The lack of ethics has become a household norm. Whether it be in the political arena from which it is blatantly absent or in business, ethical violations have become the new normal. Still how disheartening to see a business we grew up with, our kid’s happy meal place, a pillar of our community be struck by the malaise that is swirling everywhere.
The latest to fall victim to the ethics syndrome…. McDonalds, a company synonymous with American culture. McDonalds fired it’s CEO, Steve Easterbrook, after a board investigation into his relationship with an employee. Mr. Easterbrook resigned from the board as well.
McDonald’s has a company policy barring employees from relationships with direct or indirect reports.
McDonalds’ CEO since 2015, Mr. Easterbrook has been credited with turning around McDonald’s since one of its worst financial performances ever in 2015. While CEO the company’s shares nearly doubled.
According to Jonathan Maze, the editor of Restaurant Business, Mr. Easterbrook’s “been a very good CEO … He really made that organization a lot leaner, they make decisions a lot more quickly… they have gone from a company that was well behind on technology to one that is arguably at the forefront of things like artificial intelligence and delivery.”
Mr. Easterbrook may have been a “good” CEO technically, however, let’s examine ethics – without judgement. Ethics is defined as a moral philosophy or code of morals practiced by a person or group of people. Ethics is a code of conduct, a set of moral principles, a system of moral values.
And it starts at the top.
McDonald’s code of ethics says:
“Sound ethics is good business. At McDonald’s we hold ourselves and our conduct and our business to high standards of fairness, honesty and integrity, we are individually accountable and collectively responsible. We take seriously the responsibilities that come with being a leader.”
Enough said. No judgement toward Mr. Easterbrook but obviously the leaders did not take seriously the responsibilities that go with being a leader. While their standards say they take seriously the responsibilities that come with being a leader, their actions were not aligned.
Actions speak louder than words as many companies in the last several decades have learned. A written code of conduct has no value if not followed. And while Mr. Easterbrook may state an apology to employees by email, that he violated a company policy and said, “This was a mistake. Given the values of the company, I agree with the board that it is time for me to move on.”
If you dig deeper into company policy, it also appears that McDonalds has not been conducting themselves according to their code. McDonalds has been underpaying employees and violating environmental ethics for some time.
In the 1988 bestseller, The Power of Ethical Management, by Kenneth Blanchard and Norman Vincent Peale, the authors say, “everywhere we turn today there are signs of ethical deterioration. In business bright young people have made immoral millions by using insider trading information… hardly a day goes by without some public official being involved in an ethical dilemma on Capitol Hill, cheating scandals among students…” and the list they cite from goes on.
Thirty-plus years later the ethical dilemma is worse. The authors outline an Ethics Check:
- Is it legal?
- Is it balanced?
- How will it make me feel about myself?
In this powerful book one of its heroes says, “at our company we try to make managers understand that they not only have an obligation to the company to do what is right but also an obligation to those people who report to them and look tom leadership. You can make a significant influence on the people around you.”
As it was then, when this book was published in 1988, it still is today in spades. The key business issue of today is ethical management. As S.N. McDonnell, former Chair and CEO of the McDonnell Douglas Corporation said, “America will survive as a free republic only if its leaders and the majority of its people believe in and practice basic ethical values.”
McDonalds’ CEO’s apology accepted. Yet his behavior has caused damage to an American icon and tarnishes the company we think of as American as apple pie.
Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.
