From time to time I write on procurement ethics, but today I question where the business ethics have gone. In the past two weeks, we’ve seen:
- Volkswagen’s Chief Executive Martin Winterkorn resigns after it was disclosed that Volkswagen will repair up to 11 million vehicles and overhaul its namesake brand following the scandal over its rigging of emissions tests.
- Martin Shkreli, CEO of Turing Pharmaceuticals, acquired the rights to Daraprim, which was developed in the 1950s. The drug is the best treatment for a relatively rare parasitic infection. People with weakened immune systems, such as Aids patients, have come to rely on the drug, which, until recently, cost about $13.50 a dose. But when the price was raised to $750 a pill, a more than 5,000% increase, Mr. Shkreli’s brash defense of the decision has made him a pariah among patients-rights groups, industry spokespersons and politicians, making him one of the most disliked CEOs in America.
- Stewart Parnell, the former CEO of Peanut Corporation of America, was sentenced to 28 years in prison. He had a role in concealing a 2008 and 2009 salmonella outbreak that sickened more than 700 people and killed nine.
It seems that we are seeing integrity breaches in business every day. There is a code of ethics for all business that true procurement leaders have always followed. I believe this is an area that sets apart leaders from the crowd; it’s obvious that these three CEOs lacked the integrity and leadership to do the right thing.
On a personal note, I had a mentor and boss in the early 1980s who gave me some advice and coaching that set a standard for how I operate. When I made a decision in the best interest of my company, several corporate executives wanted me to compromise my ethics and give an unfair advantage to a business owned by someone with political influence. I held my ground and my mentor said “I can’t help you and you may get fired, but there are worse things than getting fired for having integrity.” He also said “Remember, you can never put a price on integrity.” These were wise words and some advice that these three executives either never received or chose to ignore when faced with the choice between profit and principles.
I must not be alone in questioning ethics; this morning’s HBR Management Tip of the Day is Know When to Speak Up About an Ethical Issue. Is it time for your firm to think about reinforcing the company ethics standards and conducting an integrity audit?
Does your reputation have a price?