Yes, You Can Learn about Ethics from a Car Dealer

Reading in the news recently about fatal car accidents traced to recalled, faulty airbags heightened my appreciation of the 2016 Baldrige Award-winning small business Don Chalmers Ford. This car dealership near Albuquerque, New Mexico, has distinguished itself by ensuring integrity and ethics in its practices, and its leaders consider this a core competency of the business. 

At the Baldrige Program’s Quest for Excellence® Conference last month, Don Chalmers Ford (DCF) President and Dealer Principal Gary Housley stressed the focus on ethics in his leadership presentation. An example he shared was the dealership’s decision not to sell a group of used cars with an open recall on their airbags despite the fact that selling used cars with potentially faulty airbags was legal, that competitors were doing so, and that the small business would face a significant loss of revenue in the short term.

If you are familiar with the Criteria for Performance Excellence (part of the Baldrige Excellence Framework), you know that ethical behavior is an essential component of this framework for organizational leadership and management. Ethical behavior is both a core value of the Baldrige framework and the focus of a set of questions that are requirements in the leadership category (at 1.2b[2]).

To learn more about DCF’s ethical practices, you can read the publicly available summary of the dealership’s 2016 application for the Baldrige Award. Following is DCF’s response to the Criteria question How do you promote and ensure ethical behavior in all interactions?

“The auto industry does not have an ethical reputation,” it begins. “DCF takes this seriously, beginning with comprehensive and strategic hiring. Approaches promote and ensure ethical business practices for all stakeholders initially in the Employee Handbook and continuously in the Driving Forward Report, Compli, and the online process manual. The SLT [Senior Leadership Team] evaluates and strengthens these deployment methods.”

If you are not familiar with a Baldrige assessment, note that in this excerpt DCF is intentionally describing how its approaches to ethical behavior are deployed and improved because approach, deployment, learning, and integration are factors that Baldrige examiners use to evaluate an organization’s processes.

DCF’s response to the Baldrige Criteria requirement for ethical behavior in leadership—also excerpted from the company’s 2016 Baldrige Award application summary (PDF)— continues as follows:

1. Is it the truth?

2. Is it fair?

3. Is it the right thing to do?”

This timeless test was adapted from a 110-year-old service group, Rotary International, known for its honest business principles, and is deployed to every employee through training and a pocket card. A core value since 2005, making all employees responsible for ethical practices like servant leadership, integrity and ethics also met the criteria for a core competency. Innovations in key areas like Finance and Insurance [F&I] video recordings allow third party audits that assess the process discipline, and integrity and ethics of the transactions. Feedback is provided to the F&I Manager monthly to ensure that continuous improvement takes place.

As DCF Director of Performance Excellence Lee Butler explained recently, the (customer-permitted) video recordings of F&I meetings with car buyers help the dealership ensure a systematic and disciplined approach, protect the customer, and are used as a training tool to assist the finance managers in honing their skills.

“A random sample of the video recordings are reviewed by a third party for key process steps to ensure that we have presented the products correctly and that we are not misleading the customer,” Butler said. “The viewer sits down with the finance manager and goes over strengths and opportunities for improvement.”

More Methods to Ensure Ethical Behavior

DCF’s variety of approaches to promote ethical behavior begin with its orientation for new employees. As the application summary states,

The SLT reviews I&E [Integrity & Ethics] at new employee orientation as part of the “How I Connect” sheet that is 100% deployed.

In filling out the “How I Connect to the Don Chalmers Ford Experience” sheet, Butler explained recently, all new employees “write what I can do to support [the DCF value of] integrity and ethics and what we can do.” “The sheet is reviewed with the president of the dealership within the first month of their employment. The sheet is then laminated and returned to the employee,” Butler added. “This approach is repeated annually for all employees to reinforce and reconnect to the core values.”

Other DCF practices to ensure ethical behavior include the following, as described in the application summary:

A confidential employee hotline is available for employees to report any integrity, ethics or legal issues to a third party. Background checks and drug tests are performed on new employees, with monthly random drug tests on existing employees. Immediate and serious consequences, leading up to termination, discourage deviations from the organization’s culture of integrity and ethics. When breaches are suspected or reported, the I&E Process is used to verify the concern, determine severity, and decide appropriate consequences …

Benefits of Being Ethical

DCF’s evident commitment to ethical behavior supports its stated mission of “Growth Through Customer Loyalty,” as it has helped the small business distinguish itself from competitors. DCF’s many industry- and benchmark-level performance results for its measures of customer satisfaction, loyalty, engagement, and advocacy suggest the beneficial long-term impact of its ethical practices on the business (see the “Customer-Focused Results” section in DCF’s application summary).

What’s more, ethical practices have helped DCF distinguish itself outside its industry, too. In 2014, DCF became the first automotive dealership to receive the Ethics in Business Award of New Mexico’s Samaritan Counseling Center. The nomination for that award was submitted by a financial lending partner, according to DCF. A group of University of New Mexico business school students conducted a site visit to assess the dealership’s ethical processes and then submitted their recommendation to an independent selection committee.

Through DCF’s status today as a Baldrige Award recipient and national role model, the car dealership provides a showcase for organizations in wide-ranging sectors and states across the country to learn about systematic, well-deployed, continually improved, and integrated processes for promoting and ensuring ethical behavior.

At the same time, DCF demonstrates exemplary results that can be achieved—and perhaps also suggests what tragic results can be prevented—when businesses “do the right thing.”

How does your organization promote and ensure ethical behavior in all interactions?