Kathleen Edmond, Best Buy's Chief Ethics Officer

Every year, all 180,000 Best Buy employees worldwide are asked to participate in surveys that measure their “engagement” levels as employees of the company. This survey data, in turn, is used for “action planning” activities that seek to improve the employee experience and eliminate barriers to employee engagement.

 More than simply measuring how “happy” our employees are, we focus on engagement because it has been statistically proven that our profitability and performance as a company are directly tied to employee engagement levels. The more engaged our employees are, the more likely they are to innovate, take pride in their work and make the extra effort necessary to deliver a terrific customer experience. But what about employee ethics? Is there a connection between an employee’s engagement level and their likelihood to behave in an ethical manner? A recent letter from a former Best Buy employee offers a compelling case study.

 Earlier this month, the leaders of our Loss Prevention (e.g., theft) team received a heartfelt letter from a person who had worked for a Best Buy store nearly a decade ago. He described in great detail how much he loved working for Best Buy and how he had become known among customers and co-workers for being the very best at what he did. His story had all the earmarks of a highly engaged employee – exactly the type of experience we would like every one of our 180,000 people to have.

 As the letter went on, the employee described how he also became known for something that wasn’t part of his job description per se. The employee found he could spot a shoplifter from across the store simply by observing their nervous ticks and bizarre shopping habits. He would keep an eye on these people and alert his co-workers so that the shoplifters could be legally and safely stopped in the act. By his count, he had personally prevented more than $4,000 in merchandise from walking out of the store in the coats and purses of would-be shoplifters.

 Unfortunately, this extra effort apparently went unnoticed by his store leadership team. The employee put a tremendous amount of “discretionary energy” into cutting the store’s theft losses and with great success, but that success was neither recognized nor rewarded as the employee had hoped. And so, the employee stopped caring. He no longer bothered with shoplifters, no matter how obvious. He even looked the other way when fellow employees pocketed merchandise.

 Over time, the employee lost his passion for Best Buy and left the company to pursue a different career. That was ten years ago.  Last week we received his letter along with a check for $700, an amount he thought was greater than the value of the merchandise he had knowingly allowed to be shoplifted after his engagement level had dropped.  His failure to prevent those thefts haunted him for a decade and ultimately prompted him to pay Best Buy for the lost product.

 We returned the check to our former employee, of course, and thanked him profusely for this stunning example of personal integrity. I only regret that he isn’t still a member of the Best Buy team. Who knows what value he could have added to our company if given the encouragement he was looking for? My questions for you:

 1)    Do you believe there is a direct relationship between an employee’s engagement level and their likelihood to act in an ethical manner? Explain.

 2)    Was it unethical of the employee to “look the other way” with shoplifters after he didn’t receive the recognition he felt he deserved? Why or why not?

 3)    What could Best Buy have done differently ten years ago to sustain this employee’s engagement level?

 4)    Regarding shoplifting specifically, do you believe that employee theft is ethically more serious, less serious, or no different than “ordinary” shoplifting by customers? Why?  

One of Best Buy’s most visible – and consulted – policies is our Gifts, Business Courtesies and Vendor Relations Policy. We have firm standards regarding the types of meals, gifts, travel and trinkets our employees can give and receive in the course of doing their jobs. As a general rule, anything of more than nominal value cannot be given or received by our people. However, Best Buy is a global enterprise and this blanket standard can have serious unintended consequences if not viewed in the context of the local culture. The following is a true story that ultimately resulted in significant changes to the policy.

 One of Best Buy’s most critical vendor partners in the Asia region hosted an extravagant dinner at his home. The dinner was held to celebrate a significant honor that had been bestowed upon his company and him personally. Best Buy’s senior leader in that region was invited to the party and understood that, in the context of the local culture, a very significant gift was required in that type of social situation or both Best Buy and the vendor partner would lose face.  However, Best Buy’s Gifts, Business Courtesies and Vendor Relations Policy strictly prohibited such gifts as it was then written. This left our senior leader with four very difficult options:

a)    Decline the dinner invitation, commit a social “snub,” and lose a moderate amount of face with the vendor partner.

b)    Attend the dinner, offer a small gift that conformed to then-current Best Buy policy, lose significant face with vendor, and possibly ruin the business relationship in the future.

c)    Break our company policy and use Best Buy assets to purchase a gift appropriate to the cultural significance of the event.

d)    Break our company policy and purchase an appropriate gift with his own money, but without telling anyone at Best Buy.

 Our leader ultimately chose option “d” and purchased a significant gift for the party with his own money. I later learned this on a trip to the Asia region when the leader confided the entire story to me. Clearly, this was not the intended outcome of the policy and we took immediate steps to address the situation. We re-wrote the policy to allow a certain amount of latitude – under strict oversight by senior executives and my Ethics team – for scenarios like this. We also repaid the leader for the money he had spent out-of-pocket on the gift. My questions for you:

 1)    Is it realistic for a global company to apply one set of ethical standards or cultural norms to its operations worldwide. Why or why not?

2)    In Country A, a certain extravagant gift is perceived as a bribe. In Country B, that same gift is perceived as an appropriate symbol of the relationship between two business people. Which is the correct point of view? Why?

3)    Would it be possible to specify a dollar amount maximum for gifts given/received that would work in every situation around the world? Or, attempt to list the countries where a policy does or not does apply? Why or why not?

4)    Pretend that you were the senior leader in the story above. What would you have done? Why?

In a company like Best Buy, things happen fast. A new idea can circulate throughout the business in a matter of days and become a formal SOP soon thereafter. Speed-to-market is key and our employees are encouraged to innovate on the fly. The vast majority of the time, these innovations do not hold any ethical implications for our customers, vendors or employees. Every now and then, however, an idea begs the question:

 If it’s good for Best Buy, its shareholders and employees – and is perfectly legal in all respects – does that necessarily mean it’s the right thing to do?

 As technologies change, our Geek Squad agents often lead the way on new services and solutions to support those technologies. Necessity, as they say, is the mother of invention and it is simply not realistic to think that all of these innovations will cross my desk for an ethics check. Even if that were possible, I do not always have the real world knowledge of the products, services and store environment to offer an informed opinion.

 Introducing, the Geek Squad “Agent of Justice.” My partners in the Geek Squad recently reached out to me and asked if there might be a way for Agents to receive an ethical “second opinion” as issues arises. Our solution is a new role entitled the Agent of Justice. Geek Squad Agents nationwide can now contact a special resource within the Geek Squad who will be an additional avenue to raise, discuss, and help resolve questions and concerns.  The Agent of Justice can quickly coach his teammates regarding the ethical boundaries that must be respected, and why – and can help me understand issues that Agents are concerned about.  This role does not replace any of the other ways to reach out to the Ethics Office. In fact the Agent taking on this role is doing it in addition to his “day job.”

 The Agent of Justice role was just announced this week but I could not be more excited. First, it demonstrates a high level of ethical awareness is already present within the Geek Squad organization. (Remember, they came to me with the idea.) Second, it has the potential to create a multiplier effect throughout Best Buy.  By empowering Agents to seek advice real-time from one of their own, we leverage yet another opportunity to make business ethics an everyday topic of conversation among thousands of employees. In doing so, we can squelch well-meaning but ethically short-sighted ideas, and instead teach employees how to spot issues, discuss and analyze the ethics of the situation, make a decision, and share the learning.  My questions for you:

 1)    Do you think ethical decisionmaking should be decentralized as a shared responsibility among many employees or centralized with one/few employees? Why?

 2)    If executed properly, how might an idea like this be of value to our customers? To our employees?

 3)    What risks do you foresee for Best Buy as we implement this idea and what could we do to mitigate those risks?

 4)    What other parts of our business might benefit from business-specific ethics help like this?

 5)    Do you have other ideas how Best Buy employees can be an active part of the Ethics Office while continuing to do their “day job”?

Every year, Best Buy goes to great lengths to reinforce the details of our Confidential Information Policy among employees. We have internal news stories and eLearning programs that teach our people the difference between Public, Confidential and Top Secret information. We coach employees on when to share – and not share – such information. We even prescribe the appropriate ways to transfer, store and destroy sensitive documents. Unfortunately, we still have situations in which employees fail to appreciate the proprietary nature of the information they are handling. Far more often than not, it is a simple lapse of judgment on the part of the employee with no malice intended. Malice or not, however, the damage is the same.

 Not long ago, we had an unfortunate situation in which a Best Buy employee inadvertently violated our Confidential Information Policy while interviewing for a job with a direct competitor. The employee brought a document to the interview that went into great detail about Best Buy’s confidential business projections and strategy details. She proudly showed the document during the interview as an example of the sophisticated, high quality analytical work she could perform on behalf of Competitor X, apparently oblivious to the proprietary nature of the information she was revealing in the process.

 Thankfully, someone at Competitor X realized the sensitivity of the information and shredded the document; then called to let us know what had transpired during the interview. We confronted the employee about the situation and she admitted doing it but was dumbstruck when told it was a serious breach of company policy. Apparently, she had become so desensitized to handling proprietary data that she didn’t stop to think how damaging it could be to share that information with a competitor.

 Sadly, we ended up terminating a valued employee who had worked here for years, all for something that could have been avoided so easily. Competitor X did not offer her the job, either. One can only speculate the situation did not create a favorable impression for her would-be employer.  My questions for you:

 1)    Does it matter that the employee didn’t realize her actions were in violation of company policy? Why or why not?

 2)    What if the employee was interviewing with a company in a different industry, not a direct competitor? Would that have made it OK?

 3)    What could the employee have done to show off the quality of her work without revealing proprietary data?

 4)    What about Competitor X?   How would you rate their response to the situation?

 5)    Have you ever witnessed something like this where you work? If so, how did it turn out?

The Internet has been described as “direct marketing on steroids” because of the endless variety of pop ups, banner ads and search engine keywords for sale. Social media environments offer marketers an even more exciting opportunity because of the large number of like-minded people hanging out in the same (virtual) space.

 As you would expect of someone in our business, Best Buy actively leverages the online advertising opportunities offered by the Internet. However, it also appears we are at risk of being victimized. A recent scan of social media hangouts frequented by Best Buy employees revealed several ads targeted specifically to our employees. One ad was particularly daring and appeared to be placed by a “payday loan” company. The ad itself featured the Best Buy logo and a photograph that was obviously taken inside one of our stores:

     Best Buy Employees Get Up To $1000

      Get up to $1000 cash advance today! Loans provide immediate cash relief for you and your family to  cover  life’s unexpected financial emergencies. Connect with a lender with our no obligation application.    Click here.

Best Buy, of course, was not contacted by this company and did not authorize the use of our name or identity for the ad. Although there may be intellectual property issues resulting from this company’s actions, I’m more curious about the ethical ramifications of something like this. When it comes to trying to make a buck in the Wild West culture of the Internet, where are the ethical boundaries?

 1)    Ignoring the potential intellectual property concerns, do you think it was ethical for the loan company to place this ad? Why or why not?

 2)    Does it matter what an ad promotes (i.e., high-interest rate cash loans) or are all advertisements assumed to be ethically neutral? Please explain.

 3)    Even if a certain business practice is legally permissible, does that necessarily mean it’s ethically “right”? Why or why not?

 4)    Do we have a responsibility to alert Best Buy employees who may be mislead by this advertisement, thinking that Best Buy has endorsed the product?

For many years now, Best Buy has maintained an independent third-party telephone service as a way of providing a safe “whistle blower” hotline for ethics-related issues affecting the company. More recently, the phone-based hotline has been complemented by the www.BestBuyEthics.com website, which provides the same service in an online environment.  Anyone may also directly call the Ethics Office.

 Employees and non-employees alike are encouraged to bring issues to our attention using these tools and may remain anonymous if they choose. Not surprisingly, anonymity is often critical to someone’s decision to come forward. Depending on the situation, however, anonymous tips may be difficult – if not impossible – for us to act upon. We sometimes receive calls from people who want to discuss an issue in vague terms without providing any specifics about who they are, where the issue/event occurred, or who was involved. Inquiries like this typically amount to ethical “tire kicking” as the callers try to determine whether the issue at hand is truly an ethics problem or merely something they personally find disagreeable. A decision to fire an employee, for example, may be entirely fair and ethical even though it feels unjust to the person terminated.

 We recently had an interesting situation that highlights the challenges involved with these anonymous tips. A Best Buy employee contacted the Ethics Office anonymously to disclose that she had likely violated a certain key policy and thereby acted in an unethical manner. In talking through the issue with our ethics specialist, it was determined that the employee’s actions were indeed unethical, fairly serious in nature, and of the type that would typically result in a “final warning” being issued to the employee. Upon hearing this opinion, the caller became agitated and started to change her tune. She began to rationalize the issue as an honest mistake (which is debatable given the facts of the situation) and stated that “it can’t be a big deal because I’m not an Officer or Director of the company.”

 The call ended at that point and we have no way of following up. The employee did not provide her name or any contact information.  . My questions for you:

 1)    What if the employee had simply followed her conscience and identified herself to the ethics hotline? Should she receive a less severe form of discipline because she came forward and self-reported her mistake? Why or why not?

 2)    What if a report was later received that identified who she was? Should the disciplinary action taken follow the standard (i.e., a final warning) or be more or less severe than standard? Why?

 3)    What about her claim that “it can’t be a big deal” because she did not hold a senior leadership role in the company? Are ethics violations more or less serious depending on the role of the employee?

 4)    What about the “honest mistake” defense? Does it make a difference if: a) The employee honestly did not know their actions were unethical, or; b) The employee knew their actions were unethical but did it anyway?

 5)    In this instance, did the availability of anonymous reporting help or hinder our desire to enable a transparent and ethical work environment at Best Buy? Please explain.

Best Buy had an unusual situation not long ago in one of our businesses outside the U.S.  As is common in our business, the team obtained legal advice from a private law firm on a certain topic before taking action.  The conservative opinion of the attorney was that, under local law, Best Buy would not be permitted to take the course of action most beneficial to the company.  However, it appeared that a well-meaning Best Buy employee edited the attorney’s response to say that the action would be permissible under local law.  The employee vigorously denied being responsible for altering the opinion letter.

 Management thought highly of this employee and reasoned that even if the employee did it, he probably honestly thought he was doing the company a favor.  The employee had no personal stake in the matter, financial or otherwise, and Best Buy would clearly benefit from the altered “advice.”  Thankfully, the discrepancy was discovered in time, Best Buy acted in accordance with the attorney’s original guidance, and no harm was done.  But what do you do with the employee?

 1)    What ethical problems do you see in the employee’s actions?

 2)    If it was your employee, how would you handle the situation? Would you terminate him outright, coach him on how to weigh the opinions of outside legal counsel, or something in between? Why?

 3)    Does it matter that the employee was attempting to help Best Buy? Why or why not?

 4)    Does it matter that the employee would not personally benefit from his actions? Why or why not?

 5)    What if the employee had felt pressured to do so? How might your opinion of the situation change?

We had an unfortunate situation not long ago involving the improper use of vendor data in an attempt to secure more advantageous contract terms for Best Buy. It was a complex triangle of relationships that went something like this:

• Best Buy has ongoing relationships with both Vendor A and Vendor B.
• Likewise, Vendor A does business with Vendor B independent of Best Buy.
• In the course of normal business, Vendor A shared proprietary information with Best Buy regarding Vendor A’s contract with Vendor B.
• The Best Buy employee who received this confidential information from Vendor A later used it in an attempt to negotiate better contract terms with Vendor B.

 When Best Buy leaders were made aware of this situation, they immediately contacted all employees who had dealings with Vendor A and destroyed all copies (both electronic and paper) of the proprietary contract information that had been shared with us. In addition, the employee who attempted to use the information as leverage against Vendor B was terminated despite having a solid employment record to that point. Two significant errors in judgment were apparent:

• Even though he did not request the information, the Best Buy employee knew the contract information provided by Vendor A was proprietary to Vendor B and that it was highly inappropriate for Vendor A to share it with us.
• The employee did not “take a partner” or  speak with a manager before attempting to use the information to sway Vendor B.

 This situation was especially alarming because it shows how easily a well-meaning employee can lose sight of the ethical implications of their actions. My questions for you:

 1)    Do you agree it was wrong for the Best Buy employee to use the information provided by Vendor A to re-negotiate with Vendor B? Why or why not?

 2)    Assume for a moment the Best Buy employee had succeeded in negotiating a better contract for us by using the information and that it materially benefited our bottom line and enriched our shareholders. Would that change your answer to #1? If so, why?  

 3)    How might Vendor A’s actions impact their relationship with Vendor B?

 4)    What about Best Buy’s relationships with Vendor A and Vendor B? Where do we go from here?

For the third year in a row, I have the pleasure of announcing that Best Buy has been selected by the Ethisphere Institute as one of the World’s Most Ethical Companies. Only 110 companies worldwide can claim this distinction for 2011 and our three-peat performance is even more rare. Best Buy shares the spotlight this year with big hitters like Ford Motor Company, General Electric, PepsiCo and Microsoft and was one of only four Specialty Retailers to be so honored along with Target, Hennes & Mauritz (Sweden) and Sonae (Portugal).

 To earn the “Most Ethical” label, each company must pass the scrutiny of an independent panel of attorneys, professors and government officials who consider seven distinct criteria including Corporate Citizenship and Responsibility, Executive Leadership and Tone From the Top, and Innovation That Contributes to the Public Well Being. Indeed, it’s much easier to lose the “Most Ethical” ranking than it is to attain it. Among last year’s winners, 26 dropped off the list in 2011 because of lawsuits, documented ethics violations and other challenges.

 Of course, as Chief Ethics Officer, I get much of the glory whenever Best Buy wins an award like this. However, you need only to scan the Ethisphere Institute’s award criteria to see that this recognition reaches far beyond me and the limited impact of my role. It’s our culture that has won this award for Best Buy three consecutive years and that culture is comprised of 180,000 employees around the world doing their best to live up to our Enterprise values each and every day – even when people aren’t looking:

• Have fun while being the best
• Learn from challenge and change
• Show respect, humility and integrity
• Unleash the power of our people

 Congratulations, Best Buy. This award is yours and I could not be more proud. Let’s make it four in a row!

 1)    What attributes, experiences or behaviors shape your opinion of a company’s ethics?

 2)    What companies do you perceive to be highly ethical? Why?

 3)    What if one of those companies had a highly publicized ethical misstep of some sort? Would that one incident change your perception of the entire company and erase the prior goodwill? If so, how?

 4)    Once a company loses your good opinion, how difficult is it for that business to win it back?

 5)    Do you believe it is more difficult for a large company to be ethical in its decisions and actions than a small company? Why or why not?

I’ve recently blogged about Best Buy’s Gifts, Business Courtesies and Vendor Relations policy and our restrictions regarding accepting gifts, lavish entertainment or travel from a vendor partner. An occasional pen or t-shirt emblazoned with the vendor logo is allowable but tickets to major entertainment or sporting events are not allowed unless a key strategic business relationship is at stake (see my blog entry for Feb. 5).

 An employee recently asked me an insightful question about vendor accommodation programs. In any given month, Best Buy employees may have access to dozens of special discount offers directly from our merchandise vendors. These accommodation programs typically enable Best Buy employees to purchase certain vendor products at a generous discount – sometimes amounting to hundreds of dollars. In other cases, employees receive “points” from the vendor for completing product-specific training. These points can then be redeemed later for free or discounted merchandise from that vendor.

 Such accommodation programs are common in the retail industry and are another way for manufacturers to put product into the hands of the people who sell them to customers. My questions for you:

 1)    Is there a difference between receiving a free gift from a vendor and being allowed to purchase their product at a discount? If so, why?

 2)    Does the size of the discount matter in this scenario? Why or why not?

 3)    Does the fact that such accommodations are broadly available to thousands of employees make a difference in your opinion? 

 4)    Do you see a conflict of interest in allowing store employees to acquire merchandise “points” in exchange for making an effort to learn about a manufacturer’s products?

 5)    If you were the Chief Ethics Officer, would you put limits on our vendor accommodation programs? Be specific.