Qwest’s ex-CEO reports to jail

On April 14th, Joseph Nacchio, the former CEO of Qwest Communications, began his prison sentence, after a judge sentenced him to serve six years for insider trading in 2007. After a two-year period of post conviction jockeying of appeals and delays, Nacchio began his sentence at a minimum-security prison in Minersville, Pa. In addition to serving prison time, Nacchio has been ordered to pay $71 million in fines and forfeitures.

Mind you, seven-eights of a gram of marijuana earns a ten-year, maximum-security sentence. We’re are talking Oz-like hard time.

Nacchio was convicted of 19 counts of insider trading. Prosecutors said he sold $52 million worth of stock in 2001 based on nonpublic information that Qwest faced trouble meetings its sales targets. He was acquitted on 23 other counts of insider trading.

While Nacchio used private and protected information to protect his earnings, thousands of Qwest employees and other investors saw their portfolios fall to miniscule levels.

Nacchio is but the latest in a long perp walk of CEOs making astronomical sums by using insider information to make certain that they make even more. Further, what does this say about Nacchio’s contempt for his employees – many of whom had the bulk of their retirement invested in Qwest stock?

Beyond these obvious legal challenges, the question that amazes me is “how much is enough?” What do you think?

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Gay and lesbian military ban: A national disgrace

The time has long since come to reverse Don’t Ask, Don’t Tell, the 1993 ban against allowing gay and lesbians to serve openly in the U.S. armed forces. Further, President Obama made a campaign promise to reverse this discriminatory policy. And to those who claim that our country’s attention is better focused on our current financial challenges, I state that there is never a wrong time to do the right thing.

The arguments against allowing gay and lesbians to serve openly in the military were the very arguments made against admitting blacks and women in the U.S. military. Yet, after these bans were lifted, the armed services had no problem incorporating either group. There is no reason to believe that this would not be the case for gays and lesbians.

We are fortunate to have excellent comparative data from other countries that support the acceptance of gays and lesbians into the U.S. military. Most Western military forces have removed policies excluding open gays and lesbians. Of the 26 countries that participate militarily in NATO, more than 20 allow open lesbians and gays. A recent University of California study reports that in these 20 NATO countries, unit cohesion, performance and morale did not suffer because of the presence of open gay service members.

Of the permanent members of the United Nations Security Council, two (United Kingdom and France) allow gays and lesbians to serve. Countries that do not allow gays to serve openly are China, and Russia; certainly these countries would not be our model for social policy. Israel is the only country in the Middle East that allows gays and lesbians to serve openly. Again, these countries have had no difficulty incorporating gays and lesbians into their military.

Outside of outright bigotry, there is no reason to continue the ban against gays and lesbians serving openly in the U.S. military.

For those interested in an excellent study of this important issue, Dr. Nathaniel Frank has just authored an excellent book, “Unfriendly Fire: How the Gay Ban Undermines the Military and Weakens America.”

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How about an ethic of service? A different take on physician student debt

A March 11, 2008 article in The Chronicle of Higher Education notes that the American Association of Medical Colleges and the American Medical Association have written a joint letter asking Congress to reverse the Department of Education’s decision to end a program that has allowed new physician graduates to lower student loans and defer interest on their student-loan payments.

The article states that “in 2007 the average medical student graduated with $140,000 in debt, and the average first-year resident earned less than $45,000, according to the letter. Eliminating the provision, the letter warns, could discourage students from pursuing less-lucrative careers in medical education, research, public health, or primary medicine.”

Give me a break. I borrowed $100,000 to earn a doctorate in healthcare administration (DBA-Healthcare) last September at the age of 57. I teach at a small college in Northern Virginia, with four international campuses, where I earn $50,000 in base salary. I’d like to believe that what I am doing is working with the future healthcare leaders in the U.S. and around the world.

And I am not alone. There are many occupations where students have assumed substantial debt to earn terminal degrees. I personally cannot support carte blanche treatment of physicians who have been and continue to be bulwarks against universal healthcare in the U.S. What an initiative like this does is continue the stereotype that physicians are somehow medieval lords deserving of subservience and special treatment.

Let’s get behind a federal student loan repayment initiative where payment extensions or loan forgiveness would be indexed to a service contract with America. Make loan repayment a function of the degree to which the student debtor is making a social contribution. For doctors, require free clinic work and uncompensated care, for teachers incentivize teaching in low to moderate-income communities, and for graduate MBAs link repayment to helping community-based nonprofits succeed.

Let’s replace the Neanderthal notion that physicians are “entitled” with one where physicians join equally skilled and indebted graduates who direct their time and talent to service to America.

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The four ethical questions

As you prepare to make an ethical decision, consider the following:

• What is?
• What ought to be?
• How to we get from what is to what ought to be?
• What is our motivation for acting ethically?

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Ten myths about business ethics

Business ethics in the workplace is about prioritizing moral values for the workplace and ensuring behaviors are aligned with those values — it’s values management. Yet, myths abound about business ethics. Some of these myths arise from general confusion about the notion of ethics. Other myths arise from narrow or simplistic views of ethical dilemmas.

Myth 1: Business ethics is more a matter of religion than management. Diane Kirrane, in “Managing Values: A Systematic Approach to Business Ethics,”(Training and Development Journal, November 1990), asserts that “altering people’s values or souls isn’t the aim of an organizational ethics program — managing values and conflict among them is …”

Myth 2: Our employees are ethical so we don’t need attention to business ethics. Most of the ethical dilemmas faced by managers in the workplace are highly complex. Wallace explains that one knows when they have a significant ethical conflict when there is presence of a) significant value conflicts among differing interests, b) real alternatives that are equality justifiable, and c) significant consequences on “stakeholders” in the situation. Kirrane mentions that when the topic of business ethics comes up, people are quick to speak of the Golden Rule, honesty and courtesy. But when presented with complex ethical dilemmas, most people realize there’s a wide “gray area” when trying to apply ethical principles.

Myth 3: Business ethics is a discipline best led by philosophers, academics and theologians. Lack of involvement of leaders and managers in business ethics literature and discussions has led many to believe that business ethics is a fad or movement, having little to do with the day-to-day realities of running an organization. They believe business ethics is primarily a complex philosophical debate or a religion. However, business ethics is a management discipline with a programmatic approach that includes several practical tools. Ethics management programs have practical applications in other areas of management areas, as well. (These applications are listed later on in this document.)

Myth 4: Business ethics is superfluous — it only asserts the obvious: “do good!” Many people react that codes of ethics, or lists of ethical values to which the organization aspires, are rather superfluous because they represent values to which everyone should naturally aspire. However, the value of a codes of ethics to an organization is its priority and focus regarding certain ethical values in that workplace. For example, it’s obvious that all people should be honest. However, if an organization is struggling around continuing occasions of deceit in the workplace, a priority on honesty is very timely — and honesty should be listed in that organization’s code of ethics. Note that a code of ethics is an organic instrument that changes with the needs of society and the organization.

Myth 5: Business ethics is a matter of the good guys preaching to the bad guys. Some writers do seem to claim a moral high ground while lamenting the poor condition of business and its leaders. However, those people well versed in managing organizations realize that good people can take bad actions, particularly when stressed or confused. (Stress or confusion are not excuses for unethical actions — they are reasons.) Managing ethics in the workplace includes all of us working together to help each other remain ethical and to work through confusing and stressful ethical dilemmas.

Myth 6: Business ethics in the new policeperson on the block. Many believe business ethics is a recent phenomenon because of increased attention to the topic in popular and management literature. However, business ethics was written about even 2,000 years ago — at least since Cicero wrote about the topic in his On Duties. Business ethics has gotten more attention recently because of the social responsibility movement that started in the 1960s.

Myth 7: Ethics can’t be managed. Actually, ethics is always “managed” — but, too often, indirectly. For example, the behavior of the organization’s founder or current leader is a strong moral influence, or directive if you will, on behavior or employees in the workplace. Strategic priorities (profit maximization, expanding marketshare, cutting costs, etc.) can be very strong influences on morality. Laws, regulations and rules directly influence behaviors to be more ethical, usually in a manner that improves the general good and/or minimizes harm to the community. Some are still skeptical about business ethics, believing you can’t manage values in an organization. Donaldson and Davis (Management Decision, V28, N6) note that management, after all, is a value system. Skeptics might consider the tremendous influence of several “codes of ethics,” such as the “10 Commandments” in Christian religions or the U.S. Constitution. Codes can be very powerful in smaller “organizations” as well.

Myth 8: Business ethics and social responsibility are the same thing. The social responsibility movement is one aspect of the overall discipline of business ethics. Madsen and Shafritz refine the definition of business ethics to be: 1) an application of ethics to the corporate community, 2) a way to determine responsibility in business dealings, 3) the identification of important business and social issues, and 4) a critique of business. Items 3 and 4 are often matters of social responsibility. (There has been a great deal of public discussion and writing about items 3 and 4. However, there needs to be more written about items 1 and 2, about how business ethics can be managed.) Writings about social responsibility often do not address practical matters of managing ethics in the workplace, e.g., developing codes, updating polices and procedures, approaches to resolving ethical dilemmas, etc.

Myth 9: Our organization is not in trouble with the law, so we’re ethical. One can often be unethical, yet operate within the limits of the law, e.g., withhold information from superiors, fudge on budgets, constantly complain about others, etc. However, breaking the law often starts with unethical behavior that has gone unnoticed. The “boil the frog” phenomena is a useful parable here: If you put a frog in hot water, it immediately jumps out. If you put a frog in cool water and slowly heat up the water, you can eventually boil the frog. The frog doesn’t seem to notice the adverse change in its environment.

Myth 10: Managing ethics in the workplace has little practical relevance. Managing ethics in the workplace involves identifying and prioritizing values to guide behaviors in the organization, and establishing associated policies and procedures to ensure those behaviors are conducted. One might call this “values management.” Values management is also highly important in other management practices, e.g., managing diversity, Total Quality Management and strategic planning.

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Ethical leadership: Be your own “watch dog”

In the US, the consensus regarding the need for ethical business practice has been codified in The Revised Sentencing Guidelines and expanded by the Sarbanes-Oxley Act. Meeting the demands of these directives demands ethical leadership. As an example of ethical leadership of the highest order, consider the case of Jawaharlal Nehru.

In 1937, Nehru had just been elected to a second consecutive term as President of the Indian National Parliament. In a severe attack published in the Modern Review, one anonymous writer said that Nehru has all the makings of a dictator in him. He must be checked.

The author of this vitriolic article was none other than Nehru himself. Nehru understood that a leader is most ethical and effective when his or her power is limited. This great example of ethical leadership, draws three lessons:

1. Ethical leaders do not hide from debate.
2. Ethical leaders are active participants.
3. Institutional sustainability comes first.

Source: Robert E. Berenbeim. (2006, Sept.) Ethical leadership. Leadership Excellence. 23(9), p.19-20.

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Editorial: Called to a higher standard

In an article in today’s Washington Post, Rev. Ted Haggard, President of the National Evangelical Association (NEA) revealed that “he bought methamphetamine and received a massage from a self-described male escort.” Now mind you, this admission contradicted his denial only two days ago.

To put this in perspective, the NEA under Haggard’s leadership has been doggedly conservative and virulently anti-gay. The organization’s current crusade is to “save marriage” from the peril of committed same-sex relationships.

Personally, I could care less if his sexual predilections were to monkeys or if he had frequent flyer miles in a crystal meth club. It is none of my business. It became my business when a self-anointed guardian of morality pontificates on what is ethical behavior in America, uses a national bully pulpit to demonize a minority group and spends millions to pass state-based legislation to “protect marriage.” Only to be discovered to be a hypocrite.

Over the past decade, we have witnessed a tidal wave of business scandals with Enron and Tyco at the top of the list. Unfortunately, the nonprofit world is not far behind with New Era Philanthropy’s Ponzi scheme that bilked over three hundred creditors – many of which were nonprofits – out of $107 million. And no list of nonprofit shenanigans is complete without recalling William Aramony’s gutting of The United Way of America.

For me, the takeaway is clear. We work in organizations that are built on powerful mission statements and lofty values. We stand as the living promise of their dreams. The government underwrites our work with tax-exemption, and society is our ultimate customer. If we are going to lead, then our lives must be one of honesty, clarity, and even some humility. Anything less is just not acceptable.

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