Tag Archives: Beverly Kracher

Vets in Business

September 18, 2018 by

Whenever I think about the veterans I know who have started businesses after leaving the military, I reflect on the leadership qualities they learned and bring with them to the workplace. Honesty, responsibility, respect—yes, these are important values. But the best quality of them all, the one that uplifts and inspires me the most, is their extreme sense of honor. 

Having a sense of honor feels like an ancient thing, a deep and noble thing. When life is full of extreme trials and devastations, honorable people rise above the rest and stay focused on what is excellent. Others might give up or give in, succumb to rationalizations and workarounds, but those with a sense of honor have a strong appreciation of the good and the right, and they intentionally choose to live by their moral principles.

Notice, then, that the key to honor is as much about resolve and willpower as it is about having specific moral principles front of mind. Honor is an action word. Without consistent, calm, clear follow-through, a sense of honor is hollow.

When I visualize an honorable person, I think of an archer, focused on a bullseye, bow pulled taut
with an arrow ready for release. Years of dedication and practice enable the archer to remain cool and composed, shooting the arrow straight and true. Yes, for me, a sense of honor is acquired over time and through experience. 

These days, I think I have a pretty good ability to pick out businesspeople who are, or have been, in the military. I pick up on their sense of honor. When I recently met Richard Messina, owner of Play It Again Sports, his demeanor and description of how and why he runs his business exemplified his sense of honor. He could, so easily, buy used sports equipment for pennies for what they are worth and resell them for much more than they are worth. But his sense of honor directs him. He sees himself and his business as a part of the community and, so, unfair business practices are not acceptable. Rich was in the Air Force for 17 years. His aim is straight and true. 

To Rich and all Omaha vets: I admire your sense of honor and, in this, I want to be just like you.


This column was printed in the October/November 2018 edition of B2B. To receive the magazine, click here to subscribe.

Beverly Kracher, Ph.D., is the executive director of the Business Ethics Alliance and the Daugherty Chair in Business Ethics and Society at Creighton University.

New Business and Marketing Ethics

January 19, 2018 by
Photography by Bill Sitzmann

Owners of new businesses have myriad ethical problems similar to the problems in mature businesses. The difference is that new business owners don’t have years of experience to help them more easily make sound decisions. But practice and a good process can lead to long term, honorable business growth. Case in point:

Dear Ethics Adviser,

I’m passionate about making life easier for folks. I’ve started a concierge service I sell to businesses that they, in turn, provide to their employees. I’ve been able to get a few accounts, but I’m not growing as fast as I’d like. Part of my problem is not knowing how to price my service. I think I’m overcharging. It’s not as if I can ask my competitors what they charge.

A colleague of mine recommended a strategy. He said to ask a friend who does procurement at a local firm to put out a request for proposals (RFP) for concierge service. The friend wouldn’t really want the service, mind you, but would put out the RPF simply to collect bids from companies and then tell me what they charge. This way, I get the best information about the market and won’t overprice my service. Would you recommend this strategy?

Dear Passionate,

While the strategy is practical and can yield fast results, it is not ethical and should not be used. Ethical decision making requires that you think far, wide, and high about your options.

In this case, when you think far, about consequences for all, you notice that competitors would anticipate that they could get business from their work. They would use valuable time completing your fake RFP that they could instead use on live prospects. You are creating harm. Would you want someone to do this to you?

When you think wide, you recognize all of the duties and obligations you have to different people. A fundamental duty is to try to tell the truth. In this case, you are being deceptive in order to make life easier for yourself. This is wrong.

When you think high, you ask yourself, “What kind of person do I want to be? Would my mom be proud if she knew about my action?” The moms that teach us to be strong and true would not approve of this way of finding pricing information. It’s a short cut, and not noble.

So when you stop to think far, wide, and high, you see that this pricing strategy is wrong.

What can you do instead, Passionate?

Rather than seek a fast solution, get your mind around the fact that business wisdom comes from the school of hard knocks and it can’t be shortchanged. Experiment; try one solution, then another; succeed sometimes; fail others. Engage with business leaders you truly admire to get advice. Keep your values front of mind, and profit has a great chance of following.

Beverly Kracher, Ph.D., is the executive director of the Business Ethics Alliance and the Daugherty Chair in Business Ethics and Society at Creighton University.

This column was printed in the February/March 2018 edition of B2B.

Ethics

May 16, 2017 by

Years ago, my colleague Butch Ethington showed me a graphic he designed when he was the ethics officer and ombudsman at Union Pacific Railroad. I still use this graphic in my Creighton classes and the department uses it in our Business Ethics Alliance programs.

It is a pyramid. At the bottom are all the rank-and-file employees, the heart and soul of business. Their No.1 ethical issue, Butch says, is fairness. “She got more time off.” “He was given the opportunity for travel.” “She got to work from home.”

In the middle of the pyramid are the managers and directors. In between the top dogs and rank and file employees, managers and directors have tough roles. Their No. 1 ethical issue is accurate reporting. “How do I make my boss happy about the numbers?” “How do I showcase my subordinates?”

At the top of the pyramid are the executives and board members of the organization. They spend a great amount of time interfacing with government, the public, and all stakeholders. Their No. 1 ethical issue is conflict of interest.

Of course, conflicts of interest can occur at any level of an organization. Think about the conflicts that arise for salespeople, or the ones that occur in procurement. Executives have other ethical issues, for example, telling the truth or community responsibilities. Let’s focus on executives and board members and their conflicts of interest.

Three key questions arise. What is a conflict of interest? Why is it so hard to recognize our own conflicts of interest? What can be implemented to reduce conflicts of interest?

As for the first question, we all know that a conflict of interest can arise when someone is responsible for serving competing interests. But this is not, in and of itself, unethical. It is what a person does about the competing interests that matter. Classic examples of conflicts of interest focus on financial interests, for example, an executive who shares confidential information, thereby decreasing his firm’s assets and increasing his own. But a more nuanced definition of conflict of interest includes multi-dimensions and is not always about making more money. For example, what about a board member who provides a building to the firm at reduced rent? In this case, she provides a benefit because of her interest. Is this a conflict that is unethical?

It has been said that half of the battle in ethics is being aware that there is an ethical situation in front of you. Why is it so hard to see one’s conflicts of interest? Behavioral ethicists shine a light on this second question. We have psychological dispositions to think or act in certain ways, due to chemistry or socialization, which are unnoticed or disbelieved. Deeply entrenched and habitual dispositions can be healthy, like being confident. But confidence can become extreme and turn into a bias. Overconfidence bias can block one’s perception of a conflict of interest and when this happens we say a person has a psychological blindspot.

Overconfidence bias can be heard when an executive says, “This is not a problem. If anyone can handle it, I can.” But no one is immune to psychological blindspots and unethical conflicts of interest. No one. The best we can do is recognize our human nature and develop strategies to overcome our extremes. Which takes us to question three.

What can we do to reduce conflicts of interest? At the policy level, it is helpful to have executives and board members sign conflict of interest statements. But make sure the documents are multidimensional, addressing possible financial, as well as non-financial, conflicts. Most conflict of interest statements do not. Second, we can learn from something Bruce Grewcock, CEO of Kiewit, once told me. He says that the company has leaders who are willing to speak up and point out to him when he needs to examine a situation again. He’s expressing the old adage, “surround yourself with good people.” When we do this, we have the best chance of recognizing our overconfidence and reducing the chance that we will act inappropriately and wreak havoc on our world.

Beverly Kracher, Ph.D., is the executive director of Business Ethics Alliance, and the Daugherty Chair in Business Ethics & Society at Creighton University.

 

 

 

 

 

 

 

 

 

 

 

This article was printed in the Spring 2017 edition of B2B.

 

Marketing Ethics

April 17, 2014 by

When Jim moved his business in the fall of 2010 from Lincoln to Omaha, he encountered a pricing problem. The cost of his services in Lincoln didn’t suit the Omaha market.

At least that was one explanation for why Jim wasn’t getting the accounts he had planned. How could Jim determine the market price for his services before he lost too many sales and crippled his business?

A colleague of Jim’s recommended a strategy: Have two or three friends who work in Omaha businesses call Jim’s competitors. Ask them to submit proposals for their services. Once the friends acquire the proposals, they tell the competitors “thank you” and inform them that they didn’t get the bid.  In this way, the friends, who didn’t want the services anyway, are in the clear, and can give the proposals to Jim to study for pricing information.

“Everyone does this,” the colleague said. “It’s an easy way to determine market price for products or services.”

Would a marketing professional recommend such a strategy? While “easy” and “efficient” are appropriate decision rules in business, they are not synonymous with ethics.

Many marketing professionals subscribe to the American Marketing Association’s Code of Ethics. The Code was created to help them remember that reputation and trust can be destroyed when they only focus on the easy way and forget to consider honesty and harm.

Codes of ethics can help business people overcome obstacles to ethical decision making. One of the obstacles is not identifying all relevant stakeholders and the impact of our actions on them (Werhane, et. al., 2013).

In the previous case, we often forget the competitors. However, think of the Golden Rule. Putting ourselves in their shoes, we realize that none of us likes wasting our time. They are harmed because they go through the work of preparing bids that have absolutely no chance of being accepted….time and expertise that they can use to really get business.

In addition, we might not recognize the impact on our friends. We are asking them to use their businesses in dishonest ways.  None of us would like to have our businesses or reputations treated in this way.

Bounded awareness is one reason we don’t identify all relevant stakeholders and the impact on them. Bounded awareness is a pattern of thinking that prevents us from noticing relevant data (Gino, Moore, and Bazerman, 2009). It can be a good psychological mechanism because it can help us survive. But bounded awareness also has ethical implications when relevant or useful data is missed and poor choices are made based on incomplete information.

Is there a remedy for the kind of bounded thinking that leads to bad marketing strategies?

Yes, and the remedy is practice.

We need to practice exercising our moral imaginations. When making a marketing decision, take the time to systematically identify all stakeholders and imagine the consequences for them when one alternative is played out, then another, and another. Start the practice by listing options and stakeholders on paper until the mental process becomes second nature. In this way, we strengthen our moral muscle and do a better job balancing the easy and efficient actions with the honest and less harmful ones.

 

Beverly Kracher, Ph.D.

Daugherty Chair in Business Ethics & Society

Executive Director, Business Ethics Alliance

College of Business

Creighton University

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Shocking Us
 into Ethics

January 21, 2014 by

If you took a psychology class in high school or college, you studied the Milgram experiments.

In these experiments, a Teacher, the only one who didn’t know the true objective of the study, was told by an Experimenter to progressively shock a Learner with up to 450 volts of electricity when the Learner did not respond with correct answers. The Learner was never really shocked, although the Teacher thought he was because of the Learner’s (faked) cries, pleas, and protests. The Teacher was even led to believe that the Learner had a heart condition that could be exacerbated by the shocks.

The purpose of the Milgram experiments was to evaluate the extent to which someone would harm another person when told to do so by an authority figure. In this case, the authority was the Experimenter who wore a white lab coat and regularly told the Teacher (while the Teacher progressively shocked the Learner with more and more volts), “Once started, the experiment must go on,” or “Don’t worry, I will take 
full responsibility.”

What do you think? How many Teachers shocked the Learner to the fullest extent, even when the Teachers believed that the Learner had passed out from the shocks?

About two-thirds.

Approximately two out of three people continued to do what they were told, even though they believed that they were greatly harming another human being. Why?

Stanley Milgram believed that humans are hard-wired, in a way, to obey authority. Whoever the authority figure—our bosses, our teachers, our religious figures—we are psychologically disposed to obey.

When we apply Milgram’s experiment to the workplace, we gain a better understanding of why business people do bad things. Business people may behave unethically, not because they are greedy or evil, but because they are instructed to do so.

Even more fascinating is that one out of three Teachers refused to shock the Learners with up to 450 volts. Interestingly, there was a point in the study around 150 volts when a cluster of Teachers disobeyed the Experimenter. Why stop there?

The answer (Packer, 2008) is that it was at this point that the Learner would protest not only with cries of pain but with exclamations like, “I won’t be in this experiment anymore!” and “I refuse to go on!” This change in the Learner’s communication, from cries of pain to ones that express the moral concepts of rights, liberty, and freedom, allowed some Teachers to break away from the Experimenter’s authority, disengage from their role in the experiment, and reduce harm.

Let’s apply the previous conclusion to the workplace by making two points.

First, language and conversation affect our decision-making and actions (Werhane et. al., 2013). The language we use with our peers and subordinates can lull them into complacency or shock them into ethical behavior. So let’s be intentional about using moral words at work. And let’s start conversations about ethics every day by talking about current ethical issues and workplace situations.

Second, it is unlikely that the online compliance training that has swept corporate America will create the kinds of good behavior that leaders seek from their employees in the workplace. Granted, these practices are efficient and allow organizations to easily show that every employee has had ethics and compliance training. But without human interaction and discourse, there is no life to the education and we have yet to see proof that they create real behavioral impact.

Let’s continue to develop the strategies that shock us into ethics. Join with other Omaha business leaders who are at the front of a new ethics education model, creating city-level and organizational programs where well-crafted, face-to-face dialogue is positively affecting the minds and ethical behaviors of our workforce.

Beverly Kracher, Ph.D., is Executive Director of Business Ethics Alliance and Chair of Business Ethics & Society at Creighton University’s College of Business.

Beverly Kracher, Ph.D.

August 26, 2013 by
Photography by Bill Sitzmann

Beverly Kracher, Ph.D., has been teaching and researching business ethics for more than 20 years. She has been professor of Business Ethics at Creighton University since 1991. But the seasoned academic holds a strong belief that ethics discussions should reach outside the classroom and into Omaha’s day-to-day business life.

She found soulmates in many of Omaha’s business leaders who shared her passion for ethics. Working together, Omaha’s business community launched the Business Ethics Alliance in 2008. The group consults, trains, and speaks on ethics.

Founding partners are the Creighton University College of Business, Greater Omaha Chamber, Better Business Bureau, and the Omaha business community. The Business Ethics Alliance isn’t just for business. The group also interacts with college and K-12 students, as well as executives, employees, and entrepreneurs.

Business Ethics Alliance programming focuses on the core values of accountability, community responsibility, integrity, financial vitality, and moral courage. As holder of the Robert B. Daugherty Endowed Chair in Business Ethics & Society, Kracher is free to work outside the classroom. She teaches one Creighton graduate class each year.

Otherwise she leads the Business Ethics Alliance as executive director and CEO, often traveling to countries worldwide.

“Words are power. One of the easiest things we can do is practice articulating our ethics.”

“I spoke in Ethiopia recently, and they said they had never conceived of a relationship between ethics and success in business,” Kracher says.

But companies considering relocating to Omaha are well aware of the relationship, according to David Brown, president and CEO of the Greater Omaha Chamber. One Illinois company, reeling from the indictment of the state’s governor, found solace in Omaha’s ethical business community.

“Another client specifically asked us to make part of our presentation about ethical practices in Omaha because they wanted a community that took ethics seriously,” says Brown. “We blew them away.”

Helping found the Business Ethics Alliance brought Kracher a great deal of satisfaction—and an award from the Greater Omaha Chamber as the 2013 Business Woman of the Year. She’s earned it, says Brown: “She has taken a fledgling organization and turned it into something unique to Omaha. It requires business acumen, as well as the ability to work with business leaders.”

Kracher said that ethical business communities have leaders with strong, shared, positive values who are fair to their workforce, give back to their communities, and have honest and accountable employees. The ethical communities have non-corrupt government and nonprofits that partner with for-profits.

She is a columnist for B2B Omaha magazine and co-authored the book Ethinary, An Ethics Dictionary: 50 Ethical Words to Add to Your Conversation. The book sits on many business professionals’ desks around the country. “Words are power,” Kracher said. “One of the easiest things we can do is practice articulating our ethics.”

Professor, researcher, author, columnist, CEO, she also is vice president of Plant Pros of Omaha, which puts her in the small-business arena.

Ethics haven’t changed over the years, she believes: “The ancient Persians used to burn bakers in their ovens for adulterating bread with straw, etc. So bad business has been around for centuries. Good has, too.”

An Omahan in Omo Valley

It all started with National Geographic magazines. If you were a kid like me, you thumbed through them and dreamed about the exotic places that were halfway around the world. African stories always caught my eye. So unusual. So different from life in Nebraska.

Especially Ethiopia

I recently traveled to Ethiopia, spending several weeks exploring the culture and the country. Like most of you, when I travel, I pack my passions. In my case, that’s business ethics. Wherever I went, I asked about business practices and economic development. I learned a great deal about the ethics of the people and, in the process, I reflected on our Greater Omaha values. Let me share two experiences.

Hawassa University

At Hawassa University, I spent time with Dean Fitsum Assefa’s faculty and MBA students. We talked about business ethics as a competitive advantage. In a country ranked 114 of 147 on Transparency International’s Corruption Index, the consensus among students was that being ethical would not lead to business success. My experience is that our Greater Omaha students think differently than this. What is your opinion?

Omo Valley and Economic Development

One of the most intriguing destinations in Ethiopia is the Omo Valley. Through the heat and the mud, we traveled to the Valley to interact with its tribespeople. I grew up on a farm, but I have never experienced this kind of outdoor life where people live with their cattle herds and have only the most basic shelters. The customs of the people are exotic—the Mursi women wear lip plates, the Hamer people use cattle jumping as a rite of passage to manhood, and the Bumi participate in scarification. There are no other people on the planet like the people of the Omo Valley.

Herein lies the rub. The Ethiopian government has a plan for economic development. They are selling tribal land in the Omo Valley, primarily to foreign investors, to create sugar cane plantations. In tandem, they are building factories to process the sugar cane. The plan is to entice the tribespeople to work in the factories to alleviate their extreme poverty.

It is difficult to imagine the challenges for Ethiopian leaders, one of the poorest countries in the world. They must promote economic development. (Our Greater Omaha leaders have that responsibility here, too, right?) But their plan will literally destroy the tribal cultures.

So I talked to Mrs. Moges, the CEO of Travel Ethiopia, the largest travel agency in the country, and a member of the Addis Ababa Chamber of Commerce. I asked what she thought of the plan and its implication for the tribes. Mrs. Moges said, “The Omo Valley is Travel Ethiopia’s daily bread and butter. I know that the plan will destroy tribal culture and affect my business. But I think that is okay. Why? Think of the women. Daily, they carry bundles of sticks for firewood. They walk one to five miles a day with heavy containers to collect water. Childbirth is a nightmare. Is it okay to change the tribal cultures? You bet it is.”

I have been deep in thought since returning from my Ethiopian trip. When is it acceptable to change a people’s way of life for the sake of economic development? When should we save a way of life, knowing that doing so will stifle economic development? In Omaha, we have asked these kinds of questions, too, about our culture, our historical buildings, etc.

This I know: There are those who hold onto the past and those who grasp towards the future. In that tension, change is generated, and this is where communities’ values are revealed.

Beverly Kracher, Ph.D., is Executive Director of Business Ethics Alliance and Chair of Business Ethics & Society at Creighton University’s College of Business.