The High Cost of Low Ethics.

• Author: Sheffert, Mark W.

"Good management -- that is, management with real thought behind it -- does not bother trying to make its way by trickery, for it knows that fundamental honesty Is the keystone of the arch of business. It knows that you will fail if you think more of matching competitors than of giving service, that you will fail if you put money or profits ahead of work, and that there is no reason why you should succeed if what you do does not benefit others."

Would you believe that the speaker was Harvey Firestone? Firestone Tire and Rubber Co., founded in 1900, was one of the first manufacturers of automobile tires. Over the next nearly 40 years, Harvey Firestone gained a reputation for valuing common sense, tightly controlling every aspect of his company and serving as its chief salesman, financier and production manager. At his death in 1938, his company had grown from a start-up in an infant industry to an established market force that had survived the Great Depression. Firestone continued to grow, merged with Tokyo-based Bridgestone in 1990 and today is the second largest tire manufacturer in the world.

How unfortunate that Firestone is now associated with defective tires, SUV rollovers, denial of any problems and possible non-disclosure -- even cover-up. Many people are now questioning the tires' safety and the company's integrity. Because of poor-quality product and management's controversial handling of the crisis, the great company that Harvey Firestone dreamed of and built -- and its 100-year-old reputation -- is now tarnished.

How did this happen? It seems that when Firestone's management first became aware of the tire tread separation, blow-outs and claims, they were more concerned with their financials than with safety, quality or potential ethical problems. But the financial impact they were contemplating then probably would look like the deductible to a major medical compared to what the tire recall and its ramifications will eventually cost them.

In the near term, Bridgestone said it will take a one-time charge of $350 million for the recall, and analysts predict a major sales slowdown this year. More importantly, however, the damage done to Firestone's reputation for denial and alleged cover-up when families were dying will be burned in the buying public's mind for years.

Contrast Firestone to Johnson & Johnson, the makers of Tylenol, which in 1982 dealt ethically with the problem of product tampering and became the model for ethical...