Faith and Values: The Cost of Doing Business

By Keith E. Gottschalk

Native Iowan and former CEO Jerre Stead cut to the chase.

"How many of you believe CEOs cheat to be successful?" Stead asked the University of Iowa business students assembled to hear him speak Sept. 15. "How many of you saw the headline of today's USA Today 'America loves to hate dastardly CEOs.' "

Only a few hands shot up.

Stead, 62, didn't believe it. He tried again.

The former executive chairman of Information Handling Services and former CEO of Ingram Micro Inc. recalled when one of his companies was forced to pay Mexican border officials a "service fee" to move goods between the two countries.

"What might we call that here?" Stead, of Scottsdale, Ariz., asked the students. "Might we call it a bribe?"

That was perhaps the first revelation for many students that other countries have different ethical standards for doing business.

In the wake of a string of highly publicized corporate crimes, including Enron, Global Crossing, Tyco, Qwest and Martha Stewart, it's now falling on business schools to reinforce principles that should have been taught at home.

Stead's lecture was part of an emphasis on ethics at the UI's Tippie School of Business, an emphasis that permeates all its business programs, said Assistant Dean Nancy Hauserman.

"In my course -- Intro to Law -- I weave ethics into everything I teach," Hauserman said. "The MBA program also has a specific ethics course."

UI business students, like accounting major Emily Vaughan, 21, of Iowa City, benefit from role-playing exercises that present them with real-world ethical dilemmas.

"It was a huge eye opener for me that sometimes the most effective, economical or profitable way of conducting business is not always the best ethical answer," Vaughan said. "Quite frankly, I'm scared sometimes of the ethical dilemmas I'll face."

Another speaker at the UI this month might have scared straight some more of these budding business students. Patrick Kuhse, also an Iowa native, spent four years in a federal prison after pleading guilty to numerous felony counts involving money laundering, bribing a public official and conspiracy.

Kuhse, 50, of San Diego, now speaks on business ethics all over the country, using himself as "exhibit A" for how not to behave in corporate America. Kuhse said he's fighting an uphill battle.

"It really surprises me in my audiences, especially grad students, how many are willing and prepared to compromise their personal ethics to get ahead in their professions," Kuhse said. "Many expect to be asked to do something unethical when they join their respective companies, and they are prepared to do it. The other interesting result of this is how many justify that behavior by saying once they are 'established' in their firms, they will reconfirm their personal ethics and quit their unethical behavior."

As Kuhse knows, it rarely works out that way.

"It was never anyone's intention to live a life of crime," Kuhse said. "It was only meant as a short cut to a better life."

Stead credits his upbringing in Maquoketa for acting ethically later in life.

"For me, it was about growing up in a fundamentally Christian environment where I had a clear understanding of right and wrong and what I could and could not do," Stead said.

For Kuhse, who had a similar upbringing in Grundy Center, seeing the lavish lifestyles of his college fraternity brothers' families got him hooked on money as the yardstick of success. After that, a sense of entitlement to the good life took over.

Although Hauserman sees her students as no more or less ethical than in years past, she notes some differences.

"Their values are a little different, and they are more self-focused," Hauserman said. "They are very concerned with getting a job."

For Vaughan, the classes at Iowa have led her to formulate moral absolutes for her career: no trading sex for promotions or favors, no signing off on anything fraudulent and never taking credit for someone else's work.

Bottom line for Vaughan and her classmates: They believe it's harder to act ethically in business today.