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314 PART 5 • KEY STRATEGIC-MANAGEMENT TOPICS

at the head of an enterprise. For the spirit of an organization is created from the top.
If an organization is great in spirit, it is because the spirit of its top people is great. If
it decays, it does so because the top rots. As the proverb has it, “Trees die from the
top.” No one should ever become a strategist unless he or she is willing to have his or
her character serve as the model for subordinates. 4

No society anywhere in the world can compete very long or successfully with people
stealing from one another or not trusting one another, with every bit of information
requiring notarized confirmation, with every disagreement ending up in litigation, or with
government having to regulate businesses to keep them honest. Being unethical is a recipe
for headaches, inefficiency, and waste. History has proven that the greater the trust and
confidence of people in the ethics of an institution or society, the greater its economic
strength. Business relationships are built mostly on mutual trust and reputation. Short-
term decisions based on greed and questionable ethics will preclude the necessary self-
respect to gain the trust of others. More and more firms believe that ethics training and an
ethics culture create strategic advantage.
Ethics training programs should include messages from the CEO or owner of the busi-
ness emphasizing ethical business practices, the development and discussion of codes of
ethics, and procedures for discussing and reporting unethical behavior. Firms can align
ethical and strategic decision making by incorporating ethical considerations into long-
term planning, by integrating ethical decision making into the performance appraisal
process, by encouraging whistle-blowing or the reporting of unethical practices, and by
monitoring departmental and corporate performance regarding ethical issues.

Bribes
Bribery is defined by Black’s Law Dictionary as the offering, giving, receiving, or solicit-
ing of any item of value to influence the actions of an official or other person in discharge
of a public or legal duty. A bribe is a gift bestowed to influence a recipient’s conduct. The
gift may be any money, good, right in action, property, preferment, privilege, emolument,
object of value, advantage, or merely a promise or undertaking to induce or influence the
action, vote, or influence of a person in an official or public capacity. Bribery is a crime in
most countries of the world, including the United States. 5
Siemens AG, the large German engineering firm, recently was fined $800 million for
routinely offering bribes to various companies around the world to win overseas contracts.
The U.S. Justice Department and the SEC brought suit against Siemens under the U.S.
Foreign Corruptions Act. The Siemens fine was 20 times larger than any previous bribery
penalty. The SEC claimed that Siemens made at least 4,283 bribe payments totaling $1.4
billion between 2001 and 2007. These bribes allegedly were paid to government officials
in 10 countries.
Paying bribes is considered both illegal and unethical in the United States, but in some
foreign countries, paying bribes and kickbacks is acceptable. Tipping is even considered
bribery in some countries. Important antibribery and extortion initiatives are advocated by
many organizations, including the World Bank, the International Monetary Fund, the
European Union, the Council of Europe, the Organization of American States, the Pacific
Basin Economic Council, the Global Coalition for Africa, and the United Nations.
The U.S. Justice Department in mid-2009 increased its prosecutions of alleged acts of
foreign bribery. Businesses have to be much more careful these days. For years, taking
business associates to lavish dinners and giving them expensive holiday gifts and even
outright cash may be expected in many countries, such as South Korea and China, but there
is now stepped-up enforcement of bribery laws. Kellogg Brown and Root (KBR) and
Halliburton recently paid $579 million for bribing officials in Nigeria.

Love Affairs at Work
A recent Wall Street Journal article recapped current American standards regarding boss-
6
subordinate love affairs at work. Only 5 percent of all firms sampled had no restrictions
on such relationships; 80 percent of firms have policies that prohibit relationships between