Leighton Lecture 2009

UI grad returns home with strong message about personal responsibility

August 16, 2007, is a day Rita Kahle (’78) will never forget. On this day, the executive vice president of Ace Hardware Corporation watched as her company—revered for being “helpful”—became “helpless” in the wake of a significant accounting error.

Less than a month later, it was confirmed that a material error related to inventory accounting caused a $152 million fiscal shortfall. “Mistakes happen,” Kahle, a 23-year veteran of the Ace corporation, told business students during her presentation as part of the Leighton Lecture series.

According to Kahle, a lack of understanding of key business processes and an over-reliance on one individual to reconcile inventory led to differences between capitalizing freight and goods in transit. “Bottom line, it was a failure of personal responsibility.”

In January 2008, an independent investigation revealed no intentional misconduct, no intentional misstatement, no missing inventory, no missing money and no fraud. It was simply an accounting error that went on too long.

Photo: Dean DeBrock, the Leightons, Rita Kahle and son Tim & Gretchen Winter“Responsibility is synonymous for accountability,” Kahle explained before encouraging students to always ask, challenge, understand, communicate and collaborate and act by doing the right thing. She said even though Ace had an open door policy, no one questioned or bothered to learn any process beyond their job description and defined role.

“There are no dumb questions,” Kahle reminded students. “We all need to feel a little uncomfortable everyday” by asking questions until we fully understand.

Kahle and the Ace executive team knew they had to face the error and fix it. The team created an aggressive business plan focused on remediation, restatement, refinancing, restoring equity and regaining customer trust and retail momentum. The team also set out to redefine its culture by instituting core values highlighted by integrity and responsibility.

To illustrate her point, Kahle cited several current events as examples of personal and professional responsibility failures including Illinois’ pay to play politics, shootings on college campuses, the Enron and WorldCom scandals and most recently, the mortgage meltdown and auto industry collapse.

“It’s up to you as future business leaders to put personal and professional responsibility into practice,” Kahle concluded. “The future is in your hands. Take it personally.”

Kahle’s return to the University of Illinois Urbana-Champaign as part of the Leighton Lecture Series was co-sponsored by the College of Business and the Center for Professional Responsibility in Business and Society. Richard (’49) and Grace (’50) Leighton, the generous sponsors of this series, attended Kahle’s lecture and were recognized for their foresight in creating the ethics-based format.