Inc. Survey: Four vignettes posing hypothetical situations involving business ethics.
The four stories on the following pages capture some of the dilemmas of starting a business, involving tough questions of right and wrong. What would you do?
The discussion here at Inc. that morning got a little heated -- which is why we're inviting you to test your ethical judgments against those of other businesspeople all around the country.
The connection? Let me explain. Several months ago, eight of this magazine's editors gathered around the big oak conference table for a critical assessment of the previous month's issue. When the discussion turned to an article called "Supply-Side Financing" (February 1989, [Article link]) -- well, that's when a few voices were raised.
"It's just wrong," said one editor. "Bad business and lousy ethics. How can we appear to be condoning it?"
"It" was the story of Dennis Chang, president and chief executive of Jasmine Technologies Inc., in San Francisco. Strapped for cash in his company's early days, Chang had paid his suppliers as little as he possibly could. But what really galled the protesting editor was Chang's pledge of personal guarantees well beyond his net worth. "The first guarantee devalues all subsequent guarantees," wrote author Ellyn E. Spragins, "but your suppliers don't know that."
The debate raged, the idealists among the editors charging Chang with unethical behavior, and the realists accusing the idealists of terminal naïveté. ("If nobody stretched their creditors, nobody would ever get a business started.") By May a chorus of letter writers had joined in. "What happened to the days when an individual's word meant something?" asked one. "You've provided an outline for larceny," charged another. Author Spragins was unapologetic: "Supplier finance is no more inherently unethical than any other business practice," she retorted. Chang himself argued in a later letter that he had built personal relationships with his vendors, getting credit "openly and honestly." Of course, there were risks -- "but isn't that the nature of being in business?"
Somehow I doubt we'll ever resolve this dispute to everyone's satisfaction. But it got us thinking: despite all the hoopla over business ethics, no one has paid much attention to the choices entrepreneurs must make every day. If you leave one company to start another, is it OK to take a co-worker with you? What about luring away a customer? When you're borrowing money, how much do you have to tell your lender? And -- remembering Dennis Chang -- what are your obligations to your suppliers?
As they say on late-night TV, wait! Don't answer yet.
Instead, take this little test. Read the vignettes on the following pages about a fictitious company you are starting. Figure out what you'd do in the situation outlined, and check the appropriate box.
Then turn the page. Not for the "right" answers, because we don't think there are any. Instead, you'll see who agrees with you.
A few months ago we sent this same questionnaire to a sampling of Inc. readers. Several hundred responded, not only with checkmarks but with strong opinions and stories of similar situations they had lived through. Compare your own responses with theirs -- and if you don't think theirs are on the money, let us know.
Ready? Here's the background:
THE STORY
You've been involved with computers all your working life. Five years ago Rob Firman asked you to join his new data-processing company; today you're a sales manager in Firman's 20-person shop. But you really want to start your own data-processing business, and for the past few months you've spent your evenings doing spreadsheets, developing customer lists, and otherwise mapping out the new venture. Firman knows nothing about your plans. You'll tell him as soon as you're ready to give notice.
In the meantime, you continue to put in a hard day's work. But now and then a difficult situation comes up. . . .
THE KEY EMPLOYEE
It's 5:30, and there's a knock on your office door. Quickly you rehearse your pitch one last time, even as you're calling for Lowrey to come in. The programmer enters and sits down, grinning.
"Did you hear?" he asks. "Seems the boss wants me to put on a tie and begin acting like an executive."
You congratulate him, but the doubt once more flickers across your mind. The start-up you're planning needs Lowrey. He's the quickest technical guy you've ever met. He has an incredible knack for making clients feel at ease. And more than once he's told you he'd like to be involved in a new venture someday.
If it weren't for Firman, you'd offer him a job right now.
Face it, you think, Firman put you where you are today. He not only hired you and trained you, he gave you more responsibility than you were ready for, confident that you'd grow into it. And you have -- so quickly that now you're chafing under his sometimes-arrogant authority. When you leave, Firman may feel betrayed. But you steel yourself against the remorse. That's business. Firman is a big boy.
But what about Lowrey? Just last week Firman told you his hopes for the young man. He talked of broadening Lowrey's responsibilities, of eventually bringing him into management. Just the guy I need, he said, to help me take this company past $2 million.
You look again at Lowrey, sitting in your office, smiling to himself. You know he's essential to Firman's plans. But you also know where his long-term hopes lie, and that he'll take a job with your start-up if you offer one. You even think that Firman, if he weren't personally involved, would encourage you. "A man has to look out for himself," he likes to say.
What Do You Do?
* Offer Lowrey a job.
He's the one who'll be making the choice, after all. Firman can take care of himself.
* Quit thinking about the start-up
until you leave your job. You shouldn't be doing it on Firman's payroll.
* Bite your tongue.
It's OK to keep planning the start-up, but don't mention it to Lowrey until you've left.
