Business ethics, trust, safety, and corporate social responsibility have become increasingly important to consumers and in society more broadly. How should organizations conduct themselves ethically and what are the impacts on corporate governance? And what responsibilities do organizations have toward stakeholders and the larger community? We address these questions and topics such as sexual harassment, racial discrimination, and bias at Faceook with Rob Chesnut, former Chief Ethics Officer of Airbnb.

Rob took this role after nearly 4 years as Airbnb’s General Counsel. He is the author of Intentional Integrity and previously started the eBay trust and safety team.

Transcript

This transcript was lightly edited for length and clarity.

Introduction

Rob Chesnut: I would never, even as a chief ethics officer, act like Moses, go off to the mountain and figure out what Rob thinks is right, put it in a stone tablet, and then give it to everybody. I think that's wrong.

Michael Krigsman: Rob Chesnut is the former chief ethics officer of Airbnb. His new book is called Intentional Integrity.

Rob Chesnut: I started my career as a federal prosecutor. I used to prosecute drug dealers, spies, and bank robbers back in the Washington, D.C. area, so I've been working with rules and workplace violations, I guess, my whole career.

I ended up moving to Silicon Valley. I was an early employee responsible for trust and safety at eBay. I built the trust and safety department before I went to Airbnb.

The reason I wrote the book is that I noticed, about four years ago, that the world was changing. It looked to me like people were putting companies and holding them to a higher standard, and the leaders. You saw it in the #metoo movement. You saw it with people pushing companies to do the right thing for the world, going beyond just this idea of doing the right thing for shareholders.

It struck me that companies need to weave integrity into their game. They need to intentionally drive it into their cultures and the way that they do business in order to thrive, I think, in this new world.

How to create a corporate ethics program?

Michael Krigsman: Rob, for people who are interested in this topic and they're wondering, "Okay, how do we even begin? How do we grapple with this in our companies because it's important?" what do we do?

Rob Chesnut: No matter the size of your company or your organization—this all applies to nonprofits as well—it has to start with defining your North Star and what's your purpose. Profit is not purpose.

What companies need to do is think: Why do we exist? Why are we good for the world? Why is what we do important to solving some problem in the world? I think you need to start there and recognize that that is what should guide you.

A lot of times, I think companies simply exist just for the idea of making money and they get lost in the financial aspects. Michael, obviously, they're really important, but think about why you exist and what are you doing to make the world a better place.

Then, beyond that, you need to make an effort inside your company to define how you're going to work with each other, how the employees are going to interact with each other. To do that, I think you need to sit down and have a conversation. This is true whether you're operating in a garage or whether you're operating a company with tens of thousands of employees all around the globe. You need to have an honest conversation with folks in the office about how you're going to interact with each other.

Integrity, unfortunately, is a topic that a lot of people are uncomfortable with. Leaders are almost reluctant to talk about it because I think they feel that, well, that's getting into someone's morals. That's getting into someone's personal life or their religion, so let's stay away from it.

Integrity becomes a poster on the wall with the pretty lake and the tree in the background and the word "integrity," but nobody is talking about it. No one actually is defining what it means. You can't be afraid to have a conversation about it.

Corporate integrity and values

Michael Krigsman: How do we have that conversation in a meaningful way? Every single company that I know of talks about integrity and their corporate values and so forth, so what do we do?

Rob Chesnut: You know what? It shows up in their values. It shows up on the poster. But then nobody talks about it again, so you've got to get specific about it.

You've got your purpose. You've got your stakeholders. When you define your purpose, who are your stakeholders? Who are the people that you are serving? Your investors are obviously one but there's a lot more to it than that. You've got obviously your customers, your employees, and, really, the community at large, so you need to be talking about how you serve these people.

One way to do it, really, is to measure. I find you actually do what you measure. A lot of companies are great at measuring their financial numbers, but what they've got to learn to do is measure the health of their other stakeholders.

Define metrics. What does it mean for our employees to be successful? How are we looking at whether our customers are actually successful as opposed to simply figuring out how we can pull money from them? How are we thinking about our communities?

Let's define what success looks like for our communities. That might be, for example, looking at things like climate change. How is the company having an impact on the climate and what is it doing to measure success there?

Then when you look inside the company, start with a code of ethics. It's ironic, Michael. A lot of companies, when they're dealing with a code of ethics, how do they start a code? Well, they go online. They steal someone else's code of ethics. They copy it. They paste it. They put their own company's name at the top.

Then they email it out to everybody. They say, "Check a box and say that you've read it." Then that's the end of the conversation.

Well, what kind of message does that send to everybody in the company about how important it is? It doesn't do a very good job.

I think what you've got to do is you've got to actually start with a conversation with different people in your company, a diverse group. If you're a global company, don't just get a couple of folks at headquarters. Get some different perspectives because ethics and integrity can be an interesting concept that can differ depending on your background, your religion, your socioeconomic upbringing, your life experiences. Get some different perspectives. Get it in a room and work on a code of ethics that's uniquely your own, in your own company's language, that reflects the views of your employees.

Michael Krigsman: Arsalan Khan on Twitter asks, "Who decides what is ethical?" It's a very interesting question.

Rob Chesnut: Michael, you and I might look at the same situation and come up with a different take on that situation and a different idea about what's ethical. I don't think there is anyone right answer to some of the ethical dilemmas that a company is going to face, right?

What is important is the CEO ultimately has to own things. I like to say that the CEO is the thermostat for integrity.

Now, there's a difference between a thermostat and a thermometer, right? A thermostat actually sets the temperature in the room whereas a thermometer measures it. The CEO ultimately is responsible for creating the environment, the ethical environment in a company.

Ultimately, figuring out what's the purpose of the company and how is any particular one situation, how does it relate to the company's purpose? When it comes to important decisions in the company, they've got to make it. That's why the board made them the person that's in charge.

Now, I also think, however, that a CEO is probably not wise if they're making these sorts of decisions snap on their own. They're wise to take counsel, from different leaders inside the company who may have different perspectives, before they lead.

Now, employees may not like the answer. Employees, of course, I think, are increasingly empowered today. They're speaking up. They're talking to each other. They're on Blind. They're on Glassdoor. They're posting. They're tweeting. They want input in these things and I think a smart CEO leans into that. Ultimately, it's up to a CEO to make the decision about what's ethical in a company and what's not.

Ethical consistency across cultures and countries

Michael Krigsman: From LinkedIn, Sergio Quiroz asks, "How do you develop ethical consistency when you have different cultures and countries?" You just alluded to the need to have diverse teams.

Rob Chesnut: You need diverse teams. I'll give you one example of this, Sergio. We actually confronted the issue can you hug anybody anymore at work? I talked to one CEO of a Fortune 500 company and I tossed that question at him. He jumped back like I had thrown a snake in front of him and he said, "I won't touch a woman at work."

I said, "Really? Just a woman? What about a man?" That gave him pause for a moment. I said, "Well, what about a long-time employee who has just lost a loved one and they break down in front of you and reach out for a hug – a very human reaction? Does it mean you can't hug someone in those circumstances?"

We talked about it for a while. We confronted it at Airbnb because, Michael, when I throw that question out at Airbnb and I go to Europe in a European office, they look at me like I'm crazy. They say, "Of course you can hug someone. We hug and kiss everyone."

I go with that same question to offices in Asia or maybe even to the engineering department and they look at me. They're perfectly wonderful, warm people, but they're like, "Don't touch me." That's fine too.

What we can do and what we did when we were sitting down as a team is we developed a very simple rule. Touching someone else at Airbnb is an act of consent. You can't assume, if you're a hugger.

Michael, I don't know if you're a hugger. Some people are huggers and some people are, "Don't touch me." If you're a hugger, it's on you to make sure that the huggee really wants it. You can't assume that someone wants a hug just because you're into it.

You can look to body cues. If someone reaches out their arms when they see you and say, "Rob! It's great to see you," I take that as a sign that a hug is welcome and can give them a little hug. If they reach out a hand, I'll shake their hand and respect that.

Understanding the code of ethics

Michael Krigsman: We have a question. Wayne Anderson has a really good question. He says, "Once a code of ethics is defined, is it absolute? Does it change as community views change and what about the advancement of technology and does that possibly change the ethics?" I'll ask you to address that issue along with this notion of an ethical charter that you do talk about in the book.

Rob Chesnut: I think one thing that is generally fixed is the company's purpose or mission. Even that can evolve over time. A code of ethics has to evolve.

The world is constantly changing. What was appropriate 20, 30 years ago is not appropriate anymore in the workplace.

What you need is you need a group of people inside of a company. Look, for small companies, this might be just the CEO. For larger companies, it could be a general counsel, a head of HR, and a small, diverse team, perhaps that's charged at this.

At Airbnb, we updated our code of ethics every year because we're constantly learning. New things are happening. It's a journey. What you need to do is you need to update the code to reflect that journey.

It's not something that you simply write in stone tablets, bring it down from the mountain, put it down with everybody, and say, "Here it is," and then forget about it. This is a constant journey that you need to be working on as technology changes and as the world's standards change.

Michael Krigsman: I interviewed, on this show, Joel Peterson. He's the chairman of JetBlue. He talks about managing, leading by trying to solve for fairness. What do you think about that and how does that fit into this kind of ethical framework that you've been describing?

Rob Chesnut: Ultimately, your credibility as a leader and the trust that you earn from employees and from all the different stakeholders is going to depend, in a number of situations, on whether people perceive that you're fair. That goes beyond the law.

Complying with the law, that's compliance. Actually, going further and acting with integrity, I think, is deeply tied to this notion of fundamental fairness.

Now, you need more than just the word "fairness," because fairness can be interpreted by so many different people in so many different ways. As a leader, I think you need this idea of fairness as a North Star in your mind because if what you're doing is not perceived as fair, regardless if it's legal, if people don't trust you to be fair then that's going to undermine your credibility. It's going to be very difficult for you to effectively lead.

Michael Krigsman: This notion then of fairness, could you say that that is the North Star or is that insufficient in and of itself?

Rob Chesnut: I think, for a company, you need a North Star about why you exist. For example, Airbnb's North Star is not to make money. Airbnb's North Star is to foster something that we call belonging.

What's belonging? Belonging is the idea that you want people who travel and get to connect with the communities when they travel. We talk of it as immersive travel.

We want actual human beings to meet and talk with other local human beings and get to really understand people as human beings. When you travel, we want there to be a sense of belonging when you travel to communities. That's what Airbnb is about. That's Airbnb's North Star.

When Airbnb measures success, they're looking at financial numbers, but they're also looking at how much belonging did we foster during the year. How much human connection did we have? That's something that's separate from a financial number.

I think all companies need a North Star like that that guides them. But I think that when you're looking at a decision, particularly decisions around consequences for violating the code of ethics, you should always strive to be fair. The question is, who decides what's fair and how do you arrive at that conclusion? That's the journey. That's the process.

Michael Krigsman: We have a question from Wayne Anderson. He's heard people say that if your ethics change in the face of other people's views, are they really a personal code of ethics or simply a matter of convenience or marketing? Is that really situational ethics that he's describing there?

Rob Chesnut: I think it's possible to grow as a human being. I think that if you are so fixed in your views and you feel like this is ethical and there's no other way around it and I'm going to stay with that no matter what, I think there's a beauty to it. There's a sense of, "You know what? I'm going to stand by my principles no matter what."

I think there's also some danger in it, Michael. Look, I think we all need to be self-aware about the fact that we are all biased in our own way. We're all biased by our human experiences in life and by our upbringing.

I think it's just as important that we listen to others and try to understand where they're coming from and understand their perspective on things because I think that it's quite possible to evolve ethically and to evolve, grow, and understand where other people are coming from. If that's why you change your mind or make a decision then I think that's actually really healthy.

If you're changing simply in the face of someone else's criticism or you're changing because it's too hard to stick by what you said before, then I don't think that's healthy at all. But I'd leave open the possibility that maybe I've gotten a little smarter over the last 20 or 30 years in life and that maybe one view that I held 20 years ago, maybe that wasn't right and I can grow and learn as I go through life.

Michael Krigsman: Wisdom and understanding increase and that kind of flexibility clearly is a good thing but how can we tell when an organization—I kind of hate to put it this way—has authenticity about their ethics because, for example, let's say that we have a company that gives away a lot of money to very beneficial causes that are very helpful. But, at the same time, we also know that these gifts are bringing them tremendous publicity and marketing benefit. Really, at the same time, those philanthropic efforts are, one could argue, masking their marketing investments, masking as philanthropy.

Rob Chesnut: I think that there's an old fashioned notion that somehow acting with integrity costs you money or that it has to hurt you financially. There's fascinating data coming out that actually shows and proves the exact opposite.

I started thinking about this when I read a book by Adam Grant called Give and Take. Adam describes a life perspective where, if you do things for others, the irony about it is it actually comes back and helps you. You end up doing better in life as well. I don't think that that cheapens the good act. I simply think that it actually is part of this beauty in the world where, if you act ethically and with integrity, you are going to do better.

I would love it if corporations and individuals engaged in acts of giving and acts of thinking about others purely because it's the right thing to do and it feels good. Is it possible that some companies do it because they get a benefit? I suppose so. But I don't think that that somehow cheapens it.

I applaud acts of integrity done purely because it's the right thing to do. I also think it's wonderful when the world rewards acts of integrity because I think that just speeds up that virtuous cycle and encourages others to act that way.

Motivation and ethical culture

Michael Krigsman: What is the role of motivation and how important is motivation because, fundamentally, that's what you're getting to here?

Rob Chesnut: I love the idea and I want people to act with integrity simply because it's the right thing to do. We're dealing, though, Michael, I think, with a lot of people that went to business school 20, 30, 40 years ago. What was really pounded into them? Shareholder value. Anything goes as long as it's good for the shareholders. That's the way that they're used to thinking about things.

Only in the last couple of years, there's been a very significant shift, like the business roundtable suddenly throwing out the fundamental basis on which capitalism has been operating and recognizing stakeholder value. That's a challenging shift for a lot of people to make.

If it comforts them to know that operating with integrity and thinking about other stakeholders is actually good from a financial perspective, I'm okay with that because I do believe that, ultimately, I want to see people with integrity regardless of the motivation. I do believe that the more you act with integrity and the more you see the virtuous cycle that that kicks off, I think the more people are going to simply do it because it's the right thing to do and not care about when or if the financial circumstances follow. But I want to see companies acting with integrity and doing the right thing for the world frankly, Michael, because the world needs it.

Michael Krigsman: Some companies do come across as being highly trustworthy and highly authentic in the way they respond to situations. Others may respond similarly and the market views them, customers view them, with a great deal of cynicism and lack of trust. What are the factors that create that authenticity and does it relate back to this notion of motivation combined with action or, again, are they separate?

Rob Chesnut: Well, I'll give you one way and that is the timing. Sometimes companies lead. They are ahead of the world's thinking, so they're doing things before they're pressured to do them.

Other companies only act when the world starts pressuring them, when the employees are posting, when the employees are actually walking out, when customers start a boycott, when government starts to initiate a regulatory investigation. When they act then, I think the world does look with a little cynicism. It's like, "Oh, finally, you got around to doing the right thing only because everybody forced you to do it."

I'll give you an example of a company that was ahead of the curve recently: Etsy. A lot of folks may be familiar with Etsy. They're an online marketplace for hand-made, handcrafted goods. Well, Etsy itself is not really having a major negative impact on the environment, right? Etsy doesn't ship goods themselves, right? Their sellers do.

Now, what Etsy did was, Etsy said, "You know what? We feel responsible as a platform for the fact that so many people on our platform are shipping goods all around the world and that's creating carbon into the atmosphere and contributing to climate change."

Etsy took it on itself. They went out to a company, a big corp. by the name of 3 Degrees that takes a number of different companies who want to work on the issue of carbon neutralization. They help them invest in major projects that give them scale.

What Etsy was able to do was, at a cost of one cent per transaction, they were able to create a platform that is now carbon neutral and offsets all of the carbon from all of the shipping on all of the sellers throughout the platform. Then what they did was they told the world about it in their checkout that Etsy is offsetting the carbon from the shipping on its transactions.

You know what happened? The business went up by a whole one percent. In order words, Etsy benefited from its action. But the cool thing about it was, Etsy wasn't motivated or pushed by the world to do this. They did it simply because they thought it was the right thing to do. Now, that's a great example of being ahead of the curve, doing something without anybody pushing you to do it.

I've seen other circumstances, and you have too, particularly major Internet platforms, that allowed hate speech, for example. Only in the face of world criticism and a hard push did they actually change their positions and start regulating their platform. We've seen that with Twitter and Instagram, for example, and we're seeing Facebook under that kind of pressure right now. It'll be interesting to see what happens with them.

Michael Krigsman: I'm jumping to the questions very quickly because I prefer to ask other people's questions than mine. Lisbeth Shaw, who is running the @CXOTalk account, asks, "Do you find it necessary to convince CEOs and organizations to create an ethics charter?"

Rob Chesnut: Sometimes. I think some companies have leaders that naturally get it. They understand how important this is to an organization. They lead with integrity and so it doesn't take any convincing at all.

I think there's another big group where the leadership just doesn't think about it. They're so focused on just getting a product out or just hitting a number that they're not against integrity but it hasn't really occurred to them that it's any of their business when, in reality, you sit down with them, you go through the studies, you talk about the bigger world picture and why we need companies to step up. They get it. They sign up.

Then, of course, you've got that last group that I can't reach. They can buy my book. It won't help them a bit because they are so entrenched in, "Money matters, Rob. Money talks. It's a tough business world out there and I don't have time for that integrity stuff." There are some people like that and you won't be able to reach them.

I'll also tell you that I think, in the 21st Century, the world is going to push them to focus on this issue. If they don't, their business is going to be significantly impacted.

Balancing short- and long-term objectives

Michael Krigsman: To what extent should companies focus on ethics? Again, to play devil's advocate, short-term profits, especially if I'm a public company, shareholder value. Why should I waste money on a whole set of activities that you want me to spend money on, Rob, that, frankly, I don't see the value?

Rob Chesnut: If you don't see the value, in my mind, you're not an effective leader. You know what? I think if you look at people like Warren Buffett, there is widespread agreement among people who I think are seasoned investors that leadership is focusing way too much on short-term numbers and short-term results.

Giving quarterly guidance, for example, is ridiculous. It really does create the wrong sorts of behaviors.

What we need from leaders is, we want people who want to create companies for the long-run. Imagine actually thinking about doing the right thing for a company of over a one-, two-, or three-year time period. It doesn't seem like very long. But in today's world, I think you've got so many CEOs who are just so focused on a quarterly number, they're missing out on huge opportunity.

I think the reality, Michael, is that thinking about things in the medium and the long-term is much healthier for a company. CEOs and leaders are going to do much better if they just lift their head up a little bit and recognize they've got an obligation to their shareholders and to the world to think a little bit more long-term because we all want companies who will last five years from now, not ones that are going to get a nice little bump this quarter but then eventually just peter out.

Michael Krigsman: I interviewed David Cote. He is the former chairman and CEO of Honeywell. His book actually is on this topic of how to balance short- and long-term goals. The fundamental thesis is you absolutely need both.

Rob Chesnut: Yes. I agree. The stockholders are not going to be patient forever. You've certainly got to be thinking about the short-term. But I think too many people are thinking about only the short-term, and that's the real danger.

Racial discrimination at Airbnb

Michael Krigsman: Discrimination at Airbnb, can you tell us what happened, what went wrong, what the issues were, and how did Airbnb address it?

Rob Chesnut: About four and a half years ago, I had just started at Airbnb as the general counsel when we started seeing reports online that guests were being discriminated against based on the color of their skin. Hosts were turning guests down for stays based on the fact that they were black. In fact, there was even a hashtag #airbnbwhileblack.

I'll tell you this was a shock to people inside the company. It's an idealistic company in a lot of ways. I think one of the reasons the company missed it early on was because, in its earlier days in the company, Airbnb was not diverse enough. When your leadership is all white and they haven't personally experienced discrimination, I think they are stunned at the idea that discrimination could actually occur on their platform.

I think what Airbnb had to quickly realize was the power of diversity. The more you can bring in the perspective of people who have experienced discrimination, the more you could have been proactive and been prepared for this.

Airbnb was hit with this. Lawsuits started to come in. I went off to be the good lawyer. I went out and did my research. What is the legal responsibility of a platform like Airbnb when some of its hosts violate rules and discriminate?

I go in to meet with Brian. We sit down. I start going through the law. Brian holds up his hand. He says, "I don't care."

"What do you mean you don't care?" [Laughter]

He said, "Rob, I don't care what the law says because, if this is really going on, on Airbnb, we are failing as a company. Our mission is belonging. Our whole mission is about connecting people from different backgrounds and getting them to sit down together, get to know each other, and recognize how much they have in common. If this is really going on, we're failing and, Rob, I'll tell you right now. I don't care if the law requires it or not. We're going to fix this."

That was terrific. Instead of a fight mentality, I didn't have to go out and fight lawsuits, I actually went and met with people who were filing the lawsuits and said, "You know something? We agree with you. There's no need for us to spend a lot of time fighting about this. We're going to fix it and we'd love your help."

Airbnb was actually able to partner with civil rights organizations, partner with the California Department of Fair Employment and Housing, and figure things out that would reduce discrimination. I'll tell you there were some things that Airbnb did that, short-term, hurt the business.

I remember one thing that we did was we required people right up front to agree to a statement of nondiscrimination, that they would welcome all regardless of the color of their skin, religion, sexual orientation, or the like. If you didn't agree to that statement, Michael, then we told you, you weren't going to be able to use Airbnb.

Well, we lost over one percent of our users by doing that. We still felt that was exactly the right thing to do to build the community for the long-run. I think it was a really good example of how a lack of diversity hurt us in thinking about this problem early but how I think leaning into and listening to the criticism and being committed to doing the right thing for the long run helped Airbnb get past that.

Michael Krigsman: It reminds me of a story in your book where, when you were working at eBay and you had started their trust and safety department, you went on the Oprah Show to face potentially many, many, many very unhappy eBay customers who had been ripped off or what have you. Meg Whitman, the CEO, said to you, "Rob, you have $500,000 to spend. Make it right wherever you need and can make it right." It seems similar.

Rob Chesnut: Yeah. Yeah and more than that, I think what eBay learned was, when people lose money on Airbnb, back in the early days, they could send money and not get the item and they'd just be out their money. I think we realized that, in the long-run, that reflects badly on the platform and that's wrong. What we also did was we worked on implementing controls and even buyer protection.

That was one of the reasons, by the way, we bought PayPal. By getting greater control over the financial end of the transaction, we could protect consumers. If somebody lost their money due to getting a counterfeit item or not getting an item at all, they'd actually get their money back.

Now, did that cost money and create risk in the short-run? Sure, it did. But without doing something like that, I think eBay's business, in the long-run, would have gone right down the tank.

Michael Krigsman: When it comes to companies like Facebook, for example, wouldn't you agree that it's true that Facebook, they can't be held responsible for anything that takes place on their platform, right?

Rob Chesnut: Legally, I think you can make a great argument for that. When it comes to integrity and ethics, I think it falls flat.

Michael Krigsman: Why?

Rob Chesnut: They may not be a publication, but they are an amplification company. When somebody posts something on Facebook, it has the frame around it that has the Facebook logo, the Facebook colors, the Facebook URL up top, and, like it or not, if you're Facebook, what is in that frame reflects on you.

We learned this at eBay and we dealt with this with hate items. We had people posting items that were murderabilia, items that belonged to famous serial killers, or items that were related to Nazi Germany. When these items got put on eBay, our initial reaction was, "Well, legal to sell them and it's not us. We're just a platform."

You know what? One of our board members, Howard Schultz, I remember stood up at a board meeting and said, "It's wrong. This stuff is just wrong and I don't want to be associated with it and eBay shouldn't want to be associated with it either." He was right.

What we recognized was this reflects on you as a platform. Just because a third party put it up there, you're the one that is amplifying it to the entire world and you can't disclaim responsibility for it. You've got to step up. That's what eBay did.

I know eBay at one point faced a boycott because someone had gone to get communion from the Pope and they got the wafer from the Pope. Instead of putting it in their mouth and eating it, they actually put it right down in their pocket. They went out and put it on eBay. We didn't have a rule about sacramental wafers but the Catholic Church let us know really quickly that, in their eyes, we were selling the body of Christ and it was deeply offensive.

Ultimately, we learned we don't want to be a platform for hate speech. Maybe it's someone's legal right. Maybe they have the right to do this and maybe free speech permits them to do it, but free speech doesn't give them the right to do it on our platform and we don't have to be the one to amplify it.

Facebook and hate speech

Michael Krigsman: What would you say to Mark Zuckerberg?

Rob Chesnut: I understand your desire to promote free speech and I also understand your discomfort to start going down that path of figuring out what is hate and what is simply an opinion. However, you are what you publish. You are what you amplify. Do you want your name, do you want your company associated with these sorts of things? Do you really want to be promoting this?

With a few simple steps, you can actually put in place processes and procedures. Look, I know this because I did it at eBay. Then former eBay people went to companies like YouTube and other places and they've set up similar hate speech basic guidelines. You can do this. What do you want to stand for at the end of the day?

Michael Krigsman: If I were Mark Zuckerberg, I might reply something to the effect of, "Rob, you're absolutely right and what we stand for is the broad needs of our incredibly immense, diverse constituency, and we're doing exactly what you've said and we've been responsible to the government and, where we've made mistakes, we make it right. So, what's your problem?"

Rob Chesnut: My problem is that you haven't listened to your constituents. The world is speaking up loud and clear about how it feels about the fringe elements that are putting hate speech on your platform. Governments are letting you have it. The various civil rights organizations are letting you have it. People are boycotting you, and you do need to listen to your constituents.

I deeply believe in free speech, but let's not confuse what free speech means. These individuals have the right to speak up and spew this sort of language all they want to, but they don't have the right to do it on your website.

What you need to do is you need to take a stand. What do you stand for? At the end of the day, is this the hill that you want to die on? The hill of, someone has the right to spew misinformation and hate and I'm going to help them do it? I don't think that's actually what you want to be remembered for. What do you believe in?

I think they're really facing a reckoning, an ethical reckoning right now. What really is sad is that, even if they reverse course, which I think ultimately they're going to have to do, to be honest with you, they're not going to get a lot of credit for it because the world is going to look at them and say, "You only did it because everybody forced you to do it." That's sad.

Michael Krigsman: Why do some companies come across ultimately as being authentic and trustworthy and other companies don't?

Rob Chesnut: Some are more proactive. Some are visionary. Brian, at Airbnb, used to say, "Rob, help me see where the puck is going." That's what Wayne Gretzky talked about. Don't tell me where the puck is now. Tell me where the puck is going.

I think the best leaders are going to think about where the puck is going and they're going to be doing things that reflect that better understanding. They're not going to be perceived as doing things because they're forced to do it. They're going to be perceived as doing things because they saw what the right thing to do was. They anticipated. They were ahead of the world a little bit. They were already there.

You can look at a number of companies like Salesforce. Look at Microsoft. Look what Microsoft is doing. They've already come out and said they're going to be carbon negative by 2030. They're committing that they're going to pull all of the carbon, effectively neutralize all the carbon that they put into the environment since they began as a company back in 1975, not because anybody is forcing them to do it. Because they feel it's the right thing to do. I think that's ultimately going to really benefit them.

Sexual harassment

Michael Krigsman: Let's turn our attention to sexual harassment. How do we deal with that? You mentioned earlier, should we be hugging people? Should we not? What do we do?

Rob Chesnut: The world is now standing up in a broad way and saying, "We have got enough of this nonsense. This has got to stop."

You know what? We didn't have bystanders. We didn't have other men standing up and saying, "Stop doing this to women," the way that we have now.

I think the first thing we need to do we've already done it. That is, now the world has spoken in a very clear, firm, loud voice, "This needs to stop."

All right. The second thing I think companies need to do is they need to provide clarity to leaders in a company about what's expected of them in this regard. A company that says, "Oh, well, we trust your judgment on romantic relationships. As long as it's consensual, it's okay." I think they're missing the point.

Is it really consensual if a CEO approaches a lower-level employee and proposes something romantic? What's that lower-level employee going to think? I can tell you what they're going to think because they've told me. They're going to think, "What happens if I say no?"

I think a very simple rule that companies ought to be adopting is, if you're an executive at a company, if you're on the top leadership layer of a company, you ought to all look at each other and you ought to commit you will not have a romantic relationship of any kind, even consensual, with any other employee at the company or any vendor or supplier. Put it in your code of ethics. State it to the entire company. Put it out of bounds. That way, if the rule is violated then the person that suffers won't be the lower-level employee who was transferred to another place or leaves. The senior person is the one that's going to have to accept the consequences.

What people need in this area are clear rules and clear boundaries. I don't think it's unreasonable to have a rule that says top-level executives put themselves off-limits. The second clear rule should be managers should never engage in any romantic encounter of any kind with anyone in the reporting channel for the same reason. There's an inequality going on that means that you really can't have an effective consensual relationship. When things blow up, they will have such a negative impact on your entire company, you shouldn't go there.

The last rule I'll suggest is an ask out once rule. Airbnb does it. I think Facebook is actually doing this. That is, if you are not in any executive team or any reporting line, you can ask someone out or propose something one time. If you get a no, no matter how nice the no is, you have to drop it.

Look, you're not at a bar, you know, where you could try your charm multiple times. You're in a workplace and we want people to feel comfortable in the workplace. We don't want to feel like they have to dodge people and not invite them to meetings or run away, so ask out once. If you get a no, you need to move on. That's a policy that you can publish to the entire company. Tell everyone that's the expectation. I think those sorts of clear rules actually set limits with people and encourage much better behavior.

Michael Krigsman: What gives you the right to make the decision about what's ethical and impose it on me?

Rob Chesnut: As one person, I don't think I should ever do it. I would never, even as a chief ethics officer, act like Moses, go off to the mountain, figure out what Rob thinks is right, put it in a stone tablet, and then give it to everybody. I think that's wrong. But look, as a leader in a company, you do need to create the environment where everyone feels like they can do their best work.

What you should be doing is creating a diverse team within a company to talk about these things and talk about it with leadership. If leadership is aligned with those recommendations, putting those things out there, I think, is exactly what you need to do. That's leadership.

Look, I can appreciate that some employees might want to treat their office as a playground where they can do whatever they want to do when it comes to romance. That sort of desire is not consistent with the kind of workplace that people need in order to do their best work. I think it's a matter of leadership listening, listening to diverse input, and then creating rules that each company feels will allow their employees to do their best.

Racism and diversity

Michael Krigsman: Racism, structural racism, diversity, what do we do inside companies and how should companies be relating to the events that are taking place right now around us?

Rob Chesnut: In the past, companies have shied away from controversial topics. It's the old Michael Jordan, "Republicans buy shoes too," so let's just keep our head down and don't talk about it.

The truth is, in today's world, Michael, companies don't have that luxury. Employees want to know what's our position on this. I work at this company. It's my brand too. I want to be proud of it. What's our stand? I want us to speak up.

Customers aren't going to give you a pass either. Customers want to know. Hey, I'm buying your product. I want to know how you feel about this.

I think leadership is a lot harder today than it's ever been. You are not going to be able to sit on the sidelines. I think what you've got to do is go back to your North Star. Go back to your values as a company. Any issue that has any relationship, I think, to your business, you need to speak up about it.

Take Goya Foods. Their CEO recently got into hot water for praising President Trump. That was deeply offensive to key stakeholders and the Latino community who are customers of Goya and also feel that the White House has not been friendly to the Latino community.

I think the CEO should have thought carefully about taking a stand on President Trump's leadership given the stakeholders. I don't think Goya Foods has to take a position on gun control, but they are going to have to take a position on things that relate to what their employees and their customers are passionate about.

You've got to step up, you're not going to be able to stand silent, and you're going to have to think carefully about what your positions will be in relation to your North Star and your stakeholders.

Michael Krigsman: Finally, what about the ethical implications surrounding COVID-19? I don't want to wear a mask and who the hell are you to tell me to wear a mask, for example?

Rob Chesnut: Right. I'm stunned by the entire movement around not wearing a mask. To me, a mask is a basic human courtesy. It is, we're all in this together. We all need to help each other. The best way that we can help each other is to wear the mask in the workplace.

You've got a responsibility as a leader to think about the health of your employees. In fact, not just think about it but to prioritize it. Where all the science says wearing a mask is essential to create an environment where people can actually interact with each other at all, then you need to do that.

You know what? I think, as a leader of a company, you could look at everyone and say, "When you leave the building and you go off on your own, you can make your own decisions about what works for you and what works for your family. But when you come to our company, I'm responsible for the health and safety of employees and that's my decision as a leader and that's what you're going to need to do."

Michael Krigsman: I was a member of a health club and, of course, they're all closed now, here in Massachusetts. Well, I'm in Boston. They reopened, so I went to the health club and I asked them, "What are you doing?" What kind of cleaning procedures and so on. I saw somebody not wearing a mask. I said to them, "There's somebody not wearing a mask." They said to me, "We're not required by law to make them wear a mask." And so, I said, "Okay. I'm done." Then I found another health club that they do require it. Is there an ethical issue in there where one health club requires it and another doesn't or is that simply a business decision?

Rob Chesnut: My personal view is that if you own a health club, you're in the health business, right? I mean you should be prioritizing the health of your customers. That's why you exist.

The idea that a health company wouldn't adopt a policy that everyone needs to be wearing a mask is beyond me. Not only is it, I think, a poor business practice, but it seems directly contrary to what their mission ought to be. I'd say both, in a circumstance like that, and I think you did exactly what you should do. You looked at the situation and said, "I've got to go someplace where health really is a priority."

Michael Krigsman: Well, that has been a very fast show. I would like to express my grateful thank you to Rob Chesnut. You can see the cover of his book. It is Intentional Integrity: How Smart Companies Can Lead an Ethical Revolution. He's a guy that's really studied it. It's a really good book. I urge you to read it.

Rob, thank you very much for taking your time to be here with us today.

Rob Chesnut: Michael, happy birthday and thank you for taking the time to bring me onto your show.

Michael Krigsman: My mother thanks you too for that. [Laughter]

Rob Chesnut: [Laughter]

Michael Krigsman: Everybody, thank you so much for watching. Before you go, please subscribe on YouTube and hit the subscribe button at the top of our website and subscribe to our newsletter. We have great shows coming up. Check out CXOTalk.com and we will see you very soon. Hope you have a great day, everybody. Bye-bye.

This transcript was lightly edited for length and clarity.

Introduction

Rob Chesnut: I would never, even as a chief ethics officer, act like Moses, go off to the mountain and figure out what Rob thinks is right, put it in a stone tablet, and then give it to everybody. I think that's wrong.

Michael Krigsman: Rob Chesnut is the former chief ethics officer of Airbnb. His new book is called Intentional Integrity.

Rob Chesnut: I started my career as a federal prosecutor. I used to prosecute drug dealers, spies, and bank robbers back in the Washington, D.C. area, so I've been working with rules and workplace violations, I guess, my whole career.

I ended up moving to Silicon Valley. I was an early employee responsible for trust and safety at eBay. I built the trust and safety department before I went to Airbnb.

The reason I wrote the book is that I noticed, about four years ago, that the world was changing. It looked to me like people were putting companies and holding them to a higher standard, and the leaders. You saw it in the #metoo movement. You saw it with people pushing companies to do the right thing for the world, going beyond just this idea of doing the right thing for shareholders.

It struck me that companies need to weave integrity into their game. They need to intentionally drive it into their cultures and the way that they do business in order to thrive, I think, in this new world.

How to create a corporate ethics program?

Michael Krigsman: Rob, for people who are interested in this topic and they're wondering, "Okay, how do we even begin? How do we grapple with this in our companies because it's important?" what do we do?

Rob Chesnut: No matter the size of your company or your organization—this all applies to nonprofits as well—it has to start with defining your North Star and what's your purpose. Profit is not purpose.

What companies need to do is think: Why do we exist? Why are we good for the world? Why is what we do important to solving some problem in the world? I think you need to start there and recognize that that is what should guide you.

A lot of times, I think companies simply exist just for the idea of making money and they get lost in the financial aspects. Michael, obviously, they're really important, but think about why you exist and what are you doing to make the world a better place.

Then, beyond that, you need to make an effort inside your company to define how you're going to work with each other, how the employees are going to interact with each other. To do that, I think you need to sit down and have a conversation. This is true whether you're operating in a garage or whether you're operating a company with tens of thousands of employees all around the globe. You need to have an honest conversation with folks in the office about how you're going to interact with each other.

Integrity, unfortunately, is a topic that a lot of people are uncomfortable with. Leaders are almost reluctant to talk about it because I think they feel that, well, that's getting into someone's morals. That's getting into someone's personal life or their religion, so let's stay away from it.

Integrity becomes a poster on the wall with the pretty lake and the tree in the background and the word "integrity," but nobody is talking about it. No one actually is defining what it means. You can't be afraid to have a conversation about it.

Corporate integrity and values

Michael Krigsman: How do we have that conversation in a meaningful way? Every single company that I know of talks about integrity and their corporate values and so forth, so what do we do?

Rob Chesnut: You know what? It shows up in their values. It shows up on the poster. But then nobody talks about it again, so you've got to get specific about it.

You've got your purpose. You've got your stakeholders. When you define your purpose, who are your stakeholders? Who are the people that you are serving? Your investors are obviously one but there's a lot more to it than that. You've got obviously your customers, your employees, and, really, the community at large, so you need to be talking about how you serve these people.

One way to do it, really, is to measure. I find you actually do what you measure. A lot of companies are great at measuring their financial numbers, but what they've got to learn to do is measure the health of their other stakeholders.

Define metrics. What does it mean for our employees to be successful? How are we looking at whether our customers are actually successful as opposed to simply figuring out how we can pull money from them? How are we thinking about our communities?

Let's define what success looks like for our communities. That might be, for example, looking at things like climate change. How is the company having an impact on the climate and what is it doing to measure success there?

Then when you look inside the company, start with a code of ethics. It's ironic, Michael. A lot of companies, when they're dealing with a code of ethics, how do they start a code? Well, they go online. They steal someone else's code of ethics. They copy it. They paste it. They put their own company's name at the top.

Then they email it out to everybody. They say, "Check a box and say that you've read it." Then that's the end of the conversation.

Well, what kind of message does that send to everybody in the company about how important it is? It doesn't do a very good job.

I think what you've got to do is you've got to actually start with a conversation with different people in your company, a diverse group. If you're a global company, don't just get a couple of folks at headquarters. Get some different perspectives because ethics and integrity can be an interesting concept that can differ depending on your background, your religion, your socioeconomic upbringing, your life experiences. Get some different perspectives. Get it in a room and work on a code of ethics that's uniquely your own, in your own company's language, that reflects the views of your employees.

Michael Krigsman: Arsalan Khan on Twitter asks, "Who decides what is ethical?" It's a very interesting question.

Rob Chesnut: Michael, you and I might look at the same situation and come up with a different take on that situation and a different idea about what's ethical. I don't think there is anyone right answer to some of the ethical dilemmas that a company is going to face, right?

What is important is the CEO ultimately has to own things. I like to say that the CEO is the thermostat for integrity.

Now, there's a difference between a thermostat and a thermometer, right? A thermostat actually sets the temperature in the room whereas a thermometer measures it. The CEO ultimately is responsible for creating the environment, the ethical environment in a company.

Ultimately, figuring out what's the purpose of the company and how is any particular one situation, how does it relate to the company's purpose? When it comes to important decisions in the company, they've got to make it. That's why the board made them the person that's in charge.

Now, I also think, however, that a CEO is probably not wise if they're making these sorts of decisions snap on their own. They're wise to take counsel, from different leaders inside the company who may have different perspectives, before they lead.

Now, employees may not like the answer. Employees, of course, I think, are increasingly empowered today. They're speaking up. They're talking to each other. They're on Blind. They're on Glassdoor. They're posting. They're tweeting. They want input in these things and I think a smart CEO leans into that. Ultimately, it's up to a CEO to make the decision about what's ethical in a company and what's not.

Ethical consistency across cultures and countries

Michael Krigsman: From LinkedIn, Sergio Quiroz asks, "How do you develop ethical consistency when you have different cultures and countries?" You just alluded to the need to have diverse teams.

Rob Chesnut: You need diverse teams. I'll give you one example of this, Sergio. We actually confronted the issue can you hug anybody anymore at work? I talked to one CEO of a Fortune 500 company and I tossed that question at him. He jumped back like I had thrown a snake in front of him and he said, "I won't touch a woman at work."

I said, "Really? Just a woman? What about a man?" That gave him pause for a moment. I said, "Well, what about a long-time employee who has just lost a loved one and they break down in front of you and reach out for a hug – a very human reaction? Does it mean you can't hug someone in those circumstances?"

We talked about it for a while. We confronted it at Airbnb because, Michael, when I throw that question out at Airbnb and I go to Europe in a European office, they look at me like I'm crazy. They say, "Of course you can hug someone. We hug and kiss everyone."

I go with that same question to offices in Asia or maybe even to the engineering department and they look at me. They're perfectly wonderful, warm people, but they're like, "Don't touch me." That's fine too.

What we can do and what we did when we were sitting down as a team is we developed a very simple rule. Touching someone else at Airbnb is an act of consent. You can't assume, if you're a hugger.

Michael, I don't know if you're a hugger. Some people are huggers and some people are, "Don't touch me." If you're a hugger, it's on you to make sure that the huggee really wants it. You can't assume that someone wants a hug just because you're into it.

You can look to body cues. If someone reaches out their arms when they see you and say, "Rob! It's great to see you," I take that as a sign that a hug is welcome and can give them a little hug. If they reach out a hand, I'll shake their hand and respect that.

Understanding the code of ethics

Michael Krigsman: We have a question. Wayne Anderson has a really good question. He says, "Once a code of ethics is defined, is it absolute? Does it change as community views change and what about the advancement of technology and does that possibly change the ethics?" I'll ask you to address that issue along with this notion of an ethical charter that you do talk about in the book.

Rob Chesnut: I think one thing that is generally fixed is the company's purpose or mission. Even that can evolve over time. A code of ethics has to evolve.

The world is constantly changing. What was appropriate 20, 30 years ago is not appropriate anymore in the workplace.

What you need is you need a group of people inside of a company. Look, for small companies, this might be just the CEO. For larger companies, it could be a general counsel, a head of HR, and a small, diverse team, perhaps that's charged at this.

At Airbnb, we updated our code of ethics every year because we're constantly learning. New things are happening. It's a journey. What you need to do is you need to update the code to reflect that journey.

It's not something that you simply write in stone tablets, bring it down from the mountain, put it down with everybody, and say, "Here it is," and then forget about it. This is a constant journey that you need to be working on as technology changes and as the world's standards change.

Michael Krigsman: I interviewed, on this show, Joel Peterson. He's the chairman of JetBlue. He talks about managing, leading by trying to solve for fairness. What do you think about that and how does that fit into this kind of ethical framework that you've been describing?

Rob Chesnut: Ultimately, your credibility as a leader and the trust that you earn from employees and from all the different stakeholders is going to depend, in a number of situations, on whether people perceive that you're fair. That goes beyond the law.

Complying with the law, that's compliance. Actually, going further and acting with integrity, I think, is deeply tied to this notion of fundamental fairness.

Now, you need more than just the word "fairness," because fairness can be interpreted by so many different people in so many different ways. As a leader, I think you need this idea of fairness as a North Star in your mind because if what you're doing is not perceived as fair, regardless if it's legal, if people don't trust you to be fair then that's going to undermine your credibility. It's going to be very difficult for you to effectively lead.

Michael Krigsman: This notion then of fairness, could you say that that is the North Star or is that insufficient in and of itself?

Rob Chesnut: I think, for a company, you need a North Star about why you exist. For example, Airbnb's North Star is not to make money. Airbnb's North Star is to foster something that we call belonging.

What's belonging? Belonging is the idea that you want people who travel and get to connect with the communities when they travel. We talk of it as immersive travel.

We want actual human beings to meet and talk with other local human beings and get to really understand people as human beings. When you travel, we want there to be a sense of belonging when you travel to communities. That's what Airbnb is about. That's Airbnb's North Star.

When Airbnb measures success, they're looking at financial numbers, but they're also looking at how much belonging did we foster during the year. How much human connection did we have? That's something that's separate from a financial number.

I think all companies need a North Star like that that guides them. But I think that when you're looking at a decision, particularly decisions around consequences for violating the code of ethics, you should always strive to be fair. The question is, who decides what's fair and how do you arrive at that conclusion? That's the journey. That's the process.

Michael Krigsman: We have a question from Wayne Anderson. He's heard people say that if your ethics change in the face of other people's views, are they really a personal code of ethics or simply a matter of convenience or marketing? Is that really situational ethics that he's describing there?

Rob Chesnut: I think it's possible to grow as a human being. I think that if you are so fixed in your views and you feel like this is ethical and there's no other way around it and I'm going to stay with that no matter what, I think there's a beauty to it. There's a sense of, "You know what? I'm going to stand by my principles no matter what."

I think there's also some danger in it, Michael. Look, I think we all need to be self-aware about the fact that we are all biased in our own way. We're all biased by our human experiences in life and by our upbringing.

I think it's just as important that we listen to others and try to understand where they're coming from and understand their perspective on things because I think that it's quite possible to evolve ethically and to evolve, grow, and understand where other people are coming from. If that's why you change your mind or make a decision then I think that's actually really healthy.

If you're changing simply in the face of someone else's criticism or you're changing because it's too hard to stick by what you said before, then I don't think that's healthy at all. But I'd leave open the possibility that maybe I've gotten a little smarter over the last 20 or 30 years in life and that maybe one view that I held 20 years ago, maybe that wasn't right and I can grow and learn as I go through life.

Michael Krigsman: Wisdom and understanding increase and that kind of flexibility clearly is a good thing but how can we tell when an organization—I kind of hate to put it this way—has authenticity about their ethics because, for example, let's say that we have a company that gives away a lot of money to very beneficial causes that are very helpful. But, at the same time, we also know that these gifts are bringing them tremendous publicity and marketing benefit. Really, at the same time, those philanthropic efforts are, one could argue, masking their marketing investments, masking as philanthropy.

Rob Chesnut: I think that there's an old fashioned notion that somehow acting with integrity costs you money or that it has to hurt you financially. There's fascinating data coming out that actually shows and proves the exact opposite.

I started thinking about this when I read a book by Adam Grant called Give and Take. Adam describes a life perspective where, if you do things for others, the irony about it is it actually comes back and helps you. You end up doing better in life as well. I don't think that that cheapens the good act. I simply think that it actually is part of this beauty in the world where, if you act ethically and with integrity, you are going to do better.

I would love it if corporations and individuals engaged in acts of giving and acts of thinking about others purely because it's the right thing to do and it feels good. Is it possible that some companies do it because they get a benefit? I suppose so. But I don't think that that somehow cheapens it.

I applaud acts of integrity done purely because it's the right thing to do. I also think it's wonderful when the world rewards acts of integrity because I think that just speeds up that virtuous cycle and encourages others to act that way.

Motivation and ethical culture

Michael Krigsman: What is the role of motivation and how important is motivation because, fundamentally, that's what you're getting to here?

Rob Chesnut: I love the idea and I want people to act with integrity simply because it's the right thing to do. We're dealing, though, Michael, I think, with a lot of people that went to business school 20, 30, 40 years ago. What was really pounded into them? Shareholder value. Anything goes as long as it's good for the shareholders. That's the way that they're used to thinking about things.

Only in the last couple of years, there's been a very significant shift, like the business roundtable suddenly throwing out the fundamental basis on which capitalism has been operating and recognizing stakeholder value. That's a challenging shift for a lot of people to make.

If it comforts them to know that operating with integrity and thinking about other stakeholders is actually good from a financial perspective, I'm okay with that because I do believe that, ultimately, I want to see people with integrity regardless of the motivation. I do believe that the more you act with integrity and the more you see the virtuous cycle that that kicks off, I think the more people are going to simply do it because it's the right thing to do and not care about when or if the financial circumstances follow. But I want to see companies acting with integrity and doing the right thing for the world frankly, Michael, because the world needs it.

Michael Krigsman: Some companies do come across as being highly trustworthy and highly authentic in the way they respond to situations. Others may respond similarly and the market views them, customers view them, with a great deal of cynicism and lack of trust. What are the factors that create that authenticity and does it relate back to this notion of motivation combined with action or, again, are they separate?

Rob Chesnut: Well, I'll give you one way and that is the timing. Sometimes companies lead. They are ahead of the world's thinking, so they're doing things before they're pressured to do them.

Other companies only act when the world starts pressuring them, when the employees are posting, when the employees are actually walking out, when customers start a boycott, when government starts to initiate a regulatory investigation. When they act then, I think the world does look with a little cynicism. It's like, "Oh, finally, you got around to doing the right thing only because everybody forced you to do it."

I'll give you an example of a company that was ahead of the curve recently: Etsy. A lot of folks may be familiar with Etsy. They're an online marketplace for hand-made, handcrafted goods. Well, Etsy itself is not really having a major negative impact on the environment, right? Etsy doesn't ship goods themselves, right? Their sellers do.

Now, what Etsy did was, Etsy said, "You know what? We feel responsible as a platform for the fact that so many people on our platform are shipping goods all around the world and that's creating carbon into the atmosphere and contributing to climate change."

Etsy took it on itself. They went out to a company, a big corp. by the name of 3 Degrees that takes a number of different companies who want to work on the issue of carbon neutralization. They help them invest in major projects that give them scale.

What Etsy was able to do was, at a cost of one cent per transaction, they were able to create a platform that is now carbon neutral and offsets all of the carbon from all of the shipping on all of the sellers throughout the platform. Then what they did was they told the world about it in their checkout that Etsy is offsetting the carbon from the shipping on its transactions.

You know what happened? The business went up by a whole one percent. In order words, Etsy benefited from its action. But the cool thing about it was, Etsy wasn't motivated or pushed by the world to do this. They did it simply because they thought it was the right thing to do. Now, that's a great example of being ahead of the curve, doing something without anybody pushing you to do it.

I've seen other circumstances, and you have too, particularly major Internet platforms, that allowed hate speech, for example. Only in the face of world criticism and a hard push did they actually change their positions and start regulating their platform. We've seen that with Twitter and Instagram, for example, and we're seeing Facebook under that kind of pressure right now. It'll be interesting to see what happens with them.

Michael Krigsman: I'm jumping to the questions very quickly because I prefer to ask other people's questions than mine. Lisbeth Shaw, who is running the @CXOTalk account, asks, "Do you find it necessary to convince CEOs and organizations to create an ethics charter?"

Rob Chesnut: Sometimes. I think some companies have leaders that naturally get it. They understand how important this is to an organization. They lead with integrity and so it doesn't take any convincing at all.

I think there's another big group where the leadership just doesn't think about it. They're so focused on just getting a product out or just hitting a number that they're not against integrity but it hasn't really occurred to them that it's any of their business when, in reality, you sit down with them, you go through the studies, you talk about the bigger world picture and why we need companies to step up. They get it. They sign up.

Then, of course, you've got that last group that I can't reach. They can buy my book. It won't help them a bit because they are so entrenched in, "Money matters, Rob. Money talks. It's a tough business world out there and I don't have time for that integrity stuff." There are some people like that and you won't be able to reach them.

I'll also tell you that I think, in the 21st Century, the world is going to push them to focus on this issue. If they don't, their business is going to be significantly impacted.

Balancing short- and long-term objectives

Michael Krigsman: To what extent should companies focus on ethics? Again, to play devil's advocate, short-term profits, especially if I'm a public company, shareholder value. Why should I waste money on a whole set of activities that you want me to spend money on, Rob, that, frankly, I don't see the value?

Rob Chesnut: If you don't see the value, in my mind, you're not an effective leader. You know what? I think if you look at people like Warren Buffett, there is widespread agreement among people who I think are seasoned investors that leadership is focusing way too much on short-term numbers and short-term results.

Giving quarterly guidance, for example, is ridiculous. It really does create the wrong sorts of behaviors.

What we need from leaders is, we want people who want to create companies for the long-run. Imagine actually thinking about doing the right thing for a company of over a one-, two-, or three-year time period. It doesn't seem like very long. But in today's world, I think you've got so many CEOs who are just so focused on a quarterly number, they're missing out on huge opportunity.

I think the reality, Michael, is that thinking about things in the medium and the long-term is much healthier for a company. CEOs and leaders are going to do much better if they just lift their head up a little bit and recognize they've got an obligation to their shareholders and to the world to think a little bit more long-term because we all want companies who will last five years from now, not ones that are going to get a nice little bump this quarter but then eventually just peter out.

Michael Krigsman: I interviewed David Cote. He is the former chairman and CEO of Honeywell. His book actually is on this topic of how to balance short- and long-term goals. The fundamental thesis is you absolutely need both.

Rob Chesnut: Yes. I agree. The stockholders are not going to be patient forever. You've certainly got to be thinking about the short-term. But I think too many people are thinking about only the short-term, and that's the real danger.

Racial discrimination at Airbnb

Michael Krigsman: Discrimination at Airbnb, can you tell us what happened, what went wrong, what the issues were, and how did Airbnb address it?

Rob Chesnut: About four and a half years ago, I had just started at Airbnb as the general counsel when we started seeing reports online that guests were being discriminated against based on the color of their skin. Hosts were turning guests down for stays based on the fact that they were black. In fact, there was even a hashtag #airbnbwhileblack.

I'll tell you this was a shock to people inside the company. It's an idealistic company in a lot of ways. I think one of the reasons the company missed it early on was because, in its earlier days in the company, Airbnb was not diverse enough. When your leadership is all white and they haven't personally experienced discrimination, I think they are stunned at the idea that discrimination could actually occur on their platform.

I think what Airbnb had to quickly realize was the power of diversity. The more you can bring in the perspective of people who have experienced discrimination, the more you could have been proactive and been prepared for this.

Airbnb was hit with this. Lawsuits started to come in. I went off to be the good lawyer. I went out and did my research. What is the legal responsibility of a platform like Airbnb when some of its hosts violate rules and discriminate?

I go in to meet with Brian. We sit down. I start going through the law. Brian holds up his hand. He says, "I don't care."

"What do you mean you don't care?" [Laughter]

He said, "Rob, I don't care what the law says because, if this is really going on, on Airbnb, we are failing as a company. Our mission is belonging. Our whole mission is about connecting people from different backgrounds and getting them to sit down together, get to know each other, and recognize how much they have in common. If this is really going on, we're failing and, Rob, I'll tell you right now. I don't care if the law requires it or not. We're going to fix this."

That was terrific. Instead of a fight mentality, I didn't have to go out and fight lawsuits, I actually went and met with people who were filing the lawsuits and said, "You know something? We agree with you. There's no need for us to spend a lot of time fighting about this. We're going to fix it and we'd love your help."

Airbnb was actually able to partner with civil rights organizations, partner with the California Department of Fair Employment and Housing, and figure things out that would reduce discrimination. I'll tell you there were some things that Airbnb did that, short-term, hurt the business.

I remember one thing that we did was we required people right up front to agree to a statement of nondiscrimination, that they would welcome all regardless of the color of their skin, religion, sexual orientation, or the like. If you didn't agree to that statement, Michael, then we told you, you weren't going to be able to use Airbnb.

Well, we lost over one percent of our users by doing that. We still felt that was exactly the right thing to do to build the community for the long-run. I think it was a really good example of how a lack of diversity hurt us in thinking about this problem early but how I think leaning into and listening to the criticism and being committed to doing the right thing for the long run helped Airbnb get past that.

Michael Krigsman: It reminds me of a story in your book where, when you were working at eBay and you had started their trust and safety department, you went on the Oprah Show to face potentially many, many, many very unhappy eBay customers who had been ripped off or what have you. Meg Whitman, the CEO, said to you, "Rob, you have $500,000 to spend. Make it right wherever you need and can make it right." It seems similar.

Rob Chesnut: Yeah. Yeah and more than that, I think what eBay learned was, when people lose money on Airbnb, back in the early days, they could send money and not get the item and they'd just be out their money. I think we realized that, in the long-run, that reflects badly on the platform and that's wrong. What we also did was we worked on implementing controls and even buyer protection.

That was one of the reasons, by the way, we bought PayPal. By getting greater control over the financial end of the transaction, we could protect consumers. If somebody lost their money due to getting a counterfeit item or not getting an item at all, they'd actually get their money back.

Now, did that cost money and create risk in the short-run? Sure, it did. But without doing something like that, I think eBay's business, in the long-run, would have gone right down the tank.

Michael Krigsman: When it comes to companies like Facebook, for example, wouldn't you agree that it's true that Facebook, they can't be held responsible for anything that takes place on their platform, right?

Rob Chesnut: Legally, I think you can make a great argument for that. When it comes to integrity and ethics, I think it falls flat.

Michael Krigsman: Why?

Rob Chesnut: They may not be a publication, but they are an amplification company. When somebody posts something on Facebook, it has the frame around it that has the Facebook logo, the Facebook colors, the Facebook URL up top, and, like it or not, if you're Facebook, what is in that frame reflects on you.

We learned this at eBay and we dealt with this with hate items. We had people posting items that were murderabilia, items that belonged to famous serial killers, or items that were related to Nazi Germany. When these items got put on eBay, our initial reaction was, "Well, legal to sell them and it's not us. We're just a platform."

You know what? One of our board members, Howard Schultz, I remember stood up at a board meeting and said, "It's wrong. This stuff is just wrong and I don't want to be associated with it and eBay shouldn't want to be associated with it either." He was right.

What we recognized was this reflects on you as a platform. Just because a third party put it up there, you're the one that is amplifying it to the entire world and you can't disclaim responsibility for it. You've got to step up. That's what eBay did.

I know eBay at one point faced a boycott because someone had gone to get communion from the Pope and they got the wafer from the Pope. Instead of putting it in their mouth and eating it, they actually put it right down in their pocket. They went out and put it on eBay. We didn't have a rule about sacramental wafers but the Catholic Church let us know really quickly that, in their eyes, we were selling the body of Christ and it was deeply offensive.

Ultimately, we learned we don't want to be a platform for hate speech. Maybe it's someone's legal right. Maybe they have the right to do this and maybe free speech permits them to do it, but free speech doesn't give them the right to do it on our platform and we don't have to be the one to amplify it.

Facebook and hate speech

Michael Krigsman: What would you say to Mark Zuckerberg?

Rob Chesnut: I understand your desire to promote free speech and I also understand your discomfort to start going down that path of figuring out what is hate and what is simply an opinion. However, you are what you publish. You are what you amplify. Do you want your name, do you want your company associated with these sorts of things? Do you really want to be promoting this?

With a few simple steps, you can actually put in place processes and procedures. Look, I know this because I did it at eBay. Then former eBay people went to companies like YouTube and other places and they've set up similar hate speech basic guidelines. You can do this. What do you want to stand for at the end of the day?

Michael Krigsman: If I were Mark Zuckerberg, I might reply something to the effect of, "Rob, you're absolutely right and what we stand for is the broad needs of our incredibly immense, diverse constituency, and we're doing exactly what you've said and we've been responsible to the government and, where we've made mistakes, we make it right. So, what's your problem?"

Rob Chesnut: My problem is that you haven't listened to your constituents. The world is speaking up loud and clear about how it feels about the fringe elements that are putting hate speech on your platform. Governments are letting you have it. The various civil rights organizations are letting you have it. People are boycotting you, and you do need to listen to your constituents.

I deeply believe in free speech, but let's not confuse what free speech means. These individuals have the right to speak up and spew this sort of language all they want to, but they don't have the right to do it on your website.

What you need to do is you need to take a stand. What do you stand for? At the end of the day, is this the hill that you want to die on? The hill of, someone has the right to spew misinformation and hate and I'm going to help them do it? I don't think that's actually what you want to be remembered for. What do you believe in?

I think they're really facing a reckoning, an ethical reckoning right now. What really is sad is that, even if they reverse course, which I think ultimately they're going to have to do, to be honest with you, they're not going to get a lot of credit for it because the world is going to look at them and say, "You only did it because everybody forced you to do it." That's sad.

Michael Krigsman: Why do some companies come across ultimately as being authentic and trustworthy and other companies don't?

Rob Chesnut: Some are more proactive. Some are visionary. Brian, at Airbnb, used to say, "Rob, help me see where the puck is going." That's what Wayne Gretzky talked about. Don't tell me where the puck is now. Tell me where the puck is going.

I think the best leaders are going to think about where the puck is going and they're going to be doing things that reflect that better understanding. They're not going to be perceived as doing things because they're forced to do it. They're going to be perceived as doing things because they saw what the right thing to do was. They anticipated. They were ahead of the world a little bit. They were already there.

You can look at a number of companies like Salesforce. Look at Microsoft. Look what Microsoft is doing. They've already come out and said they're going to be carbon negative by 2030. They're committing that they're going to pull all of the carbon, effectively neutralize all the carbon that they put into the environment since they began as a company back in 1975, not because anybody is forcing them to do it. Because they feel it's the right thing to do. I think that's ultimately going to really benefit them.

Sexual harassment

Michael Krigsman: Let's turn our attention to sexual harassment. How do we deal with that? You mentioned earlier, should we be hugging people? Should we not? What do we do?

Rob Chesnut: The world is now standing up in a broad way and saying, "We have got enough of this nonsense. This has got to stop."

You know what? We didn't have bystanders. We didn't have other men standing up and saying, "Stop doing this to women," the way that we have now.

I think the first thing we need to do we've already done it. That is, now the world has spoken in a very clear, firm, loud voice, "This needs to stop."

All right. The second thing I think companies need to do is they need to provide clarity to leaders in a company about what's expected of them in this regard. A company that says, "Oh, well, we trust your judgment on romantic relationships. As long as it's consensual, it's okay." I think they're missing the point.

Is it really consensual if a CEO approaches a lower-level employee and proposes something romantic? What's that lower-level employee going to think? I can tell you what they're going to think because they've told me. They're going to think, "What happens if I say no?"

I think a very simple rule that companies ought to be adopting is, if you're an executive at a company, if you're on the top leadership layer of a company, you ought to all look at each other and you ought to commit you will not have a romantic relationship of any kind, even consensual, with any other employee at the company or any vendor or supplier. Put it in your code of ethics. State it to the entire company. Put it out of bounds. That way, if the rule is violated then the person that suffers won't be the lower-level employee who was transferred to another place or leaves. The senior person is the one that's going to have to accept the consequences.

What people need in this area are clear rules and clear boundaries. I don't think it's unreasonable to have a rule that says top-level executives put themselves off-limits. The second clear rule should be managers should never engage in any romantic encounter of any kind with anyone in the reporting channel for the same reason. There's an inequality going on that means that you really can't have an effective consensual relationship. When things blow up, they will have such a negative impact on your entire company, you shouldn't go there.

The last rule I'll suggest is an ask out once rule. Airbnb does it. I think Facebook is actually doing this. That is, if you are not in any executive team or any reporting line, you can ask someone out or propose something one time. If you get a no, no matter how nice the no is, you have to drop it.

Look, you're not at a bar, you know, where you could try your charm multiple times. You're in a workplace and we want people to feel comfortable in the workplace. We don't want to feel like they have to dodge people and not invite them to meetings or run away, so ask out once. If you get a no, you need to move on. That's a policy that you can publish to the entire company. Tell everyone that's the expectation. I think those sorts of clear rules actually set limits with people and encourage much better behavior.

Michael Krigsman: What gives you the right to make the decision about what's ethical and impose it on me?

Rob Chesnut: As one person, I don't think I should ever do it. I would never, even as a chief ethics officer, act like Moses, go off to the mountain, figure out what Rob thinks is right, put it in a stone tablet, and then give it to everybody. I think that's wrong. But look, as a leader in a company, you do need to create the environment where everyone feels like they can do their best work.

What you should be doing is creating a diverse team within a company to talk about these things and talk about it with leadership. If leadership is aligned with those recommendations, putting those things out there, I think, is exactly what you need to do. That's leadership.

Look, I can appreciate that some employees might want to treat their office as a playground where they can do whatever they want to do when it comes to romance. That sort of desire is not consistent with the kind of workplace that people need in order to do their best work. I think it's a matter of leadership listening, listening to diverse input, and then creating rules that each company feels will allow their employees to do their best.

Racism and diversity

Michael Krigsman: Racism, structural racism, diversity, what do we do inside companies and how should companies be relating to the events that are taking place right now around us?

Rob Chesnut: In the past, companies have shied away from controversial topics. It's the old Michael Jordan, "Republicans buy shoes too," so let's just keep our head down and don't talk about it.

The truth is, in today's world, Michael, companies don't have that luxury. Employees want to know what's our position on this. I work at this company. It's my brand too. I want to be proud of it. What's our stand? I want us to speak up.

Customers aren't going to give you a pass either. Customers want to know. Hey, I'm buying your product. I want to know how you feel about this.

I think leadership is a lot harder today than it's ever been. You are not going to be able to sit on the sidelines. I think what you've got to do is go back to your North Star. Go back to your values as a company. Any issue that has any relationship, I think, to your business, you need to speak up about it.

Take Goya Foods. Their CEO recently got into hot water for praising President Trump. That was deeply offensive to key stakeholders and the Latino community who are customers of Goya and also feel that the White House has not been friendly to the Latino community.

I think the CEO should have thought carefully about taking a stand on President Trump's leadership given the stakeholders. I don't think Goya Foods has to take a position on gun control, but they are going to have to take a position on things that relate to what their employees and their customers are passionate about.

You've got to step up, you're not going to be able to stand silent, and you're going to have to think carefully about what your positions will be in relation to your North Star and your stakeholders.

Michael Krigsman: Finally, what about the ethical implications surrounding COVID-19? I don't want to wear a mask and who the hell are you to tell me to wear a mask, for example?

Rob Chesnut: Right. I'm stunned by the entire movement around not wearing a mask. To me, a mask is a basic human courtesy. It is, we're all in this together. We all need to help each other. The best way that we can help each other is to wear the mask in the workplace.

You've got a responsibility as a leader to think about the health of your employees. In fact, not just think about it but to prioritize it. Where all the science says wearing a mask is essential to create an environment where people can actually interact with each other at all, then you need to do that.

You know what? I think, as a leader of a company, you could look at everyone and say, "When you leave the building and you go off on your own, you can make your own decisions about what works for you and what works for your family. But when you come to our company, I'm responsible for the health and safety of employees and that's my decision as a leader and that's what you're going to need to do."

Michael Krigsman: I was a member of a health club and, of course, they're all closed now, here in Massachusetts. Well, I'm in Boston. They reopened, so I went to the health club and I asked them, "What are you doing?" What kind of cleaning procedures and so on. I saw somebody not wearing a mask. I said to them, "There's somebody not wearing a mask." They said to me, "We're not required by law to make them wear a mask." And so, I said, "Okay. I'm done." Then I found another health club that they do require it. Is there an ethical issue in there where one health club requires it and another doesn't or is that simply a business decision?

Rob Chesnut: My personal view is that if you own a health club, you're in the health business, right? I mean you should be prioritizing the health of your customers. That's why you exist.

The idea that a health company wouldn't adopt a policy that everyone needs to be wearing a mask is beyond me. Not only is it, I think, a poor business practice, but it seems directly contrary to what their mission ought to be. I'd say both, in a circumstance like that, and I think you did exactly what you should do. You looked at the situation and said, "I've got to go someplace where health really is a priority."

Michael Krigsman: Well, that has been a very fast show. I would like to express my grateful thank you to Rob Chesnut. You can see the cover of his book. It is Intentional Integrity: How Smart Companies Can Lead an Ethical Revolution. He's a guy that's really studied it. It's a really good book. I urge you to read it.

Rob, thank you very much for taking your time to be here with us today.

Rob Chesnut: Michael, happy birthday and thank you for taking the time to bring me onto your show.

Michael Krigsman: My mother thanks you too for that. [Laughter]

Rob Chesnut: [Laughter]

Michael Krigsman: Everybody, thank you so much for watching. Before you go, please subscribe on YouTube and hit the subscribe button at the top of our website and subscribe to our newsletter. We have great shows coming up. Check out CXOTalk.com and we will see you very soon. Hope you have a great day, everybody. Bye-bye.