The BGS Center for Ethical Business Leadership is now open

After much planning and a great deal of work, Beta Gamma Sigma members can see for themselves what the EBL Center is all about. Log on to www.EBLCenter.org and as always let us know what you think.

Also know that this is the first stage of the Center. Right now members and others can access a great deal of information through short clips of video arranged under a variety of EBL-related topics. In the future we will add transcripts, corporate background information, message boards, blogs and much, much more. The next stages are being planned and developed, but the Society is asking for your involvement and feedback on progress so far.

Concept and Overview

Beta Gamma Sigma shared with its lifetime members in Fall 2006 that Ethical Business Leadership was an important initiative that would be a focus for the Society going forward. In that issue of the BGS International Exchange, John Wholihan, then-president of Beta Gamma Sigma, trumpeted a goal that has guided our efforts to this point:

“We plan to develop ways to encourage business leaders to adhere to the highest ethical standards, and to show that this is one of the most important aspects of leadership in the 21st Century…The Society plans to emphasize that good ethical behavior in business is more often than not a result of leaders, at all levels, displaying the courage and conviction to make the right choices at the right times.”

It was a lofty goal, and to be honest the road map was still being laid out at the time. Beta Gamma Sigma’s Board of Governors and staff knew this was a worthwhile effort and if done correctly could affect change throughout business, but how to proceed involved making difficult decisions. It was decided that to have the most impact, speaking directly to business leaders who made some great decisions about building ethical cultures within their organizations would be a good place to start.

When discussing the genesis of EBL as an initiative, David Blake, Chair of the BGS Center for Ethical Business Leadership and a member of the Board of Governors, points to a Board strategic planning retreat held summer 2005 in Chicago. It was suggested by Board members in attendance that Beta Gamma Sigma needed to “stand for something” greater, and Blake was one of the first to endorse Ethical Business Leadership.

The Board of Governors was seeking ways to serve lifetime members, as well as collegiate and alumni chapters and the broader business community, in a more effective way, Blake said. Although this is the honor society for AACSB accredited business schools, the Board’s goal was to have a more significant impact in one of the most critical and ongoing issues of business, and that is ethical business practices.

Blake said rather than focusing on business ethics itself – there are many centers, institutes and faculty members who are focusing on that – the Board members agreed it is more appropriate given the high caliber of the Society’s membership that it focus on the issue of Ethical Business Leadership. In essence, this means the Society will attempt to promote and assist managers in understanding the role of leadership in ensuring ethical business practices are followed throughout their corporations or organizations.

“When we talk about leadership we are not just talking about the CEO or the very top leadership, because we know that ethical issues can crop up at any time or any place, and can affect any person in a management position,” Blake said. “And in such a situation leadership is required. Our focus is on the leadership strategies, tactics and initiatives that will help ensure that ethical business practices are part of what it is that the corporation does and the way it conducts its business all the time.”

After the initial announcement, many lifetime BGS members communicated their strong endorsement of the effort.

“I’m a long term (1948) BGS member from the University of Chicago,” said Bill Story. “I have been disturbed by the lousy ethics of so many in business in recent years. I fear for the ethical outlook of our younger business leaders and for the values we were taught to hold dear.

“The move by the Society is very welcome and I wholeheartedly approve the decision of the Board to proceed with the Ethical Business Leadership Program.”

Other members thought this was an overdue concept, and one they would be proud to share with their Honor Society.

“Clearly this is an area that has been long neglected by the business community,” wrote Robert B. Eagleston (BGS 1938, Northwestern U.), “and it is so basic to all aspects of business and meaningful successful living. You have our full support.”

Member support is vital to every BGS program, and the Center for Ethical Business Leadership is no different. During the recent annual giving drive, many chose to designate their gifts specifically to this program. This kind of support is necessary and appreciated as we continue to make the EBL Center even better.

The Board in 2007 approved the initiative’s Mission and Vision:

Mission of the BGS Ethical Business Leadership Initiative
Beta Gamma Sigma will influence discussion about and the practice of ethical business behavior by gathering information about ethical business leadership and disseminating that information in useful ways to its alumni and collegiate members and chapters and to the broader business community world-wide.

Vision of the BGS Ethical Business Leadership Initiative
Beta Gamma Sigma will become a premier global resource for information and ideas about effective ethical business leadership. Its efforts will establish BGS as a significant force in the field whose impact and reputation will be both profound and global in scope and relevance.

Blake said that as the Society opens the Center it is important that members become a part of this initiative. He said as an honor society, Beta Gamma Sigma is uniquely positioned to make a difference in this area.

“Beta Gamma Sigma throughout its (nearly) 100-year history has defined itself not just as rewarding academic excellence – which we do, and we’re very, very proud of that –
but also recognizing that it’s the whole person in his or her job and the way he or she carries himself throughout the entire career that makes a difference,” he said. “It’s not just whether they had a 4.0 grade-point average, but rather how they conduct themselves with honor – with ethical behavior. These are the things that we stand for.

“We want to assist our people and the entire business community in these complex times where we frankly see a lot of people who make a lot of money, with a lot of power, who are acting in entirely unethical ways. The problem is that other people within the corporation, no matter what level, need to have the courage to be able to stand up and say, ‘This is not an ethical practice.’ Think of the thousands of jobs and pensions lost, and heartaches that should have been avoided. Think of the damage that has been done to corporations because people further down the line didn’t feel prepared or empowered to stand up and say, ‘This is not right.’

“That’s why we are focusing on something much more than just academic excellence.”

The EBL Center Today

While the BGS Center for Ethical Business Leadership has been developed by Beta Gamma Sigma and will be a long-term Society initiative, it has been intentionally designed to be beneficial to the entire business community. While members are encouraged to visit the EBL Center often and take advantage of its features, non-members are invited as well.

Blake said that to have the most impact, the Center had to be “open to the public.”

“The Board and all of us associated with Beta Gamma Sigma recognize this is not a BGS issue, per se, or a member issue, per se,” he said. “It’s a significant societal and business issue.

“If business is not able to effectively address the issue of leadership to ensure that ethical behavior and practices are engrained in the organization, then some of these really outrageous things that we’ve seen crop up again and again in the newspapers…are going to undermine and undercut the trust and confidence that business is an institution we can believe in.

“I must say that if the general public no longer has that confidence, that will affect every one of us, whether we’re members of Beta Gamma Sigma or not.

“So we really felt like we should join the dialogue from the perspective of leadership, because that dialogue wasn’t really being advanced very well. And modestly, we hope that we can contribute to that, and we hope that our members will feel encouraged and almost required to stand for what is right – not just in their corporate lives but in their communities and their associations and things of that sort.

“This is a way of giving voice to what a vast majority of business people feel – and we hope all of our members feel – so they can then advance that dialogue and help stand for the right kinds of behavior.”

One of the things visitors might notice when accessing the Center is the prominence of those featured in the interview clips. This should not be construed as meaning leadership, especially ethical leadership, is or should be limited to those sitting in the top levels of management.

Blake says that on closer examination one sees the opposite is true.

“Leadership takes place all the time throughout many parts of the corporation,” he said. “While we are interviewing CEOs and those at the vice presidential level and down a bit, what we’re looking at essentially is what it is that companies have done as a result of leadership to ensure that people throughout the organization deal with these complex issues – especially for those folks who are at the middle levels and have lots of people reporting to them. They have responsibilities dealing with vendors; they are dealing with different cultures, etc. These people are just as much on the firing line. So it’s the leadership that they demonstrate, hopefully supported by the very top of the corporation.

“The top people cannot make everybody’s decisions. That’s why supporting leadership throughout the organization is what we are seeking to do.”

In fact, this may be the program’s true strength. If this were simply a primer on “best practices for presidents and CEOs,” its value would be very limited. The vast majority of BGS members and other business professionals could rightly ignore the lessons of the EBL Center as “decision making that takes place above my pay grade.”

Quite the opposite is true, however. The frank discussions of past mistakes and lessons learned can be valuable for leaders at any level. Perhaps an individual member isn’t currently in position to change the way her multi-national corporation deals with ethical issues involving vendors.

She can, however, affect change within her sphere of influence that ethical practices lead to better business results in the long run. And relying on the thoughts and lessons discussed by the corporate leaders at the EBL Center can help in that process.

A Few Lessons Learned So Far

Beta Gamma Sigma has been very fortunate to have the opportunity to sit down with so many outstanding business leaders during the formation of the BGS Center for Ethical Business Leadership. The Society is extremely grateful for those business leaders who agreed to sit down with us and discuss openly the ethical cultures within their organizations.

Blake said that in the interviews he’s conducted, it’s been very gratifying to see the level of commitment by such high-ranking individuals.

“These extremely busy people are very eager to talk to us about this issue,” Blake said. “It would be very easy for people who are running multi-billion dollar companies to say, ‘I don’t have enough time. I’ve got a lot of things to do.’

“But to them, their sense of importance about this issue made it a real priority to take time away from their incredibly busy schedules and responsibilities to talk with us about this. To my way of thinking that is a wonderful affirmation of what it is we’re doing in the Ethical Business Leadership Initiative.”

Blake said that some of those interviewed thought the discussions helped them reaffirm in their own minds that the ethical cultures they’ve helped develop are still working.

“After the conversation they have found and expressed thoughts that the conversation was very helpful to them; it sharpened their views about what it was that they were trying to do. They were seeing the connections between the various things that have been done over the years.”

The level of candor – discussing topics that can be uncomfortable – has been impressive to those who have seen the clips so far. Blake says the people interviewed have a lot to teach all of us.

“Every single conversation I’ve learned quite a lot from,” he said. He pointed to the strong, passionate commitment shown by those who he’s talked to as an example.

“I’ve also been very impressed with how people have tied ethical business practices to effective and successful businesses so that they’re not two separate things,” he noted. It’s not that “You do ethics on Sunday and the rest of the week you make decisions that will help the company be successful. Quite the contrary.

“The people we’ve talked to have made a direct link between their companies’ values – their commitment to ensuring ethical behavior throughout the corporation – and the success of their corporations. Success not only in the traditional financial sense, but also success in attracting and keeping the kind of people who will continue to help the company succeed in business terms and otherwise.

“That linkage has been very clear and indeed in certain cases we’ve had situations where companies were suffering terribly in business terms – finances, market, etc. – and they felt an important part of the strategy to turn that around was to develop ethical business practices, which enabled people to feel pride in their companies and to turn the companies around altogether – financially and otherwise.”

In other words, doing good helps a company do well.

In several of the interviews, leaders talk about the paths their organizations’ took to develop, maintain and enhance an ethical culture. They are often quite straightforward in their belief that part of their companies’ success comes from that commitment to culture.

“Quite frankly when I arrived here in 2001, for five straight years we were the poorest performing food company in the world,” said Doug Conant, president and CEO of Campbell Soup Company. “We were highlighted by the leading analyst in our sector as being the next buggy-whip in the food industry – anchored in an old product line, condensed soup; anchored with old management that wasn’t acting in an enlightened way.

“So in the first three years we turned over 300 of our top 350 executives. Many of them chose not to play by the rules that we had created. But we had to make many tough calls as well.

“The good news was that of the 300 we replaced, we were able to promote 150 people from within who had all the heart for the journey that we were about to undertake. We also had to go outside to find 150 more that were living by the kind of motto we embrace here, which is Character, Competence and Teamwork, and operating within the construct of the Campbell leadership model.”

In another telling clip, Willie A. Deese, president of Merck Manufacturing, stressed the need for companies to find candidates that fit their ethical culture.

“In one of my previous roles I was interviewing someone and I asked him during the interview, ‘Can I trust you?’” Deese said. “And the person really thought that was a strange question.

“I remember he came back to me later after we hired him – he turned out to be a great employee – and said, ‘I didn’t fully understand why you asked me that in the beginning. Later on I did…You were working to bring about transformational change in the company and you needed people working with you that you could trust because you knew it was going to be difficult.’

“It’s important to have people around you that you trust and that you can trust, particularly in an industry like ours, and particularly if you now are working in a situation where you are making significant change to the way you’re running the business.”

Support for the BGS Center for Ethical Business Leadership

Conceptualizing, planning, building and acquiring the content for the EBL Center has been a time consuming, staff intensive and costly undertaking. It will continue to be. In addition to the generous donations given by members, which was mentioned above, two companies have taken the lead so far in helping to fund the Center’s activities.

First, in 2007, Beta Gamma Sigma received a $10,000 startup grant from KPMG and the KPMG Foundation as a way to get the program going. This enabled the Society to buy equipment, travel to conduct interviews and work on completing the first phase of the EBL Center.

Then in December 2008, KPMG and the KPMG Foundation once again stepped forward as the first Charter Sponsor of the EBL Center, committing to a $60,000 grant over a four-year period. This generous commitment has allowed BGS to continue moving forward on plans to expand the Center over the next year.

In January 2009, Chick-fil-A became the second corporation to contribute to the EBL Center with a one-time $5,000 gift.

In these difficult economic times for corporations and individuals, Beta Gamma Sigma appreciates the contributions –
both large and small – of its corporate partners and generous members. If you or your company would like to be involved in helping to fund the EBL Initiative in the future, please contact Tim Weatherby, Beta Gamma Sigma Development Director, at tweatherby@betagammasigma.org or 314-432-5650.

The EBL Center vs. Today’s Headlines

We are constantly bombarded with news reports detailing some ethical violation or another. The business world, while already guilty of raising to the level of celebrity those who do not deserve it, keeps seeing some of its mightiest fall by the wayside. Whether it’s the latest $50 billion Ponzi scheme or the global banking operation – fresh from accepting $50 billion in taxpayer money in the form of a bailout – ordering a new state-of-the-art corporate jet for its executives, there’s no shortage of questionable ethical decision making.

So how does the good news depicted at the EBL Center make any kind of ripple? Who will pay attention to the positive when there is so much negative to distract us?

“I think one of the best ways of getting attention is when there is controversy and conflict,” said Blake. “If everybody thinks everything is going just fine, then people aren’t likely to pay attention to it.

“We had a very interesting comment from Anne Mulcahy (chairman and CEO) of Xerox who said, ‘If everybody says that everything is going just right, don’t believe it.’ Because that means that people aren’t really paying attention to the problems that can come up.

“Fortunately, the press is independent enough to help surface these things, but within corporations it’s easy to fall into, ‘Well, we’re doing everything just right.’ If anybody believes that, problems are likely to crop up.”

So, is it worrisome that ethical violations at some of the featured organizations could wind up on tomorrow’s evening news?

“Will some of these companies run afoul with problems in the future?” Blake asked. “Yes they will, just by the nature of large organizations. But do I think that these companies are trying very hard to ensure that’s not going to happen? Yes I do think that, and that’s the essence of leadership.

“Leadership doesn’t mean that everything you do succeeds. Nor does it mean that everyone in your community of leadership is going to conduct themselves the way you want them to. If that were the case, then every sports team would be undefeated; there would never be any issues associated with any company. But that’s not the way life is. That’s not the way people are, sadly.

“But we’re focusing on good practices that others can adapt and adjust and use for their particular situation. Because what’s right for Xerox, and what seems to work for General Electric and what has worked for Turner Investments, may not be appropriate for somebody who runs a significant car dealership in Omaha. But the same kind of ethical principles and priorities are important.”

Leadership is the Key

The bottom line is that Beta Gamma Sigma as an honor society believes leadership is the key to ensuring the organizations of the future don’t repeat the mistakes of the past. Leadership is needed to quickly address issues as they arise, and leaders must be given the freedom and responsibility to point out the things that are wrong.

“I’m a believer in leadership,” Blake said. “And I’m a believer in leadership throughout organizations – whether you’re the CEO or a regional manager or a district executive. Leadership, I think, is essential for the effective operations of any organization.

“I also feel that the ethical transgressions of a serious sort, when we see so much of it occurring at the top of some corporations, then I worry greatly about whether there will result a distrust in the corporate world, free enterprise system, and leadership. We see that the lowest approval rankings in our government are with the legislature. That’s awful, because that means people have lost confidence in that institution – not just the people, but in the institution – to serve their needs.

“Same thing exists with corporations. Fifty billion dollars has apparently been lost through the actions of (Bernard) Madoff. People have lost their life savings, and we’ve all lost a great deal through the current meltdown.

“If we can’t reestablish confidence – not that everything is always going to go up and we’re all going to get wealthy, but rather that there aren’t people who are skirting propriety and skirting the truth in order to enrich themselves at our cost – why would a society, why would people continue to believe in a system where that seems to be the norm?”

A Call to Action

“We view Ethical Business Leadership as providing an opportunity for our members not only to participate in this dialogue, but to be activists in trying to ensure ethical business behavior,” said Blake. “So this is not just something to discuss over a glass of wine. This is something that all 600,000 members have the opportunity to implement and to further. It’s for them that we are doing this.”

Please visit the BGS Center for Ethical Business leadership at www.EBLCenter.org. Consider ways that the experiences shared by those interviewed could be applicable in your sphere of leadership. And let us know what you think.

“Just think for a second that we have 600,000 lifetime members spread throughout the world in all kinds of corporations – very small ones, startups, regional ones, local ones, and global multi-national corporations,” said Blake. “Just think if that army of 600,000 people used their leadership skills and talents to at least ensure that as far as the scope of their leadership works, they are going to conduct things in ways that are going to advance society as a whole according to ethical principles that we all share. What a marvelous thing that would be.

“Our membership has already shown how smart they are, how intelligent they are, and hopefully how effective they are. So therefore we’ve kind of armed the best to go out and have an impact. I would feel very happy if that happened.”