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History repeats itself

So to believe that it hasn’t been there, isn’t there today and won’t be there in the future is not realistic. But company business is global, it’s more complex, it’s faster moving. Big companies have thousands of employees. The larger the company, the more you have to have rules and regulations to provide guidelines. Otherwise everybody is defining what’s right and wrong and there are going to be people who define it outside the boundaries of what’s comfortable. If you have a small company you might know everybody’s strengths and weaknesses and you know them to be good, honest people. When you have 60,000 people, there are going to be some who aren’t. You have to have guidelines and rules. You can’t just leave it up to vagaries of chance.

Is business capable of self-regulation?
Personally I believe that self-regulation is the best model, but unfortunately we misbehave and we get regulated when we misbehave. When the regulators respond to the bad actors, they come in and paint the whole business community with one broad brush. The bad actors are likely to not pay that much attention to the rules. The good companies will implement the rules and follow them. Does it really solve the underlying problem? I’m not sure it does. Or does it just add more regulation and more controls on the people who were already following the rules?

What if rule-breaking is not overtly malicious, but is advanced as just a ‘brilliant’ new way to represent the numbers?
There are no black and white answers to all the complex business strategies and models out there, so to believe you can write rules to perfectly define the answer in every situation is not realistic. I still think free enterprise is the best model. It spawns creativity and aggressiveness, which means occasionally people are going to do bad things. But the alternative is to shut all that down, which is probably not going to stop a bad actor anyway. It’s the ‘minus’ in the system. The ‘plus’ is that you have an environment that spawns new products, new services, new business, new commerce. With that come challenges where sometimes people break the rules. But I wouldn’t want to give up all the positives by shutting all that down and having a highly regulated, controlled marketplace.

Have businesses simply become too large?
As long as human beings have been on the globe we seem to figure out ways not to be very nice to each other. The fundamental issue is that individual, community, corporate, and political levels of society pretty much mirror societal challenges right back at each other. Companies are made up of human beings. They’re not inanimate objects, they’re not mechanical devices. It’s a bunch of people and they do mirror back all the plusses and minuses of societal issues on everything from discrimination to people breaking every kind of law. Most of the people who do these things go to work somewhere. They’re not all unemployed. They come from every walk of life.

We went through the ‘90s, which were labeled a “period of excess,” and “the perfect storm.” We became enamored of the dot-com world — if you put dot-com at the end of a company name it was guaranteed to go up in value. People started walking away from the fundamentals and started believing all the hype. They expected high returns year after year after year. People lost sight of the fact that what can go up can go down. The whole system got caught up in it—individual investors, companies, the government, the investment community, bankers, lawyers, the media, they all stopped paying attention to the basic fundamentals of good business—such as, does the enterprise make any money?

So everybody got swept up and that created excesses. People were worth a lot of money on paper. And it crashed. The analogy is, when times are good, you can’t see the rocks in the bottom of the river, but when the water level goes down all the rocks are there to bump into. When the bottom fell out there were a lot of people hiding behind that growth curve. Did they have real sustaining value? Well, we found out the ones that didn’t. When things come down it’s back to survival of the fittest and free marketplace, and those that weren’t real and weren’t sustainable do not make it through those cycles.

I mean, I could be in charge of a lot of people…they don’t have any choice but to show up if I call a meeting (laughs). But would they show up if they didn’t have to? A leader is someone people are willing to follow because of who they are and what they represent. It applies at the family unit level, in a department of 10 workers, or running a company of 70,000 people. There is a lot of heroic leadership well below the marquee positions in large companies, large countries or large globals.

An ethics officer alone can’t make a company ethical. That’s like saying a safety officer will make a company safe. It can’t be one person. Everybody in the company owns the ethic of the company. It’s the collective behavior of the group. But an ethics officer can provide guidance and policy and training and awareness. People are pretty astute. They pay attention and respond to the environment they’re in. If they do bad things and nothing happens to them, they’ll probably keep doing it. People look for signals. If the company says, ‘I’m going to look the other way,’ they pick up on that. If the company says, ‘we’re not going to tolerate that,’ they pick up on that, too. 

Should an ethics officer be involved in decisions at every level?
Literally, no. It’s impossible. You’re hopefully providing guidance and policies and expectations that permeate from the top down through the organization. But can the ethics office be in the boardroom for every decision, or at every cabinet meeting, in every critical decision making meeting? No, because then why do you need all those other people? You could just ask the ethics officer (laughs). It’s not possible from a literal sense because there are thousands of decisions that are made every day of the week.

The fact is, most companies had very credible ethics programs before WorldCom  happened, and continued to have them after. Have they improved them? Yes, I would say that’s true. Is some of it a lot of bureaucratic window dressing and noise? There’s a certain amount of that. Because with regulations come things you just do because you have to, as opposed to it making good sense. But most companies, particularly most large companies, had ethics programs, they had ethics officers, they had ethics policies. They strive every day to do the right thing and not break the law.

It’s not like most companies were starting from ground zero when the new rules came out. It was more like adopting and adapting as opposed to creating something that didn’t exist. So that may be a perception issue, and there’s no question the paper’s full of stuff every day, but it’s still a small number of companies relative to the universe of businesses that are out there. The issue has been overstated to a degree.

We all live inside the same system. We have a public investment community. We all participate in these public companies, so when there are a few bad apples in the barrel it tends to spoil the whole barrel for a while. And, yes, we’ve hampered the integrity of the system. We’ve got an investment community that’s skeptical and why shouldn’t it be? So we have to do things to help restore the credibility of the system, we can’t just say, ‘well, it was this other guy that cast a shadow over the whole thing.’ We all have to step up and help restore the credibility of the whole process.

That’s the price you pay if you want free enterprise—you have to live with the vagaries of it. When the bad actor is out there, there are repercussions on you whether you did anything wrong or not. You can sit around and whine about it or you can suck it up and help restore the confidence in the system. Sometimes that means more rules and spending money on following procedures that to you, as a company, probably don’t really improve the overall control environment. But if it helps the investment community feel more comfortable, then is it a good investment? It probably is.

It’s many years after the crash. What does it mean that we’re still living in the effect?
It’s a ripple effect. You drop the stone in the pond five years ago with an Enron, and the trials are just happening now. That restarts all those memories and the people that were harmed by that. These things don’t come to fruition in short periods. They take years to resolve. Yes, it does seem like a long time, but the reality is that it takes from then to now to get a trial, and then there’s another whole set of headlines around an issue that happened five years ago. That’s what we’re going through right now—the backwash of all those events is starting to show up again. But all the rules were put in place and things have changed during that whole time in response to that. It’s a little bit of a time-lapse environment.

How important is it that people get a sense of justice being done?
My sense is that people want it. With the kind of verdicts that are coming in and the kind of sentences being put on some of these people, we’re saying that white-collar crime is no laughing matter. I think the views have shifted. We went from the 1990s when people weren’t paying a lot of attention and tolerating a lot of things, to now they’re wanting people to pay for what they did. 

Did we consciously avoid paying attention? That is, weren’t we all perfectly happy to ignore the signs when the markets were at record highs?
That’s my whole point. The attitudes have shifted—and the shifted attitudes are looking back on history and saying, ‘That was bad.’ But at the time when people were doing it, no one was complaining. It’s a little bit of revisionist history, you know; we’re turning around and looking backwards and saying ‘oh, those were all bad things’ because now we can see the outcome of those actions. It’s pretty easy to judge when you have the answers, when you can see the outcome of it all.

There was an awful lot of blame to be spread around in the ‘90s, not just on a couple CEO’s…the whole world kind of got swept up into this thing. Everybody was pretty happy. The greed factor was there. They were thinking, ‘I don’t have to pay that much attention to the fundamentals of the company, all I have to do is put the money in the market because it’s gonna’ go up.’ You got a whole generation of people that all they saw was another bull market.

That’s not an excuse for the bad things and the people who preyed on it or took advantage. I’m not trying to justify their actions. I’m just saying there’s more to it. The whole system was tolerating something in 2000 that it wouldn’t tolerate today, so that you’re using today’s values and looking back at them and saying those were all bad things. In that moment in time they weren’t being judged as bad things.

We can hope we’ve all learned something from it and the next time something such as this comes up we are better at recognizing signals and avoiding bad behaviors.

In a sad way, that’s probably not true (laughs). We learn from our mistakes for a while and then we forget. Another generation comes along, or some new variable…you know, we had the dot-com era…what era will there be 15 years from now? I don’t know what it’ll be but a new something will get us out of phase.

Like the perfect storm?
Well, we had the whole Internet explosion of information and access to information. This was a whole new economy that was emerging out of the birth of the Internet. People could only see upsides, they couldn’t see the downsides of it. Well, there’ll be some new event. I don’t know what it is. In terms of technology we’re creating things faster than we know what the repercussions or implications of them are. Will it be 10 years from now? I mean, we’ll remember for a while—people don’t forget overnight. None of us lived through the Depression, but it sure had an impact on that whole generation for a while, right? Well, we’ll remember the dot-com bubble burst for quite a while, but will our kids? Or the next generation? They’ll experience some new wave of something that will cause them the same trouble. The point is, we do need to reflect and learn by our mistakes. But we shouldn’t be so naïve as to believe that it won’t happen again. We’re more sensitized to it, and maybe we won’t respond to the same situation again the same way, but something new will probably come along to upset the apple cart.

What direct connections can you draw from your experience at UNI to your achievements in work and life?
Probably the biggest impact on my work and my life is that Joy and I got married. We’ve been partners in this since we were seniors in college, so we’ve taken this journey together. I can’t imagine what it would have been like if it had gone some other way. I think UNI was a place where we all hit our strides at different times, and as far as gaining confidence in my abilities I think it happened more in college than in high school. I was a better college student than a high school student (laughs). I was more comfortable in the college learning environment than in high school. UNI provided me an environment to become confident in my abilities and I left here wanting to be a CPA, and believed I could be. And I believed that I could go anywhere I wanted to. Joy and I went to Chicago. Very few people, particularly in the ‘70s, left here and went to Chicago.  So, we gained enough confidence to say the limits weren’t just local. We picked up and moved to Chicago and started careers together.

Would either one of us by ourselves gone to Chicago? I’m not sure, but together we could. But again, I believe we left here saying, ‘why not?’ UNI opened us up to opportunity that, had we not gone to college, we may not have seen or thought was attainable. It was a springboard, a catalyst, to say, ‘let’s go try…let’s go outside our comfort zone.’  

What should today’s students pay attention to as they enter the workforce?
It’s a given that they need to be extremely proficient in all the technology, that they’re comfortable in a computerized environment. That certainly wasn’t the case a couple of decades ago.

To be a well-rounded business person or person in general has always been important, but it’s never been as important as it is today. The reality is that getting along with others and being an effective leader are key differentiators that can set you apart from other people who learned the same things in school. How to work interactively and work as a team, a strong work ethic—all of those are important attributes.

People want to know that you can be trusted, that you have integrity, that you’ll live up to your commitments and that you’re not afraid to challenge the status quo.

What kind of environment should they look for in a workplace?
You’ve got to feel comfortable that you can speak up when you feel something’s wrong.

Maintained by the UNI Alumni Association
Last Modified: August 2, 2006