Wednesday, August 30, 2006

DO ERRANT EXECUTIVES DESERVE A SECOND CHANCE?

[In light of Barry Minkow's appearance this past Sunday, August 27, on "60 Minutes," I'm posting a column that originally ran on October 19, 2003 in the Sunday New York Times.]

''AT some point in our lives, as imperfect human beings, we find ourselves in need of forgiveness,'' says Barry Minkow. In 1989, at age 23, Mr. Minkow was sentenced to 25 years in prison for defrauding investors in ZZZZ Best, a carpet-cleaning company he started when he was 16. All told, he fabricated more than 20,000 documents related to the business, which grew into a public company worth more than $200 million.

Mr. Minkow was released after serving seven and a half years of his sentence, and he seems to have turned his life around. Since 1997, he has been the senior pastor of the Community Bible Church, a nondenominational church in San Diego. He also helped found the Fraud Discovery Institute, a consulting firm that helps detect corporate fraud. But he still owes millions of dollars in restitution to the victims of his crimes.

Mr. Minkow's past raises the question of whether people are always entitled to second chances, or if there are some acts that are beyond redemption. For example, does Michael R. Milken, the former junk bond financier, deserve to be forgiven? He pleaded guilty to charges of securities fraud in 1990, served almost two years in prison, and is barred from working in the securities industry for life. Is it enough that he has re-established himself as a philanthropist and the chairman of Knowledge Universe, a company he founded that markets the LeapFrog line of children's educational products?

Samuel D. Waksal, the former chief executive of ImClone Systems, is serving a seven-year jail sentence, while L. Dennis Kozlowski, the former chief executive of Tyco International; Frank P. Quattrone, a Silicon Valley investment banker; and Franklin C. Brown, the former chief counsel for Rite Aid, sit on trial. Countless other executives caught up in recent scandals either await trials or possible charges. Does this fresh batch of alleged wrongdoers deserve a second chance?

''If somebody is honestly contrite, of course you say you forgive them,'' said Bart Victor, a professor of moral leadership at the Owen Graduate School of Management at Vanderbilt University in Nashville. ''But people need to step up and say, 'This was wrong for me to do.'''

The urge to forgive may stem in part from the fact that many people believe they ''were just as guilty as the ones who were caught,'' Professor Victor added.

It doesn't pay to be unbending if the guilt of others hits too close to home. ''I don't think anyone would want all of their actions in the business environment to come to light,'' said David Batstone, a professor of social ethics at the University of San Francisco and the author of ''Saving the Corporate Soul -- and (Who Knows?) Maybe Your Own'' (Saving the Corporate Soul--and (Who Knows?)... ).

But is a ''there but for the grace of God'' attitude enough of a reason to forgive? Just as it is possible to want to forgive people because their crimes reflect on our own shortcomings, it is understandable to rage against those whose misdoings eviscerate our personal fortunes.

''All corporate sins are forgivable,'' said Daryl Koehn, director of the Center for Business Ethics at the University of St. Thomas in Houston. A failure to forgive, she said, is unethical: ''It imprisons us in our rage and impedes our development.''

Perhaps, but there is a difference between forgiving and forgetting. Business deals are built on trust. When someone violates that trust, we choose carefully how we deal with that person in the future.

Mr. Minkow, who is banned from being an officer or director of a public company, said he not only recognized others' wariness toward him, but he also felt it about himself. ''I realize that I have a propensity to not handle money well, so in my new leadership positions at the church and the fraud company I do not sign checks,'' he said. ''This is true accountability in that I realize, given the best of temptations, I could commit the worst of sins.''

Forgiveness signifies that we have faith that people can make amends and transform themselves. But it also acknowledges that most of us won't allow ourselves to be defined by someone else's transgressions. In the long run, our capacity for forgiveness says more about us collectively as human beings than the shameful behavior of a handful of wrongdoers ever could.

Tuesday, August 29, 2006

THE NAKED TRUTH

[This "The Right Thing" column originally appeared on June 13, 2004. As we head into a new school year, I thought it appropriate to post it again here.]

It was to be the highlight of the beginning oil-painting class offered by a local art league in Indianapolis -- a painting session featuring a live nude model.

So imagine Bill Gulde's surprise when he walked into the studio, 10 minutes late for the class, and there -- about to drop her robe and strike a pose -- was an 18-year-old student from the high school where Gulde has taught history for the past 17 years.

Yikes! There's no rule in the high school teacher handbook covering such a delicate situation, so Gulde had to make a quick decision about the right thing to do. He assumed he had two options: take a deep breath and stay for the session or make a mad dash for the exit.

"I'm very liberal in my outlook," says Gulde, who is 39. "At first I thought, 'I can deal with this."'

So he took out his easel. But as he sat down and prepared his supplies, he grew increasingly uncomfortable. While the model had never been in one of his classes, he says, "I know this girl. She's a student. I see her every day."

And suddenly he decided he needed to get out of there.

But when the instructor learned why Gulde was leaving, he urged him not to go. As the model sat ready to disrobe, the instructor canvassed the rest of the class and found that several other budding artists were uncomfortable as well -- because the girl was so young.

So the instructor asked the model to wear a form-fitting outfit rather than appear nude. She happily complied, and the class got on with its renderings. (Lest you think any great artistic enterprise was undercut here, at one point the instructor commented to Gulde that he seemed to be having trouble painting the model's arm. "That's her torso," Gulde responded.)

Seldom are the only solutions to ethical dilemmas those that are thrust at us in stark black and white. In Gulde's case, he could have stayed, in spite of his extreme discomfort, because he knew he wasn't doing anything wrong. Or he could have left, avoided the issue, and missed out on the exercise he'd most been looking forward to in class.

But a third option might have been the best: He could have asked for someone else's take on the situation. As it turned out, the instructor offered help without being asked. He found a solution that satisfied the class while alleviating the discomfort raised both by the model's age and the notion that Gulde might someday find himself having to teach a history lesson to someone he'd seen naked (a situation most high school teachers presumably try to avoid).

In the end, Gulde and his classmates seemed satisfied about getting to work with a nude-like model, and an ethical crisis was averted.

And Gulde says that when he saw the student the next day, she enthusiastically waved her arm at him and "was delightful." At least, he thinks it was her arm.

Sunday, August 27, 2006

STAMPING OUT MISLEADING DIRECT MAIL

When I first started writing an ethics column, my father would regularly urge me to write about a company that kept sending him letters written like bills for a magazine to which he had never subscribed.

At first, he thought that he might have forgotten that he had indicated an interest in the magazine. But it became clear to him that he had never heard of the publication, let alone tried to subscribe to it. The magazine company's sales strategy was simple -- entice him to buy the product by making him think he already wanted it.

I never wrote about the letters. I figured that if my father could figure out that he hadn't subscribed to the publication that sent them to him, there was no harm and no foul.

I was wrong.

Companies engaging in direct mail to consumers have an obligation not to mislead prospective customers. Apparently, it's a message still lost on some companies.

Recently, J.W., a reader from Baltimore, wrote to tell me that he received letters from both a magazine and a company that makes commemorative coins and other memorabilia with the words "invoice enclosed" printed on the envelope.

"Letters from both companies stated or strongly suggested I had ordered product from them and showed the amount I owed," writes J.W. "Several follow-up letters pressed the point. Of course, I had ordered nothing from either."

J.W. wonders if these were just examples of desperation in marketing, or whether they could be attempts "to capitalize on the inattention of a busy consumer." He asks if I see this as a "question of ethics."

I do. And so does the direct mail industry's trade association. On its website, the Direct Marketing Association (www.the-dma.org) clearly states that envelope copy of any direct mail efforts must be honest. Its Guidelines for Ethical Business Practice states: "Offers that are likely to be mistaken for bills, invoices, or notices from public utilities or governmental agencies should not be used."

Companies should sell their goods and services aggressively without misleading consumers.

People like my father and J.W. who would like to stop receiving direct mail offers of any kind can do so by going to the DMA's consumer website at www.dmaconsumers.org and clicking on the phrase "remove my name from those lists," which appears on the association's home page. But this step doesn't prevent companies from continuing to make misleading offers to other people.

If a consumer wants to take a stance that may change the behavior of a company that doesn't hew to its own industry standards, the right thing to do is to file a complaint with the Federal Trade Commission's Bureau of Consumer Protection. On the bottom of the FTC's homepage (www.ftc.gov) are the words "file a complaint," which link to the form and procedure.

In a perfect world, companies would follow their own codes of ethics. When they don't, consumers are right to call them to task.

SOUND OFF: A BLEMISH ON A FORMER GOOD NAME

The majority of readers who responded to the question of whether Ohio State University should rename The Roger D. Blackwell Inn because its former marketing-professor namesake has been convicted of insider trading and other financial crimes (http://jeffreyseglin.blogspot.com/2006/07/sound-off-tainted-name.html) agreed with Ruth Wagner of Madison, Wisc., who writes, "Mr. Blackwell's name should definitely be taken off the building."

"OSU was fully aware of his blind ambition and actually contributed to it," writes Ken Dodson of Columbus, Ohio. "They should now have the guts to do the right thing."

Bill Kotys, also of Columbus, believes that once Blackwell's appeals are complete, OSU should return the money and rename the inn: "[It's] representing the university in a very bad light, ... [and] it only would serve as a negative reminder to everyone that it's 'about the money' and not about integrity."

"If his conviction is ultimately upheld, keeping his name on the building would be a public embarrassment and would teach students and others a lesson that is better left untaught," writes Lawrence Herman of Columbus.

Send your thoughts to rightthing@nytimes.com or post them by clicking on "comments" below. Please include your name, your hometown and the name of the newspaper in which you read this column. Readers' comments may appear in an upcoming column.

Jeffrey L. Seglin, author of "The Right Thing: Conscience, Profit and Personal Responsibility in Today's Business" (Smith Kerr, 2006), is an associate professor at Emerson College in Boston, where he teaches writing and ethics. He is also the administrator of http://jeffreyseglin.blogspot.com, a Web log focused on ethical issues.

Do you have ethical questions that you need answered? Send them to rightthing@nytimes.com or to "The Right Thing," New York Times Syndicate, 609 Greenwich St., 6th floor, New York, N.Y. 10014-3610.

Thursday, August 24, 2006

ETHICS OF USING AOL SEARCH DATA

Nate Anderson of Ars Technica has written an article about the ethics of researchers using AOL data that was released and then recalled when AOL discovered that individual user's identities could be uncovered with it. His article appears at http://arstechnica.com/news.ars/post/20060823-7578.html.

In his article, Anderson quotes me as saying the responsibility of ensuring the privacy of users falls on AOL, but that researchers who use the information are in the clear if they don't use it to uncover individual identities.

There is space to comment on Anderson's article if you click on "discuss" at the end of the piece.

Sunday, August 20, 2006

SOUND OFF: HEY, WAIT, ISN'T THAT MY MONEY?

It used to be that when Don Hull of Costa Mesa, Calif., made a hotel reservation and was asked for his credit-card number, it was to reserve a room and guarantee payment if he didn't show up and hadn't canceled ahead of time. In recent years, however, more and more hotels have charged his credit card for the hotel room in advance of his stay.

"I think it is essentially dishonest," Hull writes, "because the hotel then has the money to work with and not the customer, even though no cost has yet been imposed on the hotel."

In his view the practice is unethical. What do you think? Is it ethical for a hotel to take your credit-card reservation for a future date and then collect the money from your credit-card company in advance of your stay?

Send your thoughts to rightthing@nytimes.com or post them here by clicking on "comments" below. Please include your name, your hometown and the name of the newspaper in which you read this column. Readers' comments may appear in an upcoming column.

Jeffrey L. Seglin, author of "The Right Thing: Conscience, Profit and Personal Responsibility in Today's Business" (Smith Kerr, 2006), is an associate professor at Emerson College in Boston, where he teaches writing and ethics. He is also the administrator of http://jeffreyseglin.blogspot.com, a Web log focused on ethical issues.

Do you have ethical questions that you need answered? Send them to rightthing@nytimes.com or to "The Right Thing," New York Times Syndicate, 609 Greenwich St., 6th floor, New York, N.Y. 10014-3610.

THE UNKINDEST CUT

I get many questions from readers that fall more into the category of etiquette than into ethics.

Lynn LaBranche of Ontario, Canada, for example, wants to know if you should base a tip on the cost of a meal before taxes or including taxes. Traditionally it's calculated before taxes -- but that's a question that's more about etiquette than about my column's world of navigating between right and wrong.

Sometimes, however, the two overlap.

When C.C. of Montpelier, Vt., wrote to me about her experience waiting in line at a grocery store, at first I dismissed it as falling outside my purview. Upon further thought, however, I decided that the incident raises issues that get at how we deal fairly with others, regardless of who they are. How we choose to behave when we're together has "ethics" written all over it.

C.C., a woman in her 50s, was waiting in the express line at her grocery store behind two men about her age. Behind C.C. was an elderly woman.

"Along comes a pretty young girl with a loaf of bread," writes C.C. "Immediately the first man in line offers to let her go ahead of him."

This upset C.C., because there were three other people behind "Mr. Chivalrous," as C.C. calls him.

"Before showing his gallantry," she writes, "he should have asked us if it was OK."

It also bothered C.C. because the elderly woman behind her was also buying only one item, and nobody had offered to let her go ahead.

"Was I wrong," she asks, "to think that he should have checked with the rest of the line first?"

No. If Mr. Chivalrous had been sitting on a bus and wanted to give up his seat to someone who had come on after him, that might have been acceptable. I'd like to think that he would give it up to someone who needed it more than he did, but that's his choice.

Bus riders don't generally queue up waiting for the next available seat, however. Supermarket shoppers do wait for the next available cashier.

Mr. Chivalrous did not have the right to allow someone, no matter how young or pretty, to cut in front of him, unless he was the only one in line. C.C. is absolutely correct that the right thing for him to have done was to check with the others in line to see if they minded. For her part, Ms. Pretty Young Thing should have had the good sense simply to move to the end of the four-person line in the first place.

But in suggesting that it would have been fairer if Mr. Chivalrous had also yielded to the elderly woman who also had only one item to buy, C.C. goes off the rails. The issue is not whom Mr. Chivalrous allows to cut in or how young, old, attractive or unattractive they may be, but rather that he is giving away not only his own time but also that of the people in line behind him.

That's where ethics comes into play. Because he can't give away something that isn't his, Mr. Chivalrous should check with those in line before letting anyone cut in. The age of the person doesn't matter -- Mr. Chivalrous still has a responsibility to be fair to his fellow customers.

When I first read C.C.'s e-mail, it struck me that everyone knows the right choices to make in forming queues. But, judging by similar reader e-mails and my own experience, I'm not so sure.

So here's my advice: Be fair and considerate. And shop nice.

Sunday, August 13, 2006

DRIVEN TO DISTRACTION

As older people's health begins to falter, often their adult children must step in to manage their financial affairs. The more complicated the situation, the more challenging it becomes for multiple siblings to sort things out so that their parents are cared for and so that whatever assets remain after both parents die are distributed fairly and according to the parents' wishes.

As many adult children know firsthand, caring for an ailing parent can be an exhausting, time-consuming endeavor. It's easy to get caught up in the concerns of the moment and not look ahead. As a result, some details of how their parents wanted their assets to be handled may not have been discussed thoroughly enough to avoid confusion or strife among sibling heirs.

If the siblings have a good relationship, such details can be worked through with little acrimony -- "You take the china, I'll take the silver." But when sibling relationships are already strained, minor details can escalate into painful controversies.

A reader from the Southeast wrote to me about the recent death of her father. After a stroke, her father had become very ill and incapacitated. My reader, the middle of his three daughters, became his primary caretaker and also gained power of attorney over his affairs. She began to work with her father to ensure that all of his assets would be distributed equally to his three daughters.

Immediately prior to his stroke, her father had paid $25,000 in cash for a new car.

"My father didn't drive much," my reader writes, "and was obsessive about keeping his car immaculate."

The stroke intervened, however, and he could no longer drive a car. Because she had been charged with putting her father's affairs in order, my reader decided that it would be best to ask her father if she could buy his new car and transfer ownership to her name. He agreed.

When they went to the Division of Motor Vehicles to transfer ownership, however, she was told that they had to list a purchase price, a detail on which they had not settled previously.

On the spot they agreed upon "an obligatory $1," she writes. "It was not discussed again."

It was only after their father's death that the other two siblings learned that the car actually belonged to the middle sister. They were furious, but the probate lawyer told my reader that she did not owe her siblings any money for the car and should simply keep it.

Her younger sister still insists that she stole the car.

"Did I?" my reader asks. "Do I owe them their third of what the resale value of the car would have been at the time?"

The right thing for her to do is to follow the probate lawyer's advice. Her father named his price when they traveled to the DMV to transfer ownership. If he had wanted her to pay him more for the car, he would have told her then or, most likely, before they reached the DMV. Her father may have had any number of reasons for wanting her to have the car. As his primary caretaker, for instance, she needed the car to drive him to doctor's appointments and other destinations.

Regardless of his specific intentions, however, so long as their father was in his right mind and was not unduly influenced in making the decision to sell, the other two sisters have no claim upon a share of the car's value. The sale was made between the father and the middle daughter, and the low agreed-upon price doesn't change that.

It would have saved my reader some grief if her father had told his other daughters that he had sold the car to the middle sister, but that oversight doesn't diminish her rightful place in the driver's seat.

SOUND OFF: IF YOU COULD READ MY MIND

Reader response was mixed about whether it was OK for some institutions to use magnetic-resonance imaging as an alternative form of lie-detector test.

Margaret Blum of Orange, Calif., strongly disapproves.

"Companies that want the business will possibly be less than honest about effectiveness and other information," Blum writes. "People should beware."

Others feel that the practice is permissible.

"Advances in technology will always be utilized by some," writes Philip Alexander of Windsor, Ontario. "Is it not better for all of us to fully understand what the capabilities and limitations of such developments are, as contrasted with banning their use and depriving ourselves of that insight?"

Finally, Chris Beale of Columbus, Ohio, asks: "If you do not have anything to hide, why oppose it?"

Check out other opinions at http://jeffreyseglin.blogspot.com/2006/07/sound-off-dont-even-think-of-it.html or post your own by clicking on "comments" below.

Jeffrey L. Seglin, author of "The Right Thing: Conscience, Profit and Personal Responsibility in Today's Business" (Smith Kerr, 2006), is an associate professor at Emerson College in Boston, where he teaches writing and ethics. He is also the administrator of http://jeffreyseglin.blogspot.com, a Web log focused on ethical issues.

Do you have ethical questions that you need answered? Send them to rightthing@nytimes.com or to "The Right Thing," New York Times Syndicate, 609 Greenwich St., 6th floor, New York, N.Y. 10014-3610.

Friday, August 04, 2006

SOUND OFF: SECOND CHANCES

Let's say that you manage a team of highly talented consultants who travel far afield to work with clients. You find out that one of your most talented team members has missed a critical meeting with one of your company's largest customers. The company ends up losing $100,000, half of the fee you anticipated from the job.

Several days pass before you can locate the employee through one of his family members. You find out that he has started drinking again, after having been sober for many years.

Do you fire him for not showing up and for costing the company significant revenue? Do you ask him to agree to enter rehab and give him another chance? Or do you do overlook the episode and chalk up the experience as a cost of dealing with a highly talented individual who in the big picture has made your company a great deal of money and will probably do so again?

Send your thoughts to rightthing@nytimes.com or post them here by clicking on "comments" below. Please include your name, your hometown and the name of the newspaper in which you read this column. Readers' comments may appear in an upcoming column.

Jeffrey L. Seglin, author of "The Right Thing: Conscience, Profit and Personal Responsibility in Today's Business" (Smith Kerr, 2006), is an associate professor at Emerson College in Boston, where he teaches writing and ethics. He is also the administrator of http://jeffreyseglin.blogspot.com, a Web log focused on ethical issues.

Do you have ethical questions that you need answered? Send them to rightthing@nytimes.com or to "The Right Thing," New York Times Syndicate, 609 Greenwich St., 6th floor, New York, N.Y. 10014-3610.

RAGE AGAINST THE MACHINE

Picture yourself on a road trip, driving along the interstate. You pull into a rest area to stretch your legs and use the facilities. Then you stop at a vending machine to purchase a refreshing beverage to quench the thirst you've built up on your long summer drive.

A bottle of water costs $1.25, so you start dropping change into the machine. You're about 60 cents in when you realize that the machine's digital display isn't registering the amount you've deposited. You hit the change-return button several times, with increasing force, to no avail. The machine has eaten your 60 cents.

You spot a rest-area attendant, but she refers you to signs in the vending area proclaiming that attendants are not responsible for the vending machines. Instead there's a stack of mail-in cards you can use to ask for a refund.

The cards are not postage-paid, however. If you mail one as a post card, you'll be out another 24 cents for postage. If you'd prefer to have your home address hidden inside an envelope, it'll run you 39 cents. There is no indication on the card that you should add the cost of postage to the amount you've been shorted.

Let's agree for the moment that it's not OK to put your steel-toed work boot directly through the front of the machine in an effort to jiggle free your lost change. Is it ethical to build into your reimbursement request the price of the postage needed to send the request?This is exactly what K.E. of Columbus, Ohio, wants to know.

He and his girlfriend were driving from Chicago to Columbus a few weekends ago. Right outside Indianapolis, heading east on I-70, they pulled into the rest stop that is home to the change-gobbling vending monster in question.

K.E. believes that the postage should be prepaid for customers who need to use the cards to get a refund.

"If it is not," he writes, "it seems silly to have to pay to get a small amount of money refunded."

So he tacked on 39 cents for postage, rounded up a penny and, having lost 60 cents, asked for a refund of one dollar.

Soon, however, he began wondering if he had done something wrong by tacking on the extra 40 cents for postage.

"The postcard had an ominous `using the mail to commit fraud is a crime' type warning at the bottom," he says. "I feel a little sheepish now, wondering if I was perhaps overly self-righteous in my moral superiority."

Self-righteousness doesn't enter into it -- it's more like understandable frustration -- but yes, technically it was unethical for K.E. to add the extra money for postage, and the extra penny to make an even $1 is even more unjustifiable, though hardly significant in the big scheme of things. By claiming to have lost $1 when he actually lost only 60 cents, K.E. was lying at worst, misleading at best.

Without question, the right thing would be for the vending-machine company to foot the bill for the postage, ideally by providing postage-paid cards. K.E. should not be expected to pay to get back what's rightfully his. But the company is not legally obligated to do so, and it has chosen not to do what both K.E. and I consider to be the right thing.

The right thing for K.E. to do would have been to send the company an itemized bill for 99 cents, citing 60 cents in lost money and 39 cents for the cost of postage. Ideally the company would remit the full amount. If it didn't, however, K.E. would at least have the consolation of not having let 40 cents get in the way of the truth -- and a good reason to avoid that company's vending machines thereafter.

College food fight gets messy

This fall, a teenager, let's call him Ken, has been settling in as a freshman at a large state university. Three months in, he appe...