Kathleen Edmond, Best Buy's Chief Ethics Officer

At Best Buy, we challenge our leaders to innovate, show initiative and find creative ways to get things done – particularly things that will enhance the employee and/or customer experience in some way. An unintended side effect, of course, is that leaders are sometimes tempted to work around rules or processes that have been put in place for very good reasons. When this happens, the leader invariably uses a classic “end justifies the means” argument to defend their actions. It all makes for lively debate, as you can imagine. Here is one such example:

• Best Buy has certain design standards governing the layout, construction methods and materials used to build our stores. These standards bring consistency to the brand impression we make on customers, hold construction costs to a minimum, and ensure a safe and durable physical environment.

• The local Best Buy team in charge of managing a store remodel project asked permission within the company to deviate from the standard store plan, presumably to enhance the store in some way to suit the local market. The local management team was told there was no budget to support the request and that any request requiring additional funding would not be approved. Thus, they were denied permission to deviate from the plan and instructed to simply continue according to company standards.

• Working around this process, the local Best Buy team engaged directly with the third-party construction workers and asked them to implement the design alterations. The construction workers obliged and personally benefitted in two ways: 1) They earned extra pay from their employer for the extra time required to perform the “over and above” work; 2) They received free and deeply discounted merchandise (50% off or more) from the local Best Buy team as a “thank you” for doing the work.

 In the end, the Best Buy employees involved in the situation received varying degrees of disciplinary action, including termination for some. As for the contractor, we asked them to reimburse Best Buy for the value of the extra hours billed and merchandise/discounts received. My questions for you:

 1)    It was clearly against company policy for the local Best Buy management team to pursue the construction alterations after being denied permission to deviate from the standard plan. However, does that necessarily mean it was unethical? Why or why not?

 2)    How about the local management team’s decision to sell merchandise to the construction workers at deeply discounted prices? Ethical, unethical, and why?

 3)    And what about the third-party construction workers? Was it ethical of them to alter the plan at the local client’s request and then “double dip” by receiving extra pay/overtime from their employer and free/discounted merchandise from Best Buy?

 4)    In your opinion, if the store design changes truly resulted in a better experience for employees and/or customers, would that justify the actions taken?

 5)    When trying to balance innovation and initiative with policy and procedure, where is the line and how do you know when you’re about to cross it?

The New York Times recently published a story about a phenomenon called “decision fatigue” and how making a series of decisions in succession – no matter how insignificant – can create mental fatigue, reduce our willpower, and make us prone to imprudent decisions thereafter (Aug. 17, 2011; by John Tierney). Researchers also found a direct link between blood glucose levels and our ability to make sound decisions.

 A particularly frightening example was found in the decisions made by a parole board. Researchers noted different parole decisions for prisoners with similar profiles who had committed similar offenses. It seems this parole board worked a full day with a mid-morning break (at which they were served a sandwich and piece of fruit) and a full lunch break later on. The results:

• Prisoners who appeared immediately before the mid-morning snack had only a 20% chance of receiving parole; those appearing immediately after had a 65% chance of parole.
• The likelihood of parole dropped again in the late morning to only 10% immediately before lunch and soared to 60% immediately after lunch.
• As the afternoon wore on, a prisoner’s chance of receiving parole dropped steadily again as the number of decisions mounted and the board members’ glucose levels declined. 

 In the parole board scenario, both garden variety decision fatigue (from the sheer number of consecutive decisions made between breaks) and blood glucose shifts came into play. Other studies drew similar conclusions in settings ranging from wedding planning or ordering a custom-tailored suit to configuring the options on a new built-to-order PC. A study performed in car dealerships, for example, challenged car buyers to choose from multiple engine and transmission pairings, color combinations and other add-on features. As buyers gradually fatigued during the decision process, they became increasingly likely to select the “default” option as the path of least resistance. In doing so, researchers found they could manipulate customers into selecting options that added more than $2,000 to the price of the car on average, simply by altering the sequence of the decisions to capitalize on the declining willpower of the decision maker.

 Says social psychologist Roy F. Baumeister, “Good decision making is not a trait of the person, in the sense that it’s always there. It’s a state that fluctuates. The best decision makers are the ones who know when not to trust themselves.” My questions for you:

 1)    In your opinion, did the parole board members noted above behave ethically in their decision making process? Why or why not?

  2)    Whether shopping for clothes, picking out a home theater system or planning a wedding, have you ever personally encountered decision fatigue? If so, how did you become aware of it?

 3)    How could decision fatigue impact your personal ethics in the workplace and what can you do to guard against this happening?

 4)    Regarding the car dealership example, how should a retailer such as Best Buy structure its customer-facing sales/decision processes to account for the reality of decision fatigue?  Is there an ethical way to do this and an unethical way?

A recent joint study by the Ethisphere Institute and Jones Lang LaSalle, a global commercial real estate services firm, found an apparent link between an employee’s physical work environment and his or her ethical behaviors. More than 200 companies of all sizes, types and industries were surveyed in an effort to gauge the relationship between workplace environment and things like corporate culture, productivity and employee misconduct. The study compared open work spaces (i.e., low or no cube walls), working from home, and the traditional closed office environment where employees have private offices (such as the mythical Sterling Cooper office of TV’s Mad Men).

 Interestingly, the study concluded that open work spaces and working from home both reduced the frequency of ethical misconduct by employees. To paraphrase the study:

• Open work spaces create a “see and be seen” phenomena that serves to reduce offensive language while increasing politeness, transparency, sensitivity and consideration toward others, and the free exchange of information.

• Working from home removes the employee from common misconduct “opportunities.” Furthermore, employees so appreciate the freedom of working from home they tend to guard their behavior lest they lose the privilege.

 I’m curious what you think of these conclusions. For you Mad Men fans, how much of Don Draper’s bad behavior might be preventable if he simply worked at a desk on the floor or from home with his family?

 1)    Do you agree with the “see and be seen” conclusion regarding the open work space? Why or why not?

 2)    How about working from home? Do you think the average worker would be more likely or less likely to violate company policy (or act unethically in some way) while working from home? Why?

 3)    Ultimately, ethical behavior is all about personal decision making. Can you think of scenarios in which an open work environment and/or working from home might precipitate bad decisions on the part of an otherwise ethical employee?

 4)    Have you ever observed a situation in which the physical workspace advanced or hindered ethical transparency and decision making? If so, what happened?

As is common in our industry, many of Best Buy’s vendor partners offer training incentive programs to encourage our in-store employees to spend quality time learning about the merchandise. Take an e-learning course about a new product, pass a test to prove you were paying close attention, and receive rebate points or some other purchase incentive direct from Vendor X. It’s a shared win for the vendor, Best Buy, our employees and our customers:

• The vendor helps ensure our employees are knowledgeable about the finer points of their products and can represent them effectively to customers.
• Best Buy receives product-specific training for its employees at no incremental cost.
• Best Buy’s employees earn the opportunity to purchase the latest and greatest merchandise at a discounted price.
• Best Buy’s customers interact with an employee population that is well-schooled in the features and benefits of the products we sell.

 Sadly, a Best Buy employee recently attempted to take advantage of one of these vendor learning programs through an elaborate scam. Here’s how it went:

• Employee orders vendor merchandise via an intra-company transaction.
• When the product arrives at the store, the employee secretly goes to the loading dock and clips the UPS and model number info off of the boxes.
• Employee submits this UPS/model information to the vendor as proof of purchase to obtain the cash rebate associated with their completion of the e-learning program.
• Employee cancels the intra-company order, never takes possession of the merchandise, and simply deposits the vendor rebate checks ($1,100 worth) when they arrive.

 The employee, as you would expect, was terminated for perpetrating this fraud against our vendor partner. That was not the only fallout, however. The vendor was understandably disappointed by the situation and could very easily have decided to abandon the training program altogether. Fortunately, they were wonderful to work with and the relationship remains solid despite this unprecedented incident. My questions for you:

 1)    How should individual Best Buy employees be educated and then held accountable for safeguarding the company’s critical business relationships?

 2)    What obligation does Best Buy (as a company) have to its vendor partner in a situation like this?

 3)    Imagine if the training incentive program had been discontinued. What negative impact would that have had on other Best Buy employees? On Best Buy’s customers?

 4)    Do you think the employee should be on the hook for repaying the vendor $1,100?

A colleague recently forwarded an interesting story from the Harvard Business Review (“The Daily Stat,” May 17, 2011). According to research conducted by Stanford University and the University of California – Santa Barbara, 88% of graduating MBA students say they would take a pay cut to work for companies that have ethical business practices. Even more impressive, they claimed to be willing to forgo an average of $8,087 per year in salary to do so.

 It’s worth noting that the sample size was only 759 students and included both North American and European participants. Nonetheless, it is encouraging to see such a strong preference for an ethical work environment, even at the expense of maximum income potential. It also makes me wonder if the opposite would hold true if they conducted the study again.

 1)    How about you? Would you be willing to take a pay cut to work for a highly ethical company?

 2)    If so, how much annual salary would you be willing to give up for that experience?

 3)    Now, let’s flip the scenario. Would you work for a company that had obviously unethical business practices? If so, how much more would you have to earn to quell your conscience?

 4)    Have you ever had to make a trade-off like this in your career? If so, what did you decide and how did it turn out?

The majority of the time, most people will choose to act in an ethical manner when given the choice. I firmly believe that the average person is hardwired to want to be ethical and fair; it’s just that human nature sometimes gets in the way. Of course, if you read this blog on a regular basis, you might not think so. Given the topic, my blog is generally focused on bad behaviors that I hope to use as a learning opportunity. The good stuff is definitely out there, however, and I thought it was time I mixed it up a bit.

 Best Buy’s ethics website is freely accessible on the internet at www.BestBuyEthics.com. If you scroll down, you will see a “Tell Us About The Good Stuff” link where we encourage Best Buy employees to provide examples of co-workers who “stepped up and did the right thing.” I recently received this submission from a Best Buy employee about a co-worker named Norrand:

It has amazed me through my time working for this company that some of the most important staff goes unappreciated. One such person is the DCI of the Geek Squad, Norrand. This man has, at times, worked from open to close because one of his agents had called in sick. When one of his “Geeks” has a family emergency, he is the first one to step up and get that employee to their family’s side. He is the Saint of this store and he allows for his agents to go to school and helps them out as much as he can. There was an incident where one of the college-attending Agents had to, at the last minute, go to a speaking engagement. Norrand stayed and covered that agent’s shift until he could make the several-hour round trip, being several hours late to work. This agent could have been scolded for being late on such short notice, but instead he was just commended for being able to do such things. [Norrand] is a man who should receive all that comes to him.

 You may wonder why I posted this example. Being a great team player and maintaining a positive attitude don’t appear to be directly related to business ethics – or are they? Is it possible that attitude and ethics are actually two sides of the proverbial coin? My questions for you:                                                                                        

1)    Based solely on the description provided above, do you think it is likely that Norrand is more ethical, less ethical or no different from the “average” employee? Why?

 2)    If you worked on the same team as someone like Norrand, do you think your ethical decision making would be influenced in any way? If so, how?

 3)    One of my favorite books, The Art of Possibility by Benjamin Zander, talks about how you can “lead from any chair.” It’s a reference to the fact that every musician in an orchestra, even the unheralded cellist in the 11^th chair, has the power to enhance the quality of the orchestra’s overall performance from where they sit. How is the concept of “leading from any chair” relevant to a discussion about business ethics?

 4)    I am grateful this story was brought to our attention so we can express our appreciation to Norrand for everything he does. What sometimes happens to the Norrands of the world when their efforts go unrecognized?

I read a fascinating New York Times article earlier this year (Stumbling Into Bad Behavior; April 20, 2011) that described a phenomenon known as “ethical fading” and the role our unconscious thoughts play in ethical decision making. Our legal system is usually focused on preventing and prosecuting acts involving willful misconduct or gross negligence. But what about the unintentional unethical behaviors that result from our innate bias toward self-interests? Could you be behaving unethically and not even be aware of it? The article describes two studies that illustrate this problem:

 Study #1:  Participants were asked to pretend they were the management team of a manufacturer in an industry that generates toxic pollutants. The pseudo management team was told they were under pressure to reduce toxic emissions and must abide by an agreement with regulators to voluntarily use a type of equipment that would reduce the volume of those emissions. Some participants were told they would be fined if they broke the agreement while others were told there would be no financial penalty for breaking the agreement. As the study scenario played out, participants who had been told they would be fined for not honoring the agreement were more likely to ignore the agreement; participants told they were not subject to fines were less likely to violate it. The conclusion: The fine was actually counterproductive. By attaching a fine to the unethical behavior, participants began to view the decision purely in terms of dollars and cents, not ethics.

 Study #2:  Students were asked to estimate the market value of a fictitious company from the vantage point of one of four roles: buyer, seller, buyer’s auditor or seller’s auditor. Though everyone in the study had access to the same information, the market value estimates varied significantly depending on the role being played. Estimates generated by the “seller” group were significantly higher than that of the “buyer” group. More alarming, however, was the disparity in the estimates provided by the supposedly unbiased auditor groups. Estimates made by the “seller’s auditor” group were 30% higher than estimates representing the “buyer’s auditor” group. These same results were later replicated in a study involving actual auditors from a major public accounting firm. The conclusion: No matter how ethical or well-intended you may be, if you have a vested self-interest in something, you will likely find it difficult to remain objective and may be completely blind to that lack of objectivity. (Mortgage lenders, are you listening?)

 The implications for companies like Best Buy are enormous. In our continual march to deliver strong quarterly financial results and delight the Wall Street analysts, “ethical fading” could potentially lead individuals – or entire groups of individuals – to engage in behavior they would ordinarily recognize as unethical. My questions for you:

 1)    Generally speaking, do you think most people can recognize unethical behaviors in their own actions?  What safeguards (or people) do you have in your life to give you honest feedback on your actions?

 2)    Regarding study #1, can you think of a scenario in which a fine or penalty actually made you less likely to honor an ethical standard? Why do you think that happened?

 3)    Regarding study #2, have you ever been involved in a business negotiation and found yourself over-inflating the value or relative merits of your offer? In hindsight, was that an ethical approach on your part?

 4)    Have you ever seen “ethical fading” in action where you work? If so, were you able to recognize it before any harm was done?

We had an unfortunate situation recently in which a contract worker was released from her assignment at Best Buy for forging a colleague’s signature on dozens of documents. It seems the contract worker would submit various orders/requests and then forge the signature of a Best Buy employee as the “approver.”  The Best Buy employee did not know about – or authorize – the proxy signatures.

The contractor initially denied doing so but later admitted to the forgeries. In her defense, she did not derive any personal gain from these activities and appeared to be solely motivated by a desire to speed up critical work while taking an administrative burden from the Best Buy employee.  My questions for you:

1) If there was no ill intent and her actions helped expedite important work for Best Buy, was it truly wrong of the contract worker to forge the employee’s approval?

2) Does it matter that she was a contract worker? Would you hold a Best Buy employee to a different standard?

3) What if the Best Buy employee had authorized the contract worker to forge his approval?  Would that change your opinion of the situation?

4) In any large company there are barriers and snags to getting work done quickly.  Clearly, forging another’s signature for approval is not the right way to move the system – so what is?  What methods have you found to defeat inertia and increase efficiency in a large corporate system?

 A few months ago, I wrote about a Best Buy employee who shared a proprietary document in a job interview with our competitor as a sample of her work. Oddly enough, the exact opposite happened to us recently. An external candidate interviewed for a job at our corporate office and presented a document that appeared to list confidential pricing information for this person’s current employer – one of our vendors. I say “appeared to” because there was no way to know whether the data was factual or fictitious. However, the names of the companies in the work sample were real and relevant to our industry. Similar to the prior incident, we destroyed the document and made a courtesy call to the job candidate’s current employer and let them know what had transpired. We chose not to hire the person because of obvious concerns about his judgment and confidentiality. I have no idea whether he will retain his current employment.

 For anyone who is reading this, please make note and spread the word to all of your friends. While it is perfectly OK to show elaborate spreadsheets and reports as samples of your work when interviewing for a job, you must ensure the document does not betray confidential information of any kind. My advice is to simply change company names to obvious pseudonyms like Santa Claus and Sleeping Beauty and replace all figures with randomly keyed numbers. To top it off, add a “not actual numbers – for illustrative purposes only” footer or watermark to the document. Your analytical skills will still be readily apparent to the hiring manager and you will further impress him or her by handling your current employer’s confidential information in a discreet manner. My questions for you:

 1)    Would it have been ethical for Best Buy to use the pricing information given to us in that job interview?

 2)    What if it were legal to do so, which it likely was? Shouldn’t ethical standards perfectly mirror the law? Why or why not?

 3)    What if an employee is interviewing for a role in a completely different industry and the data provided is of no use to the hiring company? Would it still be necessary to remove confidential details?

 4)    Pretend you are the hiring manager. What impression would the candidate make if he or she were to share confidential documents with you? Why?

A recent New York Times article offers a fascinating look at humans’ apparently innate desire for fairness. Anthropologists suggest that “the belief in fairness and reciprocity, a capacity for empathy and impulse control, and a willingness to work cooperatively” are what set humans apart from other primates and enable our dominant position within the Animal Kingdom.

 Dr. Ernst Fehr of the University of Zurich notes that “by the age of 6 or 7, children are zealously devoted to the equitable partitioning of goods, and they will choose to punish those who try to grab more than their arithmetically proper share of Smarties and jelly beans even when that means the punishers must sacrifice their own portion of treats.” Likewise, Dr. Katarina Gospic of the Karolinska Institute in Stockholm describes how a complex game study involving the partitioning of money “indicated that the act of treating people fairly and implementing justice in society has evolutionary roots.”

 If you are at all intrigued by nature vs. nurture arguments or ever wondered why humans do the things they do, click the link above to learn more. My questions for you:

 1)    Do you believe humans are hard-wired to desire fairness in their interactions with other humans? Why or why not?

 2)    The article asserts that “Homo sapiens have an innate distaste for hierarchical extremes.”  How should we balance the need to attract, retain, and reward good leadership against the risk of creating a harmful hierarchical extreme?

 3)    If humans are indeed predisposed to desire fairness and cooperation toward mutual benefit, why do we have so many rules? More importantly, why do so many people break those rules?