Ethics Is Good Business

Jan. 28, 2003
Last year’s high-profile scandals cast a shadow over corporate America, reminding us about the consequences of unethical behavior and shady business practices. But, those cases should not eclipse the bright side of ethics – the positive impact that sound, ethical practices have on our country’s businesses, especially in the commercial property industry.Upholding ethical business standards, resolving ethical dilemmas right away, and rooting out unethical practices before they flourish, can solidify an organization’s sound reputation – and even its fiscal standing. Ethical commercial property professionals and the companies they work for understand this, and benefit from such knowledge in the long run.Consider a recent situation described by Jon Cicero, regional facilities manager for Downers Grove, IL-based Aramark ServiceMaster Facilities Services. While conducting an operations-related audit for one of its clients, Aramark discovered that the facilities maintenance department was over-staffed and that they could offer the client substantial savings if they trimmed back personnel. “Although we received revenue based on each employee on our staff, we, of course, made the necessary reduction and notified our client of the savings,” Cicero explains. “They were so impressed with our ethics that they gave us regional responsibilities, which tripled our revenue and subsequently allowed us to hire six more employees.”    Prometheus Real Estate Group, Redwood City, CA, has also realized the fiscal benefits of sound ethics, thanks to regional engineering supervisor Chris Larsen. “In 2002, I had conversations with a trusted consultant regarding a major project for one of our commercial buildings. The consultant had teamed with a product recently and would only recommend a particular product brand for our work that needed to be done,” he reflects. “I became uncomfortable with the recommendation and did the homework to educate myself on the choices available. In the end, I prepared the work scope for the project, saving seven percent in consulting and supervising fees and installed a higher-quality product and obtained a better warranty.”

What’s the lesson of these cases? Sound ethics make for sound business.Acting ethically is not always easy. In fact, you may even get pressure for it – at least to start with. When assistant property manager Leila Phillips of Washington, D.C.-based Spaulding and Slye took over management of a 14-year-old building, her job included evaluating a vendor who had worked in the property throughout its existence. The vendor was an amiable person who was extremely well liked by the tenants. After carefully reviewing the vendor’s work, Phillips discovered he wasn’t fulfilling the services he was hired to provide. Against the preference of the tenants, she made the hard decision to terminate the vendor – an unpopular choice to say the least. “I got a lot of flak for it at first,” she notes, “but when they saw the changes and improvement that were brought about by the vendor’s replacement, I starting receiving phone calls from tenants saying they appreciated what I did. The tenants gained a lot of trust and respect in us, because they saw that we had their best interests at heart.” So, even though ethics has a bright side, it’s not always clear what side that is.  That’s why it’s critical for everyone in every company to explore ethics on a regular basis, making the topic part of an organization’s standards and culture and establishing a firm understanding of what’s acceptable and what’s not. BOMI Institute of Arnold, MD, through its annual National Commercial Property Ethics Week, provides real property professionals with a forum to do just that.  During Ethics Week, this year taking place April 14 through 18, industry professionals will gather in 10 major U.S. cities to explore ethics through BOMI’s Ethics Is Good Business® ShortCourse™.  People from all aspects of commercial property will gain insight such as that acquired by Michael Fortunato, vice president of City Commercial Management Inc., Rancho Cucamonga, CA, who says, “BOMI’s Ethics ShortCourse reinforced the importance of ethics in any kind of business, especially in commercial real estate. By learning case histories of other companies in various industries that violated ethical principles, it became even more apparent that the line between ethical and unethical choices can be somewhat clouded – and it’s best to err on the side of caution to the benefit of the client.” The one-day seminar has won praise from many BOMI students and industry professionals, who appreciate the opportunity to bring ethics to the forefront in a formal setting. From the seminar, Jean Alpi, assistant property manager, East Setauket, NY-based TRITEC Asset Management Inc., learned “how to focus on potential areas where people can be unethical, which made me more aware of the possibilities.” And, as she points out, “Awareness is one of the key ingredients of an ethics course.”  Being aware of ethics is critical to acting ethically, explains David Mazur, director of corporate services, New York City-based MONY Life Insurance Co. “Not only has BOMI’s Ethics ShortCourse reinforced with me core values and policy already established within our organization, it continues to remind me to think objectively in all circumstances and that ethics is not a science, it’s a conscience,” he says.  While ethics should be a focus of all industries, it plays a key role in commercial property, where the stakes are high in terms of both people and property.  As Cicero notes, “It is extremely important for commercial property professionals to focus on ethics because we are in a position of trust. Our clients depend on us each day to make sound, ethical decisions concerning two of the most valuable assets they have: their employees and their buildings … It is imperative that we operate as good stewards demonstrating integrity at all times.” Fortunado, too, understands the incredible responsibility of industry professionals, expressing, “The client is placing a great deal of trust in allowing the commercial real estate manager to handle what is usually a large amount of assets and cash. And in some instances, these investments represent a large portion of the client’s net worth, and may represent their accumulation of life savings. To violate that trust by unethical behavior is unconscionable, and of course any infraction in that area would destroy the trust relationship with that (and future) clients.”  In the commercial property industry, trust is a valuable asset. This was realized, first hand, by Al Hinkle, deputy project manager for Engineering at Crystal City, VA-based Consolidated Engineering Services Inc., who was asked to review a particular project for the client that involved replacing some major electrical switchgear. His company would receive a percentage fee for managing the job. Analyzing the situation, Hinkle recommended a less costly alternative, even though his company received less of a fee.  Down the road, Hinkle’s ethical choice, and his company’s support of that choice, had a positive impact on business. He explains, “In the long run, we were awarded considerably more work because we had demonstrated to the client that we had their best interests at heart. They knew they could trust us to do honest, forthright work.”For Hinkle and other ethics-conscious commercial property professionals, it seems that “Ethics Is Good Business” after all.Valry Fetrow is director of Communications at BOMI Institute (, Arnold, MD.

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