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CNN Live Today

Interview With Jeffrey Seglin

Aired June 28, 2002 - 14:47   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: Now on to the fiery topic of ethics and corporate giants. From students to salesmen to CEOs, people who find themselves in ethical quandaries turn to Jeffrey Seglin. Seglin is a business ethicist who also heads up the writing program at Emerson college, and he authors "The Right Thing" column in "The New York Times." He joins us today to talk about the people in the corner offices who may be in a whole lot of help just about now.

Thanks a lot for joining us.

JEFFREY SEGLIN, "NY TIMES" COLUMNIST, "THE RIGHT THING": Sure.

WHITFIELD: So what kind of advice are you going to have for these CEOs? President Bush has already said today that he wants to try and press Congress to try and push through some proposals that would offer these leaders some more accountability. What kind of, you know, interim advice might you have for them?

SEGLIN: Well, it's interesting. I think the accountability is really an important aspect of it. One of the things that President Bush is pushing for is for them to sign off on the audits that go on every year, which is something that's supposed to be going on already. So I'm not quite sure how useful that's going to be, having people who are already breaching ethics, change their ways.

I guess one of my concerns is that there are a lot of corporations out there that aren't acting like WorldCom or Enron. And it seems to me that there's a real need for somebody to step forward and say, look, you know, you're looking for examples of moral leadership in business. Here's how we do business.

Here's -- look at our numbers. We're public companies, we're supposed to be able to understand their annual reports anyway. So here's how you do it when you want to do it right, without crossing the line.

WHITFIELD: So, Jeffrey, a lot of those other big corporations are getting a bad rap simply by guilt by association -- the fact that they are also big companies. They may not be carrying out their practices like Enron or WorldCom or even Xerox, but for the many employees who are working at these other large corporations, how do you help -- or how do you advice these corporations to inject more confidence in the employees who are starting to wonder, what about my 401(k)? SEGLIN: Right. I think one of the things with the 401(k)s that's really important to remember is some of the basic things that happened during times when the economy is really strong, everybody wants a piece of it. But during any economy, I think investing 100 percent of your 401(k) in any one investment, even if it's your own company's stock, is not -- has never been a really wise decision.

Financial advisers have always said that diversification is really important. So I think if employees are really concerned about that, as they should be, as all consumers should be, that importance for diversification, really understanding what you're investing in becomes really important.

So some of the responsibility falls back on the individual as well, which isn't a lot of solace for the person who's -- for any of 17,000 people that are about to lose their jobs at WorldCom.

WHITFIELD: So what are some of the questions that some employees need to be asking now? Do they need to be point blank with their CEOs and other leaders of their company, to find out, you know, who is our auditing firm? I mean, you know, if they're only relying on the quarterly statements of their revenues for their companies, you know, what other questions need they be asking their superiors?

SEGLIN: Yes, I'm not sure that asking who their auditing firm these days, especially in the wake of the Xerox information coming out and having a new auditing firm being sort of named there. I'm not sure that knowing who the auditing firm is is going to help the employees know what's going on.

I think understanding how the company works is going to help. And I think one of the things that would be really interesting for large corporations to try to do is to explain to their employees how the finances of the company works. The information should be -- the big word is transparency, and I think that's the one that's being thrown around. And basically, everybody should be able to see through and understand what the companies are saying, they're doing, as far as making money goes.

And certainly the people who work for that company have even more of a responsibility to sort of demand that they know what's going on.

WHITFIELD: When all else fails, who else should be held to, you know, a higher standard? We heard President Bush earlier today. We're hearing from employees from all sorts of corporations across the country, say they're counting on their CEOs. But perhaps, need there be others who have to be held to a higher standard to be those watchdogs of these large corporations?

SEGLIN: Sure. I think one of the things you're hearing a lot about now is sort of the need for outside directors to come in. And the whole issue of corporate governance has been elevated to a really high level, where the board directors of companies are supposed to be the people who hold the CEOs and the top management in check, and make sure that they are following the procedures, and make sure that they aren't being overly compensated for jobs that they're not performing, or they're not given egregious loans that are just out of whack with any kind of common sense.

So I think one the things that people should look for is sort of a sense of holding the boards of companies more accountable as well. And there's been a huge cry for outside directors to come in, namely being those directors that aren't sort of employees of the company, simultaneously to being on the board. So there can be some objective look at what's going on.

WHITFIELD: All right, Jeffrey Seglin, thank you very much for joining us. Appreciate it.

SEGLIN: Sure, thank you.

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