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Business LibreTexts

B: Profiles in Business Ethics- Contemporary Thought Leaders

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  • Dan Bane, chairman and chief executive officer of Trader Joe’s

    With roots in Pasadena, California, the Trader Joe’s brand is no stranger to ethical and sustainable business practices. At its origin, when it was a mere convenience store and still called Pronto Markets, founder Joe Coulombe opted to pay his employees at the median California family income rate. He did not want to exploit his employees the way he felt other large convenience chains did at the time.1 After reading about the looming threats to the environment in 1970, Joe transformed his stores to become more health and environmentally conscious. Indeed, as far back as 1977, the growing chain of grocery stores began selling reusable “Save-A-Tree” canvas bags to its customers to encourage more environmentally friendly shopping practices.2

    These ethical principles, like the plastic lobsters it decorates its stores with and the Hawaiian shirts its employees wear, have become an integral and recognizable part of the Trader Joe’s brand. With more than four hundred stores nationwide, this chain of grocery stores specializing in reasonably priced, high-end cheeses, wines, and organic foods is a beacon of ethical business practices in the grocery industry.

    Joe Coulombe, the original Trader Joe, has long since given up his Hawaiian shirts and his role as leader of the company. Since 2001, Trader Joe’s chief executive officer (CEO) has been Dan Bane. Bane has held firm on the ethical values established decades before. As part of his leadership approach, he often works in his stores so he can interact with customers and employees. He imagines the organizational principle at work at Trader Joe’s as an inverted pyramid, where he as CEO sits at the bottom of the pyramid and the many employees and customers are at the top. He thinks of himself more like a conductor of an orchestra than a dictator shouting orders at his underlings.3

    Bane’s Trader Joe’s has seven core values: demonstrating integrity, being product-driven, producing customer “wow” experiences, challenging bureaucracy, seeking continuous improvement, treating the store as the brand, and being a national and neighborhood company.4 These core values are a roadmap for Bane and the company. As he sees it, it is his job to “make sure we stay on those [values] and preach those all the time.”5

    As an extension of its values, Trader Joe’s tries to keep a close watch on its supply chain. In 2010, it was taken to task by environmental groups for selling seafood that had been harvested in environmentally unfriendly ways. Bane took this criticism to heart and pledged to do better. The company now sends its purchasers out to the very locations where they produce the product they sell. Bane wants to be certain that the suppliers are using practices that are consistent with Trader Joe’s focus on environmental sustainability and even labor practices.6 As an added precaution, he also works with Greenpeace to keep the store shelves as green-friendly as possible.7

    Mary T. Barra, chairman and CEO of General Motors

    Mary T. Barra was born into a General Motors (GM) family in Michigan. Her father worked for the GM brand Pontiac for nearly four decades and one of her first jobs was working at a GM plant herself checking the fender panels and hoods of cars rolling off the line when she was only eighteen years old.

    After earning a degree in electrical engineering from the General Motors Institute (now called Kettering University) in Flint, Michigan, she returned to the company to work as an engineer for Pontiac’s new sporty two-seater, the Fiero. After a few years working as an engineer, GM then sent her to Stanford University on a fellowship to earn a master of business administration. From there, she climbed the executive ladder, working in a variety of positions until, in 2014, she was named CEO of General Motors Company, becoming the first woman ever to hold that position at a major international automaker.8

    When Barra took the reins of the company, the once-dominant automobile manufacturer had undergone a considerable decline in influence and prestige. The Great Recession hit the already struggling company very hard. As a result, it was compelled to seek bankruptcy and government support. It also went through some painful downsizing, even going so far as to discontinue the very Pontiac division Barra once worked for as a young engineer.

    Just a few years later, GM appears to have turned those lemons into lemonade. It is now a healthy company with billions in cash on its books and billions in earnings. How it got to this healthy position is due in large part to Barra’s efforts to transform GM’s famously large and clumsy bureaucracy, as well as her push to encourage diversity of thought, innovative ways of dealing with problems, and working more closely with GM’s many stakeholders.9

    But, this success aside, there were huge ethical bumps in the road that appeared right at the time Barra took control. In the spring of 2014, a string of news stories emerged regarding possible defects in the Chevy Cobalt, a GM compact car that started coming off the line in 2004. These stories eventually uncovered the fact that GM insiders had known of the defect and covered it up for a decade, even when they knew the defect was causing needless injuries and deaths.

    The press attention was a mounting disaster for GM, and Barra’s action was crucial. As the country condemned GM, Barra announced that “whatever mistakes were made in the past, we will not shirk from our responsibilities now and in the future. Today’s GM will do the right thing.”10 Barra jettisoned the “cost culture” that had precipitated the defect and cover-up, and replaced it with a “customer culture.” She also reformulated GM’s code of ethics and published a booklet on the code called Winning with Integrity. Although some have pointed to some weaknesses in the code, it remains an important step for GM in encouraging personal integrity and empowering GM employees to speak up.11 These days, GM and Barra hope the tragic lapse in ethics the company is now safely in the rearview mirror.

    Marc Benioff, chairman, CEO, and founder of Salesforce

    Marc Benioff took to computer entrepreneurism at an early age. At only 15 years old, he had already started his own software company. The profits from that company were enough to put him through college. When he graduated, he jumped right into a position at the software company Oracle, quickly climbing the corporate ladder and becoming the youngest vice president in the company’s history within a few years.12

    Benioff eventually left Oracle to start his own software company, Salesforce. At its inception, Salesforce was a revolutionary approach to software, in that it delivers centrally hosted applications over the Internet to its clients. The bold move of charting a cloud approach to computing proved successful and, as of 2017, Salesforce was pulling in $8.39 billion in revenue.

    Rather than take his success for granted, however, Benioff has tried to use his wealth and position of power to support ethical causes, such as promoting sustainable growth and diversity. He is a big supporter of stakeholder capitalism as well.13 This is an approach to business that attempts to consider the interests of all major stakeholders rather than catering merely or disproportionately to the investors.

    And Benioff has tried to put his money where his mouth is. Since 1999, he has maintained what he calls his “1-1-1 model.” This is a company program that donates 1% of equity, 1% of employee time, and 1% of products to nonprofit organizations operating in locations where his companies do business. According to Benioff, this is just one way for him to demonstrate that “the business of business is improving the state of the world.”14 Another way is by ensuring that there is pay equity between men and women working in the same positions in his company. When Benioff realized a few years ago that men and women were not being paid at a comparable rate, he took action to change this.15

    Beyond philanthropy and striving for equity in his company, Benioff recognizes that technology innovators like himself need to take initiative in ensuring that business is done ethically. He knows that the volume of innovation coming out of the industry makes it difficult to manage, and he does not trust individual CEOs and companies to always do the ethical thing. “We’re moving rapidly into a new world where we know the government is going to have to be involved in these next-generation technologies—like AI [artificial intelligence], biotech, etc.—which are all so new, and could have unintended consequences,” he said in 2018. To manage the disruption that comes with these changes, he suggested it might be necessary to create a regulatory government body not unlike the Food and Drug Administration, except for technology.16

    Recently, his ethical approach to business has led him to speak out on the autocratic style of many other leaders in Silicon Valley. Speaking in Davos, Switzerland, in 2018, Benioff challenged leaders in technology to step back from the all-too-common position he summarized as, “I’m the entrepreneur and I am in charge no matter what happens.” Citing the infamous aggressive leadership style of Uber’s founder and former CEO, Travis Kalanick, he warned against adopting this approach. Instead, he proposed they embrace the concept of trust.17 “It’s a culture issue. What is the most important thing in your company—is it trust or is it growth? If anything trumps trust, we are in trouble.”18

    John C. (Jack) Bogle, founder of The Vanguard Group

    Born months before the infamous Black Thursday stock market crash of 1929, Jack Bogle knows from experience the social and economic cost of unethical and unregulated stock market speculation. In the depression that followed the crash, his family lost much of its wealth, and his father sunk into a destructive alcoholism that tore the family apart. He and his twin brother were compelled to enter the workforce at early ages, holding menial jobs like delivering papers and waiting on tables.19 The experience was formative for Bogle, who admits he feels sorry for those who do not grow up in circumstances where they have to work for what they need. Despite earning a comfortable fortune in managing mutual funds, Bogle remains reluctant to spend money on himself, believing that extravagance is a weakness that exposes him to unnecessary risk.20

    After graduating with a degree in economics from Princeton University in 1951, Bogle went directly into the banking and investment industries. He quickly demonstrated an aptitude for making wise investments and rose up the ranks at Wellington Fund, eventually becoming the chairman in 1970. In 1975, he founded The Vanguard Group, an investment firm based on the principle that fund shareholders own the funds and, therefore, own Vanguard. There are no outside owners seeking profits at Vanguard.21

    This simple but revolutionary founding ethical standard has earned Bogle accolades from thought leaders around the world. Economist and former vice chair of the Federal Reserve, Alan S. Blinder, for example, has celebrated Bogle’s “relentless voice, sharp pen, and indefatigable energy . . . prodding the mutual fund industry in particular, and the financial industry more generally, to embrace higher business, fiduciary, and ethical standards.”22

    Beyond establishing his client-centered approach to money management, Bogle has become an important voice advocating for ethical business practices. Too often, Bogle complains, CEOs in the investment business are compelled to make bets in the expectations market rather than to do what they are supposed to and build real corporate value. The result of this type of thinking and practice has been to distort the financial system. Instead, Bogle proposes following simple ethical guidelines such as seeking higher profits for investors rather than managers, treating the client as an owner rather than a customer, and limiting risk. These guidelines have worked for him and have made a lot of money for his clients. It turns out, he contends, that “good ethics is good business.”23

    Yvon Chouinard, founder, and Rose Marcario, CEO and president of Patagonia Works

    Yvon Chouinard was introduced to rock climbing almost by accident. After taking an interest in falconry, an adult decided to teach the young Chouinard to rappel down a cliff to reach the cliff-side falcon nests. But it was not long before Chouinard was teaching himself how to climb up in the same way. Thus began a life-long love affair with climbing around the world. To support his climbing lifestyle, he learned to make and sell steel climbing pitons, the small metal spikes with an eyelet that climbers drive into the rock to guide their rope.

    The piton business proved successful and eventually became Chouinard Equipment, the largest supplier of climbing hardware in the United States. But with this success, Chouinard was suddenly faced with his first ethical dilemma. As climbing became more popular, more pitons were driven into the rock, sometimes causing great damage. This was something Chouinard’s internal sense of environmentalism could not tolerate, so he made the ethical move to phase out the pitons and sell more environmentally friendly aluminum chocks instead. Around this same time, Chouinard began experimenting in the active sportswear business. Soon the clothing line outpaced the gear line. The Patagonia clothing line was born.

    Despite Chouinard’s growing success, his interest in environmentalism never flagged. Indeed, if anything, it increased. The 1970s, 1980s, and 1990s were decades of increasing public awareness about the dangers of environmental neglect and the growing threat of climate change. It was at this time that terms like “acid rain,” “the ozone layer,” “global warming,” and “deforestation” became common rallying cries for environmentalists around the world. Chouinard wanted to make Patagonia part of the movement for change. Beginning in 1986, Patagonia committed to donating 10% of its annual profits to environmental nongovernmental organizations (NGOs). Two years later, Patagonia led its own effort to save Yosemite Valley from overdevelopment.

    This concern with environmentalism has continued with the coming on board of Rose Marcario as CEO in 2012. She shares Chouinard’s goal of applying more ethical and environmentally friendly protection methods. Using solar energy and radiant heating in their plants and retail stores, Patagonia has been able to reduce its carbon footprint. It also strives to use recycled content in its clothing and to exclude dyes that require toxic ingredients. Patagonia also switched to using only organic cotton for its cotton products to reduce its reliance on chemical pesticides. Recently, Marcario has taken up environmental activism. Alongside Chouinard, Marcario decided to protest attempts to rescind the national monument designation of Bears Ears in southeastern Utah, first by withdrawing Patagonia from the annual Outdoor Retailer trade show in Salt Lake City in February 2017, and then by suing the Trump administration for its decision to reduce the monument’s size.24 Like Chouinard, Marcario believes strongly in maintaining public lands free of private development. Many decades after it was founded as an outdoor clothing line, Patagonia’s policies remain consistent with the environmental ethics of its founder.

    Tony Hsieh, CEO of Zappos

    Born to Taiwanese immigrants in Illinois and raised largely in San Francisco’s Bay Area, Tony Hsieh excelled at school as a child. He developed an interest in computers, which helped get him accepted to Harvard University, from which he graduated in 1995 with a degree in computer science. Upon graduation, he jumped right into the corporate world by taking a position at Oracle, a large database and software company.

    At the time, Hsieh felt he had made it. His hard work had paid off and he was now perched firmly on the ladder to corporate and business success. Five months later, however, Hsieh abruptly quit. “I did not want to carry on with my job just because it paid me a handsome salary. The job lacked creativity and the corporate environment wasn’t my style.”25

    Within a few months, Hsieh and another former Oracle employee, Sanjay Madan, launched their own business from the stuffy confines of their apartment. The company was called LinkExchange, an innovative advertising cooperative that used the power of the emerging Internet to amplify advertising. The company proved to be a huge success. Within two years, it had acquired nearly half a million members and displayed ten million advertisements per day. Microsoft bought it in 1998 for $265 million.

    After his success with LinkExchange, Hsieh was encouraged to become CEO of the newly created Zappos.com, an Internet shoe retailer. As CEO, Hsieh has embraced ethical behavior through what has been termed “radical transparency,” where he openly shares his schedule and even his personal and company priorities. Hsieh believes strongly that this transparency helps build trust with his employees and other stakeholders.26

    Beyond transparency, Hsieh’s ethical approach has created a strong office culture that encourages team unity, camaraderie, and employee empowerment. The organizational atmosphere at Zappos rejects hierarchy and management, and encourages creativity, even wackiness. And Zappos has extended this ethical approach to community involvement as well. Hsieh dumped his heart, soul, and $350 million of his own money into an urban revitalization project of the small part of Las Vegas surrounding the company. He has transformed it into vibrant and hip neighborhood of vinyl record shops, independent bookstores, trendy restaurants, and free live music. The company and its surrounding neighborhood are now almost seamless. As a result, periods of work and periods of play in the company also intermingle.27 In this way, the company is now a manifestation of Hsieh’s bold rejection of the stiff corporate culture he rejected at Oracle. And it may very well transform corporate culture entirely.

    Kim Jordan, CEO of New Belgium Brewing Company

    In 1988, while working in Europe as an electrical engineer, Jeff Lebesch took a beer-tasting trip through Belgium riding atop a fat-tire bicycle. A couple years later he met Kim Jordan and they soon married. Both being beer aficionados, they could smell a great business opportunity bubbling up from Jeff’s experience. Sensing that the famously bold flavors of Belgian beer were exactly what the American beer market lacked and needed, Jeff and Kim got to work testing methods and recipes in their Fort Collins, Colorado, basement. By 1991, New Belgium Brewing was born.28

    The brewery emerged at just the right time: Young Americans were just beginning to expand their general appreciation for craft brews. Over the next nine years, the company grew steadily. Then, in 2000, Jordan decided to grow the company in a new and radically different way. Inspired by her Quaker background, she started New Belgium’s employee stock ownership program (ESOP). She had to battle the many advisers and accountants that came out against the move, but Jordan thought it was an important ethical move to give the employees a stake in the business.29

    By 2012, Jordan had sold her last piece of ownership in the company to the ESOP. She knows that had she held onto this piece, she would have made even more money. But it was not necessarily money she was after. She wanted her employees to feel they were a part of the company and had a say in its operations. She felt this was the ethical and neighborly thing to do. According to Jordan, “We spend a lot of time at this thing called work, and if it can’t feel warm and like everyone you see every day has your back, then I think that’s a real tragedy.” To Jordan’s great credit, the ESOP has proven to be a great business success. In 2015, the company became the fourth largest craft brewer, selling nearly a million barrels in that year and pulling in $225 million in sales.30

    And Jordan’s ethical principles have been a driving force in the business even beyond transforming her employees into joint owners. New Belgium is particularly interested in demonstrating that it is environmentally safe and sustainable. For example, in 1998, it became the first U.S. brewer to power its entire operation with wind-produced electricity. In 2002, it completed a biological wastewater facility that would clean the water left over by the brewing process before releasing it back into the environment. It also uses natural draft cooling and swamp-cooling systems rather than the less environmentally friendly glycol-cooled systems for its cold storage.31

    Nor is Jordan content with only her environmental achievements. New Belgium Brewing is also a leader in philanthropy. It donates $1 to charities in its distribution territory for every barrel of beer it sells. Over the years, this has translated into millions of dollars in donations, and in 2018, the company projects that it will donate more than $900,000 to projects across the country.32 It also manages a volunteer corps it calls the Beer Scouts, which finds and helps supply volunteers for causes aligned with New Belgium’s values.33 Finally, it collaborates with a number of organizations supporting business ethics and nature conservation, such as Conservation Colorado, the Natural Resources Defense Council, and the American Sustainable Business Council.34

    Indra Nooyi, chairman and CEO of PepsiCo

    What might a company like PepsiCo, known for selling sugar-filled sodas and junk food, teach us about ethical business practices? It might actually teach us quite a lot if CEO Indra Nooyi has anything to say about it.

    Born in India and having immigrated to the United States at a relatively young age, Nooyi excelled at school and moved right into the business world after graduating from Yale University. In 1994, Nooyi came to PepsiCo as senior vice president for strategic planning. In 2006, she was promoted to president and CEO, and assumed the role of chairman in 2007. In August 2018, Nooyi announced she would be stepping down as CEO in October 2018 and leaving the position of chairman in early 2019. As CEO, she has tried to push PepsiCo in new and more ethical directions.

    Nooyi devised a sustainable-growth agenda for the company based on three pillars. The first pillar has to do with health and well-being. Through acquisitions, mergers, and other internal changes, Nooyi has tried to transform the Pepsi brand into more of an agent for change and healthy living. She does not want the company to be known merely as the junk food and sugary soda company. She believes in providing options to consumers and in making sure that PepsiCo’s traditional products are not unnecessarily unhealthy.

    The second pillar is a focus on the environment. Nooyi has driven PepsiCo to take notice of its reliance on exhaustible resources like water and she has led efforts to encourage greater energy conservation and recycling efforts. These are issues that are very personal to Nooyi, who grew up in a water-distressed city in India. She wants to use PepsiCo’s great resources not only to find ways to produce beverages that conserve water better but also to pass on this technology to local farmers so they can contribute to this process.

    The third pillar is about empowering people who typically lack power. She has promoted outreach to women and minorities so they feel comfortable and supported in the company. To do this, she has created daycare centers in the bottling plants, added maternity and paternity leave as company benefits, and even made religious accommodations. As she sees it, she wants to make PepsiCo a place “where every employee can bring their whole self to work and not just make a living but also have a life.”

    Nooyi is a champion of what she calls “Performance with Purpose.” By this she means recognizing that a company’s performance in the marketplace is intimately connected to seeking ethical and sustainable approaches. Being a steward of the environment and encouraging tolerance and inclusion are not secondary functions for Nooyi; they are inherent in the company’s approach to business. “If we don’t focus on the environment, our cost will be too high. . . . and if we don’t have the best and brightest people, we won’t be able to deliver performance.”

    Performance with purpose is different from mere corporate social responsibility. As she explains, “Corporate social responsibility is about spending the money you make. You make money and then you give it to a couple of charitable causes in some distant lands and feel good. This is not a feel-good program. This is who we are. You talk about ethics. The ethics of our company is performative purpose. The ethics of our company is the deep-seated belief that large companies can actually make a difference to societies in which we operate.”

    Jostein Solheim, CEO of Ben & Jerry’s

    Cherry Garcia, Wavy Gravy, and Chubby Hubby are just a few of the wacky flavors churned out by the four-decades-old ice cream company, Ben & Jerry’s. These quirky names are a reflection of the company’s unique business style, something Jostein Solheimsigned on to when he agreed to become CEO of the company in 2010.

    Ice cream was nothing new to Solheim. Before becoming CEO, he had worked for Unilever’s many ice cream brands like Breyers, Klondike, Popsicle, and Good Humor. Indeed, the Norway native calls himself “an ice cream guy.” And he is wildly enthusiastic about maintaining Ben & Jerry’s iconic weirdness, even celebrating Unilever’s acquisition of the company by eating a full pint of Chunky Monkey.35

    But as Solheim knows, Ben & Jerry’s is more than just an ice cream chain; it is also an organization dedicated to making a social impact. The founders of the Vermont-based company, Jerry Greenfield and Ben Cohen, transformed their ice cream–making success into a values-led social mission by supporting a host of ethical positions on such issues as responsible manufacturing, fair trade, and non–genetically modified organisms labeling.36 And Solheim has embraced this important component too. He has led the company to establish public positions on racial justice in the United States, environmental activism, and even private prisons. “What inspires me,” Solheim said, “is what social impact can we create with this business.”37

    The activism Solheim supports through Ben & Jerry’s springs from his understanding of the stakeholders in his company. For example, he refers to the consumers as “fans.” “They’re more than just customers,” he explains. “They are bigger stakeholders in our company and we have a responsibility to them beyond a basic transactional exchange of product.” And the same goes for the suppliers, farmers, and NGO partners. “They all connect in a model we called ‘linked prosperity,’ which is circular and reinforcing.”38

    It is Solheim’s vision to see Ben & Jerry’s as a leader in ethical change. Making a values-led company that embraces the concept of linked prosperity also highly profitable is major step in transforming the standard business model. He believes it is inevitable that other businesses will catch on and recognize they, too, have ethical obligations to uphold community values and recognize how their work affects the larger global community.39

    Footnotes