What Machine That Can Count Ethics Test

Jack Welch, former chairman of GE is a major champion of the supremacy of ethics in
business. Whenever an employee’s actions have put GE on the wrong side of the law, he
has hastened to co-operate with investigators, admit guilt and take prompt corrective
action. Such corporate mea culpa has served the company well.

The time-card scandal in 1985 was the first significant ethical challenge of Welch’s 25year GE career. GE Re-entry Systems, a GE subsidiary, was making a new nose cone for the Air Force’s Minuteman missile. Federal prosecutors in Philadelphia charged it with 108 counts of criminal fraud. The indictment alleged that GE managers had altered worker’s time cards with improper charges totaling $800,000. Welch’s response and damage control were brilliant, thereby winning the trust of government officials. Welch personally called on Secretary Orr, presenting a comprehensive proposal for cleaning up the mess and preventing such mess from recurring. He created a top-level review board within GE to oversee compliance.

In this time-card case and other similar instances, candor and a determination to ally GE with the forces of law have enabled GE to emerge with more vitality and systematic approaches to ethics. The experiences also underscore the challenge of having to raise employees’ awareness of the need for high ethical standards.

“You can’t audit integrity into a system any more than you can inspect quality into a machine. Where you can make a difference is by changing the culture, by tireless, forceful leadership that won’t tolerate winking, rule-bending or looking the other way.” Welch was quoted as saying. His favourite question to GE employees was: “Can you look in the mirror every day and feel proud of what you are doing.” According to Welch, “In a global business, you can win without bribes. But you better have technology. That’s why we win in business like turbines, because we have the best gas turbine. You have got to be the low-priced supplier, but in almost all cases, if you have quality, price and technology, you win.”

Even the comeback kid, Donald Trump has this advice for businessmen: “Be honest,
even if there are others around you who are not.” In the 1999, he almost wanted to run as

Companies spend a lot of money in selecting its candidates. This is normally based on competence and achievements, which are easier to measure. However, it is equally important to select candidates with high levels of integrity and ethics. Strong ethical practices should pervade across the whole corporate spectrum. It is important that board members need to be more independent. Analysts too need to provide independent views and assessments in their reports on companies. Shareholders and investors need to focus and do their homework rather than merely relying on earnings per share and short term profits. All of these issues have to do with integrity as it is necessary to do what is right
and ethical.

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Dr Mike Teng (DBA, MBA, BEng, FIMechE, FIEE, CEng, PEng, FCMI, FCIM, SMCS) is the author of the best-selling business book “Corporate Turnaround: Nursing a sick company back to health”, in 2002. In 2006, he authored another book entitled, “Corporate Wellness: 101 Principles in Turnaround and Transformation.” Dr Teng is widely recognized as a turnaround CEO in Asia by the news media. He has 27 years of experience in corporate responsibilities in the Asia Pacific region. Of these, he held Chief Executive Officer’s positions for 17 years in multi-national, local and publicly listed companies. He led in the successful turnaround of several troubled companies. He is currently the Managing Director of a business advisory firm, Corporate Turnaround Centre Pte Ltd (Website), which assists companies on a fast track to financial performance. Dr Teng was the President of the Marketing Institute of Singapore (2000 – 2004),

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