Ethics In The Gases & Welding Industry

Does a Tough Economy make it harder to do the right thing?

Maybe you’ve seen these situations: A salesperson low-balls a price, knowing the customer’s needs won’t be met and they’ll have to return for more. A customer asks for a second (read fictitious) invoice to pad an account or make reports look better. Another customer asks that a distributor falsify paperwork to show the product was shipped to a branch in a state that won’t levy sales tax. Those corners get cut in the business world all the time, right?

Well, no. But some gases and welding distributors have faced these dubious scenarios and quickly avoided them, realizing an easy dollar isn’t worth a tarnished image. As Warren Buffett said: “If you lose money for the firm, I will be understanding. If you lose reputation for the firm, I will be ruthless.” Temptations arise each day, but most people can turn to the sense of right and wrong hardwired into them during their youth and refined through the years.

Importance of Upbringing
“A lot of it comes from upbringing and the influence of family and authorities, or the lack of influence of family and particular authorities,” says Patricia Harned, managing director of programs for the non-partisan Ethics Resource Center in Washington, D.C., which works to inspire institutions to act ethically. “People do continue to develop a sense of morality all throughout their lives and it grows and changes as they encounter new experiences and take on different social obligations. All of our lives, we are developing a sense of morality, refining it and applying it.”

And sometimes, of course, people make the wrong choice. Tyco. Adelphia. Enron. The stories of reckless decisions made when no one was looking became so abundant, President Bush called for a new ethic of responsibility in America’s corporate community. “In the business world, there are so many pressures to profitability that certain practices, which ought to be questioned, aren’t,” Harned says. “Vendors offering gifts to purchasing agents, for example, has become accepted, or at least considered far above the sin of, say, doctoring financial statements offered to the SEC. But the honest road can be the longer road, and companies should question any practice that betrays the image of integrity they’ve set for themselves.”

Gary Kennedy

Gary Kennedy, president of Red Ball Oxygen (Shreveport, LA), turns to rules he learned long ago to steer his ethical behavior. “You face many of the same situations in business and in life. I’ve found it’s good business practice to follow the 10 Commandments. Don’t lie, cheat or steal, and you’ll develop a straightforward relationship,” he says. If a situation did arise, Kennedy says, “We trust our employees to do the right thing, and we will support their decision-making if they are doing what they think is right.” For the most part, though, Kennedy doesn’t see ethical dilemmas come up too often. “We’re part of a small industry,” he says, “and the people who misbehave don’t last very long.”

Why Do People Cheat?
Distributors acknowledge that sometimes losing an order is not the worst thing in the world, but honesty and integrity are more important than any dollar amount or any order that can be brought in. There are many theories as to why people cheat, but the distributors interviewed for this story had only one adamant and unanimous answer: “We won’t do business that way.”

Lloyd Robinson

Lloyd Robinson, president of Awisco New York Corp. (Maspeth, NY), knows that it is more important to be known in the marketplace as a company that behaves ethically, rather than taking on a few dollars through questionable business practices. “We don’t mind losing that kind of business,” he says. “We just tell people that’s not what we do.” Robinson says that his company simply steers clear of any situations that can lead to dishonesty, but he also knows it isn’t easy. “There’s certainly always pressure to do things, but we avoid those kinds of situations,” he says.

At Cameron Welding Supply (Stanton, CA), a sense of business ethics filters throughout the company, from hiring through sales. Joseph Churilla, president, says, “We don’t hire salespeople based on the size of their customer base. We hire them for their skills. We don’t take customers from other people.” Not only is this unethical, he notes, but customers who switch allegiances so easily are not likely to be the type of long-term customers he’s looking for anyway.

Joseph Churilla

Where to Draw the Line?
Ethical issues also come up in sales, Churilla says. “We were recently dealing with one customer and had a bid on their project. They kept telling us we had the order, which was a pretty high dollar deal. Two weeks later, the customer came back and told us someone else came through with a bid that was $5,000 less. I told our guys, ‘Let’s just walk.’”

Cameron Welding Supply’s sales manager, Dominic Rossi, also shared some experiences. “There are always situations where people try to buy business by offering tickets to ball games, dinners, trips or whatever. A lot of companies have restricted that sort of behavior in recent years, but it still exists,” Rossi explains.

He also tells the story of some customers who try to avoid paying sales tax. “We explain to them what the laws are. We’re not the tax police. We’re obligated to sell with sales tax unless they provide a card. But we do advise them of what we know the laws are.”

However, Churilla admits that business ethics are not necessarily cut-and-dried. “There’s always going to be some fuzzy areas. Sometimes you’re the incumbent and you have a competitive bid going on where you have the last look. If you have an inside line in that respect, you’ve earned that position. But if you’re buying business or going backdoor, that’s unethical.”

How Can You Avoid It?
At National Welders Supply Company (Charlotte, NC), employees are trained in standard business practices, including ethics. “We don’t approve of unethical behavior, we don’t appreciate it when someone else does it to us, so we definitely don’t want to participate in it ourselves,” says Richard Lake, president and CEO. Lake believes the best way to steer clear of such situations is to try to be proactive about the problem. “We do a lot of policing, and if we see something a little amiss, we check to make sure something unethical isn’t taking place.”

Richard Lake

Lake, though, believes that for the most part, businesses are better than they used to be at controlling questionable behavior. “The government intervention has had an effect, without a doubt. It used to be you could afford not to look every direction every time, but now when you have to sign off on something, you better make sure it’s right,” he says.

Choosing Right or Right
Business owners can struggle with ethical dilemmas when two or three options seem like the right thing to do. In his book, Defining Moments: Choosing Between Right and Right, author Joseph L. Badaracco tells the story of Rebecca Dennett, a bank manager who cannot tell an employee, desperate for information about her financial future, that the branch would be closing; Dennett has promised a higher-up that she will breathe nothing of the news since important regulatory paperwork had not been filed. She wants to be true to a friend, and true to her boss. She can’t do both.

“Good managers often struggle with some version of this predicament,” Badaracco writes. “They want to live up to their personal standards and values, they have to meet the expectations of their customers and shareholders—often in the face of relentless profit pressures, and their own jobs are the foundation of their families’ security.”

“Most of the time, managers find ways to juggle all these responsibilities and aspirations,” he writes. “In some cases, however, they cannot.”

Going for the Gold by the Golden Rule
The Small Business Administration acknowledges that business ethics are a hot topic these days. “With everything from insider trading to employee theft on the rise, it is no wonder that businesses are beginning to focus on the impact of ethical leadership. But along with this new focus comes a lot of gray area, and many times, managers are forced to decide on issues where there are arguments on both sides—a problem that makes ethical decision-making very difficult.”

Norman Vincent Peale and Kenneth Blanchard, in their book The Power of Ethical Management, list three questions to ask yourself whenever faced with an ethical dilemma in your business:

How Honest Are You?
Take the Integrity Self-Test. The questions address both personal and work situations and are a good way to remind employees of your ethics policy.

Is it legal? In other words, will you be violating any criminal laws, civil laws or company policies by engaging in this activity?
Is it balanced? Is it fair to all parties concerned, both in the short term as well as the long term? Is this a win-win situation for those directly as well as indirectly involved?
Is it right? Most of us know the difference between right and wrong, but when push comes to shove, how does this decision make you feel about yourself? Are you proud of yourself for making this decision? Would you like others to know you made the decision you did?

Most of the time when dealing with “gray decisions,” just one of these questions is not enough. But by taking the time to reflect on all three, you will oftentimes find that the answer becomes very clear.

Developing an Ethics Code of Conduct for Your Company

Companies are looking hard at ethics policies for their businesses, or at least a discussion on the importance of the qualities that make up an ethical relationship with customers, colleagues and supplier partners. The U.S. Small Business Administration offers advice on developing an ethics policy for your company and says these five fundamental principles can be your guide:

Purpose. A purpose combines both your vision as well as the values you would like to see upheld in your business. It comes from the top and outlines specifically what is considered acceptable as well as unacceptable in terms of conduct in your business.
Pride. Pride builds dignity and self-respect. If employees are proud of where they work and what they are doing, they are much more apt to act in an ethical manner.
Patience. Since you must focus on long-term versus short-term results, you must develop a certain degree of patience. Without it, you will become too frustrated and will be more tempted to choose unethical alternatives.
Persistence. Persistence means standing by your word. It means being committed. If you are not committed to the ethics you have outlined, then they become worthless. Stand by your word.
Perspective. In a world where there is never enough time to do everything you need or want to do, it is often difficult to maintain perspective. However, stopping and reflecting on where your business is headed, why you are headed that way, and how you are going to get there allows you to make the best decisions both in the short-term as well as the long-term.

You can read the Business Codes of Conduct developed at companies like BellSouth, Boeing, Buchman Laboratories, Lockheed Martin, Pitney Bowes, Tom’s of Maine and others from a link at the E-Center for Business Ethics.

Recent Books on Business Ethics
There’s No Such Thing As “Business” Ethics: There’s Only One Rule For Making Decisions by John C. Maxwell, Warner Books, 2003. Ethical lapses in corporate America are well-documented, but what lessons can be drawn from them? How does one judge what ethical behavior is? Does one ethical standard apply to all situations? Leadership expert John C. Maxwell thinks he has the answers. In this book he explains how integrity can be maintained using the Golden Rule, regardless of an individual’s creed, culture or circumstances.

Harvard Business Review on Corporate Ethics , edited by Joseph L. Badaracco, Harvard Business School Publishing, 2003. A highly readable collection of articles by leaders in the business ethics field designed to help business people recognize and respond to ethical dilemmas. At the heart of the collection is the link between good ethics and good business.

Business Ethics: Concepts and Cases by Manuel G. Velasquez, Pearson, 2001. Ethical dilemmas and the environments that create them are examined, and tools are offered to help resolve these problems. Clearly written with many examples, statistics and real-world studies, such as the Microsoft antitrust case and cigarette company lawsuits.

Recent Books on Corporate Scandals
24 Days: How Two Wall Street Journal Reporters Uncovered the Lies that Destroyed Faith in Corporate America by Rebecca Smith and John R. Emshwiller, HarperCollins, 2003. A classic David-versus-Goliath tale in the style of All the President’s Men that follows two investigative reporters from a simple story about the resignation of Enron CEO Jeff Skilling to the downfall of the worldwide $20 billion company. The narrative is as fast-paced as Enron’s collapse.

Final Accounting: Ambition, Greed and the Fall of Arthur Andersen by Barbara Ley Toffler and Jennifer Reingold, Broadway Books, 2003. An Arthur Andersen insider and former independent ethics consultant explains how arrogance, greed and an erosion of values brought down a company once described as the accounting profession’s conscience. Reingold explains what went wrong at Andersen and traces the roots of its ethical missteps. A book with ramifications for both company presidents and investors.

Disconnected: Deceit and Betrayal at WorldCom by Lynne W. Jeter, John Wiley & Sons, 2003. The primary WorldCom reporter for the Mississippi Business Journal traces the rise and fall of a corporate giant that began with the confession, in 2002, of a $7 billion accounting error. Central to the story is CEO Bernie Ebbers, who started out as a motel owner and who was at the helm when mistakes and unethical behavior finally sank the company. A gripping tale by an industry insider.

Pigs at the Trough: How Corporate Greed and Political Corruption are Undermining America by Arianna Huffington, Crown, 2003. Many of the stories of dishonesty, greed and corruption widely reported over the past few years are brought together in this book. Huffington pulls no punches. Her language, beginning with the book title, will amuse some and offend others, but her indictment of corporate and government excess is highly readable.