In a perfect world, it’s always clear what’s right or wrong. In the real world, things are often not so clear.
Someone’s wrong can be your right, which means your right will definitely, at some point, be someone else’s wrong. Most of the time the “right” choice can be subjective.
At some point in our careers, most of us will have to make tricky ethical decisions. How do you examine the issue and figure out what to do? We asked seven leaders in the business world to share their stories and lessons.
Sallie Krawcheck, chair of Ellevate Network and Ellevate Asset Management
Weeks after Krawcheck took over running Merrill Lynch’s wealth management division, in the fall of 2009, she was told that the Stable Value Fund, a financial product Merrill had sold in 401k plans, wasn’t actually so stable. The team had “messed up,” says Krawcheck. They had “managed the money in a way that something that was supposed to be low risk and maintain its value had lost value.”
Even worse, the people who would suffer most from the mistakes were low-income earners who invested in the funds as part of their retirement savings plans–specifically, Walmart employees, as the retail giant was the biggest owner of these funds.
“There were two options, one of which was to say tough luck to the Walmart employees who owned the Stable Value Fund,” says Krawcheck. “Or to put money in, in order to increase the [fund’s] value.”
Krawcheck, who had just been fired as head of CitiGroup’s wealth management division for reimbursing clients for their losses, quickly felt a sense of déjà vu in her new role.
“I’d lost my job once for doing this . . . did I want to do it again?” she recalls. “And the answer is, I did.”
She adds: “It wasn’t a lot of sleepless nights. In a way, I had set precedent for myself on this. I set precedent at [Smith] Barney’s that I was willing to lose my job for it.”
When Krawcheck came forward with her suggestions, there was a lot of back and forth because “the banks didn’t have lots of money at the time,” she says. “What I will say is that Ken Lewis, who was the CEO at the time, did support us in making what I thought was the right decision. I didn’t get fired from it. In fact, you’d never even read about it until today.”
Her advice: “We all have to find that line for ourselves and examine the downside. Are you comfortable with the downside? I didn’t love the idea of losing my job, but that was less painful to me than thinking about telling the Walmart employees that we had lost money that they had thought could not be lost.”
The lesson: “Know what your indicator is. My indicator has always been my stomach. When my stomach starts to hurt, I know that something’s wrong.”
Fifteen years ago, hours before closing a $3 billion asset acquisition, Brown, who was a senior associate in her late 20s, received some information that could have sabotaged the entire deal. At the time, her partner wasn’t reachable and Brown had a choice to make: either tell her client and risk losing the deal, or keep quiet until the papers were signed.
She chose to tell the client.
“It was early in my career,” she says. “Even if the deal had been blown up for good, honest reasons rooted in decent integrity and morality, there’s always the fear that you’re going to become the associate whose deal blew up, and now everybody’s talking about how the senior person wasn’t around and you’re being Goody Two-shoes and you ruined the deal.”
After disclosing the information she uncovered to her client, Brown was able to help both sides come to a solution, and in the end, a deal was finalized. Her ability to have good judgment, do what she thought was right, and not let fear drive her decisions are lessons Brown has carried with her throughout her career.
“Without question, I have repeatedly in my career seen that to be the case–just proceeding from a place of love and integrity and looking to solve the problem and to move the ball forward, as opposed to fear. Because usually when there’s a moral dilemma like this, the main thing that’s getting in the way of the ability to make a good decision is that we’re motivated by our fears,” she explains.
Her advice: “It’s the moment where we start giving in to our fears, that’s when people start making really bad decisions that can be very hurtful and harmful to others. People are afraid their piece of the pie is going to be cut up and given to someone else, and so that motivates some of what you see in the business context.”
The lesson: Sometimes the things we think could really hurt us or embarrass us end up being the things that become our shining, most glorious moments.
When Gerber found out that one of his employees was clocking in his wife who wasn’t actually showing up until three hours later, the company immediately fired the employee.
Afterwards, the employee came in with his father, who has worked for Gerber for two decades, and the two pleaded for another chance. He explained that he had a newborn son and that his wife couldn’t leave for work until he got home. Although it was a tough decision, Gerber and his business partner decided to give the employee another chance, mainly because his father had been a loyal employee for so long.
“[We] made the decision to [rehire] him,” says Gerber. “The decision was extremely difficult because we caught him technically stealing from the company, and we generally have a zero-tolerance policy for such behavior. But because his father has worked for us for over 20 years, and vouched that his son would never do this again, we decided to give him another chance.”
The lesson: Loyalty and longevity still matter at some companies.
When Peterson started working for big toy companies more than 10 years ago, she wanted to get young girls excited about science. Somewhere along the way, she forgot her mission and found herself–like most in the industry–advocating for toys catering to boys simply because they’re more profitable.
“The thinking was that if we design it for boys, then girls will just play too,” she says. “But if we do the reverse and design it for girls, we don’t know if boys will play. The thing to do was, by default, design the toys for boys.
“I found that to be morally not right, but I absolutely advocated what I thought was right for the business, to lead with boys, because we found that to be a more sound business decision,” continues Peterson. “There I was, year after year, representing this position that the best business decision we can make is to design toys for boys. I was never my authentic self because of that.”
Peterson has since founded her own toy company aimed at teaching STEM skills to both girls and boys, and featuring “adventurous leading female characters.”
“I now have the opportunity with my own startup to make up the rules, and we get to decide what’s important,” she says. “We decided to take our industry’s standard and flip it on its head. Instead of designing products for boys and then looking for opportunities to invite girls to play, we’re designing for girls and then looking for opportunities to invite boys to play.”
The lesson: You need to be the change you want to see.
Minshew’s toughest ethical decision involved firing a company they had signed on to do business with.
“They’d already paid us for the Muse recruiting product, but were treating our team so badly during onboarding that it just didn’t feel like how I wanted to do business,” recalls Minshew. “To make it worse, they were really nice to me. It was just the junior staff they treated poorly.”
To make matters worse, The Muse was just getting started at the time and was really in need of the revenue. Still, it felt wrong to work with a company that behaved so poorly, says Minshew.
She adds: “In the end, I gave them a warning, and then when it continued, told them nicely that it didn’t make sense to work together anymore and refunded the unused balance of their money. They tried to argue, but at that point, my mind was made up. I didn’t realize how relieved my team was–and how much they appreciated it–until after it was all done.”
The lesson: “I think backing your team in situations like that is really important, but it’s not always easy. Especially when you’re early stage.”
“During my time as a product manager on Apple’s PowerBook team, we were gearing up to launch a new product. As part of testing, we had found that a very small sample size was flawed and could be harmful. I was under tremendous pressure to make a decision on whether or not to hold off bringing the product to market. And there were good arguments on both sides.”
On the one hand, the defected sample size was small and not statistically significant, and millions of dollars would be lost by holding off shipment. On the other hand, Soohoo believed the long-term impact risk was high.
“If the flaw was bigger than we thought, it could have created a huge loss of trust with our customers,” he says.
Ultimately, Soohoo decided to delay the launch of the product. “In the end, it came down to taking a long-term perspective, and it just made more sense to delay the launch,” he says. “Putting myself in the shoes of our customers, I think that’s what they would have expected Apple to do. Not a popular decision at the time, but it was the right decision for the business.”
The lesson: “Trust your gut to do the right thing for the customers. When there is a difficult decision to make, make it based on what would create long-term value instead of gaining the short-term win. That lesson has remained with me throughout my career.”
Trae Bodge, spokeswoman and senior editor of RetailMeNot.com and cofounder of beauty brand Three Custom Color Specialists
When Bodge started her company Three Custom Color Specialists back in the ’90s, there were very few products for women of color. And there was a reason why: Creating makeup for darker skin tones was more costly.
Bodge explains: “A fair-skinned woman may have eight different tones on her face, whereas a dark-skinned woman may have 25 different tones on her face, so it becomes very hard to cater to a darker-skinned client. So many brands don’t have darker skin colors because it’s very difficult to have a range of color for those women. It’s difficult, from a business perspective, to have so many shades available, but we made it a priority.
“I always understand when I see a bigger company not having darker skin tones, because it’s very difficult in carrying those tones and making a profit on them, but I think it’s important, and I think that bigger companies should be willing to take a hit in an effort to answer to the needs of women of color.”
From day one, Bodge says her company has made it a priority to introduce a broad range of shades. Today, she’s thankful to see other makeup brands making it a priority to be inclusive of women of all skin tones.
The lesson: If you’re looking at your bottom line as a company, part of that equation should be, am I catering to all consumers? And yes, certain shades will be more profitable and certain shades will be less profitable, but there’s a middle ground there. It’s a mistake from a PR and customer service perspective not to cater to all consumers.