Business ethics rooted in the family, ex-airline CEO says

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Posted: Wednesday, October 9, 2013 12:00 am

The FBI was at the door, an employee theft ring was spreading, cash was running out and a competitor was making an unethical offer to Howard Putnam.

It was 1982 and Putnam, speaker at two ethics-related events in Omaha on Tuesday, was the CEO of beleaguered Braniff Airlines. American Airlines CEO Robert Crandall left a message to call.

Braniff's attorney suggested recording the call, which was legal in Texas. Putnam called Crandall, and during the conversation said that if American was going to start traveling the same air routes, Braniff would compete, “giving our best effort.”

Then came this exchange, according to a New York Times transcript:

Crandall: Oh, sure, but Eastern and Delta do the same thing in Atlanta and have for years.

Putnam: Do you have a suggestion for me?

Crandall: Yes, I have a suggestion for you. Raise your g------ fares 20 percent. I'll raise mine the next morning.

Putnam: Robert, we ...

Crandall: You'll make more money and I will, too.

Putnam: We can't talk about pricing.

Crandall: Oh, -----, Howard. We can talk about any g------ thing we want to talk about.

Not long afterward, the attorney gave the tape to the U.S. Department of Justice, which made the tape public and filed an anti-trust lawsuit against Crandall. The lawsuit eventually was dismissed on the grounds that no price-fixing agreement was struck.

But Crandall later said he was embarrassed by the conversation and went on to become a respected executive.

The phone call and a Harvard Business School case history on Putnam's successful restructuring of Braniff through bankruptcy have become lessons about the ethical conduct of business during hard times.

Those lessons must be repeated over and over, Putnam said Tuesday. He spoke at the annual meeting of trustees of the Omaha Business Ethics Alliance, attended by about 165 people at the Holland Performing Arts Center, and to about 625 people at the Better Business Bureau's Integrity Awards luncheon at the La Vista Conference Center.

The Omaha World-Herald was the main sponsor for the Better Business Bureau event.

Putnam, who lives in Reno, Nev., worked for United Airlines and is credited with building Southwest Airlines into a national carrier before he took the Braniff job.

In an interview, Putnam said attention to ethics in business may be fading.

“There are so many other disruptions going on that it seems not to have the same level of importance that it used to have,” he said. “It won't come back unless we keep it in the forefront.”

Putnam has given dozens of speeches a year on leadership, integrity and other topics for the past 20 years. He has written a book, “The Winds of Turbulence,” and worked as a management consultant.

Ethical conduct originates in the family, he said, and stronger family traditions in the Midwest seem to bolster ethical standards in the region.

Putnam grew up on a farm near Bedford, Iowa, about 100 miles southeast of Omaha. Each day when he got home from school, there was a list of chores he had to do before he could play.

“You realize how important that was on the farm, learning accountability, responsibility, from your parents, and how important that was in my business career and still is,” he said.

His father taught him to fly a Piper Cub, and when he was 16 he would take the airplane up for an hour a day.

“I think it just has to go back to the family, the family, the family,” he said. “I really believe that growing up in the Midwest, there is a stronger value system toward integrity and honesty. I don't see this across the rest of the U.S. as strongly.”

He encouraged those at the meetings to continue the tradition. “That's a part of America and a part of what you're doing in Omaha that we don't want to lose,” he said.

The Ethics Alliance gave Putnam its “Beacon of Ethics” award and named Bruce Grewcock, CEO of Kiewit Corp., as chairman for the next two years.

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