Allan Gilmour: “Without ethics in business, there is no success”
The Current, Winter 2002
Photo: Ford Motor Company Vice Chairman and CFO Alan Gilmour, Anne Klosterman Kennedy (’83), vice president and director of Portfolio Management at Munder Capital Management, and Gerald F. Cavanagh, S.J., Charles T. Fisher III Chair of Business Ethics and professor of Management at UDM, comment on corporate ethics during October 16 panel discussion at UDM
The ethical lapses of Enron, Arthur Anderson, WorldCom, Adelphia Communications and Tyco International, among others, have caused a crisis in consumer confidence that not only sent the stock market plummeting, but caused a general unease that continues to pervade the country.
At a recent panel discussion at UDM, Ford Motor Company Vice Chairman and Chief Financial Officer Allan Gilmour, a former UDM Board of Trustee member, offered his thoughts on rebuilding the corporate trust that has been broken so dramatically. Other panelists included Anne Klosterman Kennedy (’83), vice president and director of Portfolio Management at Munder Capital Management, and Gerald F. Cavanagh, S.J., Charles T. Fisher III Chair of Business Ethics and professor of Management at UDM.
Though he laced his remarks with humor, Gilmour’s message was very serious: “Without ethics in business, there is no success.”
Gilmour, who had previously retired from Ford after serving such roles as vice chairman, president of the Ford Automotive Group, executive vice president, International Automotive Operations and vice president, External and Personnel Affairs, rejoined the company in his current role in May 2002. He noted that business scandals are nothing new; the difference now is that so many Americans are affected through stocks, bonds, and 401K plans. The legislation enacted as a result can be considered “learning from our mistakes,” but Gilmour says, “Just having new rules and standards and checks and balances are not enough. They will not improve morals. It’s the people who have morals or not.”
“It isn’t enough to follow the law, you must follow the spirit of the law, do what’s right, and instill this into the culture of top management through training, constantly teaching ethics," Gilmour adds. "Over a period of years, it becomes imbued.”
Gilmour concluded by posing some thought-provoking ethical dilemmas, which were followed by a question and answer session: “Should one fire a shady subordinate who is very successful—or just ignore him or her? If one’s competitors are cheating—and winning–does that justify cheating? And what if one encounters reprehensible practices that are perfectly acceptable in a foreign country?”
Anne Kennedy also stressed ethics—and moral courage—in her remarks. She emphasized that everyone in our society shares responsibility if we are to move forward. First, professional investors should be responsible for completely understanding financial statements. “We allowed a blanket of obscurity to fall across Enron’s financial statement. We believed profits were going up because Enron management told us so, even though free cash flow was falling quarter after quarter.”
Second, she says, government and regulatory bodies need to clean up conflicts of interest on Wall Street.
The third and most important responsibility is that of individuals. “As individuals, we can make a difference. We need to conduct ourselves with honesty, respect, responsibility, fairness, and compassion. If we think of these as pearls, moral courage is the string holding them together.”
In Cavanagh’s estimation, three major factors contributed to the corporate meltdown: lack of oversight, the market’s obsession with earnings, and “plain old greed.”
“Precisely the people who were in charge of overseeing the system, failed. Not only did top management, auditors and analysts fail in this crisis, but business schools have also failed. “
Cavanagh says another problem with our economic system is that there is no method for measuring the impact of corporate activities on other stakeholders (the community). “Much of the rhetoric in our market system encourages greed. There’s not enough that encourages consideration for the other stakeholders, not just stockholders, but employees, customers, local community, and suppliers.”
Cavanagh asks, “How do we rebuild trust?” The ante is very high, he says. “Since the United States has the dominant socio-economic system in the world, we have to do it right.”
He believes that U.S. current foreign policy is not helping the global economic situation, but also holds that Jesuit business schools need to take the initiative. “UDM’s MBA gateway course focuses on ethics and should be required at every business school.” He also notes that in a recent issue of Business Week, 40 percent of the “Good CEOs” were from Jesuit schools.
All of the panelists agreed that unethical behavior is bad for business. As Cavanagh says, “Ethics is respect for other people. It is difficult to imagine any organization surviving without that respect.” Or as Gilmour asserts, “Do nothing you don’t want to explain on the six-o-clock news.”