An Interview with Robert Covalt
Interviewed by Pamela Gerloff

MTM: What kinds of ethical choices and dilemmas have you run into as a corporate executive?

RC: From the beginning at Sovereign, I’ve tried to establish ethical standards that I believe are important. A lot of what I decided to do with Sovereign was because, over the years, I had seen ethical standards in business diminish. I had witnessed actions that were unfair to employees, at all levels of organizations. I saw so many things in the industry that bothered me—like politics, which I have tried to eliminate. It’s wasteful and it creates problems.

MTM: What do you mean by politics?

RC: Favoritism, deals, unfair advantage. In my career, I was able to progress within a company, but so many companies bring in acquaintances and friends and they don’t reward their established, capable employees. Some companies today have such a partnership of friends that it becomes a problem. It doesn’t mean that you don’t bring in people from the outside who can do the job, but you must eliminate politics.

MTM: How do you get rid of it?

RC: You face it head on. You let everyone know that you won’t tolerate behaviors that would not be of the highest ethical standards and in the best interests of the company.

MTM: What do you mean by ethical? What is ethics, to you?

RC: For me, honesty is the most important aspect of ethics. I would say that if you’re honest, you’re probably ethical. You do the right thing because it’s honest. It’s more than just being legally correct. Honesty puts a higher condition on it.

Ethics also has a lot to do with how you treat your employees. Once I had a boss tell me, “No one ever said life is fair.” I don’t agree with that. I think fairness is part of ethics. So, to me, a big part of setting ethical standards in business is having a policy that says that people will be treated fairly, honestly, and will have the opportunity to enjoy their work and to progress if opportunities arise.

MTM: How do you make that happen?

RC: You set the standards. You develop vision, mission, and operating statements establishing your principles and goals. Once the standard is set, the day-to-day takes care of itself. As you follow the standard, it gets embedded in the culture—so you don’t have so many ethical questions arising. People just do the right thing. On the other hand, should you condone shady practices, some people may take advantage of that. What happened at Enron and some other companies is an embarrassment to all ethical CEOs. At those companies, the standard wasn’t set at the top.

MTM: You make it sound easy. Is it hard to set that kind of standard?

RC: What’s tough is that when companies merge with you, you get the viruses that they have—you get their culture. I’ve been part of 11 acquisitions with Morton, and ten with Sovereign. One of the most difficult things to do is to revise a culture, to get another company to belong to yours. The majority of employees are good, honest people and want to be part of an ethical company, but there are people who will never adjust, so you make changes in order to do that. For example, we acquired a company where one manager from the new company looked very good from a business standpoint, but from an ethical standpoint, he was not a good employee. Though he was a good business operative, he had lost respect within the company for his unethical behavior. I terminated him. When I went to talk to the employees about it, I got a standing round of applause.

MTM: So they wanted that.

RC: People like to work for a company that’s ethical and morally straight. They like it that they have an equal chance to succeed based on their abilities—not on friendships, not on politics, but on what they can do. They like it that we’re honest and fair. People knew right from the start what kind of company we were going to be. Our vice president of technology was asked in an interview what distinguishes Sovereign from other companies, he said, “We do the right thing.” I felt really good about that.

MTM: Can you give an example of an ethical dilemma you’ve faced in your work?

RC: In business, what is considered standard ethical practice varies throughout the world. Certain practices have been condoned outside the U.S. that would not necessarily be acceptable here. For example, early in my career, I was in charge of an enterprise that had a lot of business abroad. Although it’s not true anymore, at that time it was not unusual for some companies in various parts of the world to discuss how they would participate in the market. By American standards, that was considered not only unethical but quite possibly illegal, so we never considered entering those markets or participating in those businesses in those locations. Wherever I have worked, I have followed the same ethical standards, regardless of where we’re operating in the world.

MTM: Has it been hard for you to make those choices?

RC: It’s not hard when I’m the boss, because the buck stops here. No one will even come to me with questions like that because they know we’re not going to do it. I think a CEO or a manager has an obligation to create a positive ethical climate for the employees.

MTM: What if you’re not the boss? Have you ever encountered difficult ethical issues when you were the underling?

RC: Sure, but rarely. In any career, you’re sometimes put in that position.

MTM: What did you do then?

RC: I told my boss we just couldn’t do it. I would argue the facts, and point out that doing the wrong thing can only be profitable short-term. It is never profitable long-term.

MTM: You seem very clear about your ethics, as if it doesn’t really present a dilemma for you.

RC: In business, the objective is to develop a successful company, which then can provide benefits and an improved standard of living for all the employees—not just senior management. It’s not just about money, but about all the things affected by employing good ethics—working conditions, relationships, dependability, et cetera. You want people to enjoy their work and have respect for and pride in their company.

In the long run, you have to live with yourself. I wouldn’t want to work for a company where “doing what’s right” wasn’t the standard. I want to work with people who think, not, “How much more money can I make for me?” but, “How can I make this company greater?” The questions that need to be asked are, “Are we a team? Is there good collaboration? What am I able to contribute to the company? Am I enjoying it? Are we creating jobs where people can enjoy doing what they’re good at and contributing to the company’s success?”

I believe that you can be both successful and ethical and that they are truly entwined, in the final analysis. It is certainly a much better feeling to know that what you have, you have earned honestly.

Robert Covalt is chairman of Sovereign Specialty Chemicals, Inc. , a $400 million specialty chemical company, which he started in 1994 at the age of 62. In 1999, he was named Person of the Year for the adhesive sealants and coatings industry, because of “his successful business growth strategy and remarkable ability to handle the extreme fluctuations of the industry.” From 1970 to 1990, Mr. Covalt served as president of the specialty chemicals division of Morton International, Inc. During that time, the company went from $175 million to $1.4 billion in revenue. Before launching his own company, he spent three years as Morton’s corporate executive vice president. Mr. Covalt holds an honorary doctorate from Purdue University, an MBA from the University of Chicago, and a BS in chemical engineering from Purdue.

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