Ethics

American Society / Education / Ethics / law / Management / Political — 0 Comments
25
Nov 11

Cheating

An ongoing cheating scandal in the affluent suburbs of New York City now stains our headlines.   Students in several outstanding academic high schools paid test takers to take their college entrance exams.  Six students were arrested in September, and earlier this week an additional 19 students either surrendered to the police or were arrested.  Students paid these test takers $500 to $3500.  See More Arrests in SAT Cheating Investigation.

It is too easy to blame this behavior on the decline in morality evinced by Wall Street scandals and the behavior of our political class.  A deeper point needs to be addressed.  We have become a society of numbers and meaningless symbols.   How much do you make per year?  What school did you attend?  How much is your house worth?

Hiring by the Numbers

For much of my career, a significant part of my responsibility was the hiring and supervision of attorneys in a large legal department.   At best, hiring is a crap shoot.  Despite a glossy resume, one can never tell why someone is in the job market at any given time, or how that person will actually meet the standards and fit the profile of the job for which they are interviewing.  Usually complicating the decision making process is  the legal department’s need to hire  experienced attorneys with a minimum ten years experience. In this environment a new hire was expected to perform at an extremely competent level with little or no training or supervision, the proverbial “hit the ground running” paradigm.

One of my peers hired strictly by the numbers.  A candidate had to be a graduate of one of the top 41 law schools, and had to have more than a 700 LSAT.  My colleague preferred a candidate to have a background as a prosecutor with US Attorneys’ Office or the Judge Advocate General.

After a while, I broke the code on my colleague’s idiosyncratic requirements.  I discovered that he used the Gourman Report of Graduate Programs.  Dr. Gourman does not reveal his exact methodology or statistics.  Generally, the Gourman Report methodology asks university graduate departments to rate each other, and assess which they think are best in their field.   By definition then, this questionable methodology yields a self-reinforcing cycle of the top programs continuing to nominate each other in a reciprocal and mutual admiration society.  See Caveat Emptor: The Gourman Report for a critique of the report’s methodology.   The same large prestigious universities continue to populate these lists.  Page 1 of the Gourman Report list of law schools had exactly 41 names; my colleague’s law school alma mater happened to be number 41.  Thus, I deciphered my colleague’s “scientific” method of hiring and the inherent folly of using numbers to find good people.  (Soon thereafter, for amusement I confronted him and pointed out that to be really scientific he would have to find the Gourman report related to the year that the candidate graduated law school to really ascertain whether he was hiring a true “top 41” candidate.)

In another example of this folly, we later merged with a company which would only hire candidates who had combined SATs over 1500, LSATs over 700, a top 15 law school degree (thank goodness for Gourman) and experience in a prestigious law firm or prosecutor’s office.

I am still amazed that I was ever hired, promoted or retained after we completed several major mergers.  I fit none of these criteria nor did many of the best attorneys in our legal department.

The Hard Work of Hiring; the Harder Work of Assessing Job Performance

The SATs are primarily predictors of how well one will perform on tests like the SAT’s.  Since they were instituted as a method of evaluation, they have been repeatedly called into question as predictors of college success. Further, how well one performs in college and law school is not a total predictor of how well one performs in that first law job.  At each step, real life intrudes, essential character and temperament inserts itself into the process, and a lawyer has either learned to practice law competently or not.

No short cuts or quantitative formulas exist in making hiring decisions.  Generally, every candidate I interviewed had a good academic and work record.   Intelligence, analytical prowess and certainly test numbers were merely table stakes to get in the door.  Other more important factors determined whether or not an attorney would be successful in a corporate environment.  In evaluating candidates, I tried to ferret out the following:

  • Can they work under pressure, or under attack?
  • Can they take on a project with minimal supervision?
  • Are they willing to put in long hours, including nights and weekends, to accomplish the job?
  • Are they patient and persistent; can they see a project to its conclusion?
  • Are they creative; have they ever displayed ingenuity? Can they work with and lead a team of lawyers and business people?
  • Do they communicate clearly in speech and writing?
  • Can they accept criticism?
  • Do they respect subordinates as well as superiors?
  • Do they display emotional intelligence; can they intuit the atmosphere as well as the facts of a situation?
  • Is integrity clearly a part of their makeup?  Has it ever been tested?

The Education Testing Service and testing results cannot measure any of the above-listed factors.  And in my 32-year corporate career I firmly believe that one cannot be successful on a long-term basis without meeting the above criteria.

Despite conducting rigorous interviews and extensive background checks, an honest hiring supervisor will admit that it is difficult to judge these non-numerical factors.  Further, if a hiring supervisor is correct 50% of the time, he or she has beaten the odds.  I was lucky and was able to hire many attorneys who rose through the corporate ranks and became senior corporate leaders.  Some went to the “best” law schools, some did not. I was also required to ask some of my hires to leave.  While difficult each time, that too is the nature of hiring and corporate management.

Looking for the Easy Way Out

This returns us full circle to the Long Island SAT/ACT cheating scandal.  As a society we look for the easy way out in decision making.   Perhaps those Long Island students were thinking: if I can just achieve a high enough test score, I can attend a prestigious university which will guarantee me access to a great job or graduate program, which in turn will assure my success in life.  Success is more complicated than that.

We have deteriorated to a society of numbers and brands.  The ideal political candidate goes to the right schools, has the right tickets punched on his or her resume, gets elected to the right office and now is the right candidate for higher office.  We fail to delve into the more important factors of character, grace under pressure, emotional intelligence and integrity.  The epiphany, long since necessary for all of us, is that we entrusted our money and our government to Wall Street and Washington charlatans who went to all the right schools, held  all the right jobs and had all the right  connections.  And look what happened.

Given all of this, it is no surprise we now have a group of students on Long Island willing to sell their souls for $3500 or less.

 

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9
Aug 11

“My Word is My Bond”

A phrase I heard often from adults when I was growing up was: “my word is my bond.”   I return to it often now, as it indicates to me not just a promise in a particular circumstance or business transaction, but rather a belief system. If we heard someone utter that phrase today would we believe it?  Sadly these days, most likely we would believe that we were about to be defrauded or worse.

In my professional life, I have witnessed the steady decline in the bonds of interpersonal trust. The financial crisis of 2008, which has never really ended, demonstrated that trust between people has deeply eroded. It was not only the outright frauds of Madoff and other Ponzi schemers, but more mundane misbehavior as well: borrowers lying about their incomes and assets to obtain loans, and lenders deceiving borrowers, government regulators and their shareholders.

It is time to reflect on some biblical wisdom.

The Bible and Truth

Sir Jonathan Sacks, Chief Rabbi of the United Kingdom, in his weekly blog “Keeping Our Word,” examines the Bible’s attitude toward vows and oaths, and the interconnection of trust with freedom.  As background he first examines adherence to the law.  People obey laws for two reasons:  (1) because of they are fearful of power and punishment or (2) it is to their self-interested advantage to do so.   However, both power and self-interest frequently corrupt those who pursue them. And corrupt power will lead to loss of freedom.  And corrupt self interest will lead to loss of social cohesion.

The Bible offers a third, more positive, reason for obeying the law:

… people obey the law because they have voluntarily undertaken to do so. This is a society based not on power or the pursuit of self-interest but on freely embraced moral obligation. Keeping our Word

We use words, performative utterances, to bind our future behavior, thus creating “an orderly future out of the chaos of human instincts and desires.”  The Bible is telling us that words create:

…because words are holy: that is to say, they bind. When words bind, they generate trust. Trust is to society what predictability is to nature: the basis of order as opposed to chaos.

Social institutions in a free society depend on trust, and trust means that we keep our word. We do what we say we are going to do. If we make a vow, an oath, a promise, a verbal undertaking, then we hold ourselves bound by it. This means that we will actually fulfil our commitment unless we can establish that, due to circumstances unforeseeable at the time, we are simply unable to do so.

If trust breaks down, social relationships break down, and then society depends on law enforcement agencies or some other use of force. When force is widely used, society is no longer free.  Keeping our Word

Stated simply, words, vows, oaths, promises and freedom are all intertwined.  When trust breaks down, freedom is lost.

The Current Crisis in Trust

At the core of our current sad state of affairs is a lack of trust.  We cannot count on our leaders to keep their word.  Government statistics are constantly “massaged” and restated.  When can we remember a business leader or politician telling us the truth?   Truth rarely emerges until we reach the crisis stage.

A memory and observation from my working life:  when I first started practicing law more than 35 years ago, I was routinely involved in corporate acquisitions and divestitures.  A contract to sell a business with several hundred million in sales (a large transaction at the time) would run less than 100 hand-typed, double spaced pages.   By the time I retired, a similar transaction would require massive teams of specialized lawyers: corporate, tax, employment, environmental, and more.  The documents would run into the thousands of pages.  At the end of such a transaction, I might receive several embossed, hard bound books for my library shelf (the size of a small encyclopedia).   Why?  I do not think we became more sophisticated.  I believe we trust each other less.  The same phenomenon occurs in federal regulations, with the Code of Federal Regulations filling an entire library wall.  Do all these laws, regulations and words create more or less trust?

Perhaps if we had a little more trust, we would need fewer words.  And when we uttered or wrote those words we would really mean them.

 

 

 

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27
Dec 10

Life Lessons From It’s a Wonderful Life

One of the pleasures of the season is the classic film “It’s a Wonderful Life.”  The story is a virtual cinematic Rorschach test.  Each viewer can find a personally resonant message: the love of a good woman, the evil of greed, the importance of community, faith or thrift.  Angel Clarence helps our hero George Bailey realize that every life is precious, we are all connected to each other and each of us makes a difference.  These are certainly valuable lessons.  However, some of the film’s equally important lessons in George’s story are sometimes overlooked.

Should We Ever Question Authority? Young George Bailey’s boss, the pharmacist Mr. Gower, learns of his son’s death and accidentally puts poison in a prescription.  Realizing this dangerous mistake, George disobeys Mr. Gower and does not deliver the prescription.   He returns to the pharmacy and receives physical abuse from the distraught and distracted Mr. Gower.  Ultimately George convinces his boss that the prescription is lethal, and Mr. Gower is forever in George’s debt.

Should We Work in a Family Business and Delay College? After high school, George must work in the family building and loan and save money before going to college.  George has the opportunity to learn the savings and loan (S & L) business directly from this father. The experience is probably an education and valuable apprenticeship that George could not replicate in college or an MBA program.

How do We Lead in a Crisis? Just as George is preparing to leave for college, his father dies unexpectedly.  The evil and greedy Mr. Potter convinces the S & L board to close the business.  The directors rebuff Potter, but inform George that the business will stay open only if he agrees to succeed his father.  George must weigh his college career and dreams of adventure against his father’s dream of providing decent housing for his community.  Further, George knows that leaving for college now would mean loss of employment for his uncle and others.  Displaying leadership and courage, George gives up college and assumes the leadership of the savings and loan.

What Skills Get Us Through a Business Crisis? On his wedding day and in the taxi to leave on his honeymoon, George witnesses a run on his S & L bank.    Potter calls in the bank’s loan, imperils the business and threatens to close it permanently if it cannot remain open until the close of that very day.

At the gated door of the savings and loan, George calmly speaks to his angry depositors.  George opens the doors and invites everyone inside.  First, he reasons with the crowd, explaining that each depositor is invested in the other’s home, and there is little actual cash on hand.  Second, he points out their depositor agreements require sixty days notice before a withdrawal.  Third, when the depositors still demand their money he does not panic.  Rather, with his new bride Mary by his side, he begins to negotiate with his depositors.   Fourth, the new Mrs. Bailey devises a creative solution.  To allay the concerns of the depositors she waves $2000 of wedding gift money.  Fifth, while George agrees to give the first depositor all his money, he does not permit the man to close his account:  “Your account’s still here. That’s a loan.”   Sixth, he finally turns the tide, and convinces the next few depositors to withdraw only a small fraction of their accounts,  that is, only what they need immediately.  Everyone makes it through the business day, even though the bank has but $2 left in the safe.  This one scene is a veritable training film of management ethics, courage, improvisation, knowledge of customer base, negotiating skill and emotional intelligence.

Should One Change Jobs for More Money? Recognizing that George represents a long-term threat, Potter makes him a spectacular job offer.  Potter offers George almost tenfold per year with the promise of travel to New York and Europe.  Overwhelmed by the offer, George is on the verge of accepting.  But he realizes that this is another of Potter’s evil plans to destroy the savings and loan and keep more community neighbors in substandard rental housing.   Ever his father’s son, the principled George turns down the offer and speaks truth to power, berating Potter for unethical business practices.

Clearly, George has compared his current and prospective work environments and considered intangibles such as respect, responsibility, ethics and the reputation of the employer.  For George, success and job satisfaction is not defined by money alone.

How Do Managers Make Difficult Personnel Decisions? Uncle Billy loses $8,000 on his way from the S & L to deposit the funds at Potter’s bank.  George has witnessed Uncle Billy’s drinking and forgetfulness.  Banking requires sobriety and attention to detail.  Should George have terminated Uncle Billy years before?  George suffers the consequences of this personnel decision, and sets up the arrival of Clarence the Angel in the climactic scenes of the movie.

Do Big Bad Banks Get Away with Bad Behavior? Potter winds up in possession of the lost $8000 and he never returns it to Uncle Billy, George or the savings and loan. In fact, he swears out an embezzlement complaint against George.  Potter is never punished for his misdeeds.

How Important Is Family and Community? Faced with ruin George panics and flees. But Mary recognizes the enormous social capital that she and George have built up in their small town.  She gets on the phone and gets help.   Her former boyfriend authorizes up to $25,000 to help George.  Both rich and poor citizens and even the bank examiner contribute to save George, Mary and the savings and loan.

The overarching quote and lesson in this film, in business and in life, explicitly and elegantly stated, is “Remember George: no man is a failure who has friends.”  The unrecognized good that we do during our lifetime returns to us in ways that we may never expect.

Happy Holidays to All!

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12
Aug 10

Hurd Roundup

DS, a Human Resources Vice President and former colleague, is an expert on organizational behavior, leadership training and executive development.  After reading Following the Hurd,  he provided these comments:

Another aspect of these cases that still continues to amaze me – as a former leadership development guy – is that all of our efforts (and expense) to instill and develop in leaders the decisions, actions and behaviors associated with good and moral leadership is largely ineffective and neutralized in the presence of the self-affirming/aggrandizing bubble (as you describe) that surrounds characters such as Hurd.

The other element at play I believe has to do with emotional age when assuming the top position and tenure in the job.  Back in the day, executives didn’t get tapped for these jobs until they were pushing 60 or so and maybe they would have a run of five years.  Early in their tenure, the leader almost always navigated the first crisis (usually a business crisis, but sometimes personal).   Given their five year window, back then, they almost never had to deal with a second crisis of major magnitude – they went off into retirement, revered.  The next guy then came in and repeated the same process.

But today, executives are quite a bit younger at appointment, imbued with certainty, looking to prove their virility and more easily seduced by power.  Their anticipated tenure could easily exceed ten years.  Likewise, the top jobs are now of such staggering complexity (cognitive, physical and psychological), that few air-breathing humans can actually perform them well, by themselves – thus the trend toward Office of the Chairman, Executive Leader Council and other rickety power-sharing, “star-chamber” arrangements.  The business environment and the operational tempo today almost guarantees that they will experience a major crisis (business or personal) every 18-24 months.  Like their forebears, they’ll handle the first one just fine, for a variety of reasons they will be unable to navigate the second crisis.  The odds and time itself are against them and they are ill-equipped (on many levels) to prevail.

Add that to the dirty water they are swimming in inside the “bubble” and you have a predictable (maybe unavoidable, though I’d hate to concede that) outcome.

Surviving a Crisis

DS’ additional thoughts on CEO crisis management:

The reasons why they handle the first crisis well are at least twofold -

Early in their tenure their sense-making skills are at their peak – primarily because of the novelty of a new job/environment, they are listening to many sources of input, they are open to new ideas and haven’t wall themselves off in the star-chamber and surrounded themselves with sycophants.  Ironically, the fact that they are short on “experience” in the new situation works to their benefit because they avoid the traps that come with believing they are “familiar” with what is going on.  Big ears trump experience!

Second, they make quicker and more confident decisions early on vs. later when their decision-making slows and they become more risk averse.

With the passage of time on the job, the factors reverse themselves – they stop listening and their reaction and decision-making time slows down.  This is ironic since they have had the opportunity to accumulate helpful experience.

Voila!  Train wreck!

Unfortunately, the Mark Hurd saga is not an isolated instance.  American business has seen a spate of ethical lapses and high level departures. See Ethical Lapses Felled Long List of Company Executives.

Final Thoughts

Hurd’s departure has left a void and recriminations.   The acting CEO is desperately trying to reassure customers, Wall Street and employees that all is well and it is business as usual.   The Board is commencing a search for a new CEO.  Given the fast moving nature of the technology industry, Wall Street is openly worried about a delay in finding a successor.  Finally, the Board is miffed that Hurd did no depart quietly, but sought to vindicate his actions and preserve his reputation. See Digits Live Show: Mark Hurd Isn’t Leaving H-P Quietly

Perhaps the Board should spend less time searching for a cost cutting guru or the next creative Steve Job-like creative genius, and more time and thought on the moral character of Mr. Hurd’s successor.

If my colleague is correct, Mr. Hurd will not be the last CEO to exit in an ignominious fashion.

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