It’s About Business--
Forget the Nonsense Talk About
Ethics, Honesty and Character

Edition: September 2002 - Vol 10 Number 09
Article#: 1313
Author: John Graham

It’s not about good people gone wrong. It’s time to get our heads on straight. That sixties phrase is a perfect fit for today’s confused and disturbing business climate, as each newscast brings darker revelations of corporate abuse.

As a former top executive of Enron constructs his fabled $30 million Florida dream home while awaiting possible criminal charges, thousands of former employees are stunned and jobless.

The list of charges grows longer by the day. Energy companies across the nation bet the farm like neophyte gamblers turned loose for the first time in Las Vegas––and Americans will be paying off the debts for yeas to come.

And, of course, there’s that legendary family in the obscure community of Coudersport, Pennsylvania that took care of the town while looting Adelphia, the company they founded, and turning it into a “piggy bank” for their personal pleasure.

What’s it all mean? Frankly, the millions of words in print and on the air make for good entertainment but little enlightenment. And the plentiful but preposterous and self-serving political posturing only adds to the dimwitted din.

When it comes to identifying the basic problem, the widely touted sins of greed, immorality and defective character are irrelevant. Whether it’s Arthur Andersen or WorldCom, there’s little or no indication that the perpetrators of dishonesty are “bad people.”

Quite the contrary, many are the portrait of what we consider “the good American.” Devoted to their families, they attend church regularly and give their time to civic concerns. The founder of Adelphia was generous to a fault, helping employees and those in the community who had a financial need. Yet, he and his family members looted the company of hundreds of millions of dollars.



The Disloyalty Deed

The problem isn’t bad, dishonest or greedy people. It’s not about putting the brakes on acquisitiveness or isolating some defective moral gene. The bedrock issue is totally different: All of these executives exhibited a total disregard for their companies. No matter what position of responsibility they held, their actions were identical: they were disloyal to their employers.

It’s striking that in many cases it was the founders of these corporations who did the most damage. They willfully destroyed what they created. If those who perpetrated such wholesale destruction are faulted, it should be for disloyalty. This may seem dated at a time when loyalty has all but disappeared. And that’s the problem.

Many look upon those who spend their entire working lives in one or two companies as wimpish or even stupid. Just hearing about some old timer who worked for IBM for 40 years must seem quaint.



Getting It Right

There’s another, dramatically different side to the story, however. By most any standard, Arm & Hammer may stand as the best-protected brand in business history. If it is, much of the credit should go Dwight C. Minton, the CEO of Church & Dwight from 1969 to 1995.

Now, chairman emeritus and still a board member, Minton expressed his position on protecting the brand (Harvard Business Review, June 2002). “The Arm & Hammer brand is far and away the company’s most valuable asset. The prospect of something damaging our reputation is frightening…Protect the Arm & Hammer brand, not dollars, not personal reputation.” His crystal clear and unequivocal message is next to impossible to miss. What word don’t we understand?

Minton continues with words that deserve to be seen in executive offices and boardrooms everywhere. “Aggressively protecting a brand does not come free. It means publicly admitting a problem if one exists, even though that admission might incur cash costs, a higher cost of capital, or government actions against the company.”

That’s loyalty, and in a profound sense, it’s one for the books (business books, that is).



The Destructiveness of Disloyalty

While waiting for a plane in what was then National Airport in Washington, D.C., a business executive was intrigued by the candid conversations of the corporate types waiting for their flights. He reports sitting across from a man with a Macintosh computer case at his feet. He told a fellow traveler that he worked for the now-defunct Digital Equipment Corporation. Recognizing the bright little apple, the person asked, “Why do you use a Mac computer when you work for DEC?” The questioner was clearly confused and even slightly aghast at what she perceived to be a not so inconsequential breech of loyalty. “I don’t like DEC computers,” shot back the man, without even a twinge of embarrassment.

The issue is not whether GM employees should be expected to drive GM products or DEC employees to use DEC computers. At the same time, the honor code works in certain colleges not because the students are more ethical than those attending other institutions or are afraid of getting caught. It works because there is a high regard for the institution.

Damaging the corporation is no different from injuring the family, the college, the team, or even the country. The devastating flaw is disloyalty.



Implications for Action

The loyalty issue has practical implications for every business. Here are a few possibilities:

1. Focus more on loyalty when hiring employees. This is not about the long-disdained loyalty oaths of a half-century ago. It’s about performance. Just as we want to authenticate a prospective employee’s job skills, ability to work with others, honesty, and other pertinent qualities, why not seek to understand how individuals feel about the companies where they have worked?

What about those thousands of dot.comers who held more jobs in eleven months than the average person has in a lifetime? It may be worth discovering what role their apparent disregard for the companies they worked for played in the demise of at least some of the dot.coms.

It may be that performance – including loyalty – is just as important as experience and skill.

2. Change the focus from holding a job to task performance. If there was an inherent flaw in the old IBM system of working your entire career for one company, it was allowing employees to assume that their jobs were almost automatically secure until retirement.

The picture has changed. “In the coming era,” writes business writer Price Pritchett, “jobs will be tasks you do, not something you have.” While these are harsh words to some, they are the requirements for meeting the challenges of an increasingly competitive (if that seems possible) business environment.

The delivery driver rushed into his boss’ office sweating and voice quivering. “I didn’t get a signature for the package even though I was supposed to. But I found the person and gave it directly to her.” “That’s better than a signature,” said his supervisor with a smile. That’s also task-oriented.

In the final analysis, it’s not putting in the time that deserves plaudits; it’s results that count. It’s the task that loyalty is made of.

3. Focus more on the value of the company. In answer to the question, “What business are you in?” Walt Disney possessed an understanding that is nothing less than legendary. Walt Disney didn’t make movies; he created memories. Even today, Disney is in the business of creating wonderfully warm and memorable traditions for families everywhere.

“Most parents don’t take their kids to Walt Disney World just for the event itself, but rather to make that shared experience part of everyday family conversations for months, and even years, afterward,” suggest Joseph Pine II and James Gilmore in The Experience Economy. “While the experience itself lacks tangibility, people greatly value the offering because its value lies within them, where it remains long afterward.”

Experiences have the same positive effect on companies as they do on families. For the most part, it is the traditions that determine loyalty to both family and employer.

One business executive never leaves his office on a Friday without leaving his desk in good order, papers filed, and emails answered. “As you might imagine, it’s the effect my mother had on me. We never left a room without turning off the lights or left the house without making the bed and washing the dishes. When I think about it, that’s one way I honor my mother’s memory.” And then he added, “Why the clean desk on Fridays? Mother made it clear that you don’t play until the chores are done.”

Simple traditions are the stuff from which company loyalty blossoms.

It’s safe to suggest that many find the idea of loyalty irrelevant and out of step with the times. They are probably rolling their eyes. They are saying that companies fail to exhibit much loyalty to customers, suppliers, and employees. It’s absolutely true. Their actions reflect the people who make decisions. It’s just one more reason to make loyalty a priority. n



John R. Graham is president of Graham Communications, a marketing services and sales consulting firm. Mr. Graham is the author of The New Magnet Marketing. Mr. Graham writes for a variety of publications and speaks on business, marketing and sales topics for company and association meetings. He is the recipient of an APEX Grand Award in writing. He can be contacted at 40 Oval Road, Quincy, MA 02170 (617-328-0069; fax 617-471-1504); j_graham@grahamcomm.com). The company's website is grahamcomm.com.