Archive for the ‘Congress’ category

The Week in Ethics: Corporate Citizenship in a Trump Administration

January 26, 2017

trump_white-house-photo-2017-featureCircumstances have caused an increasing number of companies and CEOs to speak out in recent years on hot-button social issues that previously weren’t part of traditional corporate citizenship. For example, nearly 400 companies filed an amicus brief on marriage equity with the Supreme Court, and employers and organizations banded together using economic leverage to fight legislation discriminating on the basis of sexual-orientation in IndianaNorth Carolina and Georgia. CEOs also weighed in against policies that exacerbated racial tension, like flying the Confederate flag and excessive use of force by local police.

This experience will serve corporate leaders well in navigating the challenges ahead. Issues of gender, race, sexual-orientation, pay equity, gun control and climate change are among the many hot-button social issues not going away – and likely to become more divisive — under the administration  of U.S. President Donald J. Trump. Corporate citizenship may be entering its greatest test.

Will a Trump presidency have the effect of muting CEO voices for fear of reprisals and Twitter attacks in a government now controlled by one political party? Or will corporate citizenship, acting out of a bigger sense of purpose, gain increased public trust and support?

The new landscape offers unknowns, perils and opportunity even as the administration’s agenda isn’t finalized. As president, Trump wields enormous power and a low tolerance for criticism which makes dissent tactically sensitive. Companies have a full plate keeping up with economic policies impacting their business. However, the hot-button social and environmental issues will create defining moments for leadership and corporate citizenship.

Three of my observations from recent corporate citizenship challenges: 1) how a company defines its purpose fosters momentum; 2) using economic leverage isn’t corporate bullying; and 3) it’s critical to speak up collectively for what’s right.

How a company defines its purpose fosters momentum

When company leaders see the purpose of business as delivering value to society and the environment in tandem with delivering financial results, things change. They create stakeholders, shifting into a more authentic and aware relationship with employees, customers and all those impacted by the business. It makes “community” personal and shapes values and behaviors around what enables the community to flourish or be harmed. If everyone has a stake in its success as stakeholders then what everyone does matters more. If a law or action discriminates against anyone in the community, for example, it is a catalyst in seeking out like-minded leaders to join in addressing the problem.

Using economic leverage isn’t corporate bullying

Under pressure from many business leaders, Indiana, former Governor Michael Pence, now Vice President Pence, backed down on provisions in the Religious Freedom Restoration Act that invited sexual-orientation discrimination. If the provisions weren’t dropped, Salesforce.com CEO Marc Benioff was the first to threaten economic sanctions  (like reducing investment in the state and offering employees a relocation option). Economic leverage, used in other states to address discriminatory legislation was called “corporate bullying”  by critics. As discrimination is illegal, how is it bullying for companies not to want their employees put at risk?

It’s critical to speak up collectively for what’s right 

Corporate Citizenship is an individual and collective act. It involves working continuously to reinforce ethical behavior in one’s own company and working collectively with other CEOs and like-minded organizations to address social and environmental concerns important to you and your stakeholders. There is strength in numbers, especially in uncertain and volatile times. Commenting  on corporate social activismBank of America’s  Chairman and CEO Brian Moynihan  said, “Our jobs as CEOs now include driving what we think is right. It’s not exactly political activism, but it is action on issues beyond business.”

Climate change is just one example of the persistence needed for progress. Climate action to create a low-carbon economy and support the Paris Climate Agreement faces a challenge getting President Trump’s commitment as he has called global warming a hoax. The most recent Gallup Poll on the subject, found 64 percent of Americans surveyed expressed some to great concern over global warming.

It is unclear how, if at all, dissenting popular opinion will impact the Trump presidency and social and environmental issues. He lost the election’s popular vote by an unprecedented 2.9 million ballots. The day after the Inauguration over 600 peaceful marches  – 400 in the U.S. cities and more than 200 around the world –  put the president on notice regarding grassroots support for human rights issues. The president’s popularity (and how it impacts members of Congress) will be a bellwether of his ability to get his agenda through. Likewise, a company’s continued strong financial performance creates latitude to address controversial social issues.

Those companies whose business purpose is more than just profit are likely to avoid ethical problems longer if federal regulations and enforcement are relaxed. According to the 2017 Edelman Trust Barometer, 75 percent of respondents agree that “a company can take specific actions that both increase profits and improve the economic and social conditions in the community where it operates.” While 53 percent believe the current overall system has failed them, many continue to have faith in business as an institution. “Among those who are uncertain about whether the system is working for them,” the survey found, “it is business (58 percent) that they trust the most.”

Whether or not progress can be made on hot-button social issues in a Trump administration, acting out of a bigger sense of purpose and drawing strength from collective voices will likely gain increased public trust and support of corporate citizenship.

Photo via Whitehouse.gov.

Gael O’Brien, a Business Ethics Magazine columnist, is an executive coach and presenter focused on building leadership, trust, and reputation. She publishes The Week in Ethics.

Reprinted with permission: This column was originally published January 23, 2017 entitled “Corporate Citizenship in an Age of Uncertainty” in Business Ethics Magazine.

Gael O’Brien, January 26, 2017, The Week in Ethics

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The Week in Ethics: Leadership Lessons at American Academy of Arts and Sciences

June 18, 2013

column photo of ethics under microscope The integrity of the leader of an honorary society for independent public policy — founded  in 1780 during the American Revolution — is  under question as a result of misrepresentations on her resume and criticisms from former employees over her bullying, micromanaging management style.

While there is never a good moment for negative media attention, it is coming at a particularly awkward time for the American Academy of Arts and Sciences. It is landing on the eve of the June 19, 2013 release of a commission report the academy has guided for more than two years, expected to offer far reaching recommendations for education and cultural institutions.

Leslie Berlowitz, the head of the academy for the last 17 years, is now on leave while an internal investigation by an outside law firm addresses issues raised in a series of articles in the Boston Globe in June 2013. The articles indicate that the academy’s applications for at least three federal grants list Berlowitz having a doctorate from New York University (NYU) that NYU has no record of her completing. The National Endowment for the Humanities, which gave $1.2 million to the academy based on grant applications that included Berlowitz’s inflated credential, has referred the issue to its inspector general.  The Massachusetts Attorney General’s Office (charged with overseeing nonprofits) has also announced an investigation. Two others who gave grants to the academy (US Department of Energy and Carnegie Corporation of New York) are checking to see if false information was provided on their grant applications.

The articles indicate that in checking her resume against NYU records, where she worked before joining the academy, a job title for one position is misstated and length of service for another is misrepresented.  Academy employment ads refer to Berlowitz as “doctor” and further investigation by the Globe reporter found an email two years ago from Berkowitz where she implied she had a doctorate.

A month after turning down requests to be interviewed by the reporter and two weeks after the first Globe story was published, Berlowitz said in a statement that she “never intentionally misrepresented her accomplishments,” accepted responsibility for materials that left “an incorrect impression,” and acknowledged that she had the title of vice president of institutional advancement at NYU rather than academic advancement which, the Globe reported, has appeared on the academy website and in grant applications.  An academy spokesman originally blamed Berlowitz’s staff for resume errors, saying she was unaware of them.

The profile that emerges in the article is of a board/governing council extremely supportive of Berlowitz, who in 2004 bypassed the normal election process for membership into the Academy of Arts and Sciences — which honors the most accomplished scholars, innovators, and artists in their fields — when they added her as an inductee. They quietly inserted her name into “the original six-month-old announcement, a spokesman acknowledged, making it look as though Berlowtiz had been voted in along with everyone else in the spring.” Berlowitz’s $598,000 salary — higher than many college presidents’ — and first travel perks also indicate Board support. Former employees quoted in the article indicated the board ignored complaints about Berlowitz’s management style made to them.

The significant number of former employees willing to talk (anonymously and as named sources) to the Globe about their criticisms of Berlowitz’s leadership, calling her management style bullying, harsh, dismissive and micromanaging raise the question of what is motivating them. Is it a set up or revenge by those who believe they were treated badly capitalizing on her current vulnerability? Or is the issue an outcome of a detached governance process with too heavy reliance on the internal leader and no means to ensure that the leader’s management style and the organization’s work environment are functional and appropriate?

Either way it offers a cautionary tale about leaders vulnerability when they are unaware of the impact their leadership tone, style and communication have on employees; or worse, when they ignore or rationalize that impact without seeking to address it.

The unfolding saga at the academy also sends a message to boards that they have a responsibility to help an organization’s leader succeed by not just looking at the results, but being aware of the impact a leader is having on the larger team; and when there are red flags, stepping up to ensure the leader gets coaching in emotional intelligence or other issues, monitoring his or her workplace performance to be clear about expectations of improvement.

The academy’s purpose is to honor excellence. The need for all the investigations indicate that excellence has been compromised in terms of how the academy and their leaders have operated internally. Restoring integrity will involve transparency about the investigations’ findings, dealing directly with allegations about Leslie Berlowitz’s leadership, and putting as high a priority on how things are done internally as the achievements that result from them. The founding fathers would expect no less.

Gael O’Brien June 18, 2013

The Week in Ethics

Gael O’Brien is The Ethics Coach columnist for Entrepreneur Magazine. Gael is also a columnist for Business Ethics Magazine; her June 2013 column looks at leadership vulnerabilities of departing OSU president Gordon Gee.

The Week in Ethics: Goldman Sachs’ 2012 Problem with Culture

March 22, 2012

The love-hate relationship with Wall Street is complicated.

Great returns on investments are one side; examples of fraud, greed or throwing shareholders or clients “under the bus”  on the other. The global meltdown’s post traumatic stress and after shocks continue; ongoing investigations try to determine blame.

A firm’s culture and leadership are critical success factors in navigating challenges and avoiding loss of trust and reputation; or…they explain why it falls into difficulty.

Goldman Sachs continues in the hot seat. Included in recent developments are lawsuits, a Manhattan district attorney subpoena, a Financial Industry Regulatory Authority claim filed this week, insider trading investigation and an SEC probe for civil action.

On March 15, 2012 Greg Smith, an executive director and head of U.S. equity derivatives in Europe, Middle East and Africa for Goldman, resigned; expressing his reasons in a New York Times Op-Ed, he called the firm’s culture “toxic.” (Update: see his October 21, 2012 interview on 60 Minutes.)

He said Goldman was “still focused on making money over clients’ best interests. His message was that  the SEC investigation, Congressional hearings, the firm’s “rigorous self-examination” and efforts to restore reputation and  trust (see previous columns) have not moved the firm away from the attitudes that helped create the climate for the economic meltdown in 2008.

Goldman CEO Lloyd Blankfein and President Gary Cohn responded in an employee memo published on the firm website. Smith’s assertions, they said, do not “reflect our values, our culture and how the vast majority of Goldman Sachs think about the firm and the work it does on behalf of our clients.”  They pointed to favorable employee surveys as evidence. “We wanted to remind you,” the memo says, “what we, as a firm–individually and collectively– think about Goldman Sachs and our client-driven culture.”

The memo boasts that in March 2012 Goldman Sachs was named one of the best places to work in the United Kingdom, where Smith resided, and ranked highest in financial services firms for the third year in a row.

I’m reminded of the admonition (espoused by Kathryn Schulz) that “trusting too much in feeling you are on the right side of anything can be dangerous.”  It can lead to error blindness. When applied to Goldman Sachs, it suggests that believing in one’s own exceptionality can create blinders, screening out evidence to the contrary.

There is a danger when Goldman invokes its culture as some kind of shield. Culture is organic; shaped perhaps by a legacy, but defined by the mirror of the present, how we are doing things. The reflection others see is not who you were, or believe yourself to be.

Goldman’s self-examination in 2010 resulted in a review of its legendary business standards and practices; its report released in early January 2011 acknowledged that in a survey of clients, clients said “in some circumstances the firm weighs its interests and short-term incentives too heavily.”

While integrity, transparency, and addressing conflicts of interest were part of the self-review, Smith’s Op-Ed said nothing had changed in Goldman’s culture.

This was also the conclusion of Money and Power: How Goldman Sachs Came To Rule The World (2011) by William Cohan.

Cohan cites several critics who saw a pattern of Goldman putting its own interests ahead of clients, particularly in its evolution from a partnership to a corporation, from banking to trading, from longer- term to short-term gains as the firm became more aggressive in risk taking. Over the last 143 years, Goldman has become a mark to market firm involved in investment banking, securities, and investment management with 30,000 employees in 75 offices around the world.

The organization and its culture are complex.

Goldman’s challenge is the same as any company’s who has said all the right things in a code, brought it out to define who they are in meetings, but not known how to live it when the code and a business model are at logger heads.

Reputation and trust depend on the ability to integrate the code and the business model; to struggle with both until they are aligned and reflect how business is done.

That is the most enduring way for Goldman Sachs to strengthen its culture and stay out of the hot seat.

Gael O’Brien      March 21, 2012

The Week in Ethics

Gael O’Brien is also a columnist for Business Ethics Magazine; her February 2012 column includes an interview with Gallup Chairman Jim Clifton on how managers impact culture.

The Ethics of Compartmentalization and the Undoing of Rep. Anthony Weiner

June 17, 2011

The resignation June 16, 2011 of former Rep. Anthony D. Weiner (D-NY) sounded more like a political stump speech than an understanding of what happens when a leader loses trust. He commented that “the middle class story of New York is my story,” and expressed appreciation to his parents “who instilled values that have carried me this far.”

The values would appear to be defined in Weiner’s career as a crusader for his constituents. His downfall, at his own hand, suggests a fighter going down for the count because of “personal mistakes” that he seems to compartmentalize as distinct from the rest of his life, and his role as a congressman.

It raises yet again the questions: what is the code of conduct for a member of Congress; and when someone loses personal credibility by lying, is there really a firewall that can keep his or her professional credibility intact?

Ten days ago, after 10 days of denials by Weiner that he’d been involved in sending a lewd picture of himself from his Twitter account, he finally admitted sending the photo. He also admitted to online consensual relationships with six women, involving the exchange of intimate photographs, over a three-year period, before and during his marriage. However, his line in the sand was that he hadn’t met them or “had sex outside my marriage.”

In his June 6, 2011 press conference he insisted he would not resign. While he acknowledged “terrible judgment,” “terrible mistakes” and referred to the photograph as a “frivolous thing,” he indicated he didn’t believe that he had done anything that violated the law or his oath to constituents.

He said he panicked, lied because he was embarrassed and humiliated and was protecting his wife and himself from shame. But he didn’t make the connection that he had violated public trust by his actions, eroded his credibility, or behaved in a way that brought shame to Congress as an institution or body of elected officials.

I thought back to the righteous tone he took last year criticizing BP Americas President and Chairman LaMar McKay during a U.S. House Energy and Commerce Subcommittee hearing in the aftermath of the Gulf of Mexico oil spill. Weiner expressed outrage, railing against McKay, saying he had no credibility. Weiner also took on former BP CEO Tony Hayward and other executives dismissing them as liars in an interview.

Should his views on how BP handled the oil spill, his crusade for healthcare reform, his voice in public health, or environmental protection, or any other issue be discounted now that we know he had a secret life sending sexual pictures to a college student among others he met on Facebook? Is it irrelevant because he wasn’t blackmailed? Or are leaders’ voices only heard as long as they maintain trust and losing that, their voice disappears as well?

Weiner’s legacy may end up being the photo of him without underwear. Or it may be what he does in this next act of his life.

How we recover from reckless behavior, bad judgment, or self sabotage and figure out who we really are, warts and all, and how to stop derailing ourselves… well, that is a comeback. And there is no room for compartmentalization or self-deception in that scenario. Comebacks can create a new leadership opportunity out of an integrated, not divided self, where ethical behavior isn’t encumbered by dark secrets.

In thinking about Weiner, I’m reminded of a last line in a Yeats’ poem. Yeats asks the question:

“How can we know the dancer from the dance?”

The answer is we can’t. We are the dance.

Gael O’Brien   June 16, 2011

The Week in Ethics

Gael O’Brien is also a columnist for Business Ethics Magazine

Memorial Day: Veterans, Natural Disaster Victims, and Massey’s Victims

May 30, 2011

elcivics

Memorial Day in the United States honors those we have lost, who have fought for their country – and whether they died in battle or decades later – we honor their service. I think of the flag moving in the breeze beside my dad’s grave, and those of millions of other men and women.

But, especially this year, Memorial Day has for me a broader definition of honoring the dead. It is a global sense of loss.

It has been a year of horrific natural disasters – floods, wildfires, tornadoes, earthquakes and tsunamis all over the world. In March, just two weeks after the earthquake and tsunami that hit Japan, more than 10,000 people were reported dead and nearly 17,500 were missing.

We have no idea what the long-term fall out will be from damage done to the Fukushima Daiichi Nuclear Power Plant and the impact on people, wild life, and agriculture from exposure to radiation and radioactivity in the water and soil. In spite of toxic levels of radiation, at least 50 workers risked their own future at the height of the crisis by entering the plant to keep cooling water going into the damaged reactors to avert a meltdown. Their efforts were as heroic as what occurs on a battle field.

It took angry parents, so concerned about their children’s welfare, in a situation that should have spoken for itself, to push the government to increase the acceptable standards of radiation exposure which thereby increased protection for children in schools within proximity of the nuclear plant. The government then took responsibility for removing contaminated top soil at the affected playgrounds and schoolyards.

And in Joplin, Missouri, just a week after the massive tornado destroyed the town, the death toll keeps rising; about 140 people are confirmed dead, with another 100 still missing. Included in those lost are those who sacrificed their lives rescuing others in what may be the worst tornado in U.S. history.

WSJ photo of report cover

Then there are disasters deemed preventable, made by man. Earlier this month the Governor’s Independent Investigation Panel in West Virginia issued a report  on the April 2010 explosion at Massey Energy’s Upper Big Branch mine which killed 29 – the worst U.S. mining disaster in decades. The report, subtitled “a failure of basic coal mine safety practices,” blamed the bulk of the tragedy on Massey’s failure to protect its workers. In the year since the blast, the report indicated that Massey hasn’t really improved safety practices.

The report also placed blame on the U.S. Mine Safety and Health Administration for failure to use all the tools at its disposal and the West VA Office of Miners’ Health Safety and Training for failing in its role as watchdog enforcing state laws.

In talking about the culture of the company the report said: “The history of inadequate commitment to safety coupled with a window dressing  safety program and a practice of spinning information to Massey’s advantage works against the public statement put forth by the company that the April 5, 2010 explosion was a tragedy that could not have been anticipated or prevented.”

Eighteen current and former Massey executives, including then CEO Don Blankenship, refused to participate in the investigation, taking the Fifth Amendment. That is a powerful commentary on culture right there.

The leadership legacy of Blankenship, who retired in December 2010, raises many questions including the risk the company took on, at the expense of its workers, in pursuit of aggressive production goals.

While civil and criminal investigations of Massey continue, Alpha Natural Resources announced this year an agreement to buy Massey with plans to keep on many Massey executives; Blankenship is expected to be a consultant.

Memorial Day: honoring heroes of war and remembering others we have lost.

And when the deaths are determined to have been preventable as with the 29 miners, aged 20 to 61, what will we let the legacy be of human error? What will we require be changed in policies and enforcement for a company, an industry, and regulators?

Gael O’Brien   May 30, 2011

The Week in Ethics

Gael O’Brien is also a columnist for Business Ethics Magazine