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

Rich Kramer – The Goodyear Tire & Rubber Co. CEO

How does your view of ethics affect your organization?

Rich talked about “Tone at the top” – single most important thing as Leader. People do what they see so when a leader does not set the right example people will follow. When people have a vice then tend to do more of it. Leader need to create a foundation to have clear values set.

Ethics training is important with a business conduct manual signed by every employee each year. Training and tests are given throughout the year on ethical topics. People make choices whether good or bad but training is provided to educate.

How do ethics affect the bottom line of your organization?

In 2004, Goodyear went through the process to restate financials. There were legal fees, interest rates, and a lot of time put into this process. Nothing was done illegal but a few regions focused solely on cutting cost instead of hiring additional accountants. This cost the company 2 to 5 extra interest points on millions because it was risky loan compared to hiring three accountants for 100,000 each. By not hiring the accountant the bottom line was affected in the years to come because of higher interest rates as well as the reputation those kinds of loans have. If you don’t do what is right (ethics), stating here is the resources I need to get the job done right then it could cost more money. Rich said, “I have never known anyone get fired for hiring the right person but I have seen people get fired for not getting the work done or done right.”

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

There is small margin that most people live in. There is a tilt you have to make within the boundaries to be truly ethical. Goodyear does a lot for the community and charity but Rich feels it is really the employees here that make the ethical choices. Goodyear employees do activities that do not have to do with the company money. Currently there is a giving tree for local community funded 100% by Goodyear employees, each spring employees volunteer at Day of Action to support the United Way, and each quarter departments pay $20 to wear jeans on Friday with the money supporting a local woman in Goodyear Heights that runs an after school program to neighborhood kids. These things are show employees consistently handle ethical decisions to do the right thing and donate because they want too not because they feel it is something that should be done.

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

During his time at PWC, he had many clients who wanted to push the envelope in the gray market. He had to stand up for what was right and legal by saying no we can’t do this. He was threatened to be fired and kicked out of many offices. He would provide solutions within the ethical and legally boundaries but that it not what the client wanted to hear. Rich said he would leave with a smile because he knew he was doing the right thing. After some time would pass, Rich said the client would call, ask him to come back to discuss options. At the end the client was happy Rich stood his ground to help move the decision in the right direction.

While at Goodyear, terminations have been an area of ethical challenges. Goodyear has a set of rules and if you break those rules you will be terminated. An employee broke one of those rules but he was a great employee. He helped with many things and was a true asset to the team. Rich’s team had to be consistent and let the gentleman go. Rich said, “People are watching, so if you talk the talk, you have to walk the walk too.”


Goodyear carries the same ethical standards across all countries that we operate in. You have to start with the idea people are good and they want to do good things. Ethics by definition is one size fits all but the difficulty comes in with how you get there because of the interpretations. What is expected in other regions face the challenge so there needs to be a bridge to help the gap.


Asia: Given the same training as USA. Servant Leadership is found in most places in Asia. The business is dominated by authority. Leader will say do something and the employee will just do it without asking any questions. The employee believes their leader wouldn’t tell them to do something wrong.

Goodyear tries to make sure all the managers understand the ethics training. It remains difficult when the manager says yes when they really don’t understand.

China: Bribes are common and people in China may be offended if you do not take their gift.  This creates an uncomfortable situation for most because in the USA we are not allowed to take gift. In order to not offend someone, leaders have found way to accept the gift on behalf of the corporation not the individual. The leader will be it back to headquarters to display or share.