Sunday, December 14, 2014

When a company's ethics violate your own, take your business elsewhere

If you sour on the company but still care about some of its employees and value the service they provide, should you stay or should you go?

About two years ago, S.W.'s locally-owned bank in the Midwest was acquired by a much larger bank. Upon completion of the acquisition, the local bank's CEO received a golden parachute payment of roughly $18 million.

"I have no problem with this in theory," writes S.W., since "such payments are designed to assure the CEOs focus on their fiduciary responsibility to shareholders" during an acquisition. S.W. believes it's only fair that if the sale of a company increases shareholder value but results in the acquired company's CEO losing his or her job, "there should be some incentive for the CEO to proceed with the acquisition even if it comes at the expense of losing his or her job."

However, in the case of S.W.'s locally-owned bank, the CEO who pocketed the $18 million was given the top job at the acquiring bank -- and kept the golden parachute payment.

"He won twice," writes S.W. "I regard this as unethical and profligate. Neither behavior deserves my continuing patronage."

But S.W. has a dilemma. The two local bankers with whom he does most of his commercial and personal business remained with the merged bank and he likes working with both of them.

"They continue to treat me very well, though they are hampered by new policies and procedures," he writes. "I feel loyalty toward them individually but not towards their employer, the new bank."

S.W. has shared his feelings with the two bankers, who've told him that the issue of the CEO's golden parachute has been raised by many other customers, as well. Aside from keeping their jobs, the two bankers received no financial benefit from the acquisition.

"They feel my pain," writes S.W.

He's told both bankers that this issue continues to gnaw at him and might compel him to leave the bank. If he does so, however, he worries that his action would be disproportionately felt by his local bankers since he suspects their compensation is based in part on maintaining a quote of customers.

"Do I stay or do I go?" he asks.

While S.W.'s sense of loyalty to these two bankers is admirable, if he truly believes that the management of his bank behaved unethically and that the golden parachute payout to a CEO who kept his job at the merged bank represents profligate behavior, the right thing is to shop around for a new bank.

There are likely good employees at many companies whose values don't mirror those of customers. If these values are so abhorrent that S.W. doesn't want to reward the bank with his business, he should move on.

In his book Integrity (Basic Books, 1996), Stephen Carter argues that showing integrity requires three steps: discernment of the issue, action based on that discernment, and then articulation of that action. If S.W. wants to leave with integrity, the right thing is for him to let the bank's management know precisely why he's leaving and then to take his business elsewhere. 

Follow him on Twitter: @jseglin 

Do you have ethical questions that you need answered? Send them to 



Anonymous said...

This is a simple one. A person's actions are individual and should not reflect on the company. Particularly if the person's actions do not affect the current members, customers, or employees. He has left the company. A deal is a deal and so be it. He followed the rules and reaped the benefits of it. Oh well!!!
A complete non issue.

Alan Owseichik
Greenfield, Ma.

Betty Rose said...

I totally agree. As an employee, if you find that the company you're working for has unethical business practices, staying would only cause damaging ramifications on your own business values. In addition, how people perceive a company will reflect how they perceive you as an employee of the said compan. Thanks for sharing such an informative read, Jeffrey! More power to you!

Betty Rose @ Phenix Investigations