LESSONS IN LEADERSHIP
The insurance industry continues to stand tall ethically
By Robert L. Bailey
Enron!
WorldCom!
Global Crossing!
On an almost daily basis we read that another corporation was allegedly involved in financial chicanery or aggressive and dubious accounting practices.
How does that relate to the insurance industry? When the American people question the integrity or ethics of any segment of American business, that doubt tends to cast its shadow over all segments of business. Therefore, we're a part of it, whether we like it or not and whether or not we deserve it. Because of these relatively few, high-profile ethical lapses, more people will have doubts about whether they're being treated fairly by their insurance companies or agents.
Questions come up whenever I speak to a group. How can CEOs do this? Why do such horrible people rise to the top of big corporations? What causes such scandalous behavior, such infectious greed?
I certainly can't defend or explain these actions. But perhaps this real-life example will shed some light on the ethical abuses that appear all around us.
A few weeks ago I was talking to a group that was highly critical of the American business scene. The group believed that for the most part business people are bad--and that the especially evil among them rise to the CEO level. Then I asked: "Let's say all of us in this room are employees of the X Corporation. And let's say it's mid-November. You have five sick days left, and you'll lose those five days if you don't take them before December 31. How many of you will call in sick?"
Nearly half the people in the group raised their hands. "But, remember," I said, "we're talking about ethics. We're asking why we don't have total integrity in business today. We're talking about doing the right thing. Yet some of you are willing to call in sick when you're not really sick?"
"Yes, but this is different," was the gist of the responses, "because I earned it."
"So I suppose if you bought a fire insurance policy on your house, and it didn't burn down, you'd burn it down," I countered, "because you have a right to be paid the policy's face amount once you paid the premium." As you can imagine, considerable discussion ensued, but few changed their minds.
One person joked that if he wanted to be sick, he really was sick.
What's the difference between receiving a day's sick pay when you're not sick, and insider stock trading, or accounting shenanigans that affect a stock's value? Perhaps it's opportunity. Some people have an opportunity to impact greater dollar values. But the underlying ethical behavior is the same. The human mind has a way of rationalizing nearly any type of behavior--unless we consciously consider the ethical dimension of our actions.
That's why we see ethical lapses in every segment of the American economy--business, religion, labor unions, philanthropic organizations and, especially, politics. Almost every day, newspapers address examples of individual and corporate wrongdoing.
Certainly, only a relative few are involved in such unacceptable behavior. But news media coverage has the effect of magnifying these malicious activities, giving the impression that "everybody does it."
Back to the insurance industry. What must we do to rebuild consumers' confidence in American business and especially reinforce consumers' confidence in our business?
We can start by insisting to all of our people that they must always do the right thing. 100%. No exceptions. We need to create a positive work environment in which all employees know inherently that they are always expected to do the right thing. We never can permit any client to have reason to question our fairness.
Can we define the right thing?At my former company, I used to meet with each new employee, pointing out in the course of the conversation that we always expected him or her to do the right thing. "Regardless of what the contract says, always do the right thing," I would insist. "Do you know what I mean by the right thing?" I learned that if we hired the right people, they knew.
Even children know. "There are five kids and three toys. What's the right thing to do?" I've asked five- and six-year-olds. They can figure it out. But too often something happens to some of us between age five and adulthood, when we call in sick when we're not sick, or when we sell our stock before bad news--known only by insiders--reaches the investing public.
I suggest this simple ethics test: No one should be embarrassed if news of his or her actions appears on the front page of the local newspaper or USA Today. If the majority of readers reading the account say, "I think they did the right thing," that's the behavior that should be expected and encouraged.
Building a culture in which everyone knows how to do the right thing may be difficult to do initially. Keeping it going once it's established is fairly simple because the culture itself attracts people whose beliefs are the same.
Too many who consider themselves ethics experts relate ethics to profits. Some seem to have the impression that business is inherently bad--that profit is a dirty word. That simply is not the case.
Several years ago, I attended an ethics seminar conducted by the president of a theological seminary. If I understood the seminar leader's message, he said that Ray Kroc, the founder of McDonald's, was unethical because he employed people throughout the world at minimum wage levels and became wealthy in the process. He said that Sam Walton, founder of Wal-Mart, was likewise unethical because he continued to amass great wealth until the time of his death. The seminar leader did not seem to understand that thousands of jobs had been created by these individuals, many right there in our own community. In addition to the hundreds of thousands of employees of these companies, hundreds of thousands are employed by suppliers of services and products sold by these companies.
Profitable companies and individuals who have created wealth pay the preponderance of taxes to government. Profitable companies and wealthy individuals make most of the contributions to charities. Profitable companies and wealthy people do more than their fair share to help others. I can't imagine the conditions under which all of us would live if it were not possible to create wealth.
Ethics is not a matter of profits. It's a matter of fair treatment--being a solid, responsible, respected member of the community--providing a good place to work, a good place to do business. All of this leads to greater success and more substantial profits over the long term.
In the more than 40 years I've been in this business, I can say that most people in our business are very ethical. Most have total integrity and always do the right thing. What do we do in the few instances that involve lapses in ethics or integrity? It's up to all of us to remind the offenders that such behavior will not be tolerated in this industry. And we should speak out strongly. We must stand up for what is right. A few cannot be permitted to adversely affect this industry's reputation.
We're an ethical industry. We're an industry that the American people can depend on for fair treatment. We're an industry that attempts to do the right thing. We're an industry in which all of us should take pride.
I'm certainly proud of this business. Aren't you?
The author
Robert L. Bailey is the retired CEO, president and chairman of the State Auto Insurance Companies. He now is a writer and public speaker on the topics of leadership, selling value, and strategic planning and is an advisory director of Securitas Capital. He is the author of Plain Talk About Leadership (Franklin University Press - 2002). He can be reached at (740) 333-3092 or at rlbailey@dragonbbs.com.