Interview with Robert Covalt
Interviewed by Pamela Gerloff
What kinds of
ethical choices and dilemmas have you run into as a corporate
From the beginning
at Sovereign, I’ve tried to establish ethical standards
that I believe are important. A lot of what I decided to
do with Sovereign was because, over the years, I had seen
ethical standards in business diminish. I had witnessed
actions that were unfair to employees, at all levels of
organizations. I saw so many things in the industry that
bothered me—like politics, which I have tried to eliminate.
It’s wasteful and it creates problems.
What do you mean
unfair advantage. In my career, I was able to progress within
a company, but so many companies bring in acquaintances
and friends and they don’t reward their established,
capable employees. Some companies today have such a partnership
of friends that it becomes a problem. It doesn’t mean
that you don’t bring in people from the outside who
can do the job, but you must eliminate politics.
How do you get
rid of it?
You face it head
on. You let everyone know that you won’t tolerate
behaviors that would not be of the highest ethical standards
and in the best interests of the company.
What do you mean
by ethical? What is ethics, to you?
For me, honesty
is the most important aspect of ethics. I would say that
if you’re honest, you’re probably ethical. You
do the right thing because it’s honest. It’s
more than just being legally correct. Honesty puts a higher
condition on it.
Ethics also has a lot to do with how you
treat your employees. Once I had a boss tell me, “No
one ever said life is fair.” I don’t agree with
that. I think fairness is part of ethics. So, to me, a big
part of setting ethical standards in business is having
a policy that says that people will be treated fairly, honestly,
and will have the opportunity to enjoy their work and to
progress if opportunities arise.
How do you make
You set the standards.
You develop vision, mission, and operating statements establishing
your principles and goals. Once the standard is set, the
day-to-day takes care of itself. As you follow the standard,
it gets embedded in the culture—so you don’t
have so many ethical questions arising. People just do the
right thing. On the other hand, should you condone shady
practices, some people may take advantage of that. What
happened at Enron and some other companies is an embarrassment
to all ethical CEOs. At those companies, the standard wasn’t
set at the top.
You make it sound
easy. Is it hard to set that kind of standard?
is that when companies merge with you, you get the viruses
that they have—you get their culture. I’ve been
part of 11 acquisitions with Morton, and ten with Sovereign.
One of the most difficult things to do is to revise a culture,
to get another company to belong to yours. The majority
of employees are good, honest people and want to be part
of an ethical company, but there are people who will never
adjust, so you make changes in order to do that. For example,
we acquired a company where one manager from the new company
looked very good from a business standpoint, but from an
ethical standpoint, he was not a good employee. Though he
was a good business operative, he had lost respect within
the company for his unethical behavior. I terminated him.
When I went to talk to the employees about it, I got a standing
round of applause.
So they wanted
People like to
work for a company that’s ethical and morally straight.
They like it that they have an equal chance to succeed based
on their abilities—not on friendships, not on politics,
but on what they can do. They like it that we’re honest
and fair. People knew right from the start what kind of
company we were going to be. Our vice president of technology
was asked in an interview what distinguishes Sovereign from
other companies, he said, “We do the right thing.”
I felt really good about that.
Can you give an
example of an ethical dilemma you’ve faced in your
In business, what
is considered standard ethical practice varies throughout
the world. Certain practices have been condoned outside
the U.S. that would not necessarily be acceptable here.
For example, early in my career, I was in charge of an enterprise
that had a lot of business abroad. Although it’s not
true anymore, at that time it was not unusual for some companies
in various parts of the world to discuss how they would
participate in the market. By American standards, that was
considered not only unethical but quite possibly illegal,
so we never considered entering those markets or participating
in those businesses in those locations. Wherever I have
worked, I have followed the same ethical standards, regardless
of where we’re operating in the world.
Has it been hard
for you to make those choices?
hard when I’m the boss, because the buck stops here.
No one will even come to me with questions like that because
they know we’re not going to do it. I think a CEO
or a manager has an obligation to create a positive ethical
climate for the employees.
What if you’re
not the boss? Have you ever encountered difficult ethical
issues when you were the underling?
Sure, but rarely.
In any career, you’re sometimes put in that position.
What did you do
I told my boss
we just couldn’t do it. I would argue the facts, and
point out that doing the wrong thing can only be profitable
short-term. It is never profitable long-term.
You seem very
clear about your ethics, as if it doesn’t really present
a dilemma for you.
In business, the
objective is to develop a successful company, which then
can provide benefits and an improved standard of living
for all the employees—not just senior management.
It’s not just about money, but about all the things
affected by employing good ethics—working conditions,
relationships, dependability, et cetera. You want people
to enjoy their work and have respect for and pride in their
In the long run, you have to live with yourself.
I wouldn’t want to work for a company where “doing
what’s right” wasn’t the standard. I want
to work with people who think, not, “How much more
money can I make for me?” but, “How can I make
this company greater?” The questions that need to
be asked are, “Are we a team? Is there good collaboration?
What am I able to contribute to the company? Am I enjoying
it? Are we creating jobs where people can enjoy doing what
they’re good at and contributing to the company’s
I believe that you can be both successful
and ethical and that they are truly entwined, in the final
analysis. It is certainly a much better feeling to know
that what you have, you have earned honestly.
Robert Covalt is chairman of
Sovereign Specialty Chemicals, Inc.
, a $400 million specialty
chemical company, which he started in 1994 at the age of
62. In 1999, he was named Person of the Year for the adhesive
sealants and coatings industry, because of “his successful
business growth strategy and remarkable ability to handle
the extreme fluctuations of the industry.” From 1970
to 1990, Mr. Covalt served as president of the specialty
chemicals division of Morton International, Inc. During
that time, the company went from $175 million to $1.4 billion
in revenue. Before launching his own company, he spent three
years as Morton’s corporate executive vice president.
Mr. Covalt holds an honorary doctorate from Purdue University,
an MBA from the University of Chicago, and a BS in chemical
engineering from Purdue.
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