June 23, 2002|By William N. Shepherd
THIS SPRING, in the peaceful surroundings of Cumberland, nestled between the Blue Ridge and Allegheny mountains, I listened to a fit and fiery former executive talk in weak and hushed tones about his daughter's 10th birthday party.
Other kids celebrate birthdays with balloons and clowns dressed in costume. But the only costumes at this party were the uniforms worn by prison guards who stood watch over the sterile visiting area at a federal prison camp. The father who told this birthday story is a new inmate. He will spend the next two years - years 10 and 11 for his daughter - serving time at the Federal Correctional Institution in Cumberland for crimes he committed in his mortgage business.
I wasn't the only visitor hearing about the party, and he wasn't the only inmate telling stories about damage done to loved ones. Three executives-turned-inmates spoke with a group of 40 young men and women a week before they graduated with master's degrees from the Robert H. Smith School of Business at the University of Maryland. The one-day prison stop is intended to make these future business leaders think about the ethical pitfalls awaiting them.
But young MBA students are not the only ones who need to hear the message. American businesses everywhere must focus on ethical challenges. Just as the chief financial officer of a large corporation faces Wall Street pressure to "manage earnings" to beat the next quarter's whisper number, a bank branch manager faces pressures to approve a bad real estate loan or an accountant is pressured to hide a client's income.
The cautionary message from the inmates at Cumberland is simple: be vigilant, be honest and be open.
As a former prosecutor, I have seen men like these before. I have watched their business meetings on grainy black-and-white surveillance video and heard their voices on recorded phone calls. Men like the three at Cumberland were my targets.
America's corporate criminals don't often go into crime as part of a career plan. They wake up and find that they have made a series of bad decisions. They believe they have no other choice but to continue the lying and cheating that had seemed so innocent and that they had easily justified as industry practice.
Although Congress and regulatory agencies throughout the country will take recent events as a cue for reform, the answer to the problem of white-collar crime is not as complicated as the thousands of pages of definitions and regulations that will undoubtedly come.
Corporate America must force itself to spend time on ethical fundamentals. Only with those in place can a company achieve long-term growth and success. Shortcuts caught in investigations lead to long-term problems of low employee morale, an inability to recruit and a loss of productivity. Employees caught up in investigations waste time trying to justify the shortcuts of the past instead of focusing on the products that will take their company into the future.
A wink and a nod and a company handbook are not enough. The boss, whether of a Fortune 500 company or a small business, must spend time to make sure employees take ethics seriously. This is not a burden that can be ignored at the top with the hope, or even the mandate, that mid-level managers keep a better eye on their employees. It is these mid-level managers and line employees who feel the most pressure and need to be told that, while weekly, monthly and quarterly numbers are important, they do not take precedence over the long-term success of the organization.
It is easy to separate allegations about the companies making headlines today from our own organizations. We say those were the acts of greedy executives in huge corporations who gave in to corruption. But the pressures and desires that those executives faced were no different than those confronted by the three inmates in rural Maryland. No different at all.
American businesses at all levels must focus on the temptations within and the pressures to succeed.
Quick successes won by illicit shortcuts are not worth the risk, because they are not worth the price. Just look at the face of your own 9-year-old and you'll know that her 10th birthday is too high a price to pay.
William N. Shepherd is a fellow at the Center for Executive Education at the University of Maryland, College Park's Robert H. Smith School of Business, and co-academic director of the Smith Executive Ethics Certificate Program.
