“No smoke, no mirrors” – John Deere chief talks on ethics

Robert Lane, chairman and chief executive officer of John Deere, delivered a talk on business ethics at Notre Dame during a week when two disgraced executives paid stiff prices for their roles in scandals that became national symbols of corporate greed.

On Sept. 26, former Enron Corp. executive Andrew Fastow was sentenced to six years in prison and Bernard Ebbers, once the chief executive of WorldCom Inc., began serving a 25-year sentence.

“How many of you have ever seen the code of conduct for Enron, or how many of you have seen a video of Ken Lay discussing with passion the importance of integrity at Enron?” Lane asked the audience of graduate and undergraduate business students. More than half raised their hands. “So you know that on the surface these statements are outstanding. But unless the words become behavior, become inherent in business culture, they remain just words. If they are inconsistent with behavior, they become poisonous words because they reek of hypocrisy.”

Lane’s talk, “No Smoke, No Mirrors. Straight Down the Middle,” which took place Sept. 27 in Jordan Auditorium at Mendoza College of Business, centered on the vital importance of integrity in restoring public trust in business, particularly in view of recent accounting scandals.

Scandals are not new, said Lane, “but they are disappointing because the public is losing faith in business, when business in fact is lifting people out of poverty … The ramifications run deep and they hurt us all.”

He defined integrity as practicing transparency and accountability at all levels of the corporation, including its dealings with customers, employees, shareholders, suppliers and dealers. The 169-year-old Deere & Company employs about 47,000 people and does business in 130 countries.

Although Lane lauded the Sarbanes-Oxley act for helping to restore public trust, he placed emphasis on the company’s leadership for establishing the ethical culture. The leader’s focus should be on principled long-term self-interests that contribute to the greater good instead of short-term expedient goals designed to out-maneuver the competition

In practice, the “no smoke” motto means in part giving “bad news early,” said Lane. “If something is wrong, it is incumbent on every Deere employee to make bad news known early. We don’t shoot the messenger.”

It also means refusing to resort to bribes or other unethical behavior in order to gain business. “Our employees understand that after we have exhausted all efforts to win new business legitimately, we will walk away,” he said.

Lane said he believes most businesses are ethically solid and well-managed, but to restore public trust will take a combination of effective public policy that establishes basic standards, as well as fair compensation systems that link pay to sustained, delivered performance. Most importantly, to the students who plan to be business leaders, restoring trust means operating with integrity, even in the smallest items such as answering phone calls instead of instructing an assistant to make an excuse.

“Make integrity a trait for which you are known – your trademark,” said Lane.

The Berges Lecture Series is presented each fall by Notre Dame’s Center for Ethics and Religious Values in Business and Institute for Ethical Business Worldwide.

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