Two Standards

Published: June 24, 2013

By Jim Lichtman
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Friday’s news carried two business-related stories that, on the surface, may not seem similar but really demonstrate a double standard when it comes to guilt.

Paul Deen took to YouTube Friday to apologize for using the “n” word. In part, Deen said, “I want to apologize to everybody for the wrong that I’ve done. I want to learn and grow from this. Inappropriate and hurtful language is totally, totally unacceptable.”

As a result of the backlash, Food Network announced that it would not be renewing Deen’s contract, due to expire at the end of this month.

And, in a break from long-standing practice, the head of the Securities and Exchange Commission, Mary Jo White, announced that defendants would no longer be allowed to settle some cases while ‘neither admitting nor denying’ wrongdoing.

It’s interesting to contrast and compare these stories.

Historically, corporations have been allowed to make out-of-court settlements in the interest, they say, of time and convenience, which is transparent code for: we’re not going to win in the long run, so let’s cut our losses and settle. What they do is pay millions (the public never knows exactly how much) just to move on. The company is satisfied and the wronged are usually so clouded by the money that they can’t or won’t see anything else.

In the film A Civil Action, John Travolta’s character is debating with opposition attorney Robert Duvall about whether or not to settle or proceed to court with a large class-action case. Travolta’s character, based on real-life attorney Jan Schlictmann, stands for the nobility of the jury. He believes that, in the end, they will see the truth.

“The truth?,” Duvall says. “I thought we were talking about a court of law. Come on, you’ve been around long enough to know that a courtroom isn’t a place to look for the truth.”

And there is a laundry list of examples to back up his point.

However, in life, most people want to know the truth. Contrary to another famous movie line, “You can’t handle the truth!” delivered by Jack Nicholson in A Few Good Men, most people can handle the truth. What they can’t handle; what they won’t tolerate is being misled, deceived or lied to.

We need people to be accountable for their actions. We want to know the truth about the IRS scandal. We expect oversight and accountability in government institutions and individuals. Without that fundamental aspect of owning up to wrong-doing, there can be no trust. Worse still, many begin to transfer a template of distrust to other government agencies, people and institutions.

Most people want the truth, because all of us expect corporations and government institutions to act in the best interests of the public that uses their product or service.

One of the best examples of corporate responsibility is former Johnson & Johnson Chief James E. Burke who, in the fall of 1982, when he learned that Tylenol capsules in some Chicago area stores had been laced with cyanide, pulled every bottle from every store in the country. Burke believed in earlier chairman General Robert Wood Johnson’s credo that the company’s first responsibility was to its customers, then to employees, management, communities and stockholders.

In an interview, Burke told me, “As I look back on Tylenol, I think that the only way that we could have done what we did was to have all of the institutions that were affected by the Tylenol poisonings believe in us. And I want to emphasize, believe in us, the company – whether it was the head of the FBI, the FDA, or the people that we spoke to in Congress or at the White House.”

Burke’s actions cost J&J approximately $100 million that year. However, the product quickly bounced back in large part because of the trust between the public and the head of a major corporation.

Without accountability, without a sense of fairness in the system, there can be no trust. Worse, we begin to see a corrosive cynicism eat away at organizations and government so that when another scandal hits, the first reaction by many is, “See, I told you; they’re all corrupt!”

“In the interest of public accountability,” White said, “you need admissions. Defendants are going to have to own up to their conduct on the public record. This will help with deterrence, and it’s a matter of strengthening our hand in terms of enforcement.”

“In a memo to the S.E.C. enforcement staff announcing the new policy on Monday,” The New York Times writes (June 22), “the agency’s co-leaders of enforcement, Andrew Ceresney and George Canellos, said there might be cases that ‘justify requiring the defendant’s admission of allegations in our complaint or other acknowledgment of the alleged misconduct as part of any settlement.’

“They added, ‘Should we determine that admissions or other acknowledgment of misconduct are critical, we would require such admissions or acknowledgment, or, if the defendants refuse, litigate the case.’

“Ms. White said that most cases would still be settled under the prevailing ‘neither admit nor deny’ standard, which, she said, has been effective at encouraging defendants to settle and speeding relief to victims.”

Speedy relief should be the only excuse for such a settlement when cases threaten to drag on for years.

As for Paula Deen, the Associated Press writes (June 20), “Deen’s racial statements came to light as part of a deposition in a lawsuit brought by a former manager of Uncle Bubba’s Seafood and Oyster House, who claimed to be sexually harassed and said the restaurant was rife with innuendo and racial slurs.

“Deen was asked in the deposition whether she had ever used the “n” word.

” ‘Yes, of course,’ Deen replied, though she added: ‘It’s been a very long time.’

I’ve seen Deen’s YouTube apology. It appears both heartfelt and sincere.

“I want to apologize to everybody for the wrong that I’ve done,” Deen said. “I want to learn and grow from this. I’ve made plenty of mistakes along the way but I beg you — my children, my team, my fans, my partners — I beg for your forgiveness. Please forgive me for the mistakes that I’ve made.”

When was the last time you saw such an apology by a corporation or government official?

The common link between both stories is trust.

While Deen may have sincerely apologized, her future actions in how she handles her restaurants and staff will ultimately determine how she grows and learns. We will have to wait and see.

However, both Paula Deen and corporations looking to rebuild trust within their organizations should take a page from James E. Burke, whose words remain just a relevant as ever.

“I think that the world is searching for trust in all of their institutions. And I think those that perform the best and continue to perform the best over time, whether they’re a parent – a family’s an institution as well – or a teacher, or whether they’re a business, I think we’re all guided by a desire to trust those that we’re working with….

“I think that the more we do that’s right, the more successful we are as individuals and as institutions.”



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