Category Archives: Ethics

The Five Dysfunctions of Reckless Leaders

Reckless LeadersEvery so often, someone acts out in a way that is so totally destructive and outrageous that you know it’s nothing short of reckless.  Like a child flailing themselves against the tile of a supermarket floor in tantrum, reckless leaders push well beyond the bounds of common sense, decency and civility.  They seem totally clueless about the impact of their behaviors.

A reckless leader’s outbursts are certain to have consequences — both intended and otherwise.  When leaders throw civility and decency to the wind, the results are always corrosive and damaging to the organization.  In a world where the integrity and perception of your brand is paramount, reckless leadership creates huge financial risk for your brand and your organization.

If you’re wondering how reckless leadership could hurt your pocketbook and your brand read on.  Douglas A. McIntyre writing for 24/7 Wall Street identified nine well known and generally well regarded firms with the most damaged brands.  Companies such as J.C. Penney, Apple, Groupon, Boeing and others made the list in one of two ways: by aggressively promoting a product or a business strategy and failing badly, or being involved in a corporate or personal scandal.

And it’s not just major corporations or brands.  Small organizations are at risk as well.  In late October the Washington Post ran an investigative report describing how a large number of not-for-profit organizations have quietly lost millions of dollars through significant diversion of their assets — fraudulent financial transactions, embezzlement or other criminal means.

According to the Washington Post, the “diversions drained hundreds of millions of dollars from institutions that are underwritten by public donations and government funds.”  Ranking Congressional leaders have announced they will launch investigations into the matter. Demoralizing doesn’t begin to capture the impact.  So, how else does dysfunction and reckless leadership surface in organizations?

Dysfunction 1Believing your solution is the only solution.  Talented leaders are adept at listening to input and ideas from direct reports and colleagues well before settling on a path forward.  The Reckless Leader is more prone to decide they know exactly what to do from the start and are likely to demean the ideas of others along the way.

Dysfunction 2Publicly demeaning people or berating their ideas.  I’m not talking about engaging in honest and open exploration of ideas here.  I’m talking about the business equivalent of bullying.  Recent published profiles of Jeff Bezos, Chief Executive Officer at Amazon paint a disturbing portrait of a highly adversarial culture where positive feedback from superiors is rare and promotions even rarer. While some suggest intensity is a trait commonly found in technology leaders, (think Steve Jobs at Apple) some of Amazon’s practices seem ready-made for the a path to reckless leadership.  Being the Queen of Mean creates real hazards.  Act accordingly.

Dysfunction 3Using e-mail to deliver your communications. (see Dysfunction 2).  No, e-mails don’t count as communication — especially when they become personally demeaning tirades — aimed at the recipient.  Leaders need good intelligence — ground truth — to make decisions and respond to developing problems.  Reckless leaders have great difficulty understanding why no one wants to work for them.  Having strong and healthy relationships with your teams is essential to really understanding the current workings of your organization. Anything less is truly less.

Dysfunction 4Failure to share the blame and give credit where its due.  Reckless leaders are distinctive for their singular practice of blaming others for the failures and shortcoming within the organization.  Oftentimes these blame assessments are one-dimensional views of events in which the reckless leader often is complicit.  People afraid to admit they share part of the responsibility for organizational failure create a culture where blaming others becomes the default whenever something goes wrong.  Beyond destroying accountability, how likely are you to take a risk essential to success or a breakthrough development?   What’s that sound?   Oh, it’s innovation dying.

Dysfunction 5When process becomes more important than people.  Having a plan is not the same as having a working plan.  Demanding adherence to stale procedures, outdated protocols and unworkable plans isn’t leadership, it’s organizational suicide.  For reckless leaders, the unwillingness to recognize rapidly shifting conditions or changing circumstances arising in the marketplace oftentimes results in overlooking the urgency and value of re-direction or redeployment of resources.  When that happens reckless leaders will revert to some variety of dysfunctional tactics all over again.

The circle of dysfunction and reckless leadership remains unbroken. That’s a sad reality for many organizations.  How will you make sure it’s not yours?

How Safe Is Your Organization?

In 2011 approximately 275,000 organizations automatically lost their tax-exempt status because they did not file legally required Internal Revenue Service annual reports for three consecutive years. While the IRS believes the vast majority of these organizations are defunct, a review of the Revocation of Exempt Organizations roster show a surprising number that are not–or at least didn’t intend to be.  Which gives rise to wondering who exactly is leading these organizations and why are they ignoring their fundamental responsibilities?

While it’s easy to dismiss revocation as an action of an out-of-control bureaucracy where complexity rules and common sense is an oxymoron, but that reaction truly misses the point.  Every leader has a foundational set of responsibilities that simply may not be ignored.  Ignoring them risks not only your own career, but in a broader sense the integrity of your profession.  We cannot expect those we lead to respect us, our decisions or our commands when we so blatantly and irresponsibly ignore our most fundamental obligations.

Working and serving with volunteer leaders and voluntary boards it is easy to understand the operational complexities and difficult choices volunteers face serving in these roles and sharing these responsibilities.  Understanding the real challenges facing members, being certain the association is maintaining its outward focus to serve those needs and assessing the effectiveness of it all, is definitely not for the casual observer nor feint of heart.

Still too many boards fumble while working to get it right.  The very nature of their voluntary service—part-time engagement, competing business and family obligations, limited meetings, ill-defined reporting schemes, ideological splinters, and limited or non-existent safeguards—all serve not only to increase the risks but limit the volunteer’s ability to garner perspective, glean incisive intelligence and truly understand just where the organization stands. One place to look is an ineffective or dysfunctional relationship with the chief staff executive.  What do Board’s want from their senior staff leaders?

Research by Tecker International identified four beliefs that volunteer boards want to have about their senior staff.  They want to know senior staff:

(a) Authentically value and appreciate what they do to earn a living
and genuinely like them as people;

(b) Place the needs and interests of the organization and its mission
over personal career goals;

(c) Are sufficiently familiar with the conditions of the organization
and its environment to help them understand what is going on; and

(d) Are sufficiently knowledgeable about the dynamics of associations
to give them good advice about choices in discussions of challenges
and opportunities.

It’s not just Boards.  Staff leaders have a critical role to play in building and sustaining mutual trust and respect.  Sadly, the stories of dishonesty, mis-direction and less than transparent reporting by trusted  leaders are commonplace today. (a rudimentary Google search will bring you over a half million hits)  Some deceptions are big and brash, like the saga of Bill Aramony at United Way.  Others are considerably smaller.  All serve to undermine the essential confidence in our tax exempt organizations and trust in those we call leaders.  So what do you do as a leader to assure greater success?

One place to start is revisiting the core standards of your chosen profession and engaging your team in discussions about just what they mean for your organization.  If your organization has a code of ethics or conflict of interest policies bring those to the table too.  If not, perhaps now is a good time to get started.  You can use the work of your industry, other associations, or the guidance of your legal counsel as a starting point.

ASAE: The Center for Association Leadership established a set of Core Ethical Standards to which it encourages its members to aspire:

  1. Respect and uphold public laws that govern one’s work;
  2. Be honest in conducting the member’s business;
  3. Respect the confidentiality of information gained through one’s work;
  4. Act fairly;
  5. Foster an ethical culture through one’s work; and
  6. Take responsibility for one’s conduct.

Rick Cohen writing in The Nonprofit Quarterly tells a story about a building inspector who agreed to wear a wire to help prosecutors catch a crooked developer.  He did it Cohen writes, “to stand up in his own individual way for governmental integrity, for the public interest.”

If you want to lead you must be prepared to “stand-up” every day for what’s right, what’s required and what’s essential for the progress and continuity of your organization.  Don’t let what you don’t know limit that.

The Hurd Mentality

Mark Hurd lost his job as Chairman and CEO of Hewlett Packard. Why is it that CEO’s and leaders of all stripe appear to excel at self-destructive behaviors? In the last six months, US Army General Stanley McChrystal speaking out of turn about the President and his National Security Team is escorted from the field. (see When Leaders Self-Destruct)  Now, Hewlett Packard’s former CEO Mark Hurd is ousted for allegedly falsifying expense reports. Supposedly, Hurd claimed dinners with other executives, security personnel and clients while he was actually dining with a woman serving as a marketing consultant to the company. We’ll set aside the private settlement reached between Hurd and the marketing consultant Jodie Fisher over sexual harassment claims, the approximately $30 million plus Hurd will collect as severance from H-P and the earlier allegations of spying on journalists by former H-P Board Chair Patricia Dunn for the moment.

You could sprain your neck with all the head shaking going on. What was he possibly thinking? The glib will say, he wasn’t. In today’s world of electronic records, calendars and diaries does anyone really believe you can “fudge” expense reports without being discovered? It is all too strange to believe a technology titan of Hurd’s experience, with a strong record of corporate leadership, business success and obvious talent would throw it all away for $20,000 in meal expenses. That’s chump change for a guy who made almost $100 million dollars over the past three years. The ethics rules and expectations are culturally in-bred at H-P. Why take the chance? Yet, apparently he did.

He’s not alone. Witness Dennis Kozlowski of Tyco. You remember the story—Kozlowski, the CEO of Tyco who made $170 million in 1999 chose to dodge New York City and State sales tax by having more than $14 million worth of paintings invoiced to Tyco’s offices in New Hampshire, even though the paintings actually went to his Manhattan apartment. When the tax evasion scheme was uncovered, Kozlowski’s leadership and corporate practices all came under scrutiny. The result is Kozlowski now serving 8-25 years in federal prison for 22 counts of grand larceny, conspiracy, falsifying business records and violating business law. Kozlowski joins a vertiable rogues gallery of bad corporate actors including Ivan Boesky, Mike Milken, Charles Keating, Bernie Ebbers of WorldCom; Jeffrey Skilling and Andrew Fastow of Enron and John Rigas of Adelphia among others.

Frederick Wilhelm Nietzsche, the 19th century philosopher who coined the term, “herd mentality” decried both the dangers and difficulties associated with the herd. The herd mentality suggests people are peer influenced to follow trends, adopt behaviors or act in specific ways. In all of these instances, the herd is moving in a very, very wrong direction. The rugged individualism required to break away and set one’s own path demands an “overhuman” effort Nietzsche warned.

Mark Hurd is all too clearly human. He was responsible enough to own up to the fact he missed the ethical mark. In his statement announcing his departure from H-P Hurd said, “I realized there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP and which have guided me throughout my career. This is a painful decision for me to make after five years at HP, but I believe it would be difficult for me to continue as an effective leader at HP and I believe this is the only decision the board and I could make at this time.” Indeed. The whole world was watching.