Interview Segments on Topic: Code of Ethics/Mission Statement/Credo
“Jack” Koten is a founding director and first president of the Arthur W. Page Society. During his career he worked in a variety of operating, financial and corporate communications departments for Illinois Bell, AT&T, New Jersey Bell and Ameritech Corp.
At Chicago-based Ameritech Corp., one of seven telecommunications companies divested by AT&T in 1984 as the result of a federal government antitrust lawsuit, he served as Senior Vice President of Corporate Communications. He also was president of the Ameritech Foundation, which made grants totaling $25 million annually to education, economic development and cultural institutions.
After he retried, Koten organized The Wordsworth Group, a consulting firm dedicated to assisting non-profit organizations to improve their management practices, reputation and revenues. He has received numerous awards and honors, including honorary doctoral degrees from two institutions, and was inducted into the Arthur W. Page Society’s Hall of Fame in 1995.
Block: Jack let’s get into the flavor of the month, which is a very important flavor. An enduring flavor that sometimes gets lost from time to time. A couple of years ago you conceived of and edited a book that included chapters by prominent chief executive officers on the subject of integrity, corporate character, whatever you want to call it and I don’t want you to get out of here without talking a little bit about what did you learn from those chapters submitted by CEOs, or what had you hoped to learn and didn’t either way you want to look at the question. How do you institutionalize integrity? How do you insinuate that into a large organization?
Koten: Well there are several answers to that question and the first thing I like to say is that building trust was written as a project of the Page Society and it was done really as a response to the headlines denoting week after week or month after month corporate corruption, dishonesty and really acts of real criminal negligence in several cases. And in a speech that Jeffrey Garten who was at that time the dean of Yale made, he said that all that American needs or business needs is for a dozen CEOs to speak up about what they’re doing in their businesses and that will begin to quiet this furor of and feeling that all American businesses are dishonest and crooked. So the Page Society took that to heart and felt that that was one of the things that we were pretty much for because the very first principle in the Page Society, which Arthur Page articulated, was tell the truth, and we believe that wholeheartedly. We subscribe to it and all of our members did that so it became apparent that this was something that we could that we could do, and that maybe we could help the reputation of American business by taking on this activity. So consequently, because I was at that time in a retired state although my wife wouldn’t necessarily agree with that, I agreed to take on the responsibility of trying to put that book together. It was done with the help of course of Dave Drobis who was then the president of the Page Society and Ron Culp and many others really contributed to helping make it happen. One of the things that became clear to me and we, as it turned out, we wound up with essays from 23 CEOs that were included in the book. Actually my idea was to have 24 which would be two dozen which was twice what Jeffrey Garten had said but incredibly at the very last minute as we were going on the press. One of the best essays and one of the best by one of the CEOs that I happen to personally like, called me up and said that our company is, he was a major shareowner in the company, he said our company is going through an enormously difficult time here. And we’re going to reorganize and I’m not sure how where I’m going to be when the reorganization is all over. And so he said I just don’t think it would be in your best interest to have me in a book that’s coming out in six months or a year from now because I’m not sure what my fate is going to be. And so I learned that this was typical of him upfront, integrity, honest, Here’s an alert. Not every CEO would have done that. Some CEOs would have tried to fly undercover because they felt that they wanted to be part of this mixed group of outstanding CEOs. I think that the thing that I learned, that there’s no question that in a major corporation and even a minor corporation, if there is such a thing, that the CEO sets the tone. If the CEO’s behavior is above board there’s a good chance that will filter down through the organization. It isn’t going to happen automatically but if there’s any question about the behavior of the CEO the employees are going to look at this with a jaundiced eye. I think one of the best examples is what happened with Boeing and Harry Stonsteiffer who was an absolutely terrific CEO but got caught up in a couple of situations which were not in the best interest of the Boing Company and he was forced to resign, which he did. His replacement at the first meeting they had of senior management team after that meeting called them all together and the chief lawyer put up on the screen photos of two actually there were two deposed senior people at Boeing and had their head shots on there and under the head shots were a whole row of numbers. And the chief general counsel said you all know that those are not social security numbers under that. And with that the attorney who was the new CEO said. And he said, “That is precisely what will happen to anyone who violates our code of conduct and expectations for truthful behavior.” And he said “I want that to be understood right now and you are hearing it from me.” And that was a vivid illustration. I have several friends who work for Boeing and they told me if there was ever a message delivered that was that was really well done. Well in other other companies it was clear like in the Eaton Company with Cutler. He, right after he took over the job that he was confronted with the one of his officers in Asia. The head of their actually Asian operation, who was awarding contracts to the firm that his wife was involved with without putting them out for bids. When he learned that he was the best operating guy he had in the whole company, gone, he was fired. He then explained to the employees of the Eaton Corporation that this is not a three strikes you’re out company. He said one strike and you’re out. Those kinds of messages resonate through the corporations. Other corporations and Bill Weldon from J & J is a good example, have a long history of having a code of ethics or a code of conduct that they go over annually with all of their employees to make sure they understand so there’s a long history of t hat sort of thing. And consequently, you kind of expect them to have this and you learn that there is value in having a code of conduct or a set of basic principles but the thing is, and I would I think that you would agree with this, is that you can have all the code of conducts that you want in your corporation, but when it gets right down to it, it’s the individual who makes the difference. If the individual is raised in an environment where they are taught the difference between right and wrong, that’s likely to carry over throughout their lives and they’ll have that understanding. And no form of persuasion one way or the other will cause them to do other. There are other borderline cases that can be persuaded one way or the other but basically having a code of conduct is they know they are violating it but that doesn’t necessarily prevent them from doing it if they see in our culture today that somehow or other it’s in their personal best interest. And I think that’s one of the things that I learned again this whole sense of greed and the “me now” generation that you can have all the teachings whether they are from the Bible or the Koran or whatever about proper behavior, but in our culture today those can be easily ignored if there are people who feel that they can gain somehow personally from this. A person like Marilyn Carlson headed up the Carlson’s company said something that struck me as being in the book that was really significant. She said that this is basically a family company and she’s the generation that’s running it now. She said that if we expect and want our employees to keep this company alive and preserve it for a long we have to treat them like we’re running this business for a long term. We have to respect their rights. Their individual rights and what their needs are and if we can do that, then they will help us perpetuate this company. If we don’t, in a generation or two, she said we won’t be able to keep this company going.
Block: I think you’ve nailed the answer, as I expected, and I will close out by just one last comment about Mr. Page. The things that we call the Page Principles, that animate the Page Center at Penn State and animate the Page Society or brought it into being is that his genius was horse sense, believe it or not. And you know Principle 1 is Tell the Truth. You know he didn’t mean sometimes. He meant if it’s convenient. White Lies are okay. I mean he could nail it and another principle that affected public relations and we can substitute the word corporate governance is 90 percent doing and 10 percent talking about it. So as you said it doesn’t make any difference how beautifully worded your code of conduct is if no one pays any attention to it and that of course was the genius of General Johnson and the Johnson & Johnson credo because it wasn’t something on the wall or on the dashboard of a company car. It’s a living document that the management not only manages by, but rates itself against those simple propositions. You know that General Johnson just like Page put in that credo. That basically said our obligation is to our customers and to caregivers that and that’s that comes first. And basically it’s the last thing in the credo you know is if we do all of the above diligently, successfully, the shareowners will be well taken care of. He did not put the shareowners at the top. We have to optimize their income or anything like that. It was all about the customers, his employees, and the communities in which the company did business. To do right by all of them and we’ll make out fine. It’s the bottom line. So we’ll let it go at that. But keep it simple. Integrity is not something off in the ether, it’s what you do everyday.
Block: and who knows what you’re doing. Thanks Jack for sitting in on this.
Koten: Well thank you very much Ed. [interview ended]