Kathleen Edmond, Best Buy's Chief Ethics Officer

A situation at one of our stores was recently brought to my attention as a possible conflict of interest and violation of the Employee Discount Policy. It seems the spouse of a store Assistant Manager was starting her own computer repair business at home. The Best Buy employee was purchasing products at work to help her get started, generally clearance or open box merchandise. However, he also purchased some printer ink for her using his employee discount, receiving about $30 off. Lastly, he told his GM that, if anyone in town asked where to get a computer fixed, he would refer the person to his wife’s business.  My questions for you:

 1)    Was there anything wrong with the employee purchasing open box or clearance merchandise for his wife’s computer repair business? Why or why not?

 2)    How about using his employee discount to purchase ink for her? Does it matter that he only saved $30 by doing this?

 3)    What about his boast that he would “tell anyone in town” to use his wife’s repair business in lieu of Best Buy? Would it matter where he did that (i.e., in a private conversation while off work vs. in the Best Buy store while on duty)?

 4)    There is no law, of course, to prevent employees or their spouses from operating businesses on the side. What could this employee have done differently to ensure company policy and business ethics were not breached?  And resolve any actual or appearance of a conflict of interest?

Not long ago, I blogged about a Best Buy employee who shared a proprietary document with one of our competitors in a job interview as a sample of her work. I was recently made aware of another situation that has some similarities but also some key differences. Here is that story:

 A manager-level Best Buy employee left the company to accept a similar position at one of our competitors. Shortly after his departure, another Best Buy employee approached me to express her frustration over the situation. Apparently, the departing employee had made an effort to educate himself on the activities of a different business unit within Best Buy – information that did not appear to be directly relevant to his role at Best Buy but would likely be of value to his new employer.

 To my knowledge, the departing employee did not take any documents or physical assets to the competitor, merely the information in his head. Likewise, I have no way of proving that he had been offered – or even knew about – the competing job when he “went to school” on his peers at Best Buy. We are merely left to speculate on his motives and debate right vs. wrong after the fact. My questions for you:

 1)    A former employee educated himself on the activities of a peer business unit within Best Buy. That knowledge now resides at Competitor X. From an ethical standpoint, does it matter if the employee did this with the intent of pursuing a job at Competitor X? Why or why not?

 2)    Is timing relevant? For example, would your answer to question #1 change if I told you the employee sought the peer business unit information 6 months before departing for Company X? What if it was only 6 days prior to departing? 

 3)    Intellectual property law says that employee insights cannot be copyrighted but processes, information and the application of those ideas are proprietary to a company. Where, then, is the line between proprietary business information and the insights an employee carries around his or her head?

 4)    It is normal and understandable for an employee’s engagement level to drop when they are about to leave a company. However, should their ethics waver on the way out the door?

As you might expect, the line between our employees’ work lives and personal lives has become increasingly blurred with the advent of Facebook, Twitter and blogs. When a Best Buy employee Tweets with friends about the relative merits of that hot new tablet or video game, are they doing so as an independent entity or as a representative of the world’s largest consumer electronics company? It’s an evolving ethical landscape that poses many challenges that simply did not exist five years ago.

 For this reason, Best Buy has a Social Media Policy that coaches employees on how to “be smart, be respectful, and be human” when engaged in social networking while off the clock. Among the do’s and don’ts described in our Policy:

• Always disclose your affiliation to Best Buy when talking about topics related to your job.
• Make it clear it’s YOUR opinion that is being expressed, not necessarily Best Buy’s official point of view on the matter.
• Protect yourself, our customers and the company by never disclosing personal information, customer data or proprietary company secrets.
• Act ethically and responsibly at all times, embodying the very best of our company values.

 Despite these ethical guidelines, we occasionally encounter situations where an employee shares more than is appropriate while using the social media du jour. For example, a customer recently vented her frustration on one of our vendor’s tech support websites, explaining in detail how the television manufactured by Vendor X did not operate properly. Unfortunately, the post also included this phrase: “I am a Best Buy employee and should have known better!”

 With that simple phrase, what began as ordinary customer feedback for Vendor X about one of their products became a potentially embarrassing situation for Best Buy and our vendor partner. My questions for you:

 1)    Our Social Media Policy makes it clear employees should always state their affiliation with Best Buy. Do you think the employee’s comment above embodied the spirit of that Policy guideline? Why or why not?

 2)    In the scenario above, the Best Buy employee is speaking as a customer of Vendor X. They have every right to voice their point of view, of course. However, do they also have a right to leverage Best Buy’s brand in the process?

 3)    What if I told you that Vendor X is actually a private label manufacturer/business unit within Best Buy? In your opinion, would that change the expectations we should hold of our employee? If so, why?

 4)    In your opinion, where is the line between work life and personal life in the world of social media? How can you know when you’ve crossed that line?

Best Buy, like most retailers, has a number of employees who regularly travel around the world to meet with vendors and suppliers. We likely have several people in Japan, China, Korea and elsewhere right now engaged in contract negotiations and confidential previews of the coming year’s new products.  Often our vendor partners pay for this business travel to and from the overseas locations as it is more convenient for them that we travel to them, rather than they travel here.  The trips are planned in accordance with business needs.

 I recently received a note from a Best Buy employee who engages in this type of travel on a frequent basis. When planning a travel itinerary, he always makes an effort to seek cost-effective flight arrangements to limit the expense that will be passed along to the vendor partner. With a little homework, this employee is almost always able to schedule round-trip fares at a fairly reasonable cost.  However, he is sometimes embarrassed to see co-workers submitting business class travel itineraries costing up to three times more for the same destinations.  Ironically, the employee notes that such an itinerary would never be approved if Best Buy were paying the bill. For some reason, we are rather less concerned about the pricetag when Vendor X is buying the tickets.

 In this employee’s point of view, this practice is lazy at best and unethical at worst. “The vendors are put in the unenviable position of not being able to say ‘no’ to a request like that. However, I guarantee it reflects poorly on us as a company.” What do you think?

 1)    Does Best Buy have an obligation to be as cost-conscious when spending a vendor partner’s money as it would be when spending its own money? Why or why not?

 2)    It’s not uncommon for one of these relationships to be worth tens (or even hundreds) of millions of dollars per year to both companies. In that context, do a few thousand dollars really matter?

 3)    It is often difficult for a vendor to push back on an important customer. How do we create an environment or business relationship that allows for frank discussion about difficult topics?

 4)    What creative solutions might be available for both Best Buy and Vendor X?

Earlier this year, I hosted another of our global employee forums on the topic of business ethics. This particular forum focused on a number of ethical challenges addressed by Best Buy over the past decade and I invited leaders who were there to share their points of view on what was learned from each experience. Among the topics covered:

 Service Plans – Best Buy’s approach to the marketing of Service Plans has matured over time in response to changing ethical sensitivities raised by employees and customers alike.

 Human Rights – As we expand our operations overseas, Best Buy’s ethical responsibilities as a member of the global business community continue to grow.

 Recycling – Our customers want Best Buy to help them dispose of their unwanted electronics, an issue few in the industry are willing to face.

 Xbox 360 – During the holiday season of 2005, certain Best Buy stores engaged in less-than-transparent marketing practices regarding the hot product du jour, Xbox 360.

 Competitive Intelligence – Best Buy’s ethical decision making practices related to Competitive Intelligence (e.g., “dumpster diving”) have changed over the years, a point illustrated by our recent handling of a website loaded with a competitor’s proprietary business information.

 Please click here to watch a video on these topics and come back to share your observations:

 1)    Regarding our Service Plans (beginning at 1:40 on the video), Derek Kuehn mentions that Best Buy formerly placed too much emphasis on how many Service Plans were being sold and not enough emphasis on how they were being sold. Where is the line between aggressive – but ethical – business practices and unethical practices? How can you know when you’ve crossed that line?

 2)    Regarding our Human Rights awareness in the global business community (beginning at 3:10 of the video), Scott King describes how Best Buy audits overseas business partners to ensure they are adhering to an International Code of Conduct in respect to their employees. As a Best Buy employee or customer, does it matter to you whether we police the Human Rights practices of our vendors and suppliers on the other side of the world? Why or why not?

 3)    At 4:40 of the video, Mary Capozzi talks about Best Buy’s effort to make it easier for customers to dispose of obsolete electronics in an environmentally sound manner. Do you think Best Buy, as an electronics retailer, has an ethical obligation to help customers dispose of their stuff? What if that stuff wasn’t even purchased at Best Buy?

 4)    Paul Stone (at 6:00 of the video) talks about the Xbox 360 scenario and how it resulted in sweeping changes to how Best Buy “attaches” accessories to product sales. In a situation where demand for a product far outstrips the current supply, is it ethical for a retailer to restrict sales in ways that will increase sales revenue? Why or why not?

 5)    Mike Ray (at 7:40 of the video) describes a recent scenario in which Best Buy was improperly given access to a website containing a treasure trove of proprietary information about a competitor. Best Buy declined to exploit the opportunity for ethical reasons. Would all of our stockholders necessarily agree with that decision? Does that matter?

As happens from time to time in this business, Best Buy recently made an obvious data entry error that briefly resulted in a $1700 product being offered to customers for $150. Fortunately, the error was confined to our in-store kiosks only and was quickly identified. Nonetheless, a number of people spotted the error before it could be corrected and attempted to purchase the $1700 item for more than 90% off the normal retail price.

 The team that manages our kiosks ran a report that listed all of the customers who attempted to make a purchase at $150. We resolved the issue by cancelling all non-fulfilled orders, which is common industry practice for such situations. However, the scenario raises some interesting issues.

 1)    In a situation like this, is it ethical for customers to attempt to take advantage of a price that is obviously the result of a technical glitch or human error?

 2)    Do you believe a company like Best Buy is obligated to honor a mistaken sales price? Why or why not?  If we do not honor the incorrect price, do we owe the customer a gift card? 

 3)    If you answered “yes” to question #2, is the dollar amount of the error relevant? For example, if the Cadillac website mistakenly offered a $50,000 car for $500, would you expect Cadillac to honor the transaction at a discount of $49,500?

 4)    What if we discovered that one of our employees attempted to capitalize on the error? Ethically speaking, is that any different from a customer attempting to do so? Why?  What should you do if you see one of your team members purchasing a product that is obviously mispriced?

 5)    If this was your company, your brand and your bottom line, how would you handle this type of mistake?

In a retail organization with 4,000+ locations and 180,000 employees, there are hundreds of thousands of customer interactions each day and not all of them will necessarily go smoothly – either from the customer’s perspective or Best Buy’s. Misunderstandings happen from time to time and likely always will. The most important thing, in my opinion, is knowing how to balance the conflicting points of view in each situation to arrive at a solution that is ethical and reasonable for both parties.

 Case in point, we recently had an issue in a store that, if not resolved, might otherwise have resulted in a complaint. The Best Buy store was offering a great deal on a certain 3D television that included four free pairs of 3D glasses with that TV. Because of shelf space limitations, however, the display case housing the four pairs of 3D glasses was around the corner from the TV to which they were “attached.”

 A family entered our store and saw the sign touting the four free pairs of 3D glasses and thought that offer applied more generally to other models of televisions. The kids tried a different 3D TV on display, fell in love with it, and swayed the parents that the free glasses offer (a $500+ value) was the tipping point they had been waiting for as a family to invest in 3D TV technology. The parents were in the process of spending nearly $3,000 on the purchase when they learned the free glasses offer applied to a different model of TV, not the one they had purchased. Furthermore, the free glasses on display were not even compatible with their new TV.

 From the customer’s point of view, this was misleading, at best. From Best Buy’s point of view, it was an example of a customer not reading the signage in the store. The display case for the free 3D glasses was clearly marked, indicating they were part of a package deal with the specific model of TV being promoted. On the other hand, the display case was around the corner from the TV itself. For all of our other 3D televisions, the TVs and matching glasses were displayed together to prevent any possible confusion.

 The store management team ultimately did the right thing for the customer and gave them the remaining three pairs of glasses in stock for that TV at no charge. They also reconfigured the display to ensure that glasses and TVs are always together. The customer later purchased a fourth pair of glasses out of pocket, quite satisfied they had been treated fairly and that Best Buy had done its part to resolve the misunderstanding. My questions for you:

1)    Have you seen other examples of an operational error being interpreted by the customer as a question of ethics?

2)  In a situation like this, which is more valuable? The customer relationship or the sale?

3)    How might a company’s long-term profitability be influenced by “in the moment” decisions like these?

4)      Pretend it was your business and your customer. What would you have done? Why?  Is there follow up action that the GM should take?

5)    How would you prevent a similar situation in the future?

I recently posted a story about a Best Buy corporate employee who talked to an industry analyst and shared far more information than was wise. The story was a painful reminder of how easy it is to get caught up in a conversation and spill details that are proprietary to one’s company. More importantly, however, that post triggered the following comment from Katie, one of our Best Buy store employees:

 “I don’t have much to contribute, but I do want to share that at the store level we get a LOT of calls by (I’m assuming) analysts wanting to interview/survey employees in various departments. From talking to my co-workers, most (if not all) have no idea that this practice is not allowed. I think it would help a lot to have this specific issue called out, especially by management.”

 Suffice to say, this observation caught me by surprise. I have always known about the hazards of analysts calling to our corporate campus employees but had no idea our stores employees also potentially receiving calls.   While many of these calls may turn out to be legitimate inquiries from corporate or our vendor partners, I have already reached out to my teammates in Investor Relations to investigate the issue further. If indeed true, we need to train our store employees immediately on how to engage with analysts – if at all.

 Your opening phrase to the contrary, Katie, you had much to contribute and I am grateful you took the time to share your insights. Thanks to you, we might very well prevent unfortunate information disclosures in the future while helping our employees to protect the company – and their careers.

 1)    If true, is it is ethical for Wall Street analysts to call random store employees to “fish” for business details? Why or why not?

 2)    Even if you assume a store employee’s “line of sight” to the business is very localized, what risks could there be in analysts drawing random insights from our stores?

 3)    As an employer, should we hold our people to different standards of accountability when it comes to the protection of confidential information? For example, should the corporate employee in my original post be held to a higher standard than a store employee with no prior experience dealing with analysts? Explain.

 4)    What guidelines or coaching would you recommend for our employees on this topic?

I’ve blogged several times about the hazards of sharing sensitive company information with people or organizations outside the company.  Back in January, I wrote about the “expert network” phenomena and how Best Buy has a very clear policy against allowing employees to participate in such networks. More recently, I told the unfortunate story of a valued employee who made the mistake of sharing confidential documents in a job interview outside the company. Sadly, I now have another example, this one involving an employee who had been with the company for decades.

 As a Fortune 100 company and industry leader, Best Buy attracts frequent interview requests from all types of investment industry analysts. These analysts are looking for insights into the company’s strategic plans so they can offer better-informed investment guidance to their clients. Best Buy, as the other party to the conversation, sets strict rules of engagement for these interviews and coaches leaders on the types of things that can and cannot be said.

 Regrettably, a long-time Best Buy employee recently talked to an industry analyst a few times and intended only to share high-level observations and general comments. In the flow of the conversation, however, the employee inadvertently provided details that were not meant to be disclosed outside the company. These details and even direct quotes (minus the employee’s name, thankfully) later appeared in the analyst’s report.

 The employee honestly did not intend to give away company secrets and was not compensated in return.  However, the lapse of judgment, the potential damage to a vendor partner, and the specific responsibilities of the employee, resulted in the employee’s termination from Best Buy. My questions for you:

 1)    Why are information leaks so damaging to a company? What are the many potential ramifications of a situation like this?

 2)    Where is the line between transparency and confidentiality? In the ebb and flow of conversation, how can you know when you’re about to cross that line?

 3)    Analysts are not adversaries; their job is to gather, interpret and publish information. Conversely, our employees’ are expected to protect the information assets of the company. What, then, could Best Buy do to ensure something like this doesn’t happen in the future?

 4)    Do analysts have any obligation to help companies like Best Buy ensure that only the appropriate types of information are shared with the general public? Why or why not?

 5)    Did the employee’s lack of intent mitigate his actions in this case? Why or why not?

At regular intervals throughout the year, Best Buy’s CEO, Brian Dunn, hosts Enterprise-wide “Town Hall” meetings in which he updates us on the status of our strategic initiatives, provides a glimpse of the future, and addresses the challenges we are currently facing as a company. These Town Halls are webcast globally which enables Brian to reach our 180,000 employees around the world. It also gives him the opportunity to receive – and reply to – employee questions submitted via text message and e-mail. One question submitted at a recent Town Hall immediately captured my attention:

 “I have been a Best Buy employee for 10 years and believe wholeheartedly in our company’s values as they drive the heart of our business, which is our employees.  My question would be, in these challenging times, it may be easy for some leaders and employees to deemphasize our values in an attempt to drive for results that, in this current marketplace, may seem daunting.  What thoughts or feedback would you have for addressing the balance between aggressively pursuing our goals without compromising the values that sustain customer loyalty beyond that immediate transaction?”

 I love this question for two reasons:

First, it is a perfect example of how we should (and do) hold ourselves and each other accountable for doing the right thing, and asking the right questions.  The responsibility to lead in this space belongs to each of us, wherever we sit in the company. 

Second I love the question because it describes the tension an organization like Best Buy must manage as it continually balances the need for near-term results with the requirement that we maintain the highest ethical standards at all times. Whereas the former keeps our shareholders happy right now, the latter is critical to our reputation and long-term prosperity as a company. What do you think?

 1)    In an historic economic downturn like the present, should a company ever allow – or encourage – its employees to take ethical shortcuts that result in better bottom-line results? Why or why not?

 2)    What if those shortcuts would enable the stock price to surge 50%, thrill the investor community, and enrich employees in the form of pay raises, bonuses and performance incentives? Would that make it OK?

 3)    Have you ever been in a situation where “deemphasizing” your personal or corporate values would result in better near-term results? What did you do? Looking back, would you do it differently?

 4)    Pretend that you get to be Best Buy’s CEO for a day. The microphone is in your hand, the video camera is running, and 180,000 people around the world are listening. How would you answer the employee question above?