Those may be the five most dangerous words in business, wrote Warren Buffet in a September 27 memo to his top managers at Berkshire Hathaway.
According to an article today in The Financial Times, the billionaire investment guru is doubling his efforts to keep unethical practices out of his 200,000-employee corporation at a time when corporate scandals abound.
The memo was written specifically to address the backdating of stock options — a widespread practice that is not necessarily illegal, but is generally considered unethical. Many corporate governance regulators say options backdating enriches executives at the expense of shareholders.
The Financial Times reported that more than 100 companies are currently being probed in the ongoing options backdating scandal. Buffett warns that the proliferation of these “accounting gimmicks” is the result of a pack mentality — one that is not only unethical but can also be dangerous for a company.
Is it encouraging having a business leader of Buffet’s stature speak out against unethical business practices, especially at a time when corporate scandals are nearly everywhere you look?
Are there practices in your business or industry that you avoid, or probably should avoid, even though everyone else is doing it?