News FeedLessons on Ethics from Prison – Conference Paper
This is the paper I presented at the 15th Annual International Conference Promoting Business Ethics in October 2008. I plan to update the paper at the 2009 conference and add the new responses I have received as well as information from Michael Santos from our interview. Look for more detailed posts for each question soon in the Ethics category of this blog. Thanks!
Lessons on Ethics from Prison: An Analysis of Correspondence Between Incarcerated Corporate Executives and Business Ethics Undergraduates
JANA SCHRENKLER, Saint Mary’s University of Minnesota
ABSTRACT
Business Ethics is complicated for undergraduate business students to truly understand unless they have a personal experience related to the subject. This paper explains a project that involved an exchange of letters between business undergraduate students and former corporate executives now incarcerated for ethical violations and fraudulent business practices. The project scope, results, learning objectives, and ethical themes evident in the letters are discussed and analyzed.
Introduction
Many authors, business professionals, and educators are emphasizing the need for more ethics education in business school curricula. Dean Krehmeyer argues in Business Week Online that business schools are not doing their job to educate future MBAs in the area of ethics. He states that business schools need to reject the idea of either teaching ethics as a course or integrated throughout the curriculum. Rather, business schools should embrace a curriculum that encompasses a single course in ethics, cross-curricular ethics, and ethics in the “broader school community”. It requires “strong support from the business school leadership, faculty, and students…” (Krehmeyer, 2007).
While teaching on a fixed-term contract at a mid-sized state university in the Midwest, I brought up this fact to the business department, stating my dismay at not having a standalone course in Business Ethics in the undergraduate business program. After some discussion, I learned the faculty thought the integration of business ethics throughout the program (in areas such as marketing, management and business law) was sufficient to address the ethical needs of their undergraduate business students.
I successfully lobbied the department to let me offer an elective, a survey course in Business Ethics in the spring 2008 semester. After a successful registration period in which 43 students (juniors and seniors) enrolled, I embarked on the first standalone course to be offered in the past decade in Business Ethics at this University. As I pondered how to structure the course, it never occurred to me that by March we would be learning about Business Ethics from some of the most notorious corporate criminals of the 21st century.
Beginning
After watching a few films depicting famous corporate scandals from the beginning of the decade, I found I was fielding quite a few questions from students such as, “What were they thinking?” and “How could they let it get so bad?” Of course, I did not have the answers. One can only speculate on these matters so much from the front of the room. This tied in well with our frequent discussions of why making ethical decisions can be difficult, as if you are constantly operating in gray areas rather than black and white. In fact, I often found myself repeating our class motto of Think in the Gray when the students were frustrated with the lack of concrete answers.
I began to sense the subject of business ethics was not being communicated in a way that truly impacted the students personally. In his article, Professional Ethics: The Importance of Teaching Ethics to Future Professionals, Nichols states, “students’ ethical beliefs are shaped by their personal experiences, peer pressure, family, and cultural and religious standards.” (Nichols, et al 2007). I take Nichols’ sentiment to mean that in order to truly understand business ethics, there needs to be a personal experience attached to the subject. So, in order to give my students a good understanding of how to make ethical decisions and what exactly that entailed in the business realm, I needed to reach them on a personal level. I needed them to hear about real situations first hand, to learn from those who actually made the decisions. Thus, the Corporate Criminal Project was born.
Structure
After learning Jeff Skilling, former CEO of Enron, was incarcerated in the Federal Correctional Facility in Waseca, MN (a mere two hours from the University), the students wondered if interviewing Mr. Skilling was a possibility. After inquiries to the prison about a personal interview with Mr. Skilling failed, the idea of writing a letter was decided upon by the members of the class. After discussing the unlikely reality of Mr. Skilling actually answering a letter, the class decided it would be a good idea to contact a few more former executives who were incarcerated, like Mr. Skilling, for similar charges. An assignment was crafted that involved each student doing a search for incarcerated former business executives. They were to gather the following information: name, location, address, register (inmate) number, former company and position, charges, and release date. The students gathered information on twenty-three people. I am sure more could have been found if not for our limited timeframe.
After locating the executives, the students crafted questions they would ask if they were to interview them in person. The questions ranged in quality from, “Dude, what were you thinking?” to “Didn’t you know you would go to prison?” to “How did it feel to cheat all those people?” and finally “Are you [bleeping] crazy?” Eventually, the list of over 400 questions was narrowed and revised to fifteen questions in four categories.
As their instructor, I was a little nervous about sending the questionnaire. Knowing there would be no meaningful correspondence if the questions were offensive or intrusive, I tried to guide the class on how to create questions that would help uncover the ethical component of the situation, not the legal component.
Ethical Development
1. Do you feel you had/have a good understanding of your personal core values? How did those core values guide your decisions while on the job?
2. What was the most important aspect of a career in business for you? (bottom line, wealth, challenge…) What motivated you the most while working for your company?
3. Who do you think is responsible for the ethics of a company?
Ethical Decision-Making
4. Did you have a written code of ethics at your company? If so, did you base your decisions around those codes?
5. Did you believe that your business decisions followed your particular company’s core mission, vision, and values? Explain.
6. Did you think you should have been held to a higher ethical standard, given that you were in a position of great power? Explain.
7. Do you feel your employees were equipped to recognize and resolve ethical dilemmas? Explain.
Corporate Environment
8. Please explain the corporate culture within your company during your involvement.
9. Is it possible to have a very aggressive corporate culture, yet foster an ethical environment?
Reflection/Advice/Future
10. If you could choose to redo anything, what would it be?
11. Do you think anything good came out of this?
12. What is your biggest regret?
13. Do you plan on taking on the business world once again when you are released? If so, do you think you will encounter any roadblocks getting back into the business world? Explain.
14. What advice would you give to a business student about to embark on their chosen career path?
15. How do you feel about a Business Ethics class questioning you on your ethics?
Upon completion of the questionnaire, I crafted a personal letter to each of the twenty-three executives explaining the project, asking for their participation and ensuring that we were indeed real people, not a random journalist looking for a story. To help convey the personal nature of the request, I included a small picture of the entire class, hoping that putting faces to the questions would increase the response rate.
The letters were mailed in mid-February and then we waited.
Answers
As we waited and progressed through the remainder of the semester, I sensed a growing anticipation and anxiety within the class. Comments like, “They have to answer us because it’s educational.” and “But, we sent a picture! They have to write us back!” and my favorite “Well, what else do they have to do?” are examples of the types of discussions held before class. Students discussed the likeliness of getting responses in a timely manner. They also discussed what the possible answers might include. Do you think they will tell us why they did it? Do you think they regret anything? Do you think we will get to read what was not in the press? I reminded them that many of the people on the list were probably filing appeals so we may not receive a lot of responses.
Our first response came about two weeks later from a former owner of a remodeling company in Kansas City, Brent Barber. (Side note: Mr. Barber gave permission to use his name and the content of his correspondence in a separate document after the letter was received.) Mr. Barber, former CEO of Midtown Restoration LLC, confessed to 104 federal felonies. His guilty plea covered 289 fraudulent mortgage loans totaling $19.6 million (Morris, 2006). He is incarcerated in the Big Spring Federal Correctional Institution in Big Spring, TX until 2016. According to the FBI press release, the takedown of Mr. Barber and his associates was part of “the largest nationwide enforcement operation in FBI history directed at organized groups and individuals engaged in financial institution fraud” (FBI, 2004). Mr. Barber’s nearly illegible scrawls on the eight-page questionnaire were deciphered by the students and the results were transcribed into a document that was shared on our online course management site.
More letters came from executives, but they were handwritten apologies for not being able to fully answer the class’s questions due to pending litigation. However, even though the executives did not answer the questionnaire, we were able to glean some interesting insights from the tone and themes once their letters were compared.
Finally, two more letters arrived from incarcerated executives that fully answered all fifteen questions. Both asked for their names not to be used, but the content of their correspondence was permissible to use in the academic setting. In total we received seven responses, three which were complete responses to the questionnaire in its entirety. The industries represented in our response sample include: energy, home restoration, mortgage banking, publishing, retail, and a global conglomerate. Responses arrived from Federal Correctional Institutions in Texas, Colorado, Arkansas, New York, Pennsylvania and Florida. The range of respondent charges included grand larceny, conspiracy, falsifying documents, accounting fraud, securities fraud, and mortgage fraud. Sentences ranged from 29 months to 12 years.
Themes
Before discussing the ethical themes in the letters, I feel it is interesting that all of the respondents apologized for their handwriting and many mentioned they did not realize how dependent they were on computers until being forced to correspond via handwritten letters.
The questionnaire respondents indicated they had all been raised with good values and personal moral character. Students’ impressions of the respondents were that they were of poor character, raised in unstable families with questionable moral values. In fact, many of the respondents were raised in stable families and stated they had a clear understanding of their personal core values. Our discussion of the students’ preconceived notion of “criminals” centered around “the chicken or the egg” questions. Was the person of questionable moral character before or after the incident in which they were caught? Did the organization make them unethical or were they unethical before?
Mr. Barber indicated his informal organization did not necessitate having a code of ethics, but the other two executives were employed by large corporations that had formal ethics programs. All stated they were familiar with and, in fact, tried to adhere to the values stated in the code. Further, one executive admitted, “I assumed since I wrote them I had them well mastered.”
All agreed that ethics starts at the top. The ultimate responsibility for ethics is with the owners or executive team. At the very least, the theme was communicated over and over that the executives were responsible, but overall everyone needed to also be accountable for the ethics of the company and their own personal ethics. A quote from one of the executives sums it up well, “The ‘tone at the top’ is very important and mistakes made at a high level can cascade through an organization.”
If the tone at the top is so important, how is that tone communicated throughout the organization? Many feel ethics is communicated through hiring the right people or through corporate culture. Others feel it is enough to communicate ethical expectations through a values statement or code of ethics. In fact, our respondents agreed that there should be clear expectations sent out from the executive team to all organization members in multiple ways. “… I assumed too much that others would do or think as I do and perhaps failed to make my feelings clear to everyone. Without direction everyone will choose their own path.” It seems you need to give employees a framework for making ethical decisions and a language with which to communicate about ethical issues.
One example of a company that has done just that is Lifeworks Services, Inc., a non-profit organization based in Eagan, Minnesota. Lifeworks’ mission is to serve “our community and people with disabilities as we live and work together.” (Lifeworks, 2004) On a tour of their corporate offices a few years ago, I noticed the same 5×7 sign hanging throughout their offices. I noticed it because it was everywhere – on every cube wall, desk, framed on the wall, etc. Their way of communicating ethical language was to create and communicate to everyone their version of ethical standards and behavior.
Being the cynical business professor that I am, I asked my student (an employee in the accounting department) if this mantra was really followed by all Lifeworks’ employees. She shared with me that all decisions made were basically run through these four criteria. If you could justify all four areas to your boss, you were likely to get your request granted on the spot. Everyone in the organization could recite the Values-Based Decision-Making model by heart. Lifeworks had successfully created a language of ethics and decision-making for their employees.
Assuming the employees have a common ethical language and template for decision-making, there is another issue the executives agreed upon. Executives should be held to a higher ethical standard, but there is a point where the employees should be held accountable too. Surprisingly, not one of the response letters read like an excuse. Specifically, the executives were fully aware they were ultimately responsible for what went wrong in their company. However, accountability at the lower levels was a theme. This theme was evident in the following quotes:
Several times during the time frame [in] which this was happening (being investigated for mortgage fraud) I told myself to shut down the company and stop what was happening. I was the one person that had the ability and responsibility to do that. Once a situation arose that affected [the employees] financially, they too made personal choices to violate their beliefs.
Generally yes – [executives should be held accountable], although not so much as to let our lower levels ‘off the hook’ for a high standard as well.
I believe I was held to a [higher] standard incorrectly and alone.
While I was sifting through the 400-plus questions submitted by my class for the questionnaire, one question stood out above the rest. Is it possible to have a very aggressive corporate culture, yet foster an ethical environment? A common thread throughout all of the respondent’s letters was the high level of competition in both the corporate and industrial environments. Students connected with this question in a way I would not have expected. The majority of the students would be graduating at the end of the semester. They had high hopes and ideals for their first foray into the professional job market. In class discussions, often they would argue that competition does not bring out the worst in people. Rather, it drives sales and forward-thinking behavior within organizations. They failed to see that it could also be a company’s downfall if not properly managed. Our respondents treaded carefully in their answers to this question.
I think it is a very fine line. If [compensation] is not very carefully constructed, I believe you can lose control of a very aggressive culture.
Yes, but it is more difficult. I have found that the more aggressive employees lived in the grey areas and they dipped to the dark side easier.
Yes, but it needs to be set out from the top from the start and maintained. No plant will grow without water, so too ethics must be valued.
It seemed as though they recognized the need for an aggressive and competitive culture, yet their experience led them to realize it can quickly consume the organization and impact ethical decision-making. Let’s face it, competition drives our economy. However, how does an executive team balance both the drive to win and making ethically responsible decisions?
Following up on the prior question of aggressive culture versus ethical decision-making, the executives had contrasting opinions on the question that asked if their employees were equipped to recognize and resolve ethical dilemmas. Similar to the ethical language discussion a few paragraphs back, the executives opinions differed in that some felt the open management style (open door policies and such) just was not enough to guide employees through difficult decisions. However, another stated that it seemed that once their ethics were tested, the employees compromised their values for personal gain. And yet another, Mr. Barber, blamed the clients his employees were working with (banks, lenders, etc) because as he saw it, the lenders’ ideals were “all a bit lax”. Only one executive offered a solution in hindsight, “We probably could have developed some training, led by senior management, to reinforce our values and to try to influence our culture. “
Learning Outcomes
What did the students learn from this experience? The students asked for advice upon entering the business world from all of the executives. You can tell from the advice that some are still a little bitter and yet others have taken a more reflective approach.
You only have one life to live and your reputation can never be erased.
Look [at] how you live your life and the issues you have. These issues will occur in business also. The hard choices will generally get you where you set your goal. Never take an easy solution if you know it’s wrong. Things will always work out if you do the right thing.
Always stay on a path that allows you to be learning as much as possible. One of your most important assets is your capabilities as you can put yourself in an environment where you are learning and enhancing them or you will be stagnant and this asset will be depreciating. Second, conduct yourself with the highest degree of integrity possible. Your reputation is a binary attribute – it is either an asset or liability. Understand that your integrity is at risk with every memo you write, e-mail you send (or, in fact receive) or maybe you leave on phone mail. If ever viewed at a later date, such communication can be misinterpreted or misunderstood so beware of unintended nuance. As Arthur Andersen used to say – ‘think straight, talk straight’.
An overwhelming theme was the honesty and graciousness with which the former executives shared their thoughts and feelings about ethics. They were candid in their responses, which helped the students identify with them on a personal level. For example, when asked how the executives felt about a business ethics class questioning them on their personal ethics, the responses were frank and sincere.
Mixed feelings. Obviously people that do not know me probably think I have been unethical in the past. That is not a good feeling; especially for someone who believes in his integrity. However, I would like to think that one day my experiences can help future business people learn and that businesses will be better for me sharing my thoughts. So, in that sense, I am pleased to share some with you.
I wish I could flood the mountain tops and yell to everyone [about ethics] whether they listened or not. Do not make the needless mistakes I have made.
I know the position I have put myself in so I don’t have issues with it. I actually am surprised the questions weren’t more difficult and personal. I am not and would not be afraid to answer any other questions you or anyone else put before me. I hope you find [some] value in my answers.
As a business instructor, I struggle with how to communicate both the personal and subjective nature of ethics to my students. How can I make them realize that this is not just a set of theories – utilitarian, deontological, justice, etc? How can I get across to them that this is a very real, very common occurrence on the job? My goal with this project was for the students to realize that they may be put in a situation where they will have to choose between personal gain and ethical responsibility, just like the employees and executives who participated in this project. I feel this was accomplished to a degree that was reasonable in the time frame allowed and with the information obtained from the letters.
My overall hope is that my students came away with a greater appreciation for ethical decision-making and the sacrifices it may take to stay true to your personal morals and values in the face of competition and the drive to succeed.
The final lesson on ethics from prison is in the form of three great quotes from our respondents. All three quotes echo the one thing I wanted my students to learn from our time together in Business Ethics – no matter how strong you think your values and morals are, they can become compromised very quickly unless you are vigilant in your awareness of ethics both on the personal and corporate levels.
We all know right from wrong, it is a question of how much money, greed [and] desperation will it take for you to do what you know is wrong.
Once you take the first step it starts a process that can find you in my situation.
It is easier to move that line ever so slightly daily until you don’t realize how far off course you really have wandered.
References
FBI Announces Operation Continued Action Targeting Financial Institution Fraud. (2004) Press Release. Retrieved from www.fbi.gov/pressrel/pressrel04/contaction091704 on August 12, 2008.
Krehmeyer, D. (2007) Teaching Business Ethics: A Critical Need. Business Week Online. P4.
Nichols, N. (2007) Professional Ethics: The Importance of teaching ethics to future professionals. Professional Safety. P37-41
Values-Based Decision-Making. Lifeworks Services, Inc. 2004.
Jana Schrenkler is an Assistant Professor of Business at Saint Mary’s University of Minnesota in Winona, MN. She can be reached via email at jschrenk@smumn.edu.
[1] Used with permission from Lifeworks Services, Inc. www.lifeworks.org
