A Conversation on Leadership and Ethics with Former Arthur Andersen CEO Duane Kullberg
By By Nathan Rogg ‘ 15 | april, 2014, Issue 1
Former Arthur Andersen CEO Duane Kullberg
I recently sat down with Duane Kullberg, the former CEO (1980-1989) at Arthur Andersen, to discuss the role of ethics in business. At the time of Kullberg's retirement, Arthur Andersen was the largest and most trusted accounting and consulting firm in the world. One decade later, the firm's reputation was destroyed by the 2001 Enron scandal. For those interested in continuing the conversation around the importance of ethics in business, Mr. Kullberg will be the keynote speaker at the 2nd Annual Navigating the Grey Ethics Conference on Apr. 16th.
How can newly-minted MBAs create an ethically-sound culture within an organization?
By demonstrating ethics in everything you do. There are a lot of smart people, but those people often cut corners. You must make the right choices, show that you are fair and use appropriate standards. You can deal fairly with people and use the Golden Rule with your compatriots. Andersen did not sell auditing, tax or consulting work, we were selling trust. One of the greatest compliments I received when I was elected CEO was, "I don't know if you are the smartest partner in the room, but I trust you".
Milton Friedman once said "The social responsibility of business is to increase its profits." How did you balance competing interests between shareholders and other stakeholders?
Milton Friedman's statement in itself is a fair statement, but in any business relationship you have to trust the people you work with before you give them money. The economic relationships throughout the world are based on the belief that the information you are being furnished can be trusted. It is fine to make money, but if you abuse your position in the community it will impact your profits.
How can short-term judgments negatively impact an organization in the long term?
That was what happened in the 1990s with Arthur Andersen. Choices were made that were acceptable in the short run but were not in the long-term interest of the company. Most CEOs will do the right thing. The world is not made up of [former Enron executives] Jeff Skilling and Ken Lay, but you get caught up in the atmosphere. The atmosphere in the 1990s was if you are not making money you are stupid, and people got pulled into it. The pressure and the atmosphere can drive you to make stupid decisions. The same pressure drove people to sell bad mortgages years later.
Any other advice for those of us pursuing our MBA at Chicago Booth?
Take the time to look at the opportunities you will be offered. Not every hot-shot job may be the right one for you. Steve Jobs said "pursue your passion". You will put your heart and soul into something that is truly interesting, even if the salary is lower. You need to examine the characteristics of the companies that are giving you an offer. Do not take the highest salary, look at the firm's atmosphere because it is the atmosphere you will have to lead in.