Have You Crossed the Line?

© Tim Fulton

My TEC speaker this past month was Harvin Moore. The topic was business ethics. This topic is like cough medicine. You know you need to take it and you also know it may not taste very good. To my surprise, I not only enjoyed the presentation but it “tasted” good as well.

Harvin Moore was a very successful business man in Houston, Texas in the 1980’s. He was a real estate developer, an attorney, and a banker. He combined each of these entities very nicely into a business conglomerate that earned him much recognition amongst his peers in Houston and considerable financial gain as well. He seemed to have the Midas touch when it came to business.

In the mid-1980’s the Savings & Loan crash rocked the financial and real estate industries and Harvin Moore’s business was no exception. While his bank was still solvent there was enormous pressure to generate cash from their asset holdings. As a result the bank made several loans that included conditions of the borrowers that violated Federal banking regulations. As Harvin admitted to the group, “I crossed the line when I made those loans.”

Shortly after that time, the bank was audited and these questionable loans were discovered. Within months a federal grand jury indicted Harvin Moore for bank fraud. Rather than fight the charges in a very anti-banking environment, Harvin Moore pleaded guilty to the felony charges and spent over two years in a Federal prison in Texas. In addition, he paid a substantial six-figure fine, lost his right to practice law, and his wife divorced him. In a very short period of time he went from being a multi-millionaire CEO to earning 17 cents an hour in the prison cafeteria.

This tragic story really caused me to consider what it means to “cross the line”. As business owners we are faced with decisions on a daily basis that challenge our ethical values. Maybe it’s taking advantage of an unknowing customer. Or possibly it’s mistreatment of an employee. Misleading a vendor.

Misrepresenting information to our bank. Funneling precious resources from the business into our own personal means. The list goes on. How do we decide when, where, and how to “cross the line”?

In Harvin Moore’s case, his actions by his own admission were both illegal and unethical. However, at the time he felt the necessity to take these actions for the well-being of his business and its stakeholders. Would you have acted in a similar fashion?

I learned an important lesson for myself early on in my entrepreneurial career about business ethics. I was the owner and operator of a small retail business. Primarily for accounting purposes, I had multiple bank accounts set up. As money came in from customers, funds flowed from one account to another. As a sharp recent MBA graduate I began to become creative with these bank transfers when funds were low. I would write checks to transfer funds before the funds were actually available knowing that within the time the check would clear, the necessary funds would be properly deposited. On occasion, I would get caught short-handed and would pay a bounced check bank fee.

One day I got a call from my typically friendly banker. He asked me to come pay him a visit as soon as possible. That afternoon I came to his office. He was not happy. The bank had been keeping track of my creative funding and had decided it was time to put a halt to it. My banker informed me that I was guilty of check-kiting and that was a federal offense. If it continued they would close my accounts, call my loans, and prosecute if necessary.

This was a wake-up call like I had not received in a very long time. There had never really been a discussion on business ethics in business school.

What I had perceived as creative financing the bank had perceived as a felony. I had crossed the line and didn’t know it. Under different circumstances and larger dollar amounts, I too could have possibly been exposed to our Federal judiciary and penal system.

The lesson for me in this experience was to scrutinize my decisions and my actions much closer prior to taking action. Otherwise that one action could easily become a norm or a habit. By waiting it becomes much too easy to justify or legitimize our sometimes desperate actions. Luckily I found a book about that same time in my entrepreneurial career that helped me greatly in making tough ethical business decisions.

The book is “The Power of Ethical Management” and it was written by best-selling author Ken Blanchard. Blanchard recommends that you ask yourself three questions when faced with a tough decision. They are as follows:

· “Is it legal?”

· “Is it balanced?”

· “How will it make me feel about myself?”

If the answer to the first question is no, there is no reason to go to questions 2 & 3. The second question makes sure that your decision is a win/win for all parties concerned and that your gain is not a result of someone else’s loss. For me, the third question forces one to look in the mirror and make sure we can face ourselves as a result of our decision.

These three questions have become a simple yet powerful filter for me as I have wrestled with tough ethical decisions in my business and personal life for over twenty years. They also serve as speed bumps as I sometimes want to race to make quick decisions that may have significant long-term ramifications for me and others involved. I am forced to slow down and sometimes stop to consider the possible outcome of my decisions.

Harvin Moore crossed the line and paid dearly. I have crossed the line on numerous occasions and have also paid the price. I hope that the next time you near “the line” you will think of Harvin. Consider the price you may pay. Ask yourself Blanchard’s three questions and then be at peace with your decisions.

Tim Fulton is a nationally recognized small business consultant and management trainer. He is also a very popular public speaker. Tim can be reached at timfulton@hotmail.com