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Botwinick Prize Awarded to Cook and Millstein
By Donna Rosato ’00, Published in the Bottom Line, September 24, 1998
Showing that ethics and business are not necessarily an oxymoron, Columbia Business School presented the annual Botwinick Prizes for Business Ethics at Uris Hall.
"I’ve seen a steady increase in attention being devoted to ethics and social responsibility in business but the work is never done," says Columbia Business School Dean Meyer Feldberg. Columbia created the awards in 1991 as part of CBS’s efforts to highlight the importance of ethics in business.
Doing the right thing is smart business and can be profitable too, say this year’s honorees, Deloitte & Touche’s CEO J. Michael Cook and Weil, Gotshal & Manges’s senior partner Ira Millstein.
Cook received the Botwinick Prize in Business Ethics for his role in developing a program at Deloitte & Touche to retain and promote women. Faced with a high turnover of female accountants and a disproportionate number of women in leadership roles, Cook realized the male-dominated culture at Deloitte & Touche was an obstacle to women. The lack of career opportunities along with the difficulty of balancing career and personal life was driving women away. With Cook’s strong commitment, Deloitte & Touche changed the culture at the company, developing programs to enhance working relationships between men and women, focusing on career opportunities and giving all employees the flexibility to balance work and personal commitments.
Since the program was launched in 1993, the number of female partners has tripled, from 68 to 212, the highest among the Big Five accounting firms. The number of women in leadership positions, separate from partners, has also tripled. By offering both women and men more flexibility in their jobs, the turnover rate of the entire company has dropped steadily. Three years ago, one in four employees left each year. Today, annual turnover is down to 16%.
That’s important, Cook says, because clients want continuity. "Being able to retain good, experienced people makes us a better company," says Cook. It’s also a money saver: a 2.5 percentage point drop in female turnover rate in fiscal 1997 saved nearly $11 million in hiring and replacement training costs.
Still, Cook says, ethical behavior is not getting the attention it should in the United States. "The kind of ethics people expect in our government leaders is troubling." But ethics in business has come a long way from a decade ago when the business world was dominated by headlines about insider trading scandals.
Millstein, considered the founding father of the corporate governance movement, was awarded the Botwinick Prize for Ethical Practice in the Professions. His role in the 1992 ouster of the General Motors Chairman was considered a watershed event in the field of corporate governance. Millstein, a Columbia undergraduate who also earned a law degree at Columbia in 1949, says he never equated ethics with what he was doing to make boards of directors more active. But making boards of directors more responsive to shareholder rights does go hand in hand with social responsibility, Millstein says. "Boards are better today and they’re becoming more used to the idea that they have a responsibility to stockholders."
Millstein’s latest project in corporate governance is urging the Securities and Exchange Commission to define the role of a company’s audit committee. "We can’t just count on people being wonderful. Companies need oversight," says Millstein. "The pressure is constantly there for auditors to do what’s permissible under the law but not necessarily proper. Audit committees need to meet with auditors to make sure they’re comfortable with what companies are asking them to do."
Taking questions from the audience of students, faculty and guests, Millstein was asked if he thought Philip Morris made a mistake in not settling the tobacco lawsuits brought against it. "I don’t know why there hasn’t been more of an effort to get past this. I think it’s about time." Asked if the quality of financial reporting is declining, Cook said the potential for problems is greater today. "There is much more of an emphasis on earnings today than there has been in the past. When the economy slows down further, there may be additional pressure on financial reporting."
Research Insights on Leadership and Ethics
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Professor of Finance
“What makes countries rich is how productively they use their resources…Once a (more productive) technology is introduced, do people use it? Why aren’t people using the most improved technologies to begin with?”