district court on Class A reckless conduct charges that could result in a $2,000 fine and a year in jail. As the man had no previous criminal record, he was released on bail. When asked if he wanted to say anything, his only reply was, "I'm sorry. I'm sorry."

Barefoot and dressed in the same clothes he was arrested in (a T-shirt and light pants), he was greeted outside the court by his boss, Bernard Perry, Jr., president and owner of KRL Electronics/Bantry Components. It was a cold December morning, and Perry removed his topcoat, draped it around his employee, embraced him, and said he attended the arraignment to offer his support for his friend and to post bail if necessary.

Joe McCool, the reporter for the state-wide newspaper, snapped a picture that went with the story as Perry and a local police officer helped the man on with Perry's coat. It was a great news photo for which McCool was later recognized by his publisher. He then developed the story as follows: "Perry said he had hired the man about three years before as a machinist. He said, "Everybody at the factory is concerned for him. Everybody loves him. You can't find a nicer guy. He's a very gentle man." Perry added, "He's had so much bad luck. He lost his (first) wife and child in an automobile accident while he was in Vietnam. He wasn't told about it for six weeks. His life had recently been complicated with a chronic stomach ailment, his mother's illness, car problems, and a fight to keep his house after his divorce from his second wife." (And all this from his boss!)

Perry continued, "Last Friday he seemed overwhelmed with everything. I think his tenant was moving out. He's fallen on bad times. I think he was just stressed out."

Many in business will recognize this story as a first-class example of business ethics in action. I did, and proposed it to the national media, complete with an unbelievable photo. There were no takers. Editors didn't see the ethical angle. They didn't understand that this is the kind of glue that holds our economy together. It was unusual for Perry to find himself in the middle of a news story, but as we all know, it is not unusual for bosses everywhere to end up involved in the lives of their employees attempting to help them when things are not going well for them. Perhaps the editors were right. It just isn't news. True enough to the media, but the concept that there is a positive ethical component to all successful business is definitely news to the media, if not to the rest of us.

Five years later I checked back and all was well at KRL. Bernard Perry had retained his employee, who was still working in the plant.

Business ethics is not a question of right and wrong as much as it is an issue of how much good can be done within the framework of normal operations. Business needn't attempt to become a social service agency, but compassion, except in the take-over turnaround tornadoes described, is not an uncommon occurrence. It was a pure accident of media fate that the KRL story made it to print.

What does make it on the news is the big scandals. Many of these deserve to be there. Some years ago it was reported that many multi-national corporations based in the United States had adopted foreign sales practices that included factoring in questionable third-party payments for major contracts. Buying business in this way was considered culturally acceptable in some areas of the world. We would call it bribery (as it should be called anywhere and everywhere). The hew and cry went up. Laws were passed, and companies everywhere began to construct ethics policies. A substantial donation was made to one of the leading business graduate schools to make a major effort to teach ethics. What was not understood was that ethics is not a stand-alone discipline. It is more complex than that. It requires the support of additional arts. Man has dealt with this fact in Western civilization since the ancient Greeks developed metaphysics to answer the questions of who we are and where we come from. Religion supplies answers to the questions of where we are going and how we might best attempt to get there. This three-legged stool of ethics, metaphysics and religion provides basic life support. Ethics based merely on pragmatism is pretty shaky stuff. Leading an ethical life is not easy. We must work at it!

The most widely accepted individual code of ethics in the world is the Decalogue. From their reception by a Middle Eastern tribal society thousands of years ago to their use in the space age of today, the Ten Commandments have stood the test of time, unedited and unamended. It has been said that they are not the ten suggestions. Hitting for average is not the goal. Just dealing with commandment number one can be a struggle. Just who (or what) is the God you worship? Power, wealth and sexuality, while good and necessary in human society, can easily become false gods, and even addictive. Those who are addicted cannot be dealt with. They must deal with their addiction first. Rudderless ships or those out of control are a danger to navigation to all. Ethical action is required of all.

Fortunately, business professionals seldom have to deal with life and death ethical issues. Saving the life of your company by making questionable vendor payments or making wealth available to others via special business deals to gain future benefit cannot be considered a life or death decision. It might better be called by the common usage term of bribery.

Euphemisms seem to be the order of the day. They always have been useful to those who wish to justify questionable behavior. Someone who lies has not "mis-spoken"! "Spin" is rationalization in most cases. There are moral absolutes. Situation ethics is proven to be unworkable.

A wise consultant friend once told me that if in working with a client company you run across little things being done wrong, it is a pretty safe bet that the big things will also be handled poorly. Conversely, if you see the little things being done well, the big issues usually will run true to that form as well.

The same seems to be true of individuals. If they fail to keep commitments in small matters, beware of getting involved in big deals with them. No need to do in-depth analyses. People wear their integrity across their forehead for all to see. They are either people of their word in all things, or they are not. Great moral courage is usually not needed to make ethical judgments in business. It is an easy matter merely to choose not to do business with those that advertise their low regard for ethical behavior.

One company held in high esteem in the Fortune 500 for its consistent superior financial performance has told its employees in direct terms that bottom line results are the goal, and that no person's position is secure in any way without outstanding numbers. They are told to "walk this talk" (act accordingly!). The practice justifies the elimination of large blocks of workers, business units and divisions to assure the survival of the leaders of this pack. They specialize in remedial management. A true oxymoron. The top managers carrying out these draconian moves fail to hold themselves accountable for the mismanagement that caused the numbers to slip in the first place. How did they get so over-staffed? Who let quality slip? At the very least, they could share responsibility and do the hard work of correcting a situation rather than merely balancing their books on the backs of their employees.

Simple justice would dictate that cuts begin at the top, not at the bottom. This principle is true in all organizations. Junior managers in this company, although well compensated, take advantage of their ability to leave this paragon of performance for more humane and ethical outfits. Moral bankruptcy can be achieved at the same time as financial success. Getting ahead of problems is what management is all about. Not causing them in the first place is even better. People are not human resources. They are human beings.

The recognition of human dignity and the providing of a livelihood for families are generally accepted principles in business. These are rewarded with dedicated performance. This is the trust arena that ethical people operate within. A person's livelihood is not expendable.

Both life and business require discipline. Leaders must set personally high standards because once you decide to step forward in that role you become highly visible, especially from below.

Harry Truman would promptly leave any political gathering in hotel suites where unescorted women were present. He was scrupulous in his dealings with contractors as a county commissioner. He grew poor in politics while most others went in the other direction. He became one of our least likely presidents by being ethically counter-cultural to the widely accepted political practices that he found to be personally unacceptable.

It seems that few people can stand the glare of the spotlight they seek. Operating in the darkness of anonymity or secrecy is a goal for many. "Let the light shine in" are the words to live by.

Because of the massive focus on the negative, it is difficult to think of ethics in positive terms. It is the positive practice of good ethics in business that is most common. Common behavior is, of course, not news. That does not mean it isn't happening. It just means that it isn't reported. It is invisible to the media.

I was asked to see if I could somehow use a positive and somewhat unusual management story in some of the articles I was writing for various business publications in the mid-eighties.

A friend suggested I meet George Cook. He was the downtown office manager for Merrill Lynch in Boston. He was well known in the business as an exceptional manager. I was told he had an interesting story to tell that might fit into some future print piece. Would I like to meet him? Over lunch, paid for by my friend, I heard George Cook tell a most unusual story.

His sales unit was having an exceptional year. Many of his people had been recruited into the business by George and had been given their first chance at substantial earnings. Joe Kringdon, whom I met later, was a good example. He was interviewed by George in 1981. Joe was the first in his family to go to college. His father was a cab driver. George made him his job offer in person, which impressed Joe. It was in the mid-'teens. George asked what his ultimate annual earnings goal might be. Joe knew that his father had never made more than thirty-five thousand dollars a year in his lifetime, so he replied that forty-five thousand a year would be his objective. George told him that he would fire him if that was all he could do. Joe eventually made it to six figures. He said that George was never an in-your-face manager, but whatever he told you was important and it stuck. When you were working to less than your potential, George let you know that he knew. When Joe met his future wife at Merrill Lynch, they maintained a discrete relationship because it was company policy at the time that those things were discouraged. When he went to George to announce his engagement, George said that it was a surprise to him and that he would see if an exception to the corporate rule could be made at his request so they could both keep their jobs. He did, and they did!

Nothing managerially to write home about, but George did have a story to tell. It seems that at the close of a recent bonus period his sales representatives decided to take up a collection and give George a gift in appreciation for his leadership. It was some collection. They gave George and his wife a ten-day trip to London (over on the QE II and back on the Concorde). I asked George what it was like. He said it was wonderful. The ocean voyage avoided arrival jet lag while at the same time building anticipation into the vacation. On the reverse end, he said the Concorde had you home in a couple of hours when you were ready to come back. It was a memorable vacation. It surely was a unique form of management compensation, and I resolved to somehow use the story. Several months later, without having yet found a home for the George Cook piece, I was visiting the local TV news operation at the end of the day. The production manager had to stay at work until the six o'clock news had run, so he found me a seat in the control room to watch the show. The lead story popped on the screen and there was George Cook. There had been a shooting in the financial district. A disgruntled employee had pumped several shots into his boss. George Cook died in his office.

The story ran for several days and the murderer was profiled every which way from Wednesday. He wasn't making it. He had never made it. George Cook evidently had to give him the bad news one more time, which he couldn't handle. The life of the killer was reported in detail all through his trial and eventual sentencing to life in prison. It was the ultimate hot negative feature. I never was able to tell the George Cook story until this chapter. I could never find a home for a positive story on business ethics. This turned out to be the only place. It never fit a business news profile. The media continue to miss these business messages. They can be of great value to us all.