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Strong ethics come from the top

By Laurie Arendt, Corporate Report Wisconsin
January 2009

As chairman and CEO of Wisconsin-based Hammes Company, Jon Hammes knows the art of the deal. He has to as the head of the nation’s leading developer of healthcare facilities.

“We had responded to an RFP for a stadium project in Taiwan,” says Hammes, who notes that his company has also developed sports facilities like UW-Madison’s Kohl Center and the Lambeau Field renovation. “We ended up on the short list with a company from France and a company from Japan, and were invited to Taiwan for the final interview.”

With the types of projects Hammes Company does, making it to this point in the proposal process means an investment of thousands of hours and several million dollars.

In keeping with traditional Taiwanese business culture, Hammes and his company representatives sat down for a celebratory dinner. “You don’t talk business during dinner,” he says. “It was about 12:30 a.m. when we finalized the details, and I called back to the States to let our company and our partners know that we’d gotten the project.”

But then there was a point that seemed to initially get lost in translation. “When you do a project like this, there are all sorts of taxes and payments that do occur, but they mentioned a payment to an individual,” he said, thinking that this was an interpretation issue. “At first I didn’t understand, but then I was told that the mayor of the city needed to be rewarded, and he was a very influential man.”

He was further told that the payment could be hidden, wired in such a way that it would be difficult to track. “The point remained that it was still a payment, and by our business standards, it was still an illegal act,” he says. “It wasn’t a tough decision for me, and I explained our position to them.”

The Taiwanese representatives re-evaluated their decision. Can you guess what happened?

“The next morning, they informed me they awarded the project to the Japanese company,” he says.

Can you say that a similar strong business ethic exists at your company? According to a national survey by the Society for Human Resource Management and Ethics Resource Center, only 43% of human resource professionals said their organizations include ethical conduct as part of employees’ performance appraisals. Yet, they also don’t feel they are truly part of the ethics infrastructure. Usually, they are just asked to “clean up” the situations caused by ethics violations.

While most human resource professionals deal with ethics violations on a much more basic level – think abuse of office business privileges, abusing sick time or taking credit for someone else’s work – it’s really a top-down proposition.

“The real story is that you can’t cross that line,” says Hammes. “If we’d cross it, we’d be selling ourselves out for a project. That impacts our brand and impacts us going forward. We’d be compromised, and it would percolate through our organization and affect our employees.”

Hammes hits on a key point. Whether or not your business has a formal ethics program in place, rest assured your employees can probably give you a surprisingly clear idea of the ethical nature of your business. Even more important, what they perceive affects how they conduct themselves both in the office and with your clients.

“I think most of us have a rudder that speaks to us,” he says. “There’s a little ticker inside all of us – put there by our parents – that lets us fundamentally know what’s right and wrong.”

I tend to agree with Hammes, but I also think that any organization acts as a strong current to that rudder. The majority of people I’ve worked for myself fortunately have had strong ethics and morals, making work a very easy place to be. Yet I’ve also worked under a leader or two who was well known within the organization for dubious ethical decisions.

And to no surprise, right down the ladder, they set the standard for all those who worked for them.

Corporate Report Wisconsin can be located on the Web at www.crwmag.com.