Good Honest Dollar $$

Kraft’s recent takeover of Cadbury represents a historic moment for the world’s second largest food and beverage company.

But the contempt which the company has shown toward British workers and lawmakers regarding broken promises about the future of Cadbury’s Somerdale plant is shocking.

Workers deserve the truth. Those employed at target companies should at least be entitled to expect prospective acquiring firms to act in good faith when making pledges regarding continued employment.

This did not happen, and Kraft’s resulting loss of reputation is well deserved

 
The broken promise
Assurances regarding the future of Cadbury’s Somerdale plant in Keynsham represented a key plank of Kraft’s pitch to British lawmakers during the course of the protracted four month battle to gain control of the confectionery manufacturer.

The plant had been due to close in spring, but Kraft had consistently promised to keep it open – a pledge repeated on the day the merger was approved.

But shamefully, the company changed its tune almost immediately after, announcing just one week later that the factory would indeed close after all, and that all four-hundred workers would be made redundant as a result.

 
Contempt for law-makers
Making matters worse are management’s feeble efforts to pass the blame and the contempt which the company has shown to British lawmakers.

Rather than bothering to show up before British MPs at a hearing of the Commons Business Select Committee (which is investigating whether or not Kraft mislead unions, workers and politicians), chief executive Irene Rosenfeld merely dispatched three middle ranking deputies.

Even more abysmally, one of these, Executive Vice President Marc Firestone, sought to transfer the blame to onto former Cadbury management. Whilst Mr. Firestone did provide a “sincere personal” apology, he went on to claim that Cadbury had failed to share information due to the hostile nature of the bid. Kraft, he said, had acted in ‘good faith’, had been forced to rely on limited information (such as Google images of the factory exterior) and did not realise that Cadbury had invested tens of millions of pounds into a new Polish factory.

 
Pathetic
Where do we even begin?

To be fair, the difficulties which the company would have faced in gaining approval for the merger in absence of the pledge must be acknowledged. It must also be acknowledged that Kraft could not have been expected to continue to operate an unviable plant, particularly in light of the extent of investment in the new factory.

But this is no excuse.

Let’s start with the broken promise itself. The company changed its tune mighty fast once U.K lawmakers could no longer stop the merger – surely we can’t seriously be expected to believe that they ever had any real intention of sticking to their pledge.

(The problem is not the factory closure itself – unfortunate though they are, factory closures and job losses are essential from time to time. The problem is in the way this was done, and the contempt with which workers were treated during the takeover process)

Equally poor were their buck passing efforts. Kraft can complain all they like about how Cadbury management played hard ball and they were forced to act on limited information. But it was Kraft who made the pledge, not Cadbury management. Kraft must therefore acknowledge sole responsibility for this debacle. 

(Seriously, what company of any integrity makes ‘good faith’ promises about keeping factories open without any of its staff having actually seen the factory in question?

Besides, the factory had been slated for closure – did Kraft really have no inkling that it might not be viable?)

Added to this is their blatant lack of respect for the House of Commons. For any chief executive of such a large multinational not to appear before a ministerial committee despite requests for her presence is unprofessional. Rosenfelt’s conduct in this regard shows distain for British law-makers and the people they serve.

Nor was her reason for being absent overly impressive (she had to attend a board meeting). According to Peter Luff, chairman of the committee, the date for the meeting had been set at Kraft’s behest – couldn’t they have chosen a date when she was available? Alternatively, could they not have rescheduled the board meeting? And for that matter, is a company board meeting really more important than showing up before a British ministerial committee?

The way in which Kraft has conducted itself throughout this whole affair has been unprofessional and reprehensible. Their resulting loss of respect is thoroughly deserved.

Respect should be reserved for companies who conduct themselves in a manner of professional integrity.

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Today, I am delighted to have sales and marketing professional Brad Shorr as a guest writer on this blog.

Brad has many years of business experience, and in his discussion below, he talks about the need for organizations to hold discussions with their staff about the most effective ways to handle specific situations in which they may encounter potential ethical dilemmas in the course of their duties:

 
I’ve been a big fan of Andrew’s blog from the moment he told me about his theme, business ethics. It’s a topic that deserves much more attention, and I love how Andrew is able to give us a clear yet high altitude understanding of complex ethical issues.

For my guest post, I’d like to turn the tables a bit and talk about what business ethics look like from the trenches. Since that’s where I’ve spent most of my career, it seems like the logical place for me to go.

It’s been said that ethics is what you do when nobody is looking. In day to day business activities, nobody is looking pretty much all the time. I’ve worked in environments where management requires detailed call reports and looks over employee shoulders continually, but the fact is, people can get away with just about anything if they are so inclined.

Well intentioned or not, in the trenches it is difficult to tell when you’ve crossed the ethical line. Hypothetical: Supposing a customer overpays you by $10 on a $1000 invoice. Would you pocket the $10 or credit it back?

It’s quite easy to justify pocketing the $10. Processing the paperwork will cost the customer more than the $10 in question. I’ve certainly given that customer more than $10 of free service in the past, so this just evens things up. It’s the customer’s responsibility to pay properly, not mine. Ten dollars is nothing – why bother with it at all?

Even when the choice is made to refund the $10, the choice might be made for less than ethical reasons. For instance, the seller might think, I’ll show the customer how upstanding I am. Perhaps in the future I’ll be able to use it to my advantage for a greater gain.

So, even in a simple situation like this, discerning right from wrong requires a good deal of thought and reflection. But the seller could be faced with more complications still. Suppose the customer always pays 90 days beyond terms. Suppose the customer is notorious for taking unauthorized deductions or grinding suppliers’ margins into the ground? Do those considerations affect the decision of how to handle the extra $10?

And what about the big picture? In the trenches, we don’t think about that a lot. But any employee who cares about the success of his firm should. I might be able to justify keeping the $10, yet if my colleagues applied my same reasoning, my firm might overcharge customers by tens of thousands over the course of  a year. Conversely, if our firm had a policy to refund regardless of circumstances, we might forgo tens of thousands in revenue leading to a reduction in salaries and bonuses. 

In my experience, well intended business people will reach different conclusions about how to handle my hypothetical $10. Does that mean business ethics are situational? Is it possible to devise a rule to cover all variations of even the simple example in this post? I’ve been in business for more than thirty years and to tell the truth, I don’t know the answer to either question.

What I do know is, whether a firm has rigorous ethical guidelines or none at all, discussing ethical issues that occur in the trenches is a must. Discussion serves as a collective conscience. While some may not agree on the ultimate decision, everyone comes away with a new perspective and a deeper understanding. These things make it likely that the next time a problem crops up, it will be handled better and more swiftly.

How would you handle my $10 example? Perhaps we can put my theory to work and see if discussion brings clarity!

Andrew, thank you so much for giving me the opportunity to be a guest author on Good Honest Dollar $$!

 
About Brad Shorr 
Brad Shorr lives in the Chicago area, and is president of WordSell, Inc. He helps organizations strengthen their online business presence with business blogs and compelling web content.

Brad writes extensively on his own and many other blogs, mainly about writing, online marketing, entrepreneurship, sales and business humor.

A significant degree of media attention has been given over the years to the issue of small business being bullied by larger companies.

But what about bullying from government officials or politicians?

A recent Australian case highlights the potential for small business and their staff to be subject to bullying behavior from government ministers, and raises questions about the consequences which should follow such behavior.

The case involved a federal minister, Ms. Belinda Neale, and her husband, Mr. Della Bosca, Minister for Education in the state of New South Wales. Whilst drinking at Iguanas night club on Friday June 6th, the couple allegedly became irate and verbally abusive at staff when politely asked to move tables.

Ms. Neale, showering employees with a barrage of four-letter words, allegedly threatened to have the club’s operating license revoked. Mr. Bosca, adopting a standoverish posture toward staff, allegedly bellowed “Do you know who the f*** I am?”

The allegations, which were made by Iguanas staff and are disputed by the couple, are currently subject to investigation. Accordingly, any judgment relating to this particular case should be withheld pending the outcome of the investigation.

However, the case raises important questions about what action should be taken against politicians who engage in anti-social or bullying behavior when dealing with small businesses and their staff.

In this case, Prime Minister Kevin Rudd has ordered that Ms. Neale undergo an anger management program, and Mr. Bosca has been stood down pending the outcome of the investigation.

More serious consequences, including termination of employment, must follow if the investigation reveals misconduct on behalf of either minister. This type of behavior must not be tolerated, and an example must be made.

Some may view this as a trivial matter. To be sure, a few heated from politicians does not compare to some forms of bullying behavior to that endured by small business in other parts of the world. (Zimbabwe, where price controls are enforced by sending armed forces into stores to re-label prices, is a good example).

But no form of bullying or anti-social behavior should be tolerated. Whether on official business or not, senior politicians are expected to conduct themselves in a responsible manner in public.

Small businesses should not be subject to this form of abuse. Neither should their staff, particularly when they are merely carrying out their responsibilities in a dutiful fashion.

Moreover, governments must set the example. If governments demand responsible behavior from business, then senior politicians must set a positive example in their own conduct. A small amount of simple etiquette is not too much to ask.

Bullying or anti-social behavior from politicians is unacceptable. If the allegations against Ms. Neale and Mr. Bosca are proved to be correct, then an example should be made and dismissal should be very seriously considered.