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HOW MANY AUSTRALIAN CORPORATION EXECUTIVES ARE DEVOID OF ETHICS?

Some have an ingrained unethical culture



A litany of offenders


Author Kevin R Beck

Some executives working in corporate Australia should not be there if they demonstrate that they have no compact with society's grant of reciprocity.. Professionals are characterised by their unique expertise gained through education and training, a commitment to lifelong learning, service to society, a code of ethics, an agreement to abide by their profession’s code, and participation in the self-governance and monitoring of the profession. Australian society grants professionals (such as those who occupy high political, and corporate office) autonomy with the condition that the expertise will be used in the public interest and that members will abide by the profession’s code of ethics. This is a ‘social contract’, in which the professional discharges his. or her. obligation by operating with high standards of expertise and integrity.

When the professional does not maintain these standards the social contract is broken, and society (via the government sanctioned regulator or the courts) may decide to limit the role, or the autonomy, of the professional. Australian society, via our parliaments, has placed limits on the actions of professionals through legislation, new restrictions have, and are being implemented. as a result of corporate misuse of power and position. In a series of articles on my LinkedIn I explore the quality, and exhibited values, of politicians, bureaucrats, and corporate owners and executives, in Australia. I am trying to determine whether professional integrity, ethics and morals are in decline and if so for what reasons?

Is it due to a lack of education around ethics, dealing with suppliers, a lack of awareness of law, contract management principles and practices? If one treats one's relationships with disdain then eventually the relationship becomes poisoned. The level of contempt for principles and other people, exhibited by many in politics and business seems to be commensurate with the safety of the political seat held or the power the corporation has. It seems to be extreme in the food and grocery industry. If not education is it the pressures of short term demands by shareholders, performance demanded by shareholders and the subsequent demands senior leadership management put on middle managers and employees? Who in turn squeeze, threaten and exhibit unconscionable conduct and behaviours that degrade the enterprise? Do they know or care that they are? Is it arrogance, hubris and a propensity of management (particularly males) for gladiatorial displays and acting as if they are spoiling for a fight?

This is indeed a perplexing set of questions and conditions. They are nor frivolous because they go to the very heart of how we operate in society and whether or not people, such as consumers, actually care, how they got cheap prices and what cost to others? Given that politicians have abrogated any responsibility for demonstrating ethics, possession of a moral compass and attention to what is happening outside their rarefied world of privilege is it left to regulators and courts to question behaviour and maybe provide some of the answers? Harvard Business School posed many of the questions I ask back in 2011.

"Why do leaders known for integrity and leadership engage in unethical activities? Why do they risk great careers and unblemished reputations for such ephemeral gains? Do they think they won't get caught or believe their elevated status puts them above the law? Was this the first time they did something inappropriate, or have they been on the slippery slope for years? In these ongoing revelations, the media, politicians, and the general public frequently characterize these leaders as bad people, even calling them evil. Simplistic notions of good and bad only cloud our understanding of why good leaders lose their way, and how this could happen to any of us. Leaders who lose their way are not necessarily bad people; rather, they lose their moral bearings, often yielding to seductions in their paths. Very few people go into leadership roles to cheat or do evil, yet we all have the capacity for actions we deeply regret unless we stay grounded....... When leaders focus on external gratification instead of inner satisfaction, they lose their grounding. Often they reject the honest critic who speaks truth to power. Instead, they surround themselves with sycophants who tell them what they want to hear. Over time, they are unable to engage in honest dialogue; others learn not to confront them with reality.

The Dark Side Of Leadership

Many leaders get to the top by imposing their will on others, even destroying people standing in their way. When they reach the top, they may be paranoid that others are trying to knock them off their pedestal. Sometimes they develop an impostor complex, caused by deep insecurities that they aren't good enough and may be unmasked. To prove they aren't impostors, they drive so hard for perfection that they are incapable of acknowledging their failures. When confronted by them, they convince themselves and others that these problems are neither their fault nor their responsibility. Or they look for scapegoats to blame for their problems. Using their power, charisma, and communications skills, they force people to accept these distortions, causing entire organizations to lose touch with reality. At this stage leaders are vulnerable to making big mistakes, such as violating the law or putting their organizations' existence at risk. Their distortions convince them they are doing nothing wrong, or they rationalize that their deviations are acceptable to achieve a greater good." (06 JUN 2011, RESEARCH & IDEAS, Why Leaders Lose Their Way, Harvard Business School) I would expect that Australia's largest retail corporation, Woolworths, would be simply over flowing with talent and acumen. That the Board, CEO, General Managers, middle managers and category buyers, would represent the cream of the crop in Australia's corporate world. However my expectation is not borne out by reality. They are not the cream of talent in Australian retailing, far from it.

This is the poster corporation for everything that is wrong with corporate Australia, ethically and morally. It is as if the whole of the company is infected with stupidity from the top down. It is the company that proves the Australian Industry Group's proposition to our federal parliament in 2015 that many corporate executives over estimate their capabilities. What is irking me is that these people occupy positions that more talented people denied a job might do and would invariably perform better.

It irks me that the company HR employees, and the supervisors, sit in judgement of the performance of employees whilst appearing blind to the management's standards above them? I suppose in this modern day of management by fear, and obsequious sycophancy, a person will do anything to keep their job. Everyday people across Australia may experience the lazy, and incompetent management and supervisors, at their local Woolworths supermarket. These are the characteristics of my Woolworths store at Chirnside Park Victoria Australia. I feel that it has very poor management, and supervisors, who are oblivious to the proposition they are there to deliver customer service. They prefer to argue and engage. In recent times I commented to a check out operator that the big bosses were in store. They were standing within a metre of her. She did not know who they were and she had never been introduced. I asked a number of other staff if they had ever met the state manager, general managers or anyone from head office? They had not. This is the management and supervisory culture of the organisation.

By comparison Australia's competitor retailers, Coles and Aldi, in the same shopping centre, have supervisors and managers who excel at their roles engaging with every customer that they can. At Cles on Sunday the big bosses were in store and the guy packing the meat counter said he had met them.

The current Woolworths Board, CEO and management, are squandering the iconic reputation of the company engaging in conduct that is beyond being questionable. It is antisocial, arrogant and low grade. If the ACCC action and supplier claims, and the documents being tendered in court, are correct it is a self absorbed thuggish culture of threat and retribution. "A LEAKED Woolworths document has revealed the dire state of the supermarket’s relationship with its suppliers, while one senior manager has slammed the company for forcing staff to clean up for mistakes at the top. The revelations come as the Australian Competition and Consumer Commission today said it was investigating reports about the conduct of Woolworths and Aldi towards suppliers, potentially in breach of the Food and Grocery Code of Conduct.

The watchdog is concerned about Grocery Supply Agreements (GSAs) which “might give the impression that the supplier is not able to negotiate the terms”, such as requiring payment for wastage that occurs at the premises of the retailer. Meanwhile, results of a confidential survey that measures suppliers’ attitudes to retailers versus their competitors shows Woolworths’ relationship with suppliers at the lowest level ever. The 2015 Advantage Mirror Report shows Woolworths Net Favourable Score (NFS) has plummeted to 14 points, down 10 points from last year and 10 points below the average score of the top five. One senior category manager who spoke to news.com.au on the condition of anonymity said the changes over the past eight years had been “devastating”.

“You guys see the face of it at our stores, but internally we push our KPIs, push our vendors to the limit,” he said. “You’ve got blokes here like myself who have been here 20 years coming in every day waiting to get out the door at night. The culture is so bad. “Vendors don’t want to deal with us anymore because every time there’s a call it’s about money — getting more out of them for nothing. We know our suppliers are going to Coles, going to Aldi, because they work with [the suppliers for mutual benefit]. “We’re at the point now where we might as well ask them to leave their wallet at the door when they come to a meeting. It’s not a relationship exercise anymore, it’s like being a banker. You can’t continue to do that. The mental health effects are huge. It’s a blight on all of us.” (Leaked document reveals Woolies’ woes as manager hits out at ‘devastating’ mental health issues, SEPTEMBER 24, 2015, news.com.au)

Even as the ACCC begins legal proceedings, the supervisors, and the HR division, of the Woolworths retail arm have the absolute gall to sit in judgement as to whether people applying for jobs can have one, or they judge internal employee's performance, whilst they present the declining state of their decrepit management practices, and behaviour, dressed up as "international best practice". Why is their right to meet a profit target any more important than the suppliers who put products on the shelves of supermarkets?

Not only is the capacity of the Board questionable but the very essence of the company's capabilities are in every management division. Collectively the Senior Leadership Team have invested hundreds of millions in strategies, ideas, gut feeling and their own perceived capabilities and these have collectively failed . Human nature is that they cannot comprehend this and cannot let go, they believe they learn from mistakes but this is not evident. Now they publicly humiliate themselves with their ignorant persistence.

I find it extraordinary that the marketing people have not realised that their "fresh food people" campaign has no credibility. Is it a flexible definition of "fresh" and how flexible is the definition? Very. Unless the local supermarket managers are going to the farms and then bringing it to the stores how is it fresh? Is it two days old, three, a week, two or is it a year? The apples are stored by suppliers in fridges for a year and they apples are coated.

Coles presents a better quality of fresh produce than Woolworths does. As for retailing, and marketing, lessons Coles supermarket has a simple loyalty card - fly buys - Woolworths has a complicated, tricky and non nonsensical, approach to loyalty and reward. It is as if they are detached from an understanding of human behaviour. Yet even as they lose hundreds of millions on their venture into home wares via Masters they continue to exhibit a low grade of management that is breath taking in its hubris. “The competition watchdog (Australia’s Competition and Consumer Commission) has launched legal action against supermarket giant Woolworths for unconscionable conduct over its dealings with suppliers to urgently reduce its half - year profit shortfall after discovering a $50 million hole in its books. The Australian Competition and Consumer Commission instituted proceedings in the Federal Court alleging Woolworths acted in contravention of the Australian Consumer Law to eke $18.1 million from its suppliers. ACCC chairman Rod Sims said Woolworths alleged actions were "extremely egregious".

"If behaviour such as we are alleging is industry practice then industry practice needs to change, suppliers can't be in a situation where they get arbitrary demands." "We were very surprised and very disappointed when Woolworths alleged demands surfaced late last year we were in court in relation to Coles and our proven unconscionable behaviour to their suppliers and that was all over the newspapers. The ACCC alleges that in November and December 2014, Woolworths developed a strategy, approved by the former head of supermarkets and other senior managers, to urgently reduce Woolworths' expected significant half year gross profit shortfall of $50 million by December 31, 2014.

The case caps off a horror year for Woolworths, which has downgraded profits three times and saw the announcement of the resignation of its chief executive Grant O'Brien as well as the departure of its chairman Ralph Waters and a string of senior executives. The ACCC alleges that Woolworths sought approximately $60.2 million in so-called "Mind the Gap" payments from 821 of its Tier B suppliers, expecting that while many suppliers would refuse to make a payment, some suppliers would agree. It is alleged that Woolworths ultimately captured approximately $18.1 million from these suppliers to boost its profits. It is also alleged by the ACCC that, in accordance with the Mind the Gap scheme, Woolworths' category managers and buyers contacted the 821 suppliers and asked for Mind the Gap payments from those suppliers for amounts which included payments that ranged from $4,291 to $1.4 million, to "support" Woolworths. Refusing to make a payment would be seen as not "supporting" Woolworths.

Woolworths representatives used a script to seek payments from suppliers within a four days of receiving the call, or at the latest by December 19, 2014, the ACCC alleges. According to the ACCC's statement of claim the company did this "without regard to whether Woolworths had any other legitimate basis to seek the amounts" and did so purely to boost profit "and not to promote the sales of their Tier B suppliers products". Woolworths faces fines and other penalties if found to have breached consumer law. Woolworths claimed its conduct was consistent with Australian and international industry practice to "engage regularly with suppliers over product and category performance." (source: ACCC accuses Woolworths of unconscionable conduct December 11, 2015, Sarah Danckert, Sue Mitchell and Catie Low, Sydney Morning Herald)

Now despite the ACCC issuing proceedings relating to 2014 Woolworths has pressed ahead in 2015, carrying out the same practices? “Beleaguered supermarket giant Woolworths has this week demanded another set of payments from suppliers, in an apparent repeat of the December 2014 program that has led the corporate watchdog to allege that Woolworths acted unconscionably in negotiations with grocery suppliers. One supplier, who would not talk publicly for fear of retribution, said Woolworths buyers were asking for repeat payments of the Mind the Gap charges this week. "Even with the Australian Competition and Consumer Commission announcement a few days ago, we are getting [Woolworths] buyers saying 'because this happened 12 months ago we need to cycle those payments'. And by cycle those payments they mean, we got that money last year, we need it again this year," he said. "They weren't talking about Mind the Gap but they said we received this dollar amount off you last year, during December, we need to cycle that money again and repeat that money again." Woolworths' senior management was bunkered down on Friday and the supermarket chain was not saying anything beyond its comments from Thursday that it was "reviewing the ACCC claims". However, sources inside the business suggest Woolworths is preparing to fight the ACCC on the basis that its conduct is in line with industry practice in Australia and overseas. The supermarket chain is understood to be unapologetic for seeking compensation from suppliers in situations such as when product sales exceeded expectations. (Source: Woolworths prepares to fight ACCC over Mind The Gap scheme, December 12, 2015, The Sydney Morning Herald). Woolworths' Board and CEO defence is that such demands are part of Australian and International practice.

I am at a loss to understand what the Board, the CEO and the people who implement this practice do not see regarding their actions?

If the supplier does not pay it is rumoured throughout the industry, and it is reported by suppliers fearful of retaliation, that threats are made. One says that if they do not pay and by this demonstrate they are with Woolworths then Woolworths will not be with them. Others say that the Woolworths employees carrying out the policy threaten that the suppliers will be removed from promotions and favourable locations in stores. Does the Board et al understand the theory and practice of relationships, good business and integrity in dealings? Similar unconscionable conduct charges were laid on Coles Australia by the ACCC and Coles issued a mea culpa and paid a $10M fine plus legal costs.

Why do Woolworths Board, CEO and Managers think they are any different?

I am of the opinion that until our legislators enact laws that make the corporate individual, the Board members, the CEO, the managers and the employees who carry out these acts of blackmail using their superior bargaining position accountable and individually chargeable at law the message will not sink in. But putting that aside, what does it say about the ethical nature of the Woolworths Board, CEO and its employees who carry out these thuggish and unconscionable tactics bordering on what some may think is criminal behaviour?

Why can they not see that they are going to lose in the court and cost the shareholders millions and along the way they show us the calibre of the people they are? I am at a loss to understand the logic: this is the “international practice”. In South America the practice is to kidnap and demand a ransom similarly so in the Middle East and Africa, it is the practice to kidnap omen and children and offer them up as sex slaves, it is the practice for Seven 11 and other franchises to underpay and abuse people. Which practices, and what grade of practice, stay under the line of criminality, unethical behaviour or even plain stupidity? Whilst I may, as an outsider ponder these questions, I also understand the internal ethos of companies like Woolworths. I think the Drum on the ABC captures my point eloquently and succinctly. Arguments relying on the contribution of ethics to the welfare of business fail when there is a direct conflict between the needs of a business and doing the right thing. 7-Eleven franchise holders who exploited workers were doing what they thought they needed to do in order to remain in business.

If the survival of a company depends on cutting ethical corners, then the temptation to do so will be very strong. Unethical behaviour is more prevalent in small businesses or franchises where profit margins are small and survival is always in doubt. It is ironic that the competitive, risk-taking, unregulated economy that many politicians want to encourage is an environment conducive to unethical behaviour. Big corporations are generally in a better position to act ethically. But their ethical probity can be undermined by a culture that encourages aggressive, risk-taking behaviour. (Australian Broadcasting Corporation, the Drum) However, I am not commenting on a corner store franchise I am questioning the integrity and the logic of Australia’s largest corporate retailer. Why can they not see that they will lose in the court?

Why is it that their Board, CEO and managers cannot see that their positioning, marketing and management is not cutting it against the superior talent, and quality, of Coles and Aldi Board, management and employees? None of this logical to me on the outside.

Maybe that is the essence of it. I am on the outside with no skin in the game, no reputation to defend and not shackled by all of the poor decisions that the Board, CEO and managers have made compounding their shackled positions. Regardless of the justifications or ponderings I am of the view that the Board of Woolworths, the CEO and the management and employees who carry out the behaviour alleged by the ACCC all lack ethical and moral compasses, Woolworths as it currently stands should not be allowed to operate businesses in Australia.

If Woolworths Australia ceased to exist in its current form the nation might be better off,





WHAT SOME CORPORATIONS DO IN THE WORLD

THE NIGER DELTA


"The Deepwater Horizon disaster caused headlines around the world, yet the people who live in the Niger delta have had to live with environmental catastrophes for decades. We reached the edge of the oil spill near the Nigerian village of Otuegwe after a long hike through cassava plantations. Ahead of us lay swamp. We waded into the warm tropical water and began swimming, cameras and notebooks held above our heads. We could smell the oil long before we saw it - the stench of garage forecourts and rotting vegetation hanging thickly in the air. The farther we traveled, the more nauseous it became....

On 1 May this year a ruptured ExxonMobil pipeline in the state of Akwa Ibom spilled more than a million gallons into the delta over seven days before the leak was stopped. Local people demonstrated against the company but say they were attacked by security guards. Community leaders are now demanding $1 billion in compensation for the illness and loss of livelihood they suffered. Few expect they will succeed. In the meantime, thick balls of tar are being washed up along the coast.

Within days of the Ibeno spill, thousands of barrels of oil were spilled when the nearby Shell Trans Niger pipeline was attacked by rebels. A few days after that, a large oil slick was found floating on Lake Adibawa in Bayelsa state and another in Ogoniland. "We are faced with incessant oil spills from rusty pipes, some of which are 40 years old," said Bonny Otavie, a Bayelsa member of Nigeria's Parliament." (Source: Free Internet Press)


read full article

"Niger Delta oil spills dwarf BP, Exxon Valdez catastrophes"

For decades, thousands of spills across the fragile Niger Delta have destroyed the livelihoods of fishermen and farmers, fouled water sources and have polluted the ground and air." (Source:
Newsdesk.org

In the Niger Delta, millions and millions of barrels of oil have been spilt into the Delta environment..... Leaking pipelines, running through villages, farms, creeks and rivers in the Niger Delta, are a major source of pollution, sickness and economic ruin for the people of the Niger Delta. LEARN MORE ABOUT THIS HERE

OIL INDUSTRY HAS BROUGHT POVERTY AND POLLUTION TO NIGER DELTA


The oil industry in the Niger Delta of Nigeria has brought impoverishment, conflict, human rights abuses and despair to the majority of the people in the oil-producing areas, according to a new Amnesty International report. Pollution and environmental damage caused by the oil industry have resulted in violations of the rights to health and a healthy environment, the right to an adequate standard of living (including the right to food and water) and the right to gain a living through work for hundreds of thousands of people." Read Source: Amnesty International



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