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  • Thank you for joining us for the panel discussion around the return on investment of ethical

  • leadership in business organized by the BB&T Center for Ethical Business Leadership within

  • the Mike Cottrell College of Business at the University of North Georgia. I'm Latasha Brinson,

  • your moderator today. I'm the Marietta Site Lead for Lockheed Martin Aeronautics Company.

  • I'd like to welcome our distinguished panelists to include Mr. Chuck Gallagher, Chief Operating

  • Officer, American Funeral Financial and President of the Ethics Resource Group. Welcome.

  • Great to be here, absolutely wonderful and I look forward to participating in this distinguished

  • panel. Ok, Dr. Mary Gentile, Creator and Author of

  • Giving Voice to Values and Senior Researcher of Babson College, Welcome.

  • Thank you, Natasha. I'm really happy to be here and especially happy to have a chance

  • to talk with the five of us. Ok, wonderful. Mr. Joel Manby, President & Chief

  • Executive Officer, Herschend Family Entertainment, Welcome.

  • Well thank you Natasha. It's great to be here. I also look forward it have had a chance to

  • meet all of these great and very smart individuals already, so I look forward to it.

  • Ok, Dr. Bruce Weinstein, The Ethics Guy and author, most recently of the book Ethical

  • Intelligence, welcome and thanks for being here.

  • I have to say I feel really humbled to be in this company so thank you for including

  • me. Thank you all for being here and I think we're

  • going to go ahead and get started with our first question, so Mr. Gallagher, what does

  • ethics mean to you? Well, every choice in life that we make has

  • a consequence, so making choices that create positive consequences, that create the life

  • that we want to live, the life that we want, we're proud of. To me is that core foundation

  • of what really ethics is. I think I would say to the group, ethics isn't necessarily

  • black or white. It isn't set in stone. It's making the right choice based on all the facts

  • and circumstances and realizing consciously that those choices we make have consequences

  • that live with us now and certainly into the future. So, does ethics matter and what is

  • ethics? I think it starts with that. I think that was quite eloquent. One of the

  • things that I like to say about ethics is that we often talk about it as if its around

  • a set of requirements, thou shalt nots if you will. And I really like to think about

  • ethics more as having to do with something that is more aspirational. I think we're more

  • likely to behave in ways that we are all going to be comfortable with and proud of but if

  • we go back to the core and think about what is important to me? What do I value and is

  • there a way that I can make sure that I act in a way consistently throughout all of the

  • areas of my life to live up to those values. I think of it more as what I can do as opposed

  • to what I can't do. I think that's such a great point and our

  • company has used ethics as a foundation to make a great culture and because it's a great

  • place to work, we attract the best people. We have very low turnover and it's because

  • we use it as a positive thing not something that's what not to do. I think that's a great

  • and eloquent way to do it. It really does attract the best people, especially with today's

  • generation coming out of college. They want companies that care about the environment,

  • about treating people well, about caring for those that have less. I just think that it's

  • exciting for the future. There's too much negative about business in the press out there.

  • There are a lot of great companies and I think a focus on ethics can help even more companies

  • get to where they need to be. So, it not only helps with attraction but

  • with retention. With retention but it's also just the right

  • thing to do and it makes society a better place.

  • So here's the thing. Ethics is important, the practice of ethics is important. What

  • I've discovered in the 25 years I've been teaching is that the term is such a turnoff

  • that if you don't reel people in with the right marketing if you will or right packaging,

  • people won't even get to get in the game, so to speak. So, I've been de-emphasizing

  • the word ethics in my writing and my speaking and lately I've been using the term honor,

  • honorable behavior much more and I'll tell you why. We're here at the Military College

  • of Georgia and a friend of mine from Annapolis at the Naval Academy that ethics was taught

  • there but they almost never used the word ethics and instead they use the word honor

  • to appeal more to the military ethos and talking with folks over the last couple of years I've

  • decided I'm not going to talk about ethics, ethical / moral behavior but rather behavior

  • that has integrity; behavior that is honorable; it's the same thing. It's just how it's presented

  • to the world. Excellent point. One of the things Bruce in doing that that

  • I think is really important, Mary, you touched on it as well, is so often we find in many

  • companies the ethics and compliance rule. People have to go through these snoozer programs

  • that talk about well here are the rules. Well the rules are one thing but what motivates

  • human behavior and if I'm motivated by honor cause that's the ethos, now I have a reason

  • to follow the rules other than someone in HR and compliance saying well here are the

  • rules and we have to do this because we're required to.

  • If it's based on something in your heart and soul that's honor or truth then the rules

  • don't matter as much because it's always easy to find a loophole or possible to find a loophole.

  • And in fact what was Joe Paterno's first offense? He said I did not break the law by not reporting

  • this more aggressively. He's right, he didn't break the law. But the question is was that

  • honorable conduct? Was it the right thing to do? And I think we all agree that it was

  • not. At Lockheed we have a saying do what's right

  • because it's right and we encourage our employees to do what's right when no one's looking.

  • And to give them the freedom to talk about what's right because it's not always black

  • and white. It's sometimes it's gray and very complex and but to have leadership that's

  • willing to talk about it and dialogue about it and help people get to the right answer,

  • I think is really critical and that's what great leadership does, what all of us are

  • very focused on. What is that our managers, our employers, our team leaders and even our

  • senior leaders can do and I would say that one of the first things you can do is kind

  • of what you were referring to, Joel, is this idea of inviting your senior leaders to tell

  • what I call a "learning story." This is not a success story. This is not an I did the

  • right thing, I'm a hero kind of story. When people hear those stories, often they'll think,

  • that's great, but I couldn't do that. He can do that, she can do that, but I.... Instead,

  • what we do is work with the leaders to think of a situation where they were actually challenged

  • and where they had to work through how to get the right thing done and then to share

  • that learning story -- how they worked through it. What happens then, is that you both signal

  • that you're not just giving the headline of "do the right thing." You're serious. You're

  • signaling that even the leaders are struggling with this. You're signaling that the leaders

  • are willing to have this conversation in an open way, which speaks volumes for credibility,

  • and you're actually teaching a few lessons along the way. They're learning how you worked

  • through it. What I like about what you said is that it starts from the top, and then of

  • course in your company, starts at the CEO level. I'm often asked how can a company create

  • an ethical culture? It's a necessary condition that the leader of the company be on board.

  • It's not sufficient, because you have to get everyone else on board, but if the leader's

  • a crook or isn't committed to ethics, what's the incentive to create an ethical culture?

  • It's interesting, that one though. I always have a little trouble with that, because I

  • think in the absence of countervailing pressure, or countervailing messages, people often will

  • assume the worst. I had a conversation - a dinner - with the CEO, the CFO, and the COO

  • and the major strategy person for a public utility about 6 months ago, and they were

  • talking about how the employees always assumed the worst of them, the employees assumed that

  • they don't care about these things, and they do care about these things, and therefore,

  • the employees made unethical choices because they're assuming that the boss doesn't care.

  • They were turning to me and saying, but Mary, I do care. I was saying, it's not enough to

  • care. You actually have to communicate that you care. Maybe you're not doing anything

  • unethical, but in the absence of the actual assertion of that, people are afraid to assume

  • the best because they're afraid to be made fools of. They're afraid to be made vulnerable.

  • I think if you are in a leadership position, you have a responsibility to make that visible.

  • They may be concerned with that, but I would put forth that they have the responsibility.

  • If you're going to be a senior leader, you have to be willing to be vulnerable, and I

  • think Bruce's point is it's challenging. As the CEO, I feel a pressure - a constant pressure

  • of everything I do and say and how I act and behave is being viewed. It's a message whether

  • I take a certain type of transportation. All those issues. Everything. But I have to be

  • willing to be transparent and share my failures and I'm very transparent, because I have a

  • ton of them, but I think you made a really good point about transparency, but I also

  • think the leader does have to be transparent and put themselves out there. If I may, Joel,

  • you referred to failures that you've had and that you've shared with the company. Would

  • you be willing to talk about something and how that affected the company and the employees

  • for the better? Sure. I've done it often, I mean we've all made a lot of mistakes and

  • I do think it's important to be transparent. I remember one time one of our executives

  • who failed in one of our businesses wanted to quit. I sat him down and said, look, I

  • have been through a company that almost went bankrupt, had to be sold, but I learned more

  • in that failure than I did in five years of success in another situation. I gave him the

  • confidence to go back. i also share a lot about my own personal life whether it's marital

  • issues, or issues with our children to show that we are all human. We all struggle. We

  • all have ethical issues we have to deal with. I think it's really important to be transparent.

  • So transparency and tone at the top. Excellent. Dr. Gentile, I'd like to start with you for

  • our second question. As business experts, do you feel we should be focusing on teaching

  • ethics in business more within our business schools? Tell me why or why not. Well given

  • that my career has been focused primarily in the field of business education, it would

  • be sad if I didn't think it was important to do what I am doing, which is in fact addressing

  • the issues and values of leadership in business, but to be quite candid with you, if business

  • schools continue to teach ethics the way they have been teaching it, then I would answer

  • no. I don't think it's really helpful the way that we have been teaching business ethics.

  • What I'm trying to do with my work is to suggest an entirely different way of approaching the

  • issue. I always tell people it's about asking a different question. Traditionally when we

  • talk about business ethics in business schools, and my work has been primarily at the MBA

  • level, we'll share some thorny ethical case study and ask them, what's the right thing

  • to do in this situation? The students will spend 90 minutes, and they'll discuss what

  • the right thing to do is, and they may learn some philosophy along the way. It may teach

  • them about utilitarianism, but I think the best indictment of this approach is a little

  • story I'll share. It's very brief. When I was doing research for my work, a lot of people

  • said, Mary, you should go interview this guy. He's a CEO/entrepreneur with his own consumer

  • product firm. Very successful and based in the US. Privately held. He's thought a lot

  • about ethics in business. So I went to interview the guy, and he said, I want to ask you some

  • questions Mary. He said, I want to ask you some questions about business school. He said,

  • I'm concerned about how you teach ethics in business schools. I was interviewing an MBA

  • from one of the top US business schools recently, and in my interview with him, I asked him,

  • did you take a business ethics class? He said, well yeah, I was required. So the CEO said,

  • well what did you learn? And he said, well, I learned all the models of ethical reasoning:

  • utilitarianism, deontonoloy, virtue-based ethics, and then I learned that whenever you

  • encounter a values conflict, you decide what you want to do and then you select the model

  • of ethical reasoning that will best support which one to do. Now, this CEO was telling

  • me this story with a wry smile; he was kind of yanking my chain, because I was the ethics

  • lady, but there's a certain amount of truth to this. In fact, these models of ethical

  • reasoning are not designed to tell you what the right thing to do is. They, by definition,

  • conflict. The whole idea is that they help you think more rigorously about something

  • from different perspectives and see what you might miss. They don't tell you what's right,

  • and then even more importantly, once you decide what's right, they certainly don't tell you

  • how to get it done. It started to occur to me that what we needed to do was to ask a

  • different question. Instead of asking, what's the right thing to do, we should ask, once

  • you know what's right, how do you get it done in a business environment effectively? If

  • you ask that question, then a whole bunch of different things fall out of that. You

  • start looking for positive examples of folks at every level of the organization, CEOs certainly,

  • but others as well who have found ways to act effectively. You look at what are the

  • tools and strategies and literal scripts that they've used. What are the kinds of rationalization

  • and reasons and objections that they always encounter and how could they respond to those?

  • You set up a peer-coaching kind of experience. That's really what I've been trying to do

  • is to encourage people to teach ethics in that way. If you teach it in that way, you

  • don't even have to teach it in an ethics class. The beauty of that approach is that then you

  • can be in your marketing class or your accounting class and you can simply say, okay, we now

  • know what the appropriate way to report your quarterly earnings is in this particular situation,

  • but you're gonna face pressures to cook the books, so what do you do and say when that

  • happens? Use the language and the tools. Don't ask them whether they should cook the books,

  • ask them, if you've been asked to do that by a colleague and you want to resist because

  • you believe it's appropriate to resist, what kinds of arguments would be effective; what

  • kinds of strategies? I think if you re-frame it as it's about action, how to get the right

  • thing done -- absolutely. But if you keep teaching it the way we have been teaching

  • it, I'm not sure we're having the impact we want to have anyway. May I pile on here? Sure.

  • I'll go out on a limb. The worst way to teach business ethics in school is to have a class

  • in business ethics. What that does is compartmentalizes ethics and it suggests that while there's

  • ethics and then other aspects of being a successful business person as opposed to integrating

  • it throughout the curriculum and having it modeled. Again, the whole -- all the faculty

  • has to be on board with that, or at least most of them. But, spread it out across the

  • curriculum; integrate it into the coursework, the questions that are asked. It's not just

  • business schools that are guilty of this. You see it in medical school, law school,

  • as well. Nursing school. It's relegated to a couple of classes. Maybe once a year, they

  • bring in an ethics speaker. Well you see that in businesses as well. There's one hour of

  • ethics training. The best companies I'm working with see it as a way to tie into their leadership

  • development or some of their other activities. A lot of professions in business -- they're

  • required to have several hours of continuing education credits in ethics. This blows my

  • mind. Every year when I do these seminars, I'll see people coming in at the end of the

  • ethics seminar to get their ethics credit. I actually stopped one time and said, sir,

  • what a minute. I know you weren't here at the beginning. The irony of sneaking into

  • an ethics presentation. Is that lost? I mean, come on. No, no, no. I just needed the credit.

  • I just needed the credit. Thinking about it in those terms. It's not just what's taught,

  • but how it's taught. Same thought as you were speaking. You can't be a silo. It's completely

  • integrated. The way we look at it in our business -- it's the connector to everything we do

  • and how we rate people and evaluate people. It cannot be segmented off. The truth is,

  • you're not in a situation that all of sudden oh, this is an ethical situation and out here

  • ---- every day, there's hundreds of situations. They all have some kind of ethical implication.

  • Most of them do. I agree with both of your points very much. It's fascinating when you

  • come from a non-academic perspective. I have to tell you. I was at a university in Canada

  • and I was the keynote speaker, but they didn't know who I was by design. So we're going through

  • the line, and one of the professors looks at me and says, what theory of ethics do you

  • follow? I'm thinking to myself, this is a great moment. I said, the theory the keeps

  • you out of federal prison. He didn't get it until I walked in and understood that having

  • been there, and having made unethical choices, there is a practical application. I understand

  • what you're saying in terms of teaching it and how does it work and what can we do, but

  • in real life, when everything's in equilibrium, life is easy. It's very easy to choose the

  • ethical thing. It's when life gets out of equilibrium - when there's that pressure - that

  • need - that takes place. Something happens unanticipated, unexpected, and all of a sudden,

  • life is out of equilibrium and the nature of a human being is to go back into equilibrium.

  • The question is, at that moment, what do you choose to get into equilibrium? Do you naturally

  • choose the ethical thing? Can you recognize life's out of balance, there's a need. There's

  • going to be some opportunity to bring it back in balance. How can I rationalize that? If

  • I can recognize it, I have a better chance of being able to make an ethical choice to

  • bring it back into balance than if it happens, and I'm unprepared for that scenario, and