Kathleen Edmond, Best Buy's Chief Ethics Officer

Earlier this year, a Best Buy store manager was terminated for violating Best Buy’s Inappropriate Conduct Policy in a situation involving the falsification of company documents. The employee believed this decision to be unfair and requested that the Peer Review panel overturn the termination. Upon interviewing the manager and other employees with knowledge of the situation – and after reviewing Best Buy’s handling of other situations in which company documents had been falsified – the Peer Review panel upheld the decision to terminate. The Peer Review summary is as follows:

In 2008, a store manager admitted to creating fake documents in an attempt to trigger additional inventory replenishments for their store. The manager received a verbal warning at that time and was instructed to cease such practices immediately. Less than a year later, it again came to the attention of District leadership that the manager had falsified documents in an attempt to increase inventory levels in the store. In doing so, the manager had also instructed store employees to falsify inventory counts to coincide with the fake replenishment requests. When asked about the issue, the manager stated that these actions should not warrant discipline since they were done in the service of Best Buy’s customers and did not result in personal gain for the manager.

The Peer Review panel found that termination was warranted in this case. Their Decision Summary was as follows:
1. The store manager admitted to knowingly violating SOP by falsifying documents to enable additional inventory replenishments.
2. Although the manager claimed that there was no personal gain in doing so, the Peer Review panel believed that the actions take could increase store sales and, as a result, the manager’s bonus potential.
3. The manager was very familiar with the correct SOPs surrounding inventory replenishment and had trained many Best Buy associates on the procedures over a period of years.

The Peer Review panel offered the following learnings and recommendations for future consideration:
• The panel recommended an annual review and sign-off on current Best Buy policies either via eLearning programs or accountability forms/documents.
• The panel recommended that Best Buy update its inventory replenishment system to meet our local growth strategies. Store leaders are expected to innovate and grow their businesses. In this situation, limitations in the replenishment system prevented the manager from doing so with out “tricking the system” and ultimately falsifying company documents.

Does the fact that the manager was attempting to increase company sales make the falsification of company documents acceptable?

In a situation like this, where is the line between “innovation” and inappropriate conduct?

Who do you partner with when faced with challenges like this?

A Best Buy store employee was recently terminated for submitting multiple manual check requests for absence/vacation time on behalf of his peer. The peer employee worked during the time-off periods requested, making this both a violation of our Vacation Policy and falsification of employee time records. The peer for whom time-off pay was requested was also the terminated employee’s roommate and was having his wages garnished by the company. Upon review of company policies and after interviewing all parties involved, the Peer Review panel upheld the decision to terminate. Their Decision Summary is as follows:

The terminated employee acknowledged submitting time-off hours for his peer despite not knowing if the peer had actually taken the time off. He also admitted to not partnering with a store manager in submitting the check requests. In his defense, he said that another store manager had also submitted a manual check request for the same peer. When interviewed, the store manager confirmed that another manager had submitted time-off hours for the peer employee; however the peer was actually absent during those hours and that this occurred before the peer employee’s hours began to be garnished. The store manager also noted that the terminated employee submitted multiple check requests in this manner – a fact the terminated employee did not admit to when first approached – and was consistently vague in his statements during investigation.

The Peer Review panel found similar vagueness in the terminated employee’s statements and believed that the closeness of his relationship with the peer employee (i.e., roommates) constituted a conflict of interest. This belief was supported by the fact that the terminated employee had the stubs from the manual checks in his possession at the time of the investigation.  

The Peer Review panel upheld the termination and found that Best Buy policy was properly and consistently applied in this situation. The panel offered the following learnings and recommendations for future consideration:

• Leaders should reinforce the importance of taking a partner in all decisions regarding employee pay adjustments.
• Best Buy’s policies and procedures should be adjusted to prevent peer-level employees from submitting manual check requests for each other.
• Best Buy’s systems should be modified to ensure that store managers are notified when employees are placed on garnishment and to ensure that manual check requests for time off are flagged when submitted for an employee on garnishment.

Are systems and procedures in place to prevent this from happening in your store?

What ethical implications do you see for the peer who profited directly from the manual check requests?

In your opinion, which presented a more serious conflict of interest for the terminated employee; the fact that he was a peer-level co-worker or the roommate of the other employee?

Last week one of my HR partners told me of two long term employees from different districts, neither of whom ever had any sort of disciplinary action taken against the; but now we had to terminate each one for theft.  Both of them felt like they were backed into a corner because of the economy – a spouse lost a job, unexpected medical issues, and threatened foreclosure on a home.   Whatever their individual facts, they both made the decision that the only way out was to steal to meet the immediate crisis.  They both got caught and are now out of work.   

For each of them, this was the classic ethical dilemma  – is it really wrong to steal to keep my family safe?

For us it raises the question of how we can get resources to our employees who may be feeling trapped and without choices.   We walk a fine line of respecting  people’s privacy, but reaching out to offer assistance so they don’t feel alone and overwhelmed – and forced to make bad choices.  One thing we will do is to re-market the EAP program.

But I am looking for other ideas also.  When you have been in a bad spot – have you had a manager or employer that was able to help you get through it?  How?  What did they do?  How was your dignity and privacy respected, but the need understood?   

Thanks for your thoughts.

On Monday April 13th, Ethisphere, a think tank dedicated to the creation, advancement and sharing of best practices in business ethics, corporate social responsibility,  anti-corruption and sustainability,  named Best Buy to its 2009  list of “World’s Most Ethical Companies.”    It is a great recognition of our employees and all that they do every day to make this a great place to work and a responsible member of the community. 

That said – while I am very proud of us to have this public recognition, it does not mean that we are perfect.  Nor does it mean that we can stop challenging behaviors that are inconsistent with our values,  requiring transparency in our business transactions, and expecting the best from each other and our leaders.    Kudos to Best Buy employees – and customers – for expecting the best and accepting no less.

I am looking for your thoughts and comments.   This thing called “sexting” – where young women send nude or provacative pictures of themselves to their boyfriends via their mobile phones – does Best Buy (as an employer) have a responsiblility to our employees to talk about the oh-so-many ways this can go bad?    We have already had instances in the stores where employees have lost their jobs for sharing these photos with other store employees. 

Another question – does Best Buy as a retailer of mobile phones have a social responsibility to customers to inform them of the risks of this practice?  Short term on their reputation and long term if these get posted on the internet and are there forever for family members and future employers to see?

I would like to hear from Best Buy employees and others in the community.

In early 2009, a Best Buy employee was terminated for violating Best Buy’s Inappropriate Conduct policy and subsequently requested a Peer Review. Upon considering statements from all parties involved and after reviewing the policy itself, the Peer Review panel upheld the decision to terminate.

The appeal summary states that the employee returned merchandise – for which she did not have purchase receipts – to a Best Buy store. The employee initially attempted to make the returns at a neighboring store. When purchase receipts could not be located in Best Buy’s systems, she went to her “home base” store and worked with a non-manager co-worker to make the return. At the time of the return and when later questioned by a manager, the employee stated emphatically that the items were gifts from a close relative and denied that any of the items were vendor gifts from a recent Road Show event. When asked by the manager if this fact could be verified with the employee’s relative, the employee revealed that one of the returned items had been received as a vendor gift at the Road Show. The employee admitted to signing a waiver at the Road Show stating that vendor gifts cannot be sold or returned.

The Decision Summary was as follows:

1. The employee was not forthcoming with information and did not tell the truth about her merchandise returns.
2. The employee knew that the vendor-provided merchandise was not to be returned or sold.
3. The employee did not take a manager partner in the transaction and did not give a reasonable answer why.
4. Based on all testimony, the panel believed that the employee knowingly violated Best Buy’s Inappropriate Conduct policy.

What ethical missteps are apparent in this story?

Which was worse; returning the vendor-gifted merchandise or being evasive about how it was obtained?

What could be done to ensure that more employees don’t make this mistake?

Last year, a Best Buy Supervisor was terminated for violating Best Buy’s Inappropriate Conduct policy and subsequently requested a Peer Review. After review of statements from all of the people involved, as well as the Inappropriate Conduct policy itself, the Peer Review panel upheld the decision to terminate.

The appeal summary states that the supervisor instructed a direct-report employee to make an “open item” price tag for a new (unused, undamaged) product that was to be hidden behind the regular price tag until the Supervisor could decide if he wanted to make the purchase. Though the Supervisor did not purchase this particular product, he did purchase other new merchandise at markdowns of 55-65%. The Supervisor testified that he had spoken to the Product Process Manager about the markdowns in advance.  However, the Product Process Manager testified that the Supervisor did not provide any specific information about product or pricing but had merely expressed an interest in making purchases. Coincidentally, the subordinate who had been asked to hide the open box pricetag was also responsible for ringing up the order. This employee testified that the manager who performed the price overrides questioned the markdowns at the time of purchase and was told by the Supervisor that the Product Process Manager knew about it.

The Decision Summary was as folllows:
1. The discount applied was not consistent with other pricing of open box items.
2. The pricing seemed to be based on the fact that the Supervisor was purchasing it rather than on the condition of the product itself.
3. The instructions to the subordinate to hide a price were considered.
4. Management was not involved in the pricing decisions.

What ethical missteps do you see in this story?

Which of the Supervisor’s actions was most alarming to you and why?

Are there procedures in place that could prevent this from happening in your store?

Last month, a Best Buy Store Manager was terminated for violating the “Inappropriate Conduct” policy and subsequently requested a Peer Review.  After reviewing all the statements from the people involved and looking at Best Buy policy, the panel upheld the decision to terminate.

The appeal summary states that the manager held a Nintendo Wii for personal purchase when it was on the ad after telling another employee that they would have to wait in line with the customers if they wanted to purchase a Wii.  In addition, the summary states that the manager purchased the Wii at an unauthorized price.  A bestbuy.com error had the product listed for less than what it was supposed to be sold and previous communication had been sent to managers instructing them to sell at the higher price but to take care of customers on a case by case basis.  The manager acknowledged putting the product aside but then forgot to purchase it.  The following day the manager noticed the product was still available, which is why the purchase was made.  When questioned about the incident, the manager acknowledged using poor judgment but denied any wrongdoing.

The Decision Summary is as follows

1. The manager knowingly and willingly held back ad product for purchase and took unauthorized discounts on the product.

2. The manager admitted the above to the panel but felt it was just an error in judgment.

3. The manager did violate the company’s Inappropriate Conduct Policy and Conduct Guidelines for Managers.

4. The panel felt that the manager should have partnered with their immediate manager before purchasing the product to insure no policies were being violated.

5. The panel felt that the manager did not act in accordance with our company’s core values.

What ethical challenges do you see here?

Who do you partner with when faced with ethical questions like this? 

Did you know that Peer Review is now available to GMs?

I wanted to get your thoughts about the recent allegations of conspiracy and kickbacks by one of our former managers.  He is accused of over-charging Best Buy approximately $31,000,000 in parts for personal gain.  As unfortunate as the situations is, it gives us a forum to shape the ethical business culture at Best Buy.  Click the link below to read the whole story from the Minneapolis StarTribune and then feel free to give me your thoughts.  I look forward to hearing from you.

 Here is a link to the story:  http://www.startribune.com/business/36205909.html