"Ethics, honor, and integrity are just as important in the business sector
as in any other walk of life. Integrity is essential to good business, and to
the economic well-being of our country. Without integrity, people don't have
confidence in you. If they don't have confidence in you, they don't do business
with you."
Indiana Senator Evan Bayh (D), to a student panel and an audience
of faculty and staff during a Krannert-hosted visit to Purdue |
In the mid-1920s, a young plant manager from Anderson, Indiana, was called to
Chicago to meet with the president of his company. This young executive
was well respected within the organization, and had done exemplary work
during his 10 years there. The president offered him a position as a vice
president of the company and director, but with one condition: The young
executive would vote the way the president told him to on key issues concerning
the company.
Rather
than compromise his principles, the plant manager not only turned down
the offer, but also immediately quit the company. He started his own business
in Indianapolis, Indiana, with six employees, all of whom had also quit
the company in Anderson. The small group built a business that grew into
a multi-million dollar corporation.
That
new company was the Inland Container Corporation, which became the world's
fourth-largest shipper of corrugated fiber products. The young executive
with strong principles was Herman C. Krannert, who in the early 1960s donated
more than $2.7 million to Purdue University for a new building and trust
fund for the University's business school.
As
dean of the Krannert School of Management, which was named for a man who
held ethics in the highest regard, I share the concern and disgust many
people feel about recent headlines in the business world. For too long,
many top executives in the business community have considered ethics and
business practices as parallel lines, never to intersect. In fact, some
have considered the term "business ethics" to be an oxymoron.
Sadly, the exploits of these executives have eroded public trust in our
free enterprise system, and recently they have stunted any rebound our
economy has attempted.
"Integrity is simple. Do the right thing all the time. If you
know it's wrong, don't do it. The sharpness of your skill set, lacking
integrity, is devoid of real value--to the company, to your business,
and to the human race."
Marjorie Magner, MSIA '74, chief operating officer, Global Consumer
Group, Citigroup, during the 2002 Distinguished Executive Lecture
for professional master's students |
Rest assured that the Krannert School of Management takes the notion of
business ethics very seriously. We teach our students that just meeting
the minimum legal standards in business procedures and practices is not
enough. We want our students to leave Purdue and become managers with
the thought that being completely honest and ethical is the right thing
to do. This is true not only in a moral sense, but in a business sense
as well. It is my firm belief that while dishonest accounting practices
and strategic shortcuts may benefit short-term profits, in the long run,
the best way to maximize stock equity is to run a business in a
responsible and ethical fashion.
In
the movie "Wall Street," Gordon Gecko uttered the famous phrase, "Greed
is good." Too many executives have bought into that notion. Over the
past 15 years, CEO pay in the United States has risen 866 percent, to an
average of more than $10 million per year. In that same time period, worker
pay has risen only about 63 percent. Many CEO compensation packages are
tied to stock reports, giving the executives incentive to manipulate earnings.
When leaders put themselves first and make decisions based on personal
greed, failure is likely.
"You work hard. You make a contribution. You stay late. Arrive
early. Take work home. Work weekends; a holiday or two. You identify
with the company. The company is making money. But Wall Street expects
more. And to meet its expectations you are let go, with part of your
salary reverting to the CEO for letting you go. Could you stand this?
Should anyone have to?"
Jack Beatty, senior editor, The Atlantic Monthly, in a speech delivered
to Purdue faculty, staff, and students, hosted by the Burton D. Morgan
Center for Entrepreneurship's Lilly Speakers Series |
At
Krannert, we strive to impart to our students the need to conduct
business in a legal, ethical, and moral fashion. Faculty are encouraged
to integrate ethics into their everyday teaching, and we're looking to
add new courses on the topic. Through several programs, including the
Krannert Executive Forum, the Management Development Series, and the
Krannert Leadership Speakers Series, we bring in speakers from outside
the campus to talk to our undergraduate and graduate students about
doing business the proper way.
A
few years ago, I wrote an article about why corporations and their
executives may act irresponsibly. I firmly believe that executives feel
it is unlikely they will be caught, and, if they are, the penalties will
be low. The Krannert School takes strict and swift action if any students
are found to be involved in classroom cheating, and hope such actions will
serve as reinforcement to students to always do things the right way.
Despite
the recent scandals and the current state of the economy, I'm firmly convinced
that our country's free-enterprise system is the greatest in the world.
It's up to business schools such as Krannert to ensure that tomorrow's
leaders leave school and begin their careers with the highest ethical standards
to uphold the system's integrity. I'm confident that we're up to the challenge. |
