Category Archives: ethics

Kozlowski’s Take on Pay

In the early to mid-2000s, Dennis Kozlowski became something of a poster child for corporate greed thanks to his exorbitant pay package and other perks, including the well-publicized $6,000 shower curtain.

As you no doubt remember, the former Tyco CEO was convicted in 2005 of grand larceny, securities fraud and conspiracy and was sentenced up to 25 years behind bars. So it’s been quite some time since we’ve last heard from him—until today.

In an exclusive interview with Wall Street Journal writer Joann S. Lublin, Kozlowski talks about the past, including Tyco’s controversial pay practices. It makes for an interesting read.

On his pay package, Kozlowski tied it to being the “competitive person I am,” telling the journal it was “a way of showing how well I was doing.” No doubt. But I also felt, after reading the piece, he still feels a need to deflect some of the responsibility.

The Journal article said:

The disposed Tyco chief also wished he had chosen more seasoned people for his top team. ‘The lack of documentation was the key’ in his conviction for taking unauthorized compensation, he said. ‘We needed somebody to rein us in.’ 

Wonder who he’s referring to?

The story also points out that Kozlowski (who is now earning 80 cents a day doing laundry) is seeking early work release and wants to take a job with Access Technologies Group, whose offerings include job-search training for ex-convicts. Were he to be granted that opportunity, I suppose that means Kozlowski’s path back to the workplace will ironically pass, at least indirectly, through HR.

More Scandal for Murdoch?

This is an updated story:

According to the British paper, The Guardian, the Wall Street Journal has been engaging in controversial circulation activities involving its European edition — and it accuses the CHRO of ignoring a whistleblower’s accusations.

According to the news story, “the Journal had been channelling money through European companies in order to secretly buy thousands of copies of its own paper at a knock-down rate, misleading readers and advertisers about the Journal‘s true circulation.” That scheme led to the resignation earlier this week, it said, of Andrew Langhoff, the European managing director for Dow Jones.

“The emails show that the chief human resources officer for Dow Jones, Gregory Giangrande, organised a meeting in London on 14 December at which the whistleblower detailed his allegations to a Dow Jones lawyer from New York, Tom Maher, and Dow Jones’ European human resources executive Carol Bosack.

“After the meeting, Bosack emailed the whistleblower: ‘You are expected to keep details and your reaction or beliefs about the recent events confidential and not shared with anyone external or internal to the business. This matter is to be kept between us, Andrew [Langhoff], Internal Audit and Corporate Legal.’ No action was apparently taken at that time on the whistleblower’s allegations. The whistleblower, who had worked for Dow Jones for 9 years, was made redundant in January.”

As you probably can figure out, “made redundant” is British for terminated.

This certainly won’t do anything to embellish Rupert Murdoch’s tarnished reputation in some circles. Nor do the Guardian‘s accusations reflect well on the way whistleblower complaints were handled by the company.

Dow Jones emphatically denies the allegations, saying the British paper’s “inflammatory characterization … is replete with untruths and malign interpretations. Andrew Langhoff resigned because of a perceived breach of editorial integrity, not because of circulation programs, whose copies were certified by the ABC UK.”

The company also says Giangrande, the CHRO, did not ignore the alleged scam, but, in fact, initiated an investigation into the allegations. Dow Jones says the employee who was fired was not a whistleblower, but was, instead, “first investigated by the company because of concerns around his business dealings.”

It acknowledged the circulation program was “admittedly complex,” and because the company was “not comfortable with the appearance,” it subsequently no longer has “relationships with any of the third parties directly involved in these agreements.”

A Different Way of Looking at Corporate Misconduct

Not sure how helpful this is, but this recently published guide to lessons learned from cases of corporate misconduct is so uniquely packaged it caught my eye.

Called The Unlucky 13: Lessons Learned from Companies Caught in the Act, the small and free downloadable publication offers tiny little synopses of small and large cases — some I’d heard of — from the likes of Xerox, Ford, Siemens, Tyco, Hewlett-Packard, Johnson & Johnson, Mattel, Google, Verizon and more.

Most of the write-ups start with the monetary damage involved, followed by one or two graphs about what happened, followed by one or two bullet-pointed corporate “takeaways.”

Like the $50-to-$100-million case from November 2010 involving a former Ford employee who pleaded guilty to stealing trade secrets by downloading design documents unrelated to his job onto an external hard drive. Reminders there: Don’t ever give employees access to information unrelated to their jobs and eliminate their abilities to connect any sort of media-storage devices to the network.

Or the $20 million disability discrimination settlement by Verizon, underscoring the need for employers to have attendance policies in place that take into account the need for paid or unpaid leave as a reasonable accommodation for employees with disabilities.

My personal favorite: a smaller case involving a $22,500 discrimination settlement paid by Happy Days Children’s Wear Inc. for — of all things, considering the business — firing a female employee because she was pregnant.

If you really want the full scoop in any of these cases, you’ll have to do your own digging. The guide is hardly comprehensive. But you might find some of the reminders helpful.

Perhaps the best advice around corporate misconduct comes from HREOnlinecolumnist Susan Meisinger in her column this week: If you, as an HR leader, detect unethical practices or behavior that set a cultural tone you — hard as you try — can’t change … “Go. And go as quickly as you can.”

To Tell the Truth

Should we expect the next innovation in screening technology to come from, of all places, Russia?

A story appearing on today’s New York Times’ front page, entitled “Russia A.T.M. With an Ear for the Truth,” reports on how Russia’s biggest retail bank is testing the use of ATMs with voice-recognition software to determine whether or not someone is telling the truth.

The software, developed by the Speech Technology Center, analyzes “vibrations as shaped by the contours of an individual’s throat, larynx and other tissue involved in speech” to identify whether a person might be in the midst of telling a lie. Russian law-enforcement databases of people found to be lying were used to develop the software. (No doubt the voice-recognition technology is more sophisticated than some of the stuff I’ve encounter in my quest for customer-service help.)

Banks would use the analysis, along with other data collected by the ATM, to determine the truthfulness of applicants when they’re answering questions about whether they have a job or any outstanding loans.

Of course, this has nothing to do with HR. But as I read the NYT’s story, I couldn’t help but wonder whether some day we might see technology like this make its way into the job-interviewing process, where more than a few candidates have been known to stretch the truth. Companies already do thorough background checks of job candidates. So how about a little voice analysis to boot?

I’ll be the first to admit that’s a scary thought. And I imagine legality and privacy concerns would present some serious stumbling blocks. But in this day and age, it’s certainly not outside the realm of possibilities.

Going Against the Code

Pharmaceutical giant Novartis is in the news again, this time because of its decision to terminate a number of senior managers for misconduct. (Last year, you may recall, Novartis paid out $250 million when it was found guilty of sexual discrimination.)

Yesterday, the pharmaceutical industry blog Pharmalot reported the contents of an internal communication from Novartis CEO Joe Jimenez, in which he informs employees that the company had to let some senior managers go for not upholding Novartis’ corporate values and violating its Code of Conduct.

Few specifics were available and a Novartis spokeswoman told Pharmalot that the company wouldn’t comment of “disciplinary actions against current or former employees.” But it’s interesting to read some of the comments linked to the Pharmalot post, which included “these mgrs are sacrificial lambs” and “coverup.”

I wouldn’t know. But what I do know is that if you’re going to bother writing a Code of Conduct that says you won’t tolerate misconduct, you better be willing to put some teeth behind it.  Otherwise, what’s the point?  In this particular case, Novartis was prepared to do just that.

IRS Awards $4.5 Million to Whistleblower

We’ve seen and written plenty of whistleblower stories, but this one from NBC Philadelphia caught my attention because it involves the Internal Revenue Service awarding an accountant for turning in his employer for tax evasion.

The lawyer for the accountant calls it a “win-win for both the government and taxpayers.”

“These are dollars that are being returned to the Treasury that otherwise wouldn’t be,” the lawyer, Eric Young of Blue Bell, Pa., tells the press.

Mind you, this isn’t the largest whistleblower award issued. Young represented one who netted $2 billion in a case against Pfizer  was part of a $2 billion settlement Pfizer paid to the government.

It’s also not the first tip to come into the IRS Whistleblower Office  since it opened in 2007. According to this report the Office received nearly 1,000 tips involving more than 3,000 taxpayers in fiscal years 2008 and 2009.

It is, however, the first in the program to reach fruition. Could this be the start of many more to come?

IBM Settles SEC Case Alleging Bribes in Korea, China

This one came as a surprise. For those of you with subscriptions to the Wall Street Journal, here’s that paper’s recent story on IBM’s reported $10 million settlement with the U.S. Securities and Exchange Commission following the Armonk, N.Y.-based technology giant’s alleged decade-long campaign of bribery in China and Korea.

In its complaint, filed Friday, March 18, the SEC claims IBM employees gave shopping bags stuffed with cash to accomplices in South Korea and arranged junkets for government officials in China in exchange for millions of dollars worth of contracts for computer gear. The “widespread” payment of bribes, it says, involved more than 100 employees of IBM subsidiaries and occurred between 1998 and 2009.

The WSJ reported the settlement on March 19, the day after it was filed in U.S. District Court for the District of Columbia. “IBM, which neither admitted nor denied the charges,” the story reads, “said it holds employees to high ethical standards and has taken ‘appropriate remedial action’ to address the issues raised by the U.S. government, though it wouldn’t be more specific.”

This isn’t the first case to come across HRE‘s radar screen suggesting an increasing crackdown by the federal government against corporations and executives accused of violating the Foreign Corrupt Practices Act — as U.S.-based multinationals continue to grow rapidly abroad.

But it certainly is a big one, as most stories involving IBM are. The company’s immediate settlement is also worth a raised eyebrow or two.