Integrity and Business...it pays off.

by Carl Robinson, Ph.D., copyright 2003

Judging from the press, you’d think that most businesses in America survive by hook or by crook…but mostly by crook. I beg to differ. In fact, it is my experience that most business people are people of integrity and achieve success by doing business the right way. This month I am going to write about one company where the Board figured out that some of the key executives were up to no good, booted them out and have not only recovered from the scandal but, have proceeded to excel. I’ll do my best to outline to you the keys steps to their successful turnaround.

Fran Conley, the CEO of Cutter & Buck, a fast growing high-end apparel company, recently spoke at the Seattle Chapter of Rotary International (more about Rotary later). She described in gory detail how, as a board member, she uncovered financial irregularities and the course of action the board decided to take to turn things around. She also described four strategies that she and the board adopted to help the company recover and to motivate their employees (the many good ones) during the time they were trying to climb out of the pit.

Fran exemplifies what a good board member should be doing. She did not rubber stamp the reports issued by Cutter & Buck’s executives and actually questioned certain sales figures. As she looked deeper, she found irregularities and brought them to the rest of the board members’ attention. Once they realized the extent of the problems, they booted the errant senior executives and asked Fran to take command. Fran had years of experience as a CEO, senior executive and Venture Capitalist so she was well qualified to run the organization. The four strategies she employed follow:

1. Rebuild trust by disclosing bad news quickly and completely.

They didn’t cover up or stonewall, but instead let all the appropriate parties know what was happening. Shareholders, NASDAQ, the SEC and the Justice Department all were apprized. They told the truth and what they were going to do correct the problems. Yes…there were shareholder lawsuits. It goes with the territory. They dealt with them directly, honestly and quickly. Fran realized that the only way they could reassure the markets and rebuild trust with shareholders, employees, vendors and customers was to be honest and open about what happened and what they were going to do to correct the problems. No stonewalling…just honesty.

2. Empathize how each employee could use the experience, as bad as it was, to personally learn and grow.

They focused on the positive potential outcomes to the crisis and looked for the pony buried in the all the manure. She asked everyone involved, from Board members on down, to use the experience to learn about themselves and to draw from the experience lessons to live by. By doing this she turned a profoundly humiliating experience into something that each employee could use as a developmental opportunity that could help them become better people.

3. Allow integrity, professionalism and respect to guide your decision-making and behavior.

She wanted everyone to pay attention (be conscious) to how they were acting and relating to each other (process). She asked people to consciously question and respond to how they were making business decisions using integrity, professionalism and mutual respect as a guiding force.

4. Pay attention to process.

To help people question and rethink how they were conducting business, she asked them to pay attention to process. Again, she asked people to raise their level of consciousness. She wanted them to think about their business practices, think about how they related to each other and to try out new behaviors based on the guiding principles of integrity, professionalism and respect. And, to help them do this she provided the executive team with a psychologist/psychotherapist with whom each member and the team could use to discuss what was happening and to help make sense of and put to good use what they were going through. They decided to apply what I call parallel processing to what they were doing. Parallel processing means to simultaneously do the job and to observe how you are doing it so that you can consciously make adjustments rather than only react after the fact. It means thinking about what you are doing while you are doing. It’s a heads up approach to working and being.

Where is Cutter & Buck today? As I write, their stock (CBUK) is up to 7 5/8ths after falling as low as 2 7/8ths during the worst of their crisis. The proof is in the pudding when it comes to integrity and business. Hats off to Fran and company.

Lastly, I mentioned Rotary International earlier. “Rotary is an organization of business and professional leaders united worldwide who provide humanitarian service, encourage high ethical standards in all vocations, and help build goodwill and peace in the world. In 166 countries worldwide, approximately 1.2 million Rotarians belong to more than 30,000 Rotary clubs.”

“From the earliest days of the organization, Rotarians were concerned with promoting high ethical standards in their professional lives. One of the world's most widely printed and quoted statements of business ethics is The 4-Way Test, which was created in 1932 by Rotarian Herbert J. Taylor (who later served as RI president) when he was asked to take charge of a company that was facing bankruptcy (sounds like Cutter & Buck). This 24-word test for employees to follow in their business and professional lives became the guide for sales, production, advertising, and all relations with dealers and customers, and the survival of the company is credited to this simple philosophy. Adopted by Rotary in 1943, the 4-Way Test has been translated into more than a hundred languages and published in thousands of ways. It asks the following four questions:”

"Of the things we think, say or do:

  1. Is it the TRUTH?
  2. Is it FAIR to all concerned?
  3. Will it build GOODWILL and BETTER FRIENDSHIPS?
  4. Will it be BENEFICIAL to all concerned?"

Yes,… I’m a Rotarian. If you want more information let me know.