Ethical Leadership - The experience of JCU's 3rd IBD cohort

James L. Hambrick – Lubrizol CEO

How does your view of ethics affect your organization?

James responded that with any organization, be it family, company, etc., the “tone begins at the top”. The company’s view of ethics begins with him. He stressed the importance if you are going to talk the talk; you had better walk the walk. James feels that the right methods, programs, and processes are important, but people in the organization need to recognize the bottom line of what is the right thing to do. He said that the processes and programs are reinforcements over time. James used the analogy that with children, parents start training them at a young age as to what is right and what is wrong. Eventually, they get to the point where they either get it or they don’t, and James feels the same way about the organization. When I asked him if his view of ethics has changed over time, he said that no, his view hasn’t changed, but his diligence and responsibility to it has come to mean more to him. He also had me get up and read the corporate philosophy that Lubrizol follows, and he explained that ethics is in our foundation.

How do ethics affect the bottom line of your organization?

James responded by saying that ethics affect everything regarding the bottom line. He said that people make the organization, that the bottom line is a function of their creativity. The people must create a sustainable profit. If you don’t have sustainability, you have nothing. He gave examples throughout history where you had good leaders that lacked ethics, and their companies or organizations did not stand the test of time. Nazi Germany was an excellent example provided by James.

What is the relationship between ethics and corporate citizenship in your organization

James said first we need to define corporate citizenship, which he said is what it gives back to the community. We then need to define community. Through Lubrizol’s tax money, we give back at the national, regional, and local levels. In addition to this, Lubrizol has the Lubrizol Foundation, and the areas of focus are education and health and human services. Many people in the organization participate in community service activities, such as boy scouts and girl scouts, Relay for Life, serving on local community boards, among other things. James discussed how Lubrizol makes donations for people to take their time and creativity and apply their efforts towards non-profit activities. Lubrizol is heavily involved in philanthropic activities.  

 Additionally, James discussed that when you are working for a company that has an outstanding community standing, you just know it. In building off of his sustainability opinion, he mentioned that companies that have been around for a long time and have the good reputation are likely ethically sound.

What is an ethical challenge you faced during your career? How did you respond?

James gave me 3 examples of the types of ethical challenges he has faces:

Personal-He cited an example when he was working as an engineer in Deer Park, Texas. There was a physical action that needed to be done, and it was unsafe. James felt it really needed to be done, but he didn’t want to put anyone else at risk. He said that “if you aren’t prepared to do something yourself, you shouldn’t ask someone else to do it”. So James decided to do it himself.

Someone Else-He had an employee that he knew for a really long time. They were an outstanding employee, ideal worker, “you wish you had a hundred of them”. This employee has a good family and a bright future. But this employee made one mistake by making an inappropriate sexual advance towards another employee. Once they began investigating, it turned out this wasn’t the only incidence of these types of advances. So a decision had to be made, and the employee was terminated. James explained how decisions like this tear him apart. The emotional aspect comes into play, but you have to do it.

Corporate Sense/Business Level-there are many commercial rules and regulations within our industry. And sometimes you have to make a decision whether or not you self-report yourself if you are out of compliance. He said this was kind of like calling the police on yourself if you are going 75 mph in a 60 mph zone. He said that there are times when you have to make a decision between the technical rule and the practical rule. We typically turn us in. They prepare to pay the financial penalty. But there are also times we have to make sacrifices not to violate. Some of the corporate decisions are relatively small, some are relatively weighty. He gave an example of the fact that it is against the law for the U.S. to supply to some international companies, Iran for example. Even though we have international divisions and could supply to them, we ethically have made the decision to not to. This is not always the case with our competitors.

I also asked James if these decisions ever get easier. He responded that no, they don’t. But you take the appropriate time to hash the decision out, and you make the right choice. You try to remove the emotional bias. Eventually, you get better at making the tough decisions, but they never get easier to make.