Moving at the Speed of Creativity

Moving at the Speed of Creativity by Wesley Fryer

Don Cash on Business Ethics

Don Cash is Chairman Emeritus of Questar Corporation, and shared the following remarks at the TTU Ethics Day on 6 April 2006.

He become CEO at age 39, served in that capacity for 20+ years. Regards himself as a “professional board member” now. He currently serves on 5 boards. They have retired here in Lubbock, and he is now a “gentleman rancher.”

He believes the companies that operate with a strong code of ethics are and will be most successful.

Contrary to popular perceptions that all CEOs are crooks

My 3 points and a case history of an ethical public corporation.
If you are a leader of any organization, from a family to a major public company, there are 3 points you need to walk away from

1- honesty and integrity are good ethics, it is not 1 way to conduct business, it is the only way (esp for the long term)

2- good ethics in an organization (even the smallest) takes generally all the people acting together (in my case it took at least 5 years to make it work
– takes a long time to put ethics
– 1 person cannot do it, you need the help of everyone

3- even good, honest, ethical people need checks and balances to keep them honest

Good example: speeding, driving too fast
– it is a law

Let me ask you: are you an honest man/woman? Do you willingly break a law, by speeding

30 years ago I was an industrial engineer, trained as a petroleum engineer by Amoco
– little human resource training
– had big problems when I become COE of a NYSE public company
– I turned the job down the first time
– I didn’t think I was ready, I was promoted over 4 older and more experienced senior officers

Company was Mountain Fuel Supply and desperately needed to be restructured
– headquarters was in Salt Lake, were 4 different organizations
– had some problems: people using business resources for personal uses
– there were rumors floating around
– that was the lay of the land

at 39 I was relatively young, I knew for the next 20-25 years I was hopefully going to run this organizations
– I knew I needed to do the right thing, because I was going to pay for my mistakes
– many people move jobs so often they don’t have to face the consequences of their own mistakes
– public utility in any state is going to have diverse constituents
– I needed something to motivate employees so they would help the restructuring process, a mission and vision statement along with a strategy
– I needed a competitive edge, one that would last a long time

1 and only thing that would please the officers, employees, investors, public, and politicians: Honesty and integrity (good ethics)

WE completely restructured the company
– formed Questar corporation as a holding company, currently on the NYSE
– said the quest (progress and growth) of the company continues
– went to all debt holders and restructured the debt

If you have an ethical organization, you don’t need a lot of regulation
– results after we finished: drastically increased stock price of the company

Everything was on the table during restructuring except honesty and integrity
– people got tired of listening to it
– before it was fashionable, we developed a business ethics and compliance policy
– made each employee read the policy and sign they AND THEIR FELLOW EMPLOYEES did not have any violations

Ethics policy of a bank in Utah Don serves on the board of
1- be honest
2- respect others
3- avoid conflicts of interest
4- comply with laws, policies, and regulations
5- speak up

About 10 years ago, I appointed a VP for monitoring and ethics
– called people up and followed up on points people wrote down
– we setup a hotline so employees could call anonymously
– setup compensation so officers and employees were being rewarded for the same parameters
— that is very important if want people

We said officers had no more special benefits than employees, but their time was more valuable so they were paid more
– cut out first class travel, country clubs, spouse travel, company cars, special retirement benefits

Now on checks and balances
– this is VERY important
– “if you have your own way long enough, you will end up screwing yourself”

I believe that statement is true
– you have to work every day at being a person of integrity and honesty
– think about your kids watching you speeding when you are driving in the car
– ethics in the family means this: setting a good example for your family
– you are the ethical leader of your family: if you don’t practice good ethics, your children won’t either

accountants and legal resources know what is going on
– we had dual reporting chain
– you always need 2 avenues so you have a way for things to be reported

I was paid a good compliment by a former employee who said that after 5 years of having to put ethics, honesty and integrity into everything it become internalized, a source of pride
– hardest problem: was told we had a mailroom employee dealing amphetamines to other employees, and were challenged to do something about it
– I did one of the best and worst things I’ve ever done: I put a part time undercover agent working in my organization, and we found out what was going on and we fired some people
– I lost a lot of sleep over that
– that is fallout: you are going to fire some of your friends for doing the wrong thing, or your employees won’t stay behind you.

Once you know about something wrong that is going on, you have to do something about it

Officers and managers are watched very closely by the employees
– you start preaching, the preacher gets watched very closely
– employees would say: prove it by walking the talk, if you will I will

I had a bird dog, a check and balance on me, who was a lawyer
– officers and managers were no different from other employees but they were paid more

I believe this program made me and the other officers/managers better and more ethical people than we really were
– think about that a little bit
– once you start walking the talk, you can’t quit

When auditing requirements changed, we had to have some more meetings
– stocks have doubled and tripled over past years

Bad ethics is profitable only for a short period of time
– good ethics can be profitable both in the short and the long term
– it is not IF you are going to be caught– there are no secrets in a public corporation or any large organization
– it is only a matter of time till you get caught, and those repercussions today are serious: money, jail time, or both

Good ethics are the only way to go if you are a business, esp in a publicly traded company

Worldcom, Tyco, and Enron? What happened?
– we used to do a lot of work with Enron
– we didn’t understand how they were heavily leveraged
– I don’t know if those accused or guilty or not

3 things
1- they promoted an environment where new ideas, innovation and growth over good ethics
2- ignored checks and balances in their corporation: no one came forward with problems until it was too late
3- in business what we search for is respect: they lost the respect of others, including investors, so lost a multi-billion dollar company

Was in top 4 or 5 companies in the US at one time
– it all came down to bad ethics

Bad ethics: 1 little mistake, can ruin your life forever
– penalties are severe, they can stay with you forever

Bad ethics, people making a lot of money through dishonest things doesn’t pay
– there are no secrets
– eventually, it is only a matter of time till someone finds out what you did
– you still gotta pay, even if it is 30 years later

Arthur Anderson as an accounting firm is gone
– checks and balances are key
– they didn’t have real equity to support their “vehicles,” they were using company stock
– so then those went defunct and it came back on Enron’s books

Crime does not pay, maybe all you lost is reputation
– when they close your coffin, you have your reputation, your integrity, and some people believe your faith when you die

If you enjoyed this post and found it useful, subscribe to Wes’ free newsletter. Check out Wes’ video tutorial library, “Playing with Media.” Information about more ways to learn with Dr. Wesley Fryer are available on wesfryer.com/after.

On this day..

Posted

in

, , ,

by

Wesley Fryer

Tags:

My Podcasts!