Is Business Acumen an Ethical Issue? Jack Howe’s – Drum Beat News asks the question! Comments by Business Ethics Speaker Chuck Gallagher

June 13, 2011

Regularly I receive the Drum Beat News from Jack Howe and this week’s email report caught my attention.  I believe in servant leadership.  Quoted from the Greenleaf Center for Servant Leadership:

The servant-leader is servant first… It begins with the natural feeling that one wants to serve, to serve first. Then conscious choice brings one to aspire to lead. That person is sharply different from one who is leader first, perhaps because of the need to assuage an unusual power drive or to acquire material possessions…The leader-first and the servant-first are two extreme types. Between them there are shadings and blends that are part of the infinite variety of human nature.

The difference manifests itself in the care taken by the servant-first to make sure that other people’s highest priority needs are being served. The best test, and difficult to administer, is: Do those served grow as persons? Do they, while being served, become healthier, wiser, freer, more autonomous, more likely themselves to become servants? And, what is the effect on the least privileged in society? Will they benefit or at least not be further deprived?

As I read that quote, it is striking that we would not likely find the number of ethical challenge that seem to be bubbling to the surface today if we had more of an attitude of Servant Leadership pervasive in our business operations today.  That said, Jack Howe brought that back to the surface with his comments below:

Is Business Acumen an Ethical Issue?

This week was transformational for me. I was able to spend three full days renewing my spirit and my intellect. For less than a legion of others, this week will have passed as unremarkable. The reason for my joy? The 21st Annual Greenleaf Foundation Convention, was held here in Dallas, Texas. But lest we forget that our mission in this section is business acumen and that our definition of business acumen is to understand in advance, how our decisions will impact all the stakeholders of our enterprise.

Who or what is the Greenleaf Foundation? Robert Greenleaf was a student of leadership and training who spent his career working in corporate America. In his seminal work The Servant as Leader he wrote:

The failure (or refusal) of a leader to foresee may be viewed as an ethical failure; because a serious ethical compromise today (when the usual judgment on ethical inadequacy is made) is sometimes the result of a failure to make the effort at an earlier date to foresee today’s events and take the right actions when there was freedom for initiative to act. The action which society labels ‘unethical’ in the present moment is often really one of no choice. By this standard, a lot of guilty people are walking around with an air of innocence that they would not have if society were able always to pin a label ‘unethical’ on the failure to foresee and the conscious failure to act constructively when there was freedom to act. How would your business acumen be judged if reviewed under this set of criteria?

It is easy to judge looking backward!  Ethics in application today are based on facts today.  Yet, there are actions that are taken today that are, in my opinion, unethical while being quite legal.  Let me share a simple example.  If a drug company manufactured and sold a drug to the public, and then bought put options betting on the drugs failure… that would likely represent an ethical issue.  Failure to tell the buyer of the drug that the pharma company expected it to fail and their stock to drop would be unconscionable.  Yet, that is exactly what happened at the beginning of the recession.  Wall street on one hand sold subprime loans to unsuspecting buyers with AAA ratings while at the same time effectively bet on their failure.

So…those leaders who had the presence of mind to foresee the lack of value of the securities being sold were, in my opinion, unethically acting as they tried to protect their companies from the risks associated with the sale of worthless paper.

Is Business Acumen an Ethical Issue?  WHAT DO YOU THINK?

For information on Drum Beat Productions click here.

Fidelity National Title Insurance Company – When a presentation hits the Mark – Comments by Chuck Gallagher Business Ethics Speaker

June 3, 2011

For most of us in the speaking profession, we diligently work to make sure that what we share makes a difference.  While there is no criticism in being called a Motivational Speaker – the fact is – as a Business Ethics speaker – I want to make a lasting difference when I share with an audience.  Far more important to me for someone to walk away with something of value, than to get a standing ovation for a performance that folks will forget two weeks later.

Each presentation begins with the words – “Every choice has a consequence!”  If there is a take away – remembering that simple phrase can make the difference in folks making ethical choices that are empowering or finding the consequences of their unethical choices painful.

Recently I had the opportunity to speak to Fidelity National Title Insurance Company in Florida.  The crowd was responsive, yet I find that often my pointed presentation hits buttons for some creating emotional reactions.  Yet others (fortunately typically 98%) get the message.

Just a few days ago I receive an email from the meeting planner stating the following:  “I thought you would really like this Chuck.  Confirmation that your presentation really hit the mark.  Thanks again.”  Attached was a link to a recent blog post…a portion is reproduced below and the full link is here.

The Man in Handcuffs

Submitted by Stephen Collins on Mon, 05/23/2011 – 8:18am

How interesting do you think a title insurance conference is?  As good as this blog—hardly!  But Fidelity National Title Insurance Company does have a reputation for production, and I’m not just talking number of policies sold.  They put on a conference in a fair atmosphere, but when they talk ethics, they’re all business—need and opportunity do NOT justify stealing.

Fidelity National is an underwriter for Land Title of America, and we’re used to their non-conventional presentation of material.  If it’s a really boring subject, they’ll make it like a game show with Ozzy Osbourn and Minnie Pearl—you’re not going to forget the information!  For their talk on business ethics, the speaker wore an orange jumpsuit and his hands were cuffed behind him.  We thought he was another one of their gimmick speakers.  He was not.

True…a gimmick speaker I am not!  There is nothing funny about making unethical choices, losing everything (other than the love of my two sons) and spending time in federal prison.  Yet, that experience, as gnarly as it was – turned out to be one of the best things that could ever happen to me.  The consequences that followed my seriously poor unethical choices have provided a powerful framework today for sharing with others about the power of choices and ethical behavior.  Beyond theory, I share from the heart in a way that people can relate to – my message is one of choices, consequences and hope.  We are more than our mistakes and often we can avoid those mistakes if we connect the dots between choices and consequences.

Stephen Collins posts ends – “He had committed fraud and he faced up to it.  He lost his family and he served time for what he did, wearing an orange jumpsuit like that every day.  The difference now is that he holds the key to his handcuffs, and he’s come a long way through a lot of trials to say Don’t commit fraud.  When you have need and opportunity, don’t justify it to do something you know is wrong.”

Thanks to the folks at Fidelity National Title Insurance Company, it was my honor to be a part of their commitment to ethics and ethics training.

Business Ethics Training – What’s up in Cuyahoga County and Why aren’t more Municipalities taking a proactive Ethics approach?

May 29, 2011

Recently I was asked to speak at the Florida Association of Counties 2011 Annual meeting – my presentations will be on Ethics.  In the conversation leading up to the decision to engage me, it was interesting as I was told about numerous ethical issues that face elected officials and those staff employed by the various local governments.  All too often the focus on ethics is about WHAT to do and HOW to do it.  My presentation brings a different look at Ethics.  For me, to have an effective ETHICS program one must look beyond the “What” to the “WHY.”

When organizations can identify WHY otherwise ethical people make unethical decisions or do unethical things, then – and in my opinion – only then can you have a program that creates a true ethical culture.

I mention the above cause today I received notice that Cuyahoga County offers first ethics training for businesses which is a step in the right direction.  The article that appeared is as follows:

The training comes in the wake of a more than two-year federal corruption investigation, which has charged more than 50 people and exposed a culture of pay-to-play that extended from county offices to suburban school boards.

County Auditor Frank Russo has been sentenced to nearly 22 years in prison for his crimes, while Commissioner Jimmy Dimora has pleaded not guilty to charges and faces trial in January.

The county’s new ethics code is much stricter than one that used to govern the former commissioners’ offices. The policy forbids hiring of relatives, requires county officials and employees to disclose potential conflicts of interest and requires staff members and those doing business with the county to sign ethics statements. Contractors and lobbyists must register with the inspector general, and they may not give anything of value to employees or make campaign contributions.

Dettelbach, meanwhile, founded the Northeast Ohio Business Ethics Coalition in October. About 75 local companies have already joined, signing a pledge to reject corruption and unethical businesses practices.

“We continue to transform our region into a place where shakedowns are met not with silence and acquiescence, but with outrage and resistance,” Dettelbach said in the release. “Just as we do drug prevention by talking to kids in school, we are working with the business community and our public institutions to try to stop bribes and kickbacks before they occur.”

The training will take place from 9:30 a.m. to noon at the Cleveland Public Library, Louis Stokes Wing Auditorium. To register, visit the county web site and click on “Contract vendor ethics training registration.”

My hat is off to them and I suspect as more issues of corruption surface (and they will surface)… this type of proactive approach is something that is a clear step in the right direction.  My hope is that the training will not center solely on what is ETHICAL and what is not, but rather why people who know the difference between right and wrong – ethical and unethical – make unethical choices.  If we take the time to indentify the WHY we stand a much better chance of avoiding the WHAT that often leads to prison!


Developing Your Company’s Ethics Policy – A Guest Blog by John Freeborn

December 22, 2010

From time to time I come across articles or blogs that I feel would be a good fit or addition to my business ethics blog.  As a business ethics speaker, I know all to well the importance in developing a sound ethics policy and John’s comments below (presented with his approval) establish a sound outline for the beginning of that process.

There are definite advantages to owning your own business when you want to establish an ethics policy. You see, ethics come from the top. Without setting an example at the top, it is often difficult, if not impossible, to convince your employees that they, too, should be ethical in their business dealings. A well-defined ethics policy, along with an outline of related standards of conduct, provides the framework for ethical and moral behavior within your company.

What are the benefits to developing such a policy, you may be wondering. The benefits include higher employee morale and commitment, which in most cases leads to higher profits. However, higher profits should not be the motivating factor in defining your ethics policy.

An ethics policy should look at the bigger picture of how we relate to society as a whole and what our responsibility is to the greater good. Of course, in these days of downsizing and increasing change, some may argue that these ideals are unrealistic. However, it is important to note that most of the opponents of good ethics are focusing on short-term versus long-term results. Many organizations which have participated in the downsizing mania are beginning to realize that they have traded long-term employee morale and productivity for short-term profit margins.

The bottom line is “what goes around, comes around.” If you treat your employees with disrespect and distrust, chances are they will do the same toward you.

When you are developing your ethics policy, you must decide what it is you want your company to stand for, put it in writing, and enforce it. According to industry experts you can base your policy on five fundamental principles:

  • Purpose. A purpose combines both your vision as well as the values you would like to see upheld in your business. It comes from the top and outlines specifically what is considered acceptable as well as unacceptable in terms of conduct in your business.
  • Pride. Pride builds dignity and self-respect. If employees are proud of where they work and what they are doing, they are much more apt to act in an ethical manner.
  • Patience. Since you must focus on long-term versus short-term results, you must develop a certain degree of patience. Without it, you will become too frustrated and will be more tempted to choose unethical alternatives.
  • Persistence. Persistence means standing by your word. It means being committed. If you are not committed to the ethics you have outlined, then they become worthless. Stand by your word.
  • Perspective. In a world where there is never enough time to do everything we need and want to, it is often difficult to maintain perspective. However, stopping and reflecting on where your business is headed, why you are headed that way, and how you are going to get there allows you to make the best decisions both in the short-term as well as the long-term.

A company policy is a reflection of the values deemed important to the business. As you develop your ethics policy, focus on what you would like the world to be like, not on what others tell you it is.

Learn to Supercharge Your Business by creating value with your business ethics.   Contact Information for John Freeborn:

Biz 1190 WAFS now features Dan Frishberg – Under investigation by the SEC for fraud! Go Figure?

December 2, 2010

What an exciting month this has been for Dan Frishberg!  I mean really!  Dan has moved his program from his home in Houston where his entire business model crumbled under the weight of a massive investor fraud to expanding into the Atlanta and Miami markets.  I will be the first to say that this is a clear miracle.

So Atlanta…let me share with you some information so that you, too, can be informed about the person you hear each morning from 7 to 8 a.m. – perfect morning drive time.

Atlanta –  I’m sure that you can provide a great Georgia welcome to one of the newest additions to Atlanta’s business radio – The Money Man himself – Dan Frishberg!  Formally of BizRadio fame in Houston, Dallas and San Antonio – Dan Frishberg – self proclaimed Money Man has now found a new outlet in Atlanta at 1190 a.m.

But before the excitement sets in for the new morning drive time sensation, perhaps a few questions should be asked.

Referred to as the Pirate of the Airwaves – an interesting article appeared in the Houston Chronicle by reporter Loren Steffy.  The full article appears here.  For purposes of brevity and full disclosure let’s look at part of Loren’s article which I quote:

The BizRadio Network’s slogan is “the sound of your money growing,” but for about 50 investors, it’s sounding more like their money disappearing.

The AM radio network — which broadcasts investment advice and other business information in Houston, Dallas, San Antonio, Denver and Colorado Springs — received millions raised from investors under false pretenses, according to a lawsuit filed last week by the Securities and Exchange Commission.

The SEC claims that between December 2007 and August of this year, Albert Kaleta and his investment firm, Kaleta Capital Management, sold $10 million in promissory notes, telling investors the money would be loaned to small businesses at 12 percent to 14 percent interest. Instead, the SEC said, it went to the money-losing radio network and an affilated investment advisory firm, Daniel Frishberg Financial Services, also known as DFFS Capital Management.

Kaleta and Dan Frishberg, who appears on BizRadio as “The Money Man,” were among the network’s founders. Kaleta also was part owner and chief compliance officer for DFFS.

To my friends and followers in Atlanta – that is just the tip of the iceberg.  Dan “The Money Man” is under investigation by the SEC and, if my sources are correct, is likely to lose his license as a potential Registered Investment Adviser.

Interestingly enough, Dan Frishberg, in what appears to be an effort to preserve his income from his RIA – DFFS – sold the asset to Barrington Financial Services before the SEC Receiver Tom Taylor could get his hands on the asset.  Tom’s interest is to protect the defrauded investors and work to recover any assets that could be used to make them whole.  To date, Frishberg seems to have protected his income to the detriment of the defrauded – scammed investors.

Loren Steffy also wrote an interesting piece – Beware of those who say beware of Scams.  Here’s the piece for your to review.  What’s ironic and quite amazing is that Dan Frishberg and his cronies are up to their necks in lawsuits and claims of being scammed and perpetrating frauds, yet, Dan must have a teflon tailor in that he seems to slide right past the claims with no consequence.  Example, he’s now on the air in Miami bringing his radio show and skilled investment advice to a new crowd.

Here are two other links that might shed some light on this new morning radio sensation on Biz 1190 a.m.:

So here are some questions for well informed Atlanta listeners to consider:

  1. What motivated Biz 1190 a.m. to bring Dan Frishberg to the airwaves of Atlanta?
  2. Was the management team at Biz 1190 a.m. aware of Dan Frishberg’s past dealings and the allegations of fraud and wrongdoing or the SEC investigation?
  3. If they were aware, did they think that it was worth the exposure – that Dan would bring the ratings – or did they just not care?
  4. If they were not aware, then what do you think Biz 1190 a.m. management will do as they begin to see that their credibility is called into play by allowing someone under investigation by the SEC to potentially lure some unsuspecting person into a situation similar to those who were defrauded in Houston?

But here’s the real question – WHAT DO YOU THINK Atlanta?

Perhaps you should voice your opinion – do you want a person investigated for financial misdeeds by the SEC sharing his trade secrets during your morning drive time?


Fair Finance Fiasco – Owners scam investors to prop up failing business ventures

December 1, 2010

An excellent series of articles is being posted on about Fair Finance and the world of hurt the investors find themselves in as Tim Durham et. al. take funds to prop up their lifestyle and failing business ventures.

For the best set of links that you can easily find related to Fair Finance and the mess that’s been created click here.

The question that I wish to raise in this blog (and I hope I’m not beat up for it) is – with all that’s been posted, circulated and discussed, what would motivate someone to “invest” their hard earned money or savings into something that was uninsured?

Let me share a part of an article posted on and then let’s look at the triggers for a victim becoming a victim…

n November 2005, exactly one month
servers at a time parts of Durham’s financial empire are strained. They note that if the borrowers fail to pay off the loans, Ohioans who have provided capital to Fair for decades by buying short-term investment certificates may not get their money back.”

Scott dug through her family’s financial documents and discovered three of the investment certificates expired in less than a month, on Nov. 24, 2009.

She began counting down the days until she could cash them out and get back at least some of her children’s money.

To keep the cash flowing, Fair Finance filed a request in late October with the Ohio Division of Securities seeking to sell up to $250 million in new securities in Ohio.

The previous authorization to sell securities for a 16-month period was to expire on Nov. 24, 2009.

Unaware of the mounting problems, Raymond Warner, 90, of Ravenna was preparing to make his first investment.

Decades earlier, Warner’s brother, Paul, started investing with Fair Finance and boasted about the healthy returns.

Warner and his wife, Ruth, lived in Arizona for several decades, where he made a living specializing in antiques and liquidations. He handled plenty of bankruptcies, helping to sell off assets of failed or foreclosed businesses.

When his wife of 51 years became ill, the couple moved back to their native Ohio in 2005 before she died.

Several years later, $40,000 worth of the widower’s investment CDs matured. With the struggling economy, conventional CDs weren’t providing him much interest income.

So Warner talked with his brother about Fair Finance and discovered he could earn 71/2 percent interest on a six-month investment.

Warner was sold.

He and his brother hadn’t heard about the article in the Indianapolis magazine.

”We thought it was a good investment,” he said.

On the morning of Nov. 17, Warner drove with his brother to the East Market Street office in Akron intent on investing.

A woman working in the office greeted him but seemed reluctant to take his money at first.

”We only have two certificates left,” she told him. ”I’ll have to see if they’re available.”

The worker went into another room and returned a couple minutes later to let him know he could buy two investment certificates for $20,000 each after all.

Warner handed over his checks, signed the paperwork and left with two certificates in hand, along with a promise to get his first interest payment of $246.58 a month later.

A week later, on the morning of Nov. 24, Cindy Scott gathered up her children’s investment certificates that matured that day and went to Fair Finance’s Cuyahoga Falls office to cash them out.

When she got there, the office was empty. A sign on the door indicated the business was closed for the week for the Thanksgiving holiday.

”That’s nice,” she thought. ”They’ve never done that before. But that’s nice.”

Unconcerned, Scott went home to her modest but comfortable Cuyahoga Falls home to get ready to spend the Thanksgiving holiday with her family.

It wasn’t until early Thanksgiving morning two days later that she learned the truth: Fair Finance wasn’t just closed for the holiday.

It had been raided by the FBI.

The story is sad.  However, it resonates with a pattern predictable in application by victims of fraud schemes such as the Fair Finance debacle.

Let’s look at the parts to the scam:

(1) PROMISE – What was the investor looking for?  When the investor was told he could earn 7.5% on a six month investment – that was the first sign of a scam.  Funny, but those most susceptible to being scammed are the folks who succumb to internal greed.  They want the most and are blinded by the PROMISE and fail to realize the reality.  Looking back and being honest…there is NO INVESTMENT that legitimately will guarantee 7.5% return in six months.  What was he thinking?

Now, at the risk of seeming to attack the investor turned victim, I’m not.  I just know from experience that people who look beyond reality and wish to grasp an alternate view of truth are the easiest to scam.  The internal greed of wanting more or better than what someone else could have sets them up to be ripe for the picking.  Realistic folks would say, “No one gets that kind of return and, that coupled with the unsecured nature of the investment, means I should look elsewhere – unless I’m gladly willing to lose my investment.”

(2) ILLUSION – Things change and so do companies.  Fair Finance was quite the illusion.  Early on it was legitimate and produced returns for folks like any legitimate business.  What most did not know was that the form owners (what appeared to be ethical business folks) sold the business in January 2002.  Folks had the illusion that it was business as usual when in reality it was far from that. reports, “Indianapolis businessmen Timothy S. Durham and James F. Cochran extracted tens of millions of dollars to prop up hemorrhaging business ventures and to support a lifestyle that included a yacht, swanky restaurants, expensive cars and luxurious homes.”

When making your investment – always – let me repeat ALWAYS due your due diligence.  Check out the company.  Especially today with the advent of the internet, it is relatively easy to search out the status of the company that you’re seeking to invest your funds with.  No, I know, not always can trouble be spotted – example Bernie Madoff or Dan Frishberg, but for sure, a simple google search would likely turn up some issue that could at least give one pause for evaluation.

(3) TRUST – The capstone of creating a victim in a true scam is trust.  In the case of Fair Finance, that was easy.  The article states, “Decades earlier, Warner’s brother, Paul, started investing with Fair Finance and boasted about the healthy returns.”  The fact that Fair Finance had a proven track record created a level of comfort and trust that would cause most folks to believe that their investment was placed in a secure environment.  The fact was, in its former state, it was, but with the new owners, Fair Finance has become a cash cow that supported a vastly inflated lifestyle – one that eventually brought the house of cards tumbling down.

What a tangled web was woven here.

If you were a victim…FEEL FREE TO COMMENT.

As much as I hate to say it, victims are in a sense a victim of their own greed.  Not that they deserved the outcome – THEY DIDN’T.  Reality is, however, that prudence and due diligence would have provided a least a barrier from being scammed by the likes of Durham and crew.


Ethics Training – An Effective Defense According to New Sentencing Guidelines – Comments By Business Ethics Speaker Chuck Gallagher

April 28, 2010

At the risk on the front end of sounding self serving as an ethics speaker and trainer, the reality is – interest in ethics training and compliance programs  – is increasing and I’m not so sure it is solely for reasons of the common good.  Ethics, by their nature, are hard to define as they are not objective in nature.  However, ethics training and compliance programs effectively implemented in a company serve as an excellent defense when there is a breach of ethics by an employee.

New guidelines have been issued that raises the stakes and clarifies the role of ethics training and compliance.  The Sentencing Commission has introduced four new requirements for the receipt of the compliance and ethics program credit:

(1) those with operational responsibility of the compliance and ethics program must report directly to the governing authority or its subgroup, such as an audit committee of the board of directors;

The question I often face in my ethics and compliance work is – short of a Chief Ethics Officer – who has the operational responsibility for compliance and ethics training?  More times that not, this role is combined with HR in smaller operations.  Yet, the combination of that role creates reporting problems.  It’s clear that, in order for the program to work, whomever is charged with the operation of the program must have direct access to those whose roles are deemed independent enough to take ethics issues seriously.

(2) the compliance and ethics program must detect the offense before its discovery outside the organization or before such discovery was reasonably likely;

As the requirements provide – the program must be effective in detection.  More times that not, as I evaluate ethics programs of client companies, I find that detection is given “lip service”.  Honestly, most program in ineffective on that front.  Having a program is not enough, rather, the detection factor is a critical component.  In many cases the most effective way to evaluate detection is to test the system for failures.  Breaches in the system – detected early on – can be corrected so this component of the ethics defense can be utilized.

(3) the organization must promptly report the offense to the proper governmental authorities; and

I am not an attorney, but often I find that organizations weigh the legality of the ethics or misconduct breach with the PR implications of a potentially public disclosure.  Organizations are finding the reality of reporting a practical necessity and, now, a needed part of an effective program.

(4) no person with operational responsibility in the compliance program participated in, condoned, or was willfully ignorant of the offense. If these requirements are met, corporations may receive credit for their compliance and ethics program.

Furthermore, the Sentencing Commission has clarified the definition of an effective compliance and ethics program for the purposes of the culpability score reduction. The Commission elaborates upon the previous requirement of the Guidelines that, after criminal conduct has been detected, the organization must take reasonable steps to respond appropriately and to prevent similar criminal conduct in the future. Specifically, newly added language to the Guidelines clarifies that an appropriate response to criminal conduct is to remedy the conduct’s harm through, for example, restitution to victims, and that the organization must assess its compliance program, potentially with the assistance of an outside professional advisor.

Most companies now need the services of an independent professional adviser in order to evaluate their current program, test the effectiveness there of and help craft any solutions to weaknesses found therein.  Again, at the risk of sounding self-serving, regardless of whom you select, it is important evaluate and potentially shore up ethics and compliance programs.

These recent changes appear to shift the inquiry from an organization’s high-level personnel to the effectiveness of its compliance and ethics program. The changes also clarify the reasonable steps that an organization must take to respond appropriately to criminal conduct and to prevent similar criminal conduct in the future. Organizations may, therefore, choose to tailor their approach to their compliance and ethics programs based on these modifications, unless Congress prevents the changes from taking effect on November 1, 2010.

Whether the changes take effect on November 2010 or not, the guidance provided for Corporate Governance is valid and worth action.

Business Ethics Roundup – Week ending January 24, 2010 – Comments by Business Ethics Speaker Chuck Gallagher

January 24, 2010

This is a weekly round up of some of the best business ethics articles, reports and blogs that I’ve seen.  Feel free to click on the links provided, take a look and offer comments here.  The discussion that follows is useful to those who routinely come here for business ethics news and reports.

Business Schools put Ethics high on MBA agendas

This article plays an interesting theme that I am focusing in on as a business ethics speaker and blogger.  What role does the business school take when it comes to business ethics education?  Is business ethics a topic or course description or are ethics larger and part of a comprehensive education that is woven into the fabric of business disciplines taught in both graduate and undergraduate education?  The article is an interesting read.  My question, however, focuses on why just advanced degrees.  It seems to me to assume that business leaders must have advanced degrees in order to become leaders.  I’m not sure I agree with that, but take a look and feel free to offer comments.

Should business ethics be more than a course offered to business students?

Another link to a business ethics university related posting can be seen here.

Caribbean bookings up…

Now one might wonder what tourism bookings information might have to do with a business ethics blog?  Consider Haiti.  Many have criticized cruise ship companies when they continue to offer vacation bookings to Haiti and their neighbor – the Dominican Republic.  Chris MacDonald, a business ethics professor at Saint Mary’s University in Halifax, said travellers to either nation on the island of Hispaniola should not be deterred from their plans — unless logistics make scheduled trips impossible — because these struggling nations need tourism dollars.  Perhaps the luxury and opulence that folks think about when it comes to the cruise industry is, in fact, a positive ethical behavior when it comes to pumping money into the area and providing sustenance for folks who need an economic foundation.

What do you think?

Finders Fee or a Bribe?  A Case Study in Blogger Ethics:

It is incredible what innovations the internet has created.  One is the blog.  It wasn’t that long ago that I didn’t have a clue what a blog was, but less the power it wielded.  Of course, as a business ethics blogger and speaker, I am aware of the simple, yet powerful, use of the pen and open publishing that blogging provides.  This article is cool, in that, it expands the discussion of blogging and ‘financial affiliations’ in the open world of the internet.

Here’s a quote: On Jan. 14, Katherine Rothman, CEO of KMR Communications, sent a mass email to bloggers and other editors who cover beauty, fashion, health and fitness. “I would like to make an offer to you that could be mutually beneficial in the event that this is of interest,” Rothman wrote. Writers, she continued, often find themselves covering “smaller or emerging companies” that lack PR representation. “My offer is this: if you recommend a prospective client to our firm and they sign a contract with us, I would in turn provide you with a generous finder’s fee.”

The discussion is interesting and this is worth a read!

Your comments, of course, are welcome.

CLOSING COMMENTS – Thanks for being a reader of the business ethics blog.  If you run across stories of either business ethics at work (doing well) or business ethics run amuck…feel free to give me a shout.  You can reach me outside of this blog at

What Theory of Business Ethics do you follow? University Business Ethics Speaker Chuck Gallagher comments!

January 23, 2010

While standing in line for a dinner/reception at a well know Canadian University (I was there as their keynote speaker for a business ethics symposium), the Dean of the Business School asked me – “What theory of business ethics do you follow?”  Most of the time I’m fully prepared to answer questions posed about ‘ethics’, but in this case – that question caught me off guard.

I wanted to be respectful with my answer while thinking to myself – “the more academic we make ‘business ethics’ the less effective it will be for students to learn and apply.”  My response – “I follow the theory of business ethics that keeps one out of federal prison.”

The look I received in response was – priceless.  “I see,” he responded and from there the discussion seemed to change direction.

The next day it all made sense – not only to the Business School Dean, but the students in attendance – as I walked in dressed in an orange jump suit and handcuffs.  (you can see some of my presentation here).  As I explained I took 23 steps from the curb into federal prison, it became clear that every choice does have a consequence.  And, as I explain, the choices you make today create the consequences you experience tomorrow and into the future.

But…I was still plagued with the answer to the question…”What theory of Business Ethics do you follow?”


The other day, I ran across an excellent article that outlined different theories of business ethics in “the star online” – the full article written by John Zinkin is here.  The following is a reprint of excerpts from the various theories of business ethics he espouses.  Thanks and credit to Mr. Zinkin for his work.

Machiavellian ethics

These are pragmatic, weighing probable consequences and the likelihood of achieving given outcomes, often regardless of how the ends have been achieved. People practising this type of ethics will argue that the ends justify the means.

The merit of this system is that at least any decision being taken can be assessed in terms of whether it will achieve the desired ends; and if it fails this basic test, then it should not be taken.

However, there are two problems with this approach. First, it does not recognise that organisations need codes of conduct and rules to help people to make predictable and consistent decisions.

Second, it can lead to a failure of “Tone at the Top” with people encouraged to “do whatever it takes” – the kind of thinking that contributed to the recent failures of governance in Wall Street that have hurt us all so badly.

Utilitarian Ethics

These are a more moral extension of Machiavellian ethics, where the outcomes are weighed up by calculating how to “achieve the greatest good for the greatest number” for both the company and its customers. Principles are important only as rules of thumb.

The problem with this type of approach is that it encourages the tyranny of the majority and can lead to ignoring the needs of minorities and so be used to justify persecuting minority shareholders, which is poor governance.

Kantian rules-based ethics

Rules-based ethics (associated with the German philosopher Immanuel Kant) go one step further in that they also consider the effect actions have on the rules of the organisation and whether they adhere to given principles.

This approach tends to be bureaucratic and perhaps overly legalistic, sometimes with a rigid adherence to the rules without due regard for particular circumstances that may justify exceptions.

Of course, the problem is that if there are too many exceptions or waivers, the rules themselves and the system they represent are discredited; outcomes become unpredictable; and corruption and free riding are encouraged.

Rousseau’s social contract ethics

Social contract ethics recognise the need for mutuality and reciprocity if companies are to flourish: both within the organisation itself, where “Do unto others as you would be done by” is as good a rule as any for behaviour, and between the company and the community it serves.

They also recognise that no company is an island and it must therefore behave responsibly towards the community, minimising the external costs the company creates, lest it create a “tragedy of the commons” with its associated risk of systemic failure.

The problem with this type of approach is when it leads to the kind of loyalist, tribal thinking within a profession so that bad practices are covered up and justified in the name of loyalty to the group (a favourite topic of films with rogue cops who are protected from Internal Affairs for example).

Personalistic ethics

Personalistic ethics reflect what an individual feels about the decisions being taken. As such they often share the following three characteristics:

First, they are driven by the individual’s personal sense of virtue and how the decision will reflect on the person’s character and sense of self-worth;

Second, they may be based on empathy where the decision maker puts himself/herself in the shoes of the other person when deciding what to do;

Third, they may be based on intuition driven by conscience – asking the question “will I be able to sleep at nights” when making a decision.

Obviously it is important that board members must be personally comfortable with the decisions they are involved with.

The problem is that often people who decide on Personalistic ethical grounds become impatient with other people calculating what to do using either a rules-based or utilitarian approach, and may be uncomfortable with Machiavellian thinking.

SO – WHAT THEORY OF BUSINESS ETHICS DO YOU FOLLOW?  Having spent time in federal prison for unethical choices…I stand by my response to that question.  I follow the theory of ethics and choices that keep you out of prison.


University Ethics Presentations – A Report from the University of Florida on Business Ethics Speaker Chuck Gallagher

January 14, 2010

I must admit, as a speaking professional, I enjoy presentations to University students.  First, they are open to exploring ideas and generally eager to explore what is put before them.  Their questions are wide open and that makes the presentation fun.  But, more important, from my perspective, if a life can be changed early in a young career, then I will have paid it forward.  That inspires me!

I was privileged to speak to business students at the University of Florida and no long there after a young student wrote the following in the Greenback University blog.  His article (printed below) is a reflection of the presentation I made the reaction from the perspective of a student participant.

“I learned a lot of things in prison,” said motivation speaker Chuck Gallagher as he crossed the stage. “I found out what it meant to be Chuck Gallagher.”

Gallagher’s words to UF students rang true as he discussed the turbulence of his life in the past ten years.

Formerly a successful CPA and instructor, Gallagher was sentenced to federal prison for embezzling over $254,000 in a Ponzi scheme that later he reflected was a life-changing experience.

How might he be this week’s success profile? Simple. Gallagher’s story reflects a momentous ability to turn the tables after a horrific downfall.

On October 2, 1995, Gallagher took what he calls his “twenty-three steps” to federal prison, losing his CPA license, his relationship with his wife, and his colleagues’ trust.

“I’d absolutely considered myself an ethical person and an honest person at the time,” Gallagher said. “In the mind of a fraudster, I was always going to be able to pay it back.”

Gallagher’s life before his arrest for embezzlement can be said to be a success, built on the motivation to become educated and rise from the lower class.

“My dad died when I was two. My mother didn’t have a high school education,” Gallagher said, explaining his mother’s persistent pressure on him: “She would always say, ‘you can be somebody. Do not be concerned about your circumstances.’”

He took that lesson to heart, becoming the youngest tax partner in a CPA firm at age twenty-six.

One day while Gallagher was teaching a tax course in Boise, he noticed a note on his door from his partner asking him to call the office. During the break in between lectures, he called back. One of the clients had had an emergency. “I need the money,” his partner said.

Gallagher was quiet on stage, expressing the silent hysteria he felt in that moment almost twenty years ago.

“God and I knew the truth,” he said. “I had stolen the money.”

For months following the revealing of his Ponzi scheme, Gallagher considered suicide. “I picked up the telephone and started calling people.” Gallagher received six answering machines before reaching someone, whose immortal words lived on in Gallagher’s conscience: “You have made a terrible mistake, but you are not a mistake. The choices you make today will define your wife and children.”

Gallagher knew then that suicide would not be an option. “I had to admit to everyone, to my wife and children, that I was a liar and a thief.”

Gallagher stressed how simple it was for him to lose sight of ethics. “Everything I had created was an illusion,” he said. “I didn’t recognize it until it was too late.”

Prison is often said to turn a person’s life perspective around, and Gallagher was no exception. “After five years of a normal life, I was sent to an eight by eight holding cell made of cinder block with a toilet and a bench.”

Gallagher went on to explain his experiences in prison and his interactions and friendships with the other inmates. “I was paid twelve cents an hour. I would get up at 6:00 and clean toilets and urinals,” he explained.

When Gallagher was released after sixteen months, he had to start from the bare beginnings. “I worked for a company before prison. They hired me as a sales associate. I went door to door selling cemetery spots.”

Gallagher claims he was only able to move up because of his ability to outperform everyone else. “When you perform, you will get other people’s attention. When you get out of school, your degree will help you get that first job, but after that, it doesn’t matter. It’s all about performance.”

Gallagher is now the senior sales executive for the company, and lectures across the US not only on business ethics but on sales and marketing as well. He lives by the moral guidelines instilled in him from his experience as a white collar convict. “I learned that every choice has a consequence. If you are 100% truthful, you’ve got nothing to lose, but if you break someone’s trust either in business or in a relationship, that relationship will not survive.”

I appreciate the report, but more importantly I am thankful for the opportunity I have to share with students in both the US and Canada.  It’s funny, but in a presentation at another University a professor asked me, “What theory of ‘ethics’ do you follow?”  I pondered the question for a moment and then replied.  “I follow the theory of ethical choices that keeps you out of prison.”  Somehow that response seemed to stiffle the professor, but was incredibly well received by the students.  I guess when you get down to it, my job is to influence the students!

Here’s the link to the Greenback University blog.



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