| 11/21/2009 |
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There's No Such Thing As Business Ethics Whatever Happened to Business Ethics? ON NOVEMBER 8, 2001, PEOPLE WERE SHOCKED WHEN one of the hottest companies of the booming nineties, Enron, admitted to using accounting practices that had inflated its income figures by $586 million over a four-year period. Less than a month later, Enron filed Chapter 11 bankruptcy, and early in 2002, the Justice Department launched a criminal investigation into the company's practices. Investigators wanted to determine how much executives knew about the company's status, as they told their employees to hold their shares of Enron stock, but sold more than $1 billion of their own. The company went belly-up, employees' retirement savings were all but wiped out, and millions of investors lost a total of more than $60 billion. Investors were stunned. And then the questions came: How could something like this happen? Why did it happen? Who let it happen? A few months later, on March 27, 2002, the circle of people talking about ethics began to widen when the nation's sixth largest cable company, Adelphia Communications, announced that it also had financial problems. Founder John Rigas, along with his sons Timothy, Michael, and James, was accused of using company assets as collateral for loans totaling $3.1 billion to make personal purchases and finance family projects. After removing the Rigases, the company restated its earnings and later filed Chapter 11 bankruptcy. The value of its stock plummeted. On June 3, 2002, Adelphia was delisted from NASDAQ. Even more people became worried about ethics in business. And more people were asking questions: What kind of people would do such things? How could this happen? Could it happen again? That very same day, Dennis Kozlowski, CEO of Tyco, was charged by the district attorney of Manhattan in New York City with evading $1 million in sales tax on artwork and other items he had purchased for himself with company funds. As investigators looked further into Kozlowski's actions, they alleged that he and two other Tyco executives had looted $600 million from the company. The worry about private unethical practices in business was becoming a very public concern. Later that month, Time magazine declared it to be the "Summer of Mistrust" and reported, "Most Americans- 72% in the Time /CNN poll-fear that they see not a few isolated cases but a pattern of deception by a large number of companies." And that was before word got out about WorldCom, who announced that an internal audit found improper accounting procedures. Their profits from 2000 to 2002 had been overstated by $7.1 billion! And WorldCom said $3.8 billion in expenses had been improperly reported during five quarters. The consequences: Seventeen thousand workers lost their jobs, WorldCom restated its financial results (wiping out all profits during those quarters), and shares of its stock fell in value by 75 percent. And the questions in the mind of the public only increased: Why is this happening? How many companies are unethical? Whatever happened to business ethics? BACKLASH! Most people are disgusted with the state of ethics in America. They are sick of dishonesty and unethical dealings. UC Berkeley accounting professor Brett Trueman, who teaches at the Haas School of Business, remarked, "This is why the market keeps going down every day-investors don't know who to trust. As these things come out, it just continues to build." Of course, the problems aren't limited to just the business world. The public was horrified by the abuses that occurred in the Catholic Church and how the incidents were covered up. Many were surprised by reports that Pulitzer prize-winning history professor Stephen Ambrose had plagiarized passages from historian Thomas Childers for his book The Wild Blue. And those who watched the Winter Olympic Games in Salt Lake City were outraged when a figure-skating judge claimed that her decision had been coerced, altering the outcome of the pairs competition. About the author: Bestselling author and expert on leadership John C. Maxwell shares the only rule that matters—in business and in life. How does a person judge what is ethical? Sometimes it's clear. In the past year or two, ethical lapses in corporate America have been well documented. But is it always easy to see where the line is in life? What's the standard? And can it work in all situations? John C. Max- well thinks it can. In There's No Such Thing As Business Ethics, Maxwell shows how people can live with integrity by using the Golden Rule as their standard—regardless of religion, culture, or circumstances. Along the way, he delves into the desires of the human heart, reveals the five most common pitfalls that throw people off the ethical track, and teaches how to develop the Midas touch when it comes to personal integrity.
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