The Ethical Take

Published: June 18, 2014

By Jim Lichtman
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From Martha and Macy’s to mayhem in Brazil then back to my favorite CEO, let’s take a look.

Nothing to Smile About, Now –

Why is Martha smiling? Simple, she was on the stand last year arguing that a deal to sell Martha Stewart branded merchandise at J.C. Penney was perfectly acceptable despite a five year exclusive deal to sell her branded products at rival Macy’s.

Now, almost three years later The New York Times reports (June 17), that “A New York judge on Monday ruled that J.C. Penney unlawfully interfered with an exclusive merchandising agreement between Macy’s and Martha Stewart Living Omnimedia.

“At the root of the dispute was a December 2011 agreement between Penney and Martha Stewart Living Omnimedia to sell an array of her home products, like rugs and bath towels, in Penney’s stores. Macy’s sued both companies, contending that the pact violated a five-year-old deal it already had to sell many of the same housewares exclusively. …

“We are delighted, but certainly not surprised, that the court has found tortious interference by JCP,” [Macy’s said in a statement]. “It is a great shame that Macy’s had to expend time, money, and the diversion of its resources in order to protect its rights. We look forward to the damages phase of the case.”

“But the damage review could still be contentious,” The Times writes. “During the trial of the case last year, Mr. Grossman said Macy’s anticipated seeking recovery of damages in an amount that could be eight figures.”

The Ethical Take: Better listen to your attorney and board members before signing new contracts, Martha.

Where Fairness is a Weakness –

Crooks and charlatans may abound in the U.S., but on the World Cup soccer field in Brazil American athletes have got a lot to learn about cheating and play-acting.

According to a Times story (June 15), about this year’s FIFA World Cup, “For better or worse, gamesmanship and embellishment — or, depending on your sensibilities, cheating — are part of high-level soccer. Players exaggerate contact. They amplify the mundane. They turn niggling knocks into something closer to grim death.

“They do all this to force the referee to make decisions, with the hope that if he is confronted by imagined bloodshed often enough, he will ultimately determine he has seen some. Applying this sort of pressure on the official is a skill that, by their own admission, United States players generally perform poorly, if they perform it at all.

“Graham Zusi, an American midfielder, said diving, also known as flopping, ‘is something I’ve never really incorporated into my game, and I don’t plan on it.’

Tab Ramos, one of Klinsmann’s World Cup assistants and a player for the national team from 1988 to 2000, said he frequently saw Americans struggle to pull off the seemingly requisite soccer shenanigans. A Uruguayan-born American who played in Europe and the United States, Ramos is attuned to the art.

” ‘Absolutely that’s something we don’t do the way other teams do,’ Ramos said. ‘I don’t know if you call it a problem or a weakness, but it’s clear that the American nature is to try and make everything fair, to try and be fair to the game. That’s just how Americans are.’ ”

The E.T.: Memo to U.S. Players: Just because everyone else does it does not make it right.

Love that Perk! –

Starbucks CEO Howard Schultz does it again!

Through an arrangement with Arizona state university, the coffee company will offer an online college education to thousands of its workers free of charge. Further, Starbucks will not require any of these employees to remain with the company.

“The program is open to any of the company’s 135,000 United States employees, “The New York Times writes (June 16), “provided they work at least 20 hours a week and have the grades and test scores to gain admission to Arizona State. For a barista with at least two years of college credit, the company will pay full tuition; for those with fewer credits it will pay part of the cost, but even for many of them, courses will be free, with government and university aid.

” ‘Starbucks is going where no other major corporation has gone,’ said Jamie P. Merisotis, president and chief executive of the Lumina Foundation, a group focused on education. ‘For many of these Starbucks employees, an online university education is the only reasonable way they’re going to get a bachelor’s degree.’

“Starbucks is, in effect, inviting its workers, from the day they join the company, to study whatever they like, and then leave whenever they like — knowing that many of them, degrees in hand, will leave for better-paying jobs.

“Even if they did, their experience ‘would be accreted to our brand, our reputation and our business,’ Howard D. Schultz, the company’s chairman and chief executive, said in an interview. ‘I believe it will lower attrition, it’ll increase performance, it’ll attract and retain better people.’ ”

The immediate results?

“The Starbucks program sounds like a boon to Abraham G. Cervantes, 24, who lives in the San Pedro section of Los Angeles with his mother and two of his brothers, and would be the first in his family to earn a college degree. ‘I’m the only one in the family with a steady job,’ he said. In fact, he has two jobs — one at Starbucks, and another at a music studio.

“While studying at a community college, he discovered classical music, and fell in love with Chopin, Bach and Beethoven, though at home he can practice only on a worn-out piano. He said he dreamed of being a professor of music, but after five years of trying to mesh his class and work schedules, he has not finished his associate’s degree.

” ‘Working two jobs, you don’t always have time to attend school,’ he said. The new Starbucks program ‘would be a huge benefit to me,’ Mr. Cervantes said, giving him flexibility and eliminating the commute to and from school.”

The Take: Schultz’s business acumen, social responsibility, and care for employees is something more CEOs need to emulate.


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