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Archive for the ‘Organizational Culture and Ethics’ Category

And because it was tax prep week, I am a few days late getting this post together.

Nonetheless, it was a busy week in the business ethics arena:

Wells Fargo was hit with $ 3.1 million in punitive damages by a federal bankruptcy judge over a case involving just one homeowner. The judge called the bank’s handling of the five year long litigation  “highly reprehensible.”

Kodak, who has filed for bankruptcy, has requested the court’s permission to issue bonuses to selected personnel to prevent them from being hired away by others. About $8.5 million of the $13.5 million would go to middle management employees and above. This is reminiscent of Enron, which also paid post-bankruptcy bonuses to upper levels of management even as regular employees saw their retirement funds nearly disappear when the company’s stock plummeted.

In a disappointing piece of news, a subsidiary of Johnson and Johnson was found guilty by an Arkansas jury of deliberately hiding risks associated with a multi-billion dollar drug. I say disappointing because I believe that J&J has a long history of ethical behavior dating back to its handling of the tylenol poisoning event many years ago. This week’s decision was against a subsidiary of the company.

And on tax prep week, here’s this interesting item. According to a report from the nonprofit taxpayer watchdog organization Good Jobs First, a number of states are allowing employers to retain the state income tax they have been withholding from employee paychecks. Sounds like a case of subsidizing the company’s profits with money taken from the employee. While one can understand the rationale if the companies involved were small businesses, the report states that corporate beneficiaries of state largess include such profitable enterprises as General Electric, Goldman Sachs, Procter & Gamble, Toyota and Chrysler among others.

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Since this past week has had a strong spiritual element in the form of Easter and Passover, this is a good time to bring the Wegmans story to your attention. Wegmans is a privately owned and growing chain of grocery stores in the northeast. Headquartered in Rochester, N.Y., Wegmans is family owned, provides exceptional training and benefits for all of its employees, who are “our number one asset, period.” This article in The Atlantic is well worth reading and highlights the impact a positive, ethical corporate culture can have on an organization, its customers, people and shareholders.

And speaking of corporate culture, The Wall Street Journal recently featured a story comparing and contrasting the management styles of Steve Jobs and Bill Gates. The two individuals had very different management styles and approaches to satisfying consumers and the article explores how CEO management style has impact on bottom line results as well as employee contributions.

And a final note on justice satisfied, Dennis Kozlowski, former Tyco CEO, was denied parole this week.

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It’s actually only Wednesday, but we already have two major news stories related to business ethics.

In the on-going investigation into Rupert Murdoch’s News of the World’s alleged hacking of personal cell phones to obtain news stories, Rebekah Brooks, her husband and four other individuals were arrested early Tuesday morning. Brooks, a key person in Murdoch’s London operations, was an editor at News of the World and has been previously arrested in the same investigation.

This morning Greg Smith of Goldman Sachs had an op-ed published in the New York Times in which he announces the reasons behind his departure from the global investment banking firm. Mr. Smith’s piece focuses on the culture at Goldman, how that culture has changed and its implications for the firm. His hard-hitting article is well worth reading as an example of the impact organizational culture can have on ethical behavior.

Our prediction is that Mr. Smith will be written off by Goldman as ‘not a team player,’ ‘was already going out the door,’ ‘doesn’t represent what is really the character of our organization,’ and more.  In other words, we could probably write their press release for them.

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