February 5, 1994

Drilling Down

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Cover-ups are prevalent in today’s business world. Executives at Enron, Tyco, and WorldCom all tried to hide any wrongdoing. Oftentimes this action stems from poor personal character.

A poster-boy for poor personal character is Robert Torricelli, a former U.S. senator from New Jersey. Torricelli made the mistake of accepting numerous gifts and more than $53,000 in illegal campaign contributions from a supporter—but insisted that he’d done nothing wrong. Breaking the law isn’t wrong? When Torricelli dropped out of the race for his Senate seat, he attempted to defend his career. The public wasn’t buying it. His response: “When did we become such an unforgiving people? … When did we stop believing in and trusting in each other?”5 Herein lies the key. People are more forgiving and trusting when individuals who make mistakes tell the truth and ask for forgiveness, not defend their wrongdoing as Torricelli tried to do. It’s as simple as that. The ability to fess up and repent goes a long way.

A better example of ethics comes in the person of Harry Kraemer, CEO of medical supply manufacturer Baxter International. In 2001 when dialysis patients using Kraemer’s company’s filters started dying, Kraemer recalled the products as a precaution, launched an internal investigation, and hired experts to search for possible flaws. Kraemer could have tried to cover up the problem, denied that it existed, and placed blame elsewhere. So what did he do? He extended his condolences to the families of the affected patients and sought to right a wrong. Ultimately, he pulled the product from the market and shut down that division of the company—at a loss of $189 million.

Kraemer even went a step further and reported the problem to rival manufacturers he thought might experience similar difficulties. He did it because it was the right thing. He did it because it was the good thing. He did it because it was the true thing. Kraemer also recommended to the board’s compensation committee that his performance bonus be reduced by at least 40 percent that year.

Kraemer has been described as being relentlessly authentic. “Harry lives his life the way most of us would like to live our lives,” says Donald P. Jacobs, dean emeritus at the Kellogg School of Management at Northwestern University in Chicago. “What Harry says he believes in, you can put it in the bank. The way he treats his co-workers is the way he’d like people to treat him.”6

Kraemer made the best of a terrible situation with integrity. When Baxter International needed one ethical leader, Kraemer raised his hand and jumped in. That is the Power of One. Who could ask for more than that?

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