Ethics, Shmethics…James Hardie and Me

When I was a youngster, I loved the name James Hardie.  You see, from 1979 until 1981 I was ballboy for the Parramatta Rugby League Team.  The jerseys of our premiership-winning team of ‘81 proudly bore the names Hardieflex and Hardieplank.  I retain one of these jerseys to this day.

A drive across our cities reveals that Hardies products seem to clad entire suburbs of our nation’s homes.  Their brake linings slowed and stopped cars and trucks thoughout the nation.  Yet, there were dark linings to more than the brakes, for the raw material central to the Hardie product line was the lethal substance asbestos.  In fact, the Hardie headquarters was called “Asbestos House.”  Asbestos, a fibrous silicate, was extremely popular because of the strength of each of its thousands of silica strands.

A significant story in the business pages of today’s Sydney Morning Herald reports on the court case currently brought by the Australian Securities and Investments Commission (ASIC) against several directors and executives of James Hardie Industries.  ASIC claims that the defendents were fully aware that the compensation foundation established by the company to support those who contracted cancer after working with absestos at Hardies would be woefully inadequate yet publicly stated the opposite.  Not only was their leadership approach less than ethical, it was allegedly illegal.

It reminded me of a time several years ago when, as CEO of a major industry association, I met with Hardies executives and had to consider whether to accept James Hardie sponsorship of an international conference of which I was the host. 

Here is what I said at the time:

Today I met with senior executives from a company which has been on the front pages of our newspapers for the last month.  It has achieved infamy for supplying a product which turned out to cause often-fatal serious illnesses to the workers who mined the raw material and manufactured the products using the substance.  While putting aside some money for future claims, these were massively inadequate, and the firm was subsequently and understandably hammered by a government inquiry which brought them kicking and screaming to the negotiating table.  Eventually, it agreed to fund the future costs of compensating those made sick by the substance, however by then the company’s name, image and reputation was damaged, almost beyond repair.

Why would any company wait so long to offer the levels of  compensation and the kind of compassionate response which was always going to be required?  Hadn’t they learnt the lessons of firms around the world who had become tabloid fodder for not doing the very minimally socially responsible thing?  Even companies who were not in the wrong, like Arnotts Biscuits and Herron Phamaceuticals, had shown how to handle negative publicity after their products were tampered with by idiots trying to make some point or other.  Those organisations immediately went into damage control, quickly removing their products from supermarket shelves and providing daily information to consumers and the media about their efforts to resolve the situation.  When the products were reintroduced, these companies launched substantial publicity campaigns to demonstrate their commitment to consumer service and product safety.

 I also wonder about the company’s commitment to its people.  Perhaps an obsessive focus on the bottom line led to its failure to right past wrongs, but surely the lives of the thousands of employees around the world who depend on the company for a living meant something to senior executives and its board of directors.  Then again, perhaps not.

 What I can’t understand is that some executives and their boards, although thankfully small in number, seem to be stuck in some kind of 1960s or 1970s industrial timewarp.  Although I leaned more towards a Milton Friedman style approach to social responsibility  for much of my working life than I did the more activist variety historically favoured by the Anita Roddicks and Richard Bransons of this world, this is really a no-brainer.  No company can afford the exponentially increased forensic focus of a hostile media which occurs when people make indefensible corporate decisions.  No company can sit calmly by while its years of commitment to an industry slide messily down the ethical drain.  Yet, it still occurs, all too regularly.

What can we draw from this?  I’ll go out on a limb on this one.  Since we live in a world of moral relativism, a world characterised by spin and subjectivity, we cannot be surprised when individuals and companies pursue naked self-interest rather than virtue and honour.  Doing the right thing in today’s environment appears to be defined as doing the right thing firstly by oneself, secondly by one’s team and company, thirdly by one’s industry and its culture and, running a distant last, doing the right thing according to the mores and values of the surrounding community which, by the way, sustains the enterprise in the first place. 

Charles Colson once said that we live in a world of “men without chests”, a world in which there is no tempering process between the rational thoughts of the minds of individuals and the potential for darkness and misdeeds which resides in their hearts.  If this is so, it will take a whole lot more than enlightened self-interest to avoid the corporate sins of the future.

In his excellent book, Asbestos House (Scribe, 2006), Gideon Haigh concludes that the sins of the Hardie fathers were far more those of omission than they were of commision.  It was what they didn’t do, but could have, that led to decades of inaction and insensitivity.

One of the upsides of our more-transparent society is that these kinds of dark secrets are exposed for the inexcusable sins that they are.  Ethical leadership demands a style of leadership that keeps no skeletons in the cupboard.  To the contrary, it demands leadership that opens all parts of our organisations to the light, consistently and transparently.

And what of our Hardies sponsorship?  My board took the view that those companies who were without sin should cast the first stone.  Since none were blameless, we should and did accept the funds of this corporate wrongdoer.