A Practical Case for Integrity
A Practical Case for Integrity
"[The] second went beyond dumb and reached all the way to
stupid," declared Chrysler Corp. Chairman Lee Iacocca at a recent
news conference. He was referring to the 40 cars that had been
damaged in accidents during test drives, but were repaired and
sold as new. (The first, just dumb act, was when company managers
disconnected odometers on cars they had driven for up to 400
miles and then sold the cars as new.) Iacocca confessed,
regarding the damaged cars, "Simply stated, that's unforgivable,
and we've got nobody but ourselves to blame."
The remarkable aspect of Iacocca's statement is that it is
newsworthy. But he and Johnson & Johnson Chairman Jim Burke are
two lone examples of businesspersons who have dealt forthrightly
with crises of confidence and integrity. Burke's exemplary
handling of the 1982 and 1986 Tylenol tampering incidents earned
high marks for both him and J&J.
The reason such forthright behavior makes news headlines is
because -- although in my experience the average businessperson
is honest -- the average firm, when confronted with an integrity
crisis, usually defers to incompetent public relations advice and
overly conservative lawyers. To use a phrase from the Nixon
years, the average firm "stonewalls." In fact, that was
Chrysler's first reaction -- it called the Department of Justice
charges "outrageous." And you can bet that Iacocca's subsequent
chest baring was met with much lawyerly clucking.
Though it's too early to tell, my bet is that Iacocca's words
(repeated in advertisements) and deeds (issuing new replacement
cars to the 40 buyers whose cars were damaged) will defuse the
crisis. Assuming there are no "smoking guns" and that Iacocca has
been honest, I believe the story will soon fade from the paper,
and customer confidence will be restored quickly. In fact, the
confidence level will be higher than ever before; demonstrating
integrity in the face of a problem will single out Chrysler from
The pressing question, then, is will we learn? Sadly, I suspect
we won't. Rarely does a day pass without stories of corporate
malfeasance, met unfailingly with staunch denials of any
wrongdoing. Usually, automakers respond to government-mandated
recalls with an immediate denial of any problem. (Remember in
1983, General Motors tried to persuade the government that a
car's rear wheel and axle falling off was not dangerous.) Union
Carbide damaged its reputation following the 1984 Bhopal
poisonous gas disaster almost as much by its denials of guilt as
by the deadly accident.
On a more mundane level, the average customer's dealing with
regional and corporate management after a severe repair problem,
for instance, is usually nightmarish. By the time the repair is
complete, the customer feels as if she or he is the guilty party.
The ultimate response to accusations is to sue the critic.
Several local government officials have done just that of late,
after criticism of their malfeasance became strident.
The issues are moral and practical. Is business corrupt? Is
integrity at an all-time low, as the insider trading scandals and
the constant government suits against defense contractors
suggest? I doubt it. There is simply a lot of business being
done, and consequently a fair number of rotten apples turn up in
the barrel at any time.
I believe that business primarily falls down on the practical
score. Conventional, conservative businesspersons laud democracy,
open markets and entrepreneurs -- and simultaneously treat all
members of the press as mortal enemies. Hordes of lawyers and PR
flaks convince the chief that he's in the right and that
criticism is trumped-up yellow journalism. (Even Iacocca
acknowledged that he'd known about the odometer practice for nine
months, but had been assured by lawyers that it was not, in fact,
Business leaders should learn from everyday life. If you've got a
problem, come clean fast. In recent history, not doing so has
felled one U.S. president (Nixon) and mortally wounded another
(Reagan). Containable problems were allowed to fester until
irreparable damage had been done. A quick "mea culpa" in both
cases doubtlessly would have sent the stories to the back pages
in a few weeks.
On the other side of the coin, the examples of Burke of J&J and
Iacocca teach us that if we shoot straight, we will be forgiven,
even considered heroic.
Once more, we can look across the Pacific for some lessons.
Recall that following the tragic Japan Air Lines crash that
killed 520 people in 1985, the president of that company
immediately resigned. Well, it was ironic that on the same day
that Iacocca came clean, July 2, Toshiba's top two executives
resigned over the advanced technology sales by that firm to the
Soviets. Congress is in a bloodthirsty mood vis-a-vis Japan, and
the resignations will likely not assuage them entirely; but it
was one heck of a first step. American businesspersons ought to
think deeply about this traditional Japanese response to the
allegation of blameworthy behavior. While I don't necessarily
recommend automatic resignation, surely we can do better than our
equally characteristic construction of stone walls.
(c) 1987 TPG Communications.
All rights reserved.