Business ethics: Taking the high road

Should an employer summon workers into a meeting where undercover immigration officers will look at their papers?

What should a business owner do about a thieving employee whose spouse pleads for mercy?

When should an accountant drop a client who wants to claim a dubious deduction?

Members of the Omaha Business Hall of Fame talked about such cases in interviews conducted for the Greater Omaha Business Ethics Alliance.

Creighton University graduate business students talked to the businesspeople for the ethics program’s “Aiming Higher” interview series, conducted annually.

Edited excerpts from the interviews:

Michael Simmonds, chairman, Simmonds Restaurant Management

Interviewed by James Kelly and Ralph Shaver

“The hard ethical situations, in my mind, are those with gray areas. There was a big push by the Immigration and Naturalization Service a few years back to round up all the illegal immigrants and ship them out of our area. Legally, we are required to obtain certain documentation from our employees, which we did.

“The INS came in and presented a list of names, all Hispanic, and told us we needed to bring them to our training facilities to update their paperwork. It’s unfortunate that some of our hardest working employees would come to this meeting and present their paperwork to the undercover INS agents.

“The agents would confer with each other and line up all these people, put them in handcuffs and escort them out of our facility. They were not allowed to contact their family or friends. I personally believe this is wrong, but my beliefs may conflict with the law. ...

“Someone might be in this country illegally and provided illegal documents to obtain employment. However, my moral ethics tell me that these are good people. They are hard-working individuals who only want to provide for their families.”

Michael R. McCarthy, chairman, the McCarthy Group

Interviewed by Eric Schelker and Mike Strawhecker

“One of my managers faced a challenge recently that involved a round of layoffs for one of our companies. They had completed one round already and told the employees that it was going to be the only round they would have to do.

“However, after a time it was decided that another round was needed. One of the individuals that was going to be laid off was in the hospital with a sick child, and the manager wasn’t sure if he should call the employee at the hospital and let her know.

“I made the decision that the manager needed to call the hospital and let the employee know. It was the right thing to do because it was the truth, and giving someone a false sense of hope would have been wrong. ...

“There was another time where the company was defrauded by an individual and there was a choice to prosecute the person at a greater expense than we could ever recover from the lawsuit or to let it go. We decided to prosecute anyway and made that individual file for bankruptcy and move out of the state. Our rationale is that even though it costs more than we made back, he will not be able to hurt another business in Omaha.”

Frank L. Hayes, founder, president, and managing director, Hayes & Associates CPA and Consulting

Interviewed by Joseph Moore and William Reh

“We’ll have enterprising people find creative, innovative ways to avoid paying taxes, so sometimes we have to step in and point out that, ‘This creative way that you are suggesting may not be appropriate or even legal.’

“We’ve actually had clients push on that, push hard on that. We’ve taken the position of firing a client because we didn’t believe or agree with what they’re doing. ... I think it’s enormously important to our reputation and the long-term viability of a business. If you are seen as a firm that believes in something and is willing to take a hit if that belief is challenged, then I think that serves you well in the long run.”

John P. Nelson, chairman and CEO, SilverStone Group

Interviewed by Sam Gibbens and Ryan Carlson

“Occasionally, we run into a client who will try to cheat the insurance company by inflating a bill. They have a deductible and they try to inflate the claim in order to be able to pick up the deductible. When you see that, you can’t just correct it. You have to get rid of the client. And that’s hard. Or you have to go above the representative of the client and go to the president of the company and say, ‘Do you realize this is going on?’ Those kinds of situations come up. Fortunately in Omaha, those situations don’t come up too often.

“I had one employee who was stealing significant amounts of money. Our people uncovered it, and I went to the county prosecutor and got an arrest warrant and had him arrested. The guy’s wife came in and said, ‘I don’t want my children’s father labeled a criminal. I can’t pay you back, but please don’t do this.’ So being soft-hearted, I let it go.

“But you have to make those kinds of judgments. Could we really do any good by pursuing it? Those are hard decisions.”

Kathleen Dodge, president and CEO, NEI Global Relocation

Interviewed by Hyoung Jun Kim and Julie Mahony

“Because of the multiple billings to our clients, it’s not unusual to have a company pay twice for something. The right thing to do is always return the overpayment.

“A little tougher one: We found that we hadn’t been crediting a company for some payments due for a period of months, and it had gone unnoticed. We brought the matter to the attention of the client, paid the full amount plus interest and, I believe, increased the client’s confidence in our integrity.”

Robert D. Bates, retired insurance executive, chairman of the Greater Omaha Business Ethics Alliance.

Interviewed by Kyle Smith and Laramie Wingfield

The most difficult ethical situation he faced was the conversion of Guarantee Mutual Life Co. to a stock company, which was eventually acquired by Lincoln Financial Group.

“I wanted everyone involved to know that the deal was clean. If there was even perceived impropriety, the whole deal would be tainted. I wanted everyone to know it was on the up and up.”

“There should be a healthy tension between dedication to customer service and dedication to the bottom line. Good companies do both, and in today’s environment you have to do both. But everyone should embrace the values and character of an enterprise. These are the things that kick in when you are in trouble.”

Chip Davis, president & CEO, American Gramaphone, and composer, Mannheim Steamroller

Interviewed by Matthew Brand and Phil Hansen

“When Yellowstone Park burned, nobody really paid too much attention. I really felt like somebody needs to point out how important parks are. It’s important to bring those things to the consciousness of people.

“With Yellowstone, I did 22 concerts and raised a bunch of money. More than the money, I raised awareness of what the park was. We had 100 million trackable impressions for the Yellowstone concerts. That became a really good thing and a responsible thing. We were able to help. The money was good, too, but park attendance went up 36 percent.”

William Fitzgerald, former chairman and CEO, Commercial Federal Corp.

Interviewed by Jamie Jones and Brandon Struebing

A branch manager told Fitzgerald that her married regional manager consistently asked her to dinner, which made for an uncomfortable situation. Fitzgerald immediately took action and was informed that two other female branch managers had encountered the same harassment. The regional manager was immediately dismissed.

Handling the situation in this matter-of-fact manner sent two messages: behavior like this would not be tolerated, and the president of the company had the integrity to meet with a branch manager and be open-minded about her situation.

Deryl Hamann, senior counsel at Baird Holm LLP.

Interviewed by Chris Burge and Scott Christoffersen

In a law firm with 70 attorneys and many clients, it’s possible for two parties with conflicting interests to have prior relationships with the firm. In such cases, the firm is obliged to represent neither party. ...

An attorney may “borrow” from a client’s trust account to make ends meet, having every intention of paying the funds back, but in that instant a serious breach already has been committed. Lawyers are subject to human imperfection just like everyone else, but a strong ethical culture in an organization and mechanisms for accountability reduce such temptations.

Charles Heider, president, Charles Heider Co.

Interviewed by Brook Hudson and Fan Zhou

Given the competitive nature of the investment industry, the main ethical dilemma is pressure to sell products that customers might not need. While these situations are rare, the few times they came up, they were handled quickly.

Richard Holland, retired advertising executive and philanthropist

Interviewed by Ryan Cole and Terry Lanphier

His company once needed to stop doing business with a client because he was “essentially a bum and dishonest, but yet he thinks you (the company) are wonderful.”

The difficulty was finding an appropriate way to sever the relationship. Although not ideal, the company made up a “lame excuse” to cut the ties. “I mentioned that there was another, larger firm that could serve him.

“Ethical behavior in business is a reflection of the top management. If top management has a decent sense of community and behaves, it will permeate the lower ranks. I’ve seen it time after time.”

Dr. Harold M. Maurer, chancellor, University of Nebraska Medical Center

Interviewed by Greg Dyche and John Jenkins

“One time a very high official called me up and said, ‘My niece wants to apply to medical school.’ I told him to send me her transcript. I took a look at it, called this person, and told her not to bother applying. Do you know what she told me? ‘Thanks for telling me.’ She appreciated my directness.

“She wanted to know something, she got the straight answer, and that was the end of it. This type of situation happens quite often.

“Another easy situation involves a failing medical resident. The resident was doing so poorly that the department dismissed the resident. The resident came to see me, and I asked the department to send me all his information. After looking through all the information, I realized there was no due-process implemented in his dismissal. I told the department that they needed to reinstate the resident, find him a mentor and then see what happens.

“After six months of reinstatement with the mentor, he was still failing. After that, he was dismissed. The whole problem was that there was no due process, so he was not given the fair chance that everyone deserves.”

Sandy Dodge, president, N.P. Dodge Real Estate

Interviewed by James Rosser

“An agent of ours sold a house and the agent was asked if there were any deaths in the house. The agent said no, but in fact someone had passed away in the garage. This agent took the literal approach, as the death did not occur in the house but in the detached garage.

“I believe ethically he should have said there was a death in the family that was a suicide and it was not in the house but in the garage. I felt that the agent’s response was wrong and we needed to correct the fault, and we bought the house back. We dismissed the realtor soon thereafter. To me that was an easy one.

“One of our partnerships owned a shopping mall of about 35,000 square feet. The shopping center never really did work out well and we wanted to sell. We worked with the buyer for about four to six months, and finally it was scheduled to close.

“Two days prior to closing I received a call from an acquaintance of one of the tenants who owned a pharmacy that occupied about 10 percent of the space. This individual told me that the pharmacy would more than likely be going under and he was going to skip out. ... The question that I had in my mind was, ‘Do I contact the buyer about this situation?’ I had no legal responsibility to do so, but I went ahead and did it.

“The buyer appreciated the information but he still wished to close. Within a week after closing on the deal, the pharmacy closed shop and moved out. At least I felt that I had divulged all the information I could. If I lost this sale I would have had some partners who would have been really upset. ... What motivated me was, ‘How would I like to be treated if I were in this situation?’”

Contact the writer:

444-1080, steve.jordon@owh.com

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