The lack of integrity (actual or perceived) in public office and the private boardroom is a critical reason we are now experiencing what has been described as a crisis in leadership[1] and trust.[2] A deficiency of trust is indexed as the number one problem confronted by business and political leaders today. According to several studies, the integrity dilemma is not only tormenting our leaders, but also our society.[3]
Globally and in Canada, we’re losing faith across the board … we are losing trust in government … business … we appear to have lost trust in our leaders.
– Bridgitte Anderson, Edelman, Losing Faith in Institutions[4]
Business is not running as usual and this is putting extreme pressure on leaders across the world, in corporate organizations, BigLaw, and government.[5] You hear words like “unprecedented,” “uncharted” and “uncertain” used a lot more these days to describe the times we are in.[6] A volatile global economy and disruptive change has impacted business – and organizations are facing enormous competitive and sustainability challenges.[7]
This age of disruption and upheaval – and the threat posed by even more competition and disruption on the horizon – create real, genuine pressures and inappropriate incentives within an organization that may trigger unethical behaviour.[8] It would be “nice to think” that no CEO (at the top of the organization) or employee (on the frontline) ever felt afraid or threatened; that all Boards can maintain their professionalism and objectivity; that all C-Suite executives can resist the temptation of overly risky behaviour, of cutting corners, rationalizing the breaking of rules, or participating in malfeasance. But, unfortunately, this is not the case.[9]
Risks are increasing, competition is intense, trust – the “water in which we all swim” – is at a record low, and economic activity is fragile and uneven. For organizations to succeed in creating the trust in the enterprise vital to its sustainability and durability, requires the collective efforts of the entire enterprise, operating from the same understanding of strategy, purpose, and – in today’s environment – values.[10] Responsible executive leadership and an embedded culture of integrity are integral to an organization’s success in the 21st Century, and as such must also be an important objective of the modern General Counsel[11] and a critical item on every Board’s agenda.[12]
Trust, not money, is the currency of business.
– David Horsager, The Trust Edge[13]
Recent high profile corporate scandals – from Wells Fargo to Volkswagen to United Airlines[14] – have highlighted that “the future face of capitalism will be defined by delivering value and values”.[15] Organizations that embrace this reality and adapt are on the path to extraordinary opportunities. Those that ignore it, “do so at their peril”.[16]
Business has much to fear in the present context. The growing storm of distrust in business (and government) is powerful and unpredictable.[17] Responsible and ethical leadership and corporate culture is key for sustainable organizational success: “If you have integrity, nothing else matters. If you don’t have integrity, nothing else matters”.[18]
Culture eats strategy for breakfast.
– Peter Drucker[19]
Overview
There is little doubt that today is an “age of upheaval” that is posing “enormous challenges for companies”.[20]
There is a recognized and clearly articulated need for ethical and responsible leadership – in significant part – due to a deficit of integrity and ethics, principled judgment, and effective decision-making on Bay Street and Wall Street, and in government.[21] Across the board, and around the globe, we are seeing scandals and organizational crises at financial institutions, national and multinational corporations, governments, accounting firms, BigLaw, automotive companies, airlines, newspapers, and even sports governing bodies (FIFA).[22]
These highly publicized scandals – boiling up amid the heat of disruptive change – have come at a cost. Many people have lost trust and confidence in our institutions,[23] and in the integrity and ethics of business executives, legal leaders, and public figures.[24]
When people do not believe that our business and political leaders tell the truth, it erodes the basic shared values that traditionally uphold our institutions.[25] Some businesses can succeed in the short term without building or maintaining trust, but over the longer term, a business without trust negatively impacts its brand and reputation,[26] its competitiveness, and ultimately its bottom line. It may eventually even lose its perception of legitimacy – its social “licence to operate” [27] – among some stakeholders.[28]
Once we understand the hard, measurable economics of trust, it’s like putting on a new pair of glasses. Everywhere we look, we can see quantifiable impact. If we have a low-trust organization, we’re paying a tax. While these taxes may not conveniently show up on the income statement as “trust taxes,” they’re still there, disguised as other problems.
– Stephen M.R. Covey[29]
The 2017 Edelman Trust Barometer, a global survey, reveals that trust in business and government has declined broadly, observing a huge divide between the modest trust in institutions of business and government, and the “pitifully” low level of confidence and trust in their leaders.[30]
We live in an increasingly competitive and disruptive global marketplace, where the proliferation of technology and social media has cultivated superficial connections. But people and communities want genuine connection, belonging, and meaningful relationships with institutions they trust. High-trust organizations are the ones that will move beyond surviving to thriving in today’s environment[31] as individuals “cast verdicts on reputation with their pocketbooks, withholding business from companies they believe are ethically deficient and rewarding those with good reputations”.[32]
Integrity is a reputational advantage that others will weigh in subsequent dealings.
– Warren Buffett[33]
A trust-based approach has a notable impact on stakeholders[34] and the success of the business. Research across the world and statements by recognized business leaders show consistently that, while trust may not always be front of mind, it is the foundation of doing business”[35] and increasingly required for any business or government in dealing with its constituencies.
“Trust, not money, is the currency of business” (and life) – generating “tangible business benefits, with measureable fiscal and non-fiscal impacts”.[36] Values-driven leaders of integrity and accountability have been reported to bring five times as much to the bottom line as do “low character leaders”.[37] Edelman’s Trust Barometer survey noted as far back as 2011 that:[38]
“Nearly three-quarters of consumers say they will actively avoid doing business with a company they don’t trust, while 85 percent will go out of their way to buy from a company they trust.”
Trust is the essential prerequisite on which all authentic business success depends.
– Journal of Management Research[39]
For corporate leadership to win the trust issue in these trying times will take a genuine reinvention of the way many organizations operate – an emphasis on the issue as a strategic priority is required, or risk the serious consequences.[40] In this respect, risk awareness is the first step on the path to solutions.
Although not a radical revision, it is significant that ‘trust’ is being elevated to a C-suite leadership issue[41] by many national and multinational organizations. The sustainability and success of an organization is built off of the trust in the enterprise (by customers, employees, the general public, shareholders, creditors, suppliers, regulators, media, government, etc.).[42] The best way to acquire that trust is to demonstrate values of integrity and ethics in business practices, and incorporate these values into the core fabric of the organization. Why, because values drive behaviours, and behaviours drive outcomes[43] – in this case: “trust”[44] and “reputation”.[45]
Organizations that operate with integrity do so intentionally, developing an accord around mutual values. Given the importance of ethical behavior and integrity in building trust, a culture of integrity has to commence at the top and be reflected in the conduct and activities of the Board, the CEO, and their executives.[46] A sound corporation will have a world class General Counsel working closely with its CEO and executive leadership team in this respect:[47]
“The general counsel must forge an unbreakable bond between performance, integrity and risk on a set of core corporate issues: business strategy, culture, compliance, ethics, risk, governance, citizenship and organization. In so doing, the general counsel must help create the trust in the enterprise which is so vital to its sustainability and durability: trust among employees, shareholders, creditors, customers, suppliers, regulators, media, NGOs and communities.”
A culture of high performance with integrity will create the fundamental trust that is essential for building and sustaining organizational results and a strong business (i.e. greater profitability, higher return on shareholder investment, decreased turnover of top performers, increased employee engagement, heightened client and customer service, increased collaboration and teamwork, higher productivity, enhanced creativity and innovation, etc.).[48] It is a ‘strategic’ imperative,[49] and ‘execution’ of the strategy is key to actually building trust and reputational capital, retaining customers, building a sustainable business, and maintaining a competitive advantage.[50] Properly fed and nurtured by leadership, ‘tone at the top’ is the foundation upon which the culture of an enterprise is built. Ultimately, it is the glue that holds an organization – a corporation, a law firm, and even a nation – together.[51]
Trust and integrity are at the heart of an organization’s reputation, and they are inextricably connected, as “a promise is no better than the person or institution making it”: [52]
“Individuals and organizations use the presence or absence of integrity to determine whether an extension of trust is warranted. Business relationships halt or proceed based on this basic determination.”
Trust and reputation are critical company assets,[53] and must be treated as such. Trust and reputation are the easiest to lose and the most challenging to maintain.
Trust is … a critical factor of companies’ license to operate and is increasingly on the attention of business leaders.
– Rob Peters, Standard of Trust Leadership: A Clear Business Case for Trust[54]
Introduction and Primer
Disturbingly, the number of high profile corporate,[55] BigLaw,[56] and government[57] scandals have exposed widespread arrogance and unethical conduct, greed and malfeasance, fraud, conflicts-of-interest, preferential treatment, corruption, insider trading, bribes, money laundering, price fixing, concealment of evidence, and Ponzi schemes “on an unthinkable scale”.[58]
To some commentators, it appears to be “increasingly evident” that some global organizations “still see the law” today “as an obstacle to be overcome rather than a boundary to work within” – their executive leadership and Boards appearing to be both “arrogant and dismissive of the law”.[59]
The global financial crisis of 2008 resulted in a loss of more than 30 million jobs worldwide and a 37% decline in the value of global equities.[60] Corporations and executives received government bailouts, while seeming to suffer little in the aftermath. Although many companies paid large fines and settlements, few were charged criminally, even in instances where unethical and illegal activity was widespread and well documented.[61]
The Financial Crisis Inquiry Report, released in 2011, was particularly pointed in its criticism of Wall Street, which it found had taken advantage of unprepared regulatory agencies that had been methodically defanged through deregulation over several years. The report noted a term coined on Wall Street that captured the carefree wheeling and dealing in the run-up to the meltdown: “IBGYBG”—”I’ll be gone, you’ll be gone.” The term, the report states, “referred to deals that brought in big fees up front while risking much larger losses in the future.”
– Terry Carter, ABA Journal[62]
Many commentators noted a collective failure at that time among the gatekeepers charged with oversight and maintaining the public trust.[63] The question is whether this is happening again today – as current policy makers in the U.S. and some other jurisdictions seem determined to undo most of the measures underpinning the protective progress achieved – and despite officials only a decade ago vowing “never again” would society face the same risks of another global financial crisis.[64] The public has become more suspicious, more critical, and less forgiving of corporate and government leadership and their conduct (or misconduct).[65]
While the events that have undermined trust in government and big business in recent years are often perceived as a series of stand-alone crises, many of them can be categorized within wider global trends. These include scandals and corruption, but as well rapidly rising executive pay,[66] a failure to balance short term financial gains (i.e. rewarding institutional shareholders) with a long term perspective,[67] growing disparity in both income and opportunity (and a broader perception that many people have been left behind in the era of automation and globalization), systematic tax evasion, and political polarization in an increasingly disaffected and divided society and geopolitical environment. Combined with a perception of inadequate responses from leaders, regulators and governments, these trends have reinforced widespread public distrust of business and government as a whole.[68]
CEOs underperform in all of the 16 trust-building leadership attributes that the global Edelman Trust Barometer survey measured last year. Their treatment of employees and customers fell short of the public’s expectations, and they were perceived to lack integrity in their business conduct by focusing too much on short-term financial results.[69]
In a recent survey, 70% of respondents said that CEOs focus too much on short-term financial results, and nearly 60% said that they don’t focus enough on positive long-term impact. These findings mirror the growing chorus of voices in business and academia that point to short-termism as being a major threat to business.
– Harvard Business Review[70]
Loss of Trust in Institutions and Leaders
Trust—or, too often, the lack of it—is one of the central issues of our time. Without trust, institutions don’t work, societies falter and people lose faith in their leaders.[71] A pervasive lack of trust represents a leadership crisis of staggering proportions.[72]
There is a lack of belief in leaders, who damage the stature of their institutions. We now observe a huge divide between the modest trust in institutions of business and government and a pitifully low level of confidence in their leaders.
– Richard Edelman, An Implosion of Trust[73]
What is the impact on the future? Will it improve, worsen, or give us more of the same?
Some businesses can succeed in the short term without building trust, but over the longer term, a business without trust falters and eventually loses its underlying “licence to operate”.[74] When people do not believe that our business and political leaders tell the truth, it sets in motion a tidal wave of negative attitudes and ways of thinking and behaving that erodes the basic assumptions and shared values that traditionally uphold our institutions.[75]
The lack of integrity in public office and the private boardroom is the reason we are now experiencing what Richard Edelman describes as a “crisis in leadership”.[76] Broad-scope trust — how much we trust institutions such as the government or business sectors — is at a record low today.[77] This is a profound crisis in trust that may have its origins in the financial crisis of 2008, if not earlier. The aftershocks from the stunning meltdown of the global economy are still being felt today, with consequences yet unknown.[78]
It’s not healthy for people to reflexively distrust all the experts and institutions they used to rely upon.[79]
Business has much to fear in the present context. … We are in treacherous seas, without the firm moorings of a reliable government able to set easily understandable guideposts. … The growing storm of distrust is powerful and unpredictable.
– Richard Edelman, An Implosion of Trust, 2017 Edelman Trust Barometer[80]
However, business is certainly not running as usual. This is putting tremendous pressure on leaders across the world, in corporate organizations, BigLaw, and government.[81] Looking at business in particular, some commentators suggest that a volatile global economy and disruptive change (i.e. technology, business models, employment, geopolitics and political ambiguity, disaffected and divided society) has impacted and changed business – and as a consequence, organizations are facing competitive and sustainability challenges of extraordinary scale and complexity.[82] There is little doubt that today is an “age of upheaval” that is posing “enormous challenges for companies” and governments.[83] In this environment, commentators have suggested that:[84]
“At some point in our professional careers, many of us will likely encounter a situation in which we are asked—perhaps told—to do something we believe to be wrong or even illegal. Most of us are not prepared for this when it happens. This lack of preparation enables us to fall prey to rationalization—our own and that of anyone else who may be attempting to coerce us to act. Rationalization is the means whereby good people do bad things. It is the road down which many good people have traveled ….”
There are a number of drivers and root causes (i.e. complex, disconnected or ‘growth at all costs’ business model’; no accountability; conflicts of interest; etc.)[85] that may lead to ethical misconduct and poor behaviour and practices within a particular organization, and these themes cuts across businesses, industries, and sectors. Understanding and addressing the particular (and overlapping) drivers of misconduct that may be applicable to a particular organization is essential in improving standards of behaviour and organizational performance, and meeting regulatory, political, and marketplace expectations. This entails first being able to identify the key organizational risks, and then specifically addressing the corporate culture by designing and addressing applicable and appropriate pre-emptive enterprise-wide programs.[86]
Economic cycles are Darwinian, picking off weak companies and leaving survivors stronger.
– Corporate Darwinism[87]
Leaders at Berkshire Hathaway view trust as a core component of their business strategy. As noted by Warren Buffett, “trust is like the air we breathe. When it is present, nobody really notices. But when it’s absent, everybody notices”. The reason – there is a compelling link between trust and the bottom line:[88]
“Each year, FTSE Russell conducts independent research that analyzes the cumulative stock market returns of publically-traded Fortune 100 Best Companies to Work For. Here is what they discovered: if you invested in the publically-traded companies featured on the 100 Best Companies to Work For® list, and each year divested stock in the companies that were no longer on the list and invested in companies added to the list, your returns would be nearly three times that of the general market.”
A number of studies have confirmed the economic relevance of trust.[89] One study indicated that in companies where employees reported that their leaders act with integrity (an essential component of a high-trust culture), a number of competitive advantages emerged, including: (a) higher productivity, (b) increased profitability, (c) better industrial relations, and (d) greater attraction of top job applicants.[90] High-trust companies earn customer satisfaction ratings that are 2.8 to 3.2 points higher than competitors. An increase in customer satisfaction yields about a 1.6 percent increase in returns on assets.[91] During the last 15 years, researchers have estimated that the trust premium for ethical companies – the reputational value – may conservatively range from 20 to 30 percent of stock value.[92] Accordingly, reputation is an important component of an organization’s value:[93]
“Executives and outside experts alike say a good reputation adds value to the organization, helping it secure investment capital, attract talented employees, win customers, and provide a reservoir of good will to draw on when troubles arise. … A good reputation also can serve as a firewall that limits damage when something goes wrong. When stakeholders think highly of an organization, it is more likely to receive the benefit of the doubt when addressing a controversy or crisis.”
We wouldn’t survive if people didn’t trust us. Obviously everyone wants to be successful, but I want to be looked back on as being very innovative, very trusted and ethical and ultimately making a big difference in the world.
– Sergey Brin, Co-Founder and CEO of Google[94]
Is There a Remedy, a Way Forward?
Leaders must deal with growing uncertainty, complexity, and ambiguity in their decision-making environments. Risks are increasing, competition is intense, trust is at a record low, and economic activity is fragile and uneven. For organizations to succeed, it requires the collective efforts of the entire enterprise, operating from the same understanding of strategy, purpose, and values.[95]
To navigate in this environment, and to address and improve trust in our institutions, there must be leadership with integrity, and today’s leaders need the ability to see through the chaos to have a clear vision for their organizations. As business seeks to maintain the license to operate—and in tandem, its relative position of trust—it should begin with the adage, “first do no harm.” Actions that would do the most damage to trust in business range from the most egregious, such as paying off government officials and other forms of fraudulent misconduct, to the more commonplace of moving profits to other countries to avoid taxes.[96]
Leadership and culture are the biggest determinants of how employees behave. Embedding a strong ethical culture of integrity and cultivating good conduct is the key to sustaining or building reputational capital and trust, retaining customers and their loyalty, building a sustainable business, and maintaining a competitive advantage.[97] To be successful an organization must ensure it has the “right culture, the right practices, and the right behaviours”. Effective leadership is key. Leaders drive cultures of integrity.
If war can have ethics, Wall Street can, too.
– Nathaniel B. Davis[98]
This is an integral part of the remedy – or way forward – in the face of rising misconduct and distrust in an age of globalization, technology (and the Fourth Industrial Revolution),[99] disruption and upheaval – integrity and ethics are a key element of leadership (fusing high performance with high integrity and sound risk management) in the business and legal world.[100] They are the inner compass that motivates and directs a leader toward what is right, legal, and fair, and ethics help guide leaders in using their skills for noble purposes.[101]
To do this, they must understand and define the ‘True North’ of their organization: its mission, strategy, and most importantly, its values (integrity and ethics). Leadership must create clarity around this ‘True North’ and refuse to let external events pull them off course or cause them to neglect or abandon their ethics and integrity, which must be their guiding light:[102]
“With external volatility the prevalent characteristic these days, … leaders who stay focused on their mission and values and have the courage to deploy bold strategies building on their strengths will be the winners. Those who abandon core values or lock themselves into fixed positions and fail to adapt will wind up the losers.”
Avoiding further self-inflicted crises – and the human damage they cause – will require more attention to both institutional norms and ethical leadership. That responsibility ultimately lies at the very top. For example, when they hire CEOs, Boards of Directors must make ethics the deal-breaking criterion.[103] This is applicable to all legal leaders in business (General Counsel, Chief Legal Officer, etc.), law firms (i.e. CEO-managing partner or non-lawyer executive, Chair of Management Committee, COO – usually a non-lawyer executive, law firm General Counsel,[104] etc.) and government.
There is little argument that today’s General Counsel has a much wider purview beyond the customary responsibility of serving as the organization’s chief legal officer and, quite often, its corporate secretary. As these roles shift, many organizations are finding that the General Counsel (who has been trained to analyze issues legally, ethically, and objectively), is uniquely positioned to bring additional insights to strategic decisions,[105] including a broad scope beyond law that includes major matters affecting the corporation – ranging from ethics, reputation, and building a culture of integrity to governance, public policy, enterprise risk, and ultimately, corporate citizenship.[106] The ideal of the modern corporation is to hire a general counsel “who is an acute lawyer, a wise counsellor and company leader whose first question is: “is it legal?” But the ultimate question is: “Is it right?” [107]
The core mission of the modern, global corporation is the fusion of high performance with high integrity and with sound risk management.
– Ben Heineman, Jr, Inside the in-house counsel revolution[108]
Boards of directors, institutional investors, governments and the media are holding chief executive officers to a far higher level of accountability for ethical lapses than in the past. Globally, CEO dismissals for ethical lapses – scandal or improper conduct, including fraud, bribery, insider trading, environmental disasters and sexual indiscretions – increased substantially from the period of 2007-2011 to the period of 2012-2016. The increase was more dramatic in North America and Western Europe.[109]
Organizations must protect themselves and their stakeholders[110] (shareholders, the public, etc.) by making sure that their controls and compliance programs are truly world-class,[111] but — even more importantly — that their corporate culture sends and reinforces clear, well-understood messages about integrity and ethical conduct. The single most important force for preventing misconduct is a corporate culture of integrity. An effective and sound culture must clearly state the organization’s values of ethics and integrity, and the CEO must lead by example on a personal and organizational level.[112]
Leaders are role models, whether we like it or not.[113] The success (or failure) of an overall culture of integrity begins and ends with the leaders and the tone they set at the top.[114] A leader’s character shapes the culture of his or her organization and also of public opinion about an organization – and research confirms that integrity is the most important character strength for the performance and effectiveness of top-level leaders.[115]
Just as conduct within a firm is heavily influenced by what is seen to be rewarded, failure to penalize individuals involved, as well as managers in charge, for ethically or legally questionable behaviours supports its perpetuation and can foster a culture of impunity.
– Deloitte, Managing Conduct Risk[116]
Integrity, Trust and Ethical Behaviour … Not Academic or Irrelevant
The crisis of trust and leadership can be credibly addressed. But is it too late? Have people now reached the point that they are skeptical that anyone can actually be an ethical leader?[117]
“Everyone does it.” Everyone cheats. Cuts corners. Tells lies. Maybe it was different once. Not today. If you want to succeed in this economic climate, you simply have to make compromises. Right? Wrong!
The series of ethical and leadership scandals over the last two decade[118] have caused substantial financial and reputational damage to the impacted organizations themselves, but they have also caused collateral damage of billions of dollars in eroded shareholder value, financial damage to third parties, and in a number of cases bankrupt or collapsed corporations leading to thousands of lost jobs and billions of dollars of lost employee pensions. The financial crisis of 2008 alone cascaded into a global financial meltdown that significantly threatened global capitalism, requiring “massive government bailouts and emergency stimulus programs” to “stabilize the system” – but “only after many lost their jobs and wellbeing”.[119]
Broad scope trust of our institutions (business and government) is at a record low.[120] This breakdown in public confidence creates risks not only for individual companies, but also political, economic, and social systems in our particular home countries and around the globe.[121]
Financial cleverness, platitudes, and endearing advertising (by business or politicians) is not a substitute for responsible leadership and integrity. Based on where we are today, corporate and government scandals are no longer limited to just impacting the applicable organization itself (if they ever were), but will have larger and wider ramifications to the credibility and trust associated with our society’s institutions generally.
These are serious consequences! The magnitude of these national and international repercussions illustrate why integrity, trust, and ethical behaviour are not academic or irrelevant.[122]
Trust has become a C-Suite Leadership Issue
When a crisis or scandal unfolds, we are now quick to say that “the institution allowed it”. And yet even today some in the business, political and regulatory world – often relying on the explanation of disruptive change and upheaval in a “VUCA world”[123] – many are loath or hesitant to add the necessary phrase: “and top leaders enabled it”.[124] Key drivers behind institutional failure is disruption and upheaval, but also – and most importantly – leadership failure. The failure may be unintended (i.e. may not consider at a human level how leadership’s stated strategic intent shape the acceptable ethical boundaries for those who must turn those intents into reality), but that doesn’t exculpate the leadership for a corporation (at the Board level, C-suite), or political and government leaders in top positions:[125]
“While an editor “pulled the trigger” to illegally hack the mobile phone of a kidnapped child, Rupert Murdoch enabled the decision. He didn’t set ethical boundaries in a scoop-focused media market, and he hired executives who didn’t set policies and procedures to preclude such acts. (Indeed, he rehired an executive cleared of criminal wrongdoing, signaling that her ethical and managerial failures didn’t matter.) While mid-tier executives and engineers “pulled the trigger” to design Volkswagen engines that responded falsely to emissions tests, [Chairman of Board] Ferdinand Piech and [CEO] Martin Winterkorn’s demands of win-at-all-costs performance and the absence of appropriate procedural safeguards enabled – even encouraged – them to do so. At Wells Fargo, a culture and a warped incentive system created by top executives enabled malfeasance. That didn’t stop CEO John Stumpf from blaming employees who “didn’t get it right”, or CFO John Shrewsberry from blaming “under performers”. Mr. Stumpf was forced out, but since neither Mr. Shrewsberry nor CAO/HR Director Hope Harrison were, the seeds for future crises have been left undisturbed.”
The organizational crises and scandals[126] that have undermined or cratered careers and organizations illuminate the importance of integrity in top-echelon leaders. They provide important cautionary tales[127] for corporate, legal and political leaders – and if the opportunities are not permitted to slip away into history, they can offer a roadmap for organizations going forward.
So … what is, can, or should be done based on our current ‘real world’ realities?
First, leaders can succeed at the highest levels without sacrificing their principles – which, as an aside, makes life worth living – and, as noted, is a big part of the puzzle in building trust in an organization, as well as supporting society’s institutions generally (two for the price of one).[128]
Second, the single most important force for preventing misconduct (and withstanding regulatory scrutiny) is an organization’s corporate culture. To be effective, the culture and ‘tone for the top’ must clearly state and/or reflect the company’s values of ethics and integrity. To reinforce those behaviours, the company’s organizational ecosystem must address the underlying conditions that are usually present when personnel engage in illegal or unethical acts, by (a) ensuring that the company isn’t creating pressures or incentives (i.e. motive) that influence leaders and personnel to act unethically; (b) making sure business processes and financial controls minimize opportunities for unethical or bad behavior; and (c) preventing leaders and personnel from finding ways to rationalize breaking the rules. This line of thinking borrows from the classic conception of the “fraud or Compromise triangle,” which identified three elements necessary as precursors to fraud – which in our case includes misconduct generally – as: opportunity, rationalization, and pressure (motive).[129]
As our society has become more interconnected and interdependent, recognition about this leadership and business trust gap has grown within corporate leadership: 58% of CEOs regard trust as a major concern and a real threat for growth, up significantly from 37% in 2013.[130] For corporate leadership to win this issue of trust will take something breathtaking, a genuine reinvention of the way these organizations operate – an emphasis on the issue as a strategic priority is required, or risk the serious consequences.[131]
Not surprisingly, strong organizations have elevated ‘trust’ to a C-suite leadership issue[132] in recognition of its importance to the overall success of the organization. In these organizations integrity is a highly valued trait[133] in acknowledgement that values drive behaviours, and behaviours drive outcomes[134] – of which trust is one of the most important.[135]
This is where a sound corporate culture of integrity and ethics comes into play, supporting and empowering personnel at all levels of an organization – even under the most complex and stressful situations – to make the right decisions in light of whether it is right, legal and fair.[136] Why? Because integrity is the supreme quality of leadership[137] and the key ingredient in developing and maintaining trust.[138]
Creating a winning culture founded on integrity and trust is a strategic imperative that will create, build and sustain organizational results (i.e. greater profitability, higher return on shareholder investment, decreased turnover of top performers, increased employee engagement, heightened client and customer service, increased collaboration and teamwork, higher productivity, enhanced creativity and innovation, etc.).[139] You will know you have the winning formula when your leadership and corporate culture provides personnel at all levels of the organization the authority, safety and support “to stand in front of the train of fast-moving” events and do the right thing (right, legal and fair).[140]
Failure to build this type of culture of integrity will see the continued erosion of trust among clients and customers, the public more broadly, and government and regulatory bodies in an organization’s home country – and for multinational companies and Biglaw – other countries throughout the world.[141]
Ethics have become an organizational priority. In the 21st century, ethics is neither a luxury nor an option.
– Stephen Brimmer, The Role of Ethics in 21st Century Organizations
Without a deeply committed and constantly consistent CEO who leads a “performance with integrity enterprise” there can never be the requisite high-integrity culture. Such a culture is based on shared principles (values, policies, and attitudes) and shared practices (norms, systems, and processes) that influence how people feel, think, and behave. This is not an add-on to the CEO’s job: it is the core of the CEO’s job. CEOs must follow this refrain rigorously: “Do it, don’t delegate it; live it, don’t preach it.” The CEO must continuously lead and manage the high-integrity culture – the culture can change very quickly if not tended consistently, or in the face of a change in leadership that impacts corporate continuity.[142]
The ‘tone at the top’ sets an organization’s guiding values and ethical climate. It is a term that is used to define leadership’s (whether of a corporation, law firm, or even a government) commitment towards openness, honesty, integrity, and ethical behavior. The tone at the top is set by the CEO and all levels of leadership and management, including the General Counsel – and has a trickle-down effect on all employees of an organization, or citizens of a particular government. If the tone set by the CEO and executive leadership upholds honesty, integrity and ethics, people are more likely to uphold those same values. The tone set at the top forms the foundation for the organisation, and determines its culture, norms, and behaviour. In this respect, one commentator reflecting on her own experience, noted as follows:[143]
“While studying this issue I reflected on my time as an elected politician in my home country, and I could see strong parallels between how the tone set by private and public sector leaders impacted on their organisations.
In fact, I started to think that the tone set by public officials and political leaders often had a much more far-reaching impact not only on the behaviour of public sector workers and party supporters, but also on the very performance of the country. …
Leadership requires public and private officials to set the right tone. … If people do not see their leaders acting ethically, they will not have any incentive to do so either. Leaders must lead by example; they must establish ethical and values-based organisational norms. Leadership is not only about generating performance, it is also setting the right tone – promoting tolerance, integrity, honesty, respect, etc.
We know that many companies and many countries continue to grow with unethical and corrupt leaders at the top. But if history is anything to go by, then sooner or later the chickens will come home to roost. They always do.”
The organisational culture reflects the personality of the current leadership and the legacy of personalities of its previous leaders.
– Richard Barrets
Embedding a strong culture and cultivating integrity and good conduct is the key to building trust and reputational capital, retaining customers, building a sustainable business, and maintaining a competitive advantage.[144] Properly fed and nurtured by leadership, ‘tone at the top’ is the foundation upon which the culture of an enterprise is built. Ultimately, it is the glue that holds an organization – a business, a corporation, a law firm, and even a nation – together.[145]
Building a company’s reputation and ensuring that trust and integrity exist requires the board, the CEO and senior executives to set the tone and communicate a consistent message.[146] Ben W. Heineman Jr. has specifically addressed the issue of building a corporate culture of integrity, noting that “many CEOs, supported by boards of directors and top company leaders [which must include the General Counsel],[147] are trying to do the right thing. Indeed, how a corporation fuses high performance with integrity—from the CEO to the front line personnel —is a venerable topic. And, despite important roles for the board and top company leaders like finance, legal, compliance, and HR officers, the profound reality” in Mr. Heineman’s view is that “only the right CEO” working in this leadership partnership can create “high performance with a high-integrity culture”:[148]
“Why” and “how” a CEO and top company leaders should adopt these two most fundamental goals of business has not changed over the years. In a nutshell, the “whys” are (a) to avoid risks of a major integrity miss (legal actions, cost, loss of market cap, loss of top management, etc.); and (b) to create affirmative benefits in the company (high standards, high morale among employees), in the marketplace (sound relations with customers, suppliers, partners, competitors) and in the broader society (with communities, regulators, NGOs, media).
I strongly believe that “integrity” is a more robust and apt concept than compliance (important though compliance is). For me integrity means: adherence to the spirit and letter of the formal rules (legal and financial); adoption of ethical standards beyond the formal rules that bind the company and its employees; adoption of proposed changes in public policy based on a fair account of key facts and an appropriate balance between private and public interests; and an employee population that exemplifies the fundamental values of honesty, fairness, candor, trustworthiness, and reliability in both internal and external relationships.”
In today’s environment, internal (General Counsel and in-house legal) or external legal leaders (senior law firm partners) who distinguish themselves by providing appropriate guidance with integrity will be well positioned to be identified and rewarded by corporate clients (their C-suite executives, or if they are the issue per the Enron scandal,[149] their Boards) as trusted advisers and strategic partners as opposed to simply another service provider![150]
The bottom line is this: A culture of high performance with integrity will create the fundamental trust that is essential for the sustainability of a strong business.[151] A strong CEO (and their executive leadership team) must set the proper tone, the Board must have the right balance of independence and oversight,[152] and the business must be positioned to take a thoughtful approach to risk management. The CEO is key from many perspectives as “integrity flows outward from the CEO and his or her office” in a large organization[153] – however, anything short of these three criteria (i.e., a CEO who doesn’t quite get it on culture, a board that is unbalanced, under-performing or dominated by a culturally deficient CEO, and a strategic risk posture that is overly aggressive or even reckless) will undermine the sustainability and/or promotion of an ethical culture.[154]
The CEO’s reputation is inextricably linked to the reputation of a company and its value. … CEO reputation is perceived to contribute nearly half (49 percent) of a company’s reputation which, in turn, is deemed to contribute to 60 percent of a company’s market value. Clearly, a CEO’s reputation has a major impact on the bottom line.
– Leslie Gaines-Ross, Who is Responsible for Corporate Reputation?[155]
However, because the reputations of the CEO and company are so intertwined, when corporate reputation takes a plunge, the person who inevitably takes the heat is more often than not the CEO. As such, “…the wrong leader vested with power can almost single-handedly bring a company down”.[156]
Finally, in respect to the role of the CEO, it should be recognized that the “CEO reputation” is a highly personal and difficult asset to transfer when a CEO retires or otherwise leaves the organization. In fact, research shows that CEOs worry about their role as the chief reputation officer: “CEOs recognised that there is a strong (and potentially dangerous) link between the reputation of the organization and the person who heads it. One CEO went so far as to say that the reputation of the company and that of the CEO are one and the same thing”.[157]
Real World Examples
Leaders with integrity walk the talk – three of the finest leaders that I have worked with and admire are Alain Thibault (former CEO of TD Insurance), Greg Allard (former General Attorney at Liberty Mutual), and Ken Latronico[158] (former Regional General Attorney, Liberty Mutual). They were consistent, ethical, and trustworthy – they always acted in a manner that reflected what was right, legal and fair. Integrity was their watchword. Their deeds matched their words. In essence, it was the behavioural example that these leaders – that these type of leaders – set for their people to follow. It’s not something that can be captured in a code of conduct that sits on a shelf or is pinned to an office bulletin board. It has to be lived by a leader on a daily basis, and it has to be apparent to people so it can cascade throughout the organization.[159]
The supreme quality for leadership is unquestionably integrity. Without it, no real success is possible, no matter whether it is on a section gang, a football field, in an army, or in an office.
– Dwight D. Eisenhower, 34th President of the United States
Despite this, it’s surprising how often leaders forget that their behaviour is scrutinized every day and that every action they take is measured against the standards they communicate.[160]
A lot has changed since President Eisenhower – a leader of “unquestionable integrity” – marched first into the horrors of World War II and then into the White House (1953 to 1961). Although time has not diminished the importance of integrity as a leadership trait,[161] we do appear of late to live in a world where the phrase “the end justifies the means” has become an acceptable school of thought for far too many, and in many cases the person committing an inappropriate act appears to have told themselves they had a perfectly valid reason why the end result justified their lack of integrity.[162] A commitment to culture (values) requires time and attention. When senior leaders (corporate executives, law firm leadership, or government) fail to understand the importance of making this commitment, and balk at compliance and resources needed to carry out this function, an organization will suffer. There will always be naysayers in every organization, but when they are the leaders dictating an organization’s decisions and actions, there is a real danger of harm.[163]
In a world where headlines are often dominated by people who make the wrong choices, people who make the right ones can seem to be rare. There are many examples of temporary winners who won by cheating. For a number of years, Enron[164] was cited as one of America’s most innovating and daring companies. The CEO of the company knew the most important people in the country, including the President of the United States. Except that Enron’s success was built on lies, and the “winners” who headed the company went to jail, the company (the sixth largest in the U.S. at the time) collapsed, and the scandal is now a case study in every business school in the world.[165]
There are a number of current examples in the news today involving corporations, governments and other institutions across the world. It remains to be seen if they will also become case studies.
This is the moment to rethink how we operate, how we govern, how we lead and how we relate to society.
– Dov Seldman[166]
Germany, Brazil and Canada – Volkswagen, Anti-corruption drive, and RCMP
- Volkswagen and European Governments (Germany, Italy, UK)
Volkswagen is one of several European automakers that have attracted the attention of regulators on both sides of the Atlantic over emissions standards in connection with the company’s diesel cars. In a scandal often referred to as ‘DieselGate’,[167] Volkswagen has had to pay billions of dollars in settlements and fines, while several of its executives have been investigated or charged, in respect to fraudulent and/or criminal deception using a ‘defeat device’ – software surreptitiously placed in their vehicles to detect whether a car is on the road or being tested in a lab, and alter emissions levels accordingly to improve results.[168]
VW is driven by a ruthless, overweening culture. Under Ferdinand Piëch and his successors, the company was run like an empire, with overwhelming control vested in a few hands, marked by a high-octane mix of ambition and arrogance … It’s a culture that mandated success at all costs.
– Hoaxwagen: How the massive diesel fraud incinerated VW’s reputation, Fortune[169]
Volkswagen has tried to turn the page on its massive emissions scandal in recent months, in the United States alone agreeing to pay billions of dollars in federal fines and pleading guilty to criminal charges. However, legal problems have continued to follow the firm, and their CEOs.[170]
In Germany, prosecutors have now opened an investigation into whether Volkswagen’s new CEO Matthias Müller also kept investors in the dark about the automaker’s massive diesel emissions scandal. CEO Müller was head of Porsche when the ‘DieselGate’ scandal broke in 2015, but was elevated to group CEO following the resignation of then Volkswagen CEO Winterkorn. [171]
The Stuttgart prosecutor has confirmed that there is an investigation of CEO Müller on suspicion of market manipulation following a complaint from the German financial regulator, Bafin. Volkswagen has tried to turn the page on its massive emissions scandal in recent months, agreeing to pay billions of dollars in federal fines and pleading guilty to criminal charges in the United States. However, legal problems have continued to follow the firm, and their CEOs.[172]
It’s difficult to exaggerate how intertwined Volkswagen is with German institutions—from its government, politicians, and regulators to its unions.[173] Unfortunately, the cheating has also become a political issue, with European governments accusing each other of weak enforcement, including Germany, Italy and the UK.[174]
Three business professors in Canada have concluded that “the Volkswagen emissions scandal” is “a case study in corporate misbehaviour”.[175]
- Brazil’s anti-corruption Judge – addressing business and government misconduct
In Brazil – the ninth largest economy in the world at $1.77 trillion[176] – a federal judge (Harvard law trained Sergio Moro) and the Brazilian federal police have launched a broad anti-corruption program focusing on business and government corruption. It is believed to be the largest corruption case in modern history.[177] “Operation Car Wash” and the strict application of the law have led to more than 100 convictions of business executives and politicians in respect to documented evidence of fraud, bribery, and misappropriations of funds that have drained billions from the government treasury and corporations.[178]
Investigations have uncovered corruption at the heart of some of the main business sectors of the Brazilian economy, from oil and gas to banks to civil construction. Business executives and politicians, and social and economic groups “that have always been thought of as “untouchable” have begun to feel the weight of Brazilian justice”.[179] And it could force the resignation of Brazilian President Michel Temer, who – despite his denials – has been identified repeatedly in recent weeks for allegedly orchestrating and receiving millions of dollars in bribes.[180]
High level corruption scandal threatens Brazil’s political stability.
– Ciara Long, CBC News[181]
The Dean of the FDC business school in Brazil has noted that ordinary Brazilians have long held the view that “the rich, politicians and business people do not go to prison when they commit crimes”. Federal Judge Moro’s leadership is seen as “a path” to cleaning up business and government – integrity and character are some of the “leadership lessons from Brazil’s anti-corruption judge”.[182]
- Royal Canadian Mounted Police (RCMP) – Inside a Canadian Institution’s “biggest crisis”
Organizational dysfunction in the RCMP – Canada’s national police service – has been well documented.[183] Not much seems to have changed in ten years:[184]
“There are the rules, and then there are the real rules. … You look at what the RCMP itself says are its core values — integrity, honesty, professionalism, compassion, respect, accountability — and you hold them up to what you see is going on every day and there is a big difference.”
For decades, the RCMP has struggled with the problem of workplace harassment, bullying, intimidation and sexual harassment. Independent reviews, surveys, media reports and lawsuits[185] have all highlighted the degree to which these significant and pervasive problems infect RCMP workplaces, and the damage that can result.[186] The National Post reported in 2016 that the current RCMP Commissioner (Bob Paulson) himself faced a formal accusation from a subordinate of using intimidating and demeaning language, prompting an investigation. RCMP Commissioner Paulson subsequently apologized for exercising “bad judgment” and using “inflammatory language”.[187]
An independent review, conducted by the Civilian Review and Complaints Commission (“the Commission”) at the request of the Federal Minister of Public Safety, confirmed that the issues continue to be a serious problem in the RCMP. In the view of the Commission, the RCMP has a dysfunctional organizational culture, and that as a result of failing to foster a culture of leadership, a lack of effective leadership.[188]
The Civilian Review and Complaints Commission (CRCC) and former auditor general Sheila Fraser independently released reports that tied harassment to reduced effectiveness on the front lines. Both recommended the federal government legislate civilian governance and oversight of the RCMP.
– Toxic Culture, harassment issues overshadow RCMP commissioner’s tenure, CBC News[189]
While there may be numerous exemplary leaders in the RCMP, the organization does little to promote a culture of leadership among its managers, supervisors and executive officers as a whole. Unlike the Canadian Armed Forces, the RCMP does not have a professional officer corps. Supervisors and managers are offered only limited leadership development, and such training is not mandatory. This lack of leadership training was found to be a significant factor contributing to the problems of abuse of authority.[190]
The Commission recognized that workplace harassment, bullying, intimidation and sexual harassment can cause significant harm to individual RCMP members and employees, in some cases damaging careers and causing serious emotional and physical harm. It can also impact the operational effectiveness of the RCMP,[191] and eroded the trust of the Canadian public, who are asking whether the RCMP’s internal problems have “filtered outside” and affected the treatment of members of the public.[192]
Responsibility now lies with the Federal Government to effect substantive change by modernizing and civilianizing key aspects of the RCMP’s administrative management and oversight. While RCMP senior leadership are not absolved of the responsibility to make more sustained and meaningful efforts to address workplace harassment going forward, lasting change to the toxic culture will only come from fundamental reforms to RCMP governance.[193]
A key Commission recommendation is that the “Minister of Public Safety take immediate steps to effect cultural change in the RCMP by modernizing its governance structure to introduce civilian governance and/or oversight and to enhance accountability”.[194]
I have been the victim of harassment and I’ve probably engaged in activity that people probably didn’t appreciate.
– RCMP Commissioner Bob Paulson[195]
In 2016, paving the way to end potential class action lawsuits, RCMP Commissioner Paulson offered a sincere apology, stating: “You came to the RCMP wanting to personally contribute to your community and we failed you. We hurt you. For that, I am truly sorry”.[196] In 2017, RCMP Commissioner Bob Paulson disagreed with the independent Commission’s recommendation that “the federal government legislate civilian governance and oversight of the RCMP”.[197]
Public Safety Minister Ralph Goodale politely disagreed with RCMP Commissioner Paulson, stating that he is “very open” to the idea and would bring it to the Federal Cabinet for consideration. Inside the RCMP’s “biggest crisis”[198], its leadership appears to be unable to “carry out their duties with integrity and professionalism”.[199]
RCMP Commissioner Paulson announced by a letter to staff that he will be stepping down on June 30th to “focus on family”. In a tweet, Public Safety Minister Ralph Goodale thanked RCMP Commissioner Paulson for his decades of service and “dedication to protecting the safety of Canadians”.[200]
The RCMP. A royal Canadian disgrace. What will it take before someone fixes the iconic force?
– Ken MacQueen, Maclean’s[201]
- FIFA (Fédération Internationale de Football Association)
FIFA is the world football’s governing body. Football, referred to as soccer here in North America, is the most popular sport in the world producing billions of dollars in revenue. FIFA has been plagued with allegations of corruption over the last few years, and law enforcement agencies have accused FIFA’s top executives of being involved in large-scale corruption, benefiting personally from bribes and kickbacks.[202] In 2016, the head of FIFA’s independent audit committee resigned in protest over what he believed to be attacks by FIFA’s leadership on attempted reforms of the governing body.[203]
In this environment, FIFA’s current president (Gianni Infantino) this month ousted FIFA’s top ethics judge and prosecutor. The judge and prosecutor had imposed bans on former FIFA president Sepp Blatter in December 2015, and were currently prosecuting hundreds of prosecutions of suspected soccer officials – including a Russian Deputy Prime Minister:[204]
“Current investigations include Russian Deputy Prime Minister Vitaly Mutko for links to covering up doping cases. A judgment in that case could remove Mutko from heading the 2018 World Cup organizing committee, after he was already forced to cede his FIFA Council seat.
German soccer great Frank Beckenbauer and Olympic power broker Sheikh Ahmad al-Fahad al-Sabah of Kuwait are also under suspicion in cases of suspected fraud and bribery, respectively.
[FIFA’s ethics judge and prosecutor] have been with the ethics court since a revamp with greater independence in 2012, and have banned multiple officials during the biggest corruption crisis in FIFA’s history, including disgraced [FIFA] leader Blatter and then-UEFA President Michel Platini in 2015.”
Amid mounting criticism of the current FIFA President’s purge of the ethics judge and prosecutor, only one member of his council broke rank to publicly question the decision.[205] FIFA’s current president insisted its image has not been damaged by the fallout – either to its integrity or to the future of the game – despite widespread comparisons of him with U.S. President Donald Trump, who also fired a top investigator this month.[206]
Leadership is the process by which a leader influences the behaviours, attitudes and thoughts of others. Leaders set the direction, and can guide an organization in either a positive or negative direction. The ability to inspire others to work towards positive and ethical change is critical to the success of organizations and businesses (and yes, political and governmental institutions). Time will tell if FIFA’s current president and leadership is meeting this critical standard. Warren Buffet, Chairman and CEO of Berkshire Hathaway, said it best: “In looking for people to hire, look for three qualities: integrity, intelligence, and energy. And if they don’t have the first one, the other two will kill you.”[207]
The culture of an organization is the expression of its values in action; it is in some sense the company’s “soul.” Whether it be damned or not is up to those who shape it—leaders and everyone who follows.
– Wayne Brody and Mark Rowe, Corporate Culture and Compliance in the 21st Century[208]
- Current U.S. President
With a new U.S. president, the U.K. about to leave the European Union and political turmoil in many emerging markets, the global economy is far from stable in the early days of 2017. In this environment, “credibility is a precious political resource”.[209]
Quote: I could stand in the middle of 5th Avenue and shoot somebody and I wouldn’t lose voters. – Donald Trump[210]
Donald Trump entered the White House despite being associated with a number of scandals encompassing legal, ethical, and sexual controversies.[211] And now that Donald Trump is president, some of those controversies have continued to shadow him, but the biggest – Donald Trump’s relationship with Russia – has escalated into an protracted Washington scandal and full-fledged criminal investigation[212] with the appointment of a special counsel (former FBI Director Robert Mueller) to investigate any links and/or coordination between the Russian government and individuals associated with the Trump presidential campaign, and any matters that may arise from the investigation.[213]
Faith in the integrity of government institutions – including the office of the President – is critical. As noted by one American commentator, “no society can run without it. That integrity depends upon trust, and trust is as much a matter of appearance as it is of reality. No one can know the inner workings of the president’s mind. But we can know that he consistently acts in ways that flout the creation of trust. The firing of FBI Director Comey, at a moment when Comey was investigating the president, is simply the latest and most egregious example of Trump’s disregard for appearances”. [214]
In this vein, Republican Senator Ben Sasse has stated that the President’s conduct has “exacerbate[d] the erosion of trust” in government institutions.[215]
Nothing seems to change Trump. He continues to stumble through his foreign policy—embracing autocrats, alienating allies and embarrassing Americans who understand that NATO has helped keep peace in Europe for more than 65 years.
– Thomas Ricks, Politico[216]
When lack of integrity (actual or perceived) arises in respect to governance, there is instability and loss of trust. It has been widely reported by many reputable publications – Toronto Star, Washington Post, New York Times, Wall Street Journal – that the current President “lies. He lies constantly, compulsively, brazenly”.[217] One U.S. publication has said that “President Trump has sacrificed his credibility with his outrageous disregard for the truth and his penchant for outrage,” and that this “will be sorely missed when a crisis comes”[218] – a recognition that truth and credibility have real-world consequences.[219]
In this respect, the Wall Street Journal, in an editorial earlier this year (on March 9th) entitled “A President’s Credibility: Trump’s falsehoods are eroding public trust, at home and abroad”, urged the President to “show more respect for the truth”, and put forth the following question:[220]
“If President Trump announces that North Korea launched a missile that landed within 100 miles of Hawaii, would most Americans believe him? Would the rest of the world? We’re not sure, which speaks to the damage that Mr. Trump is doing to his Presidency with his seemingly endless stream of exaggerations, evidence-free accusations, implausible denials and other falsehoods.”
The President appears to have a credibility crisis: “truly, your word is very important” when dealing with national security, defence treaties (i.e. NATO),[221] and trade, and credibility is among the chief concerns allies consider. And in the event that the U.S. is thrust into a genuine national security crisis, “the question people are going to have in the back of their minds is, ‘Are we getting this straight’?[222] Mr. Trump’s “falsehoods make foreign leaders ask: can we trust him”?[223]
We are in the midst of a civilization-warping crisis of public trust. We’re going to need to have some institutions that we can rely on and believe are apolitical, when the public has more and more doubt.
– Senator Ben Sasse (R-NE)[224]
As trust in institutions erode, the basic assumptions of fairness, shared values and equal opportunity traditionally upheld by “the system” are no longer taken for granted.[225] A pervasive lack of trust represents a leadership crisis, in particular when people do not believe that business and political leaders tell the truth.[226] In addition to the President, for example, trust in Congress has apparently fallen to 9 percent.[227]
So, in this environment, will most Americans believe President Trump if an international crisis arises, or in respect to any innocent explanations he may provide in respect to one or more of the scandals surrounding him? Will the rest of the world? This article is not to address the answer to these questions, or the New York Times’ ‘question’ in respect to an international incident, that being beyond the purview of this article, and being an internal matter for the United States government and its people. The point here is simply the query – based on Mr. Trump’s reputation as a leader and in respect to integrity and veracity (is he trustworthy) – will “most Americans believe him”, will “the rest of the world”?
Given the history of repeated falsehoods, exaggerations and blatant untruths (even on issues as benign as the size of the inauguration crowds), this particular political leader may not come across as a particularly credible person in respect to integrity and trust:[228]
“The Trump White House has obviously denied more or less everything, but has so thoroughly leeched the credibility out of the office of the president and the man who inhabits it that it’s difficult to know if the administration still has its ethical bearings enough to even know where the truth begins and ends anymore.”
Looking outside the U.S., the actions of President Trump have produced shockwaves worldwide.[229] The Editorial Board of the UK’s The Guardian may have encapsulated some of concerns:[230]
“Mr. Trump’s act is a threat to US governance. It looks ominously part of a pattern of trespassing beyond constitutional boundaries. Mr. Trump fires officials who cross him. He attacks judges when they find his policies unlawful. … Mr. Trump broke a protocol long-observed: that presidents do not publicly comment on an ongoing investigation. Especially one that centres on them. In short, Mr. Trump is governing like he is the president of a banana republic, not the leader of the oldest constitutional government of modern times. …
The US system of checks and balances is a metaphor, not a mechanism. There is a separation of powers and judicial independence. But it relies on the right people making the right choices at the right time. A US president is restrained largely by conscience, training and the desire to be judged well by history. Mr. Trump appears to lack those qualities.”
Trump now faces the biggest credibility gap of any president since at least Richard Nixon during Watergate (a scandal that forced his resignation).
– Susan Page, USA Today[231]
Professor John Whitney of Columbia Business School has said that “distrust doubles the cost of doing business.” While it’s hard to quantify the cost of mistrust there is no doubt that the growing deficit of trust in political leaders exacts a hidden tax on many fronts.[232]
One example of the “tax” is with respect to employees, and the ability to attract talented senior job applicants. As the scandals related to Mr. Trump have spread, it has been reported that the candidate pool for his Administration and government jobs appear to have shrunk, such that there is a “real talent problem that continues to grow”. It has been reported that President Trump is struggling to fill hundreds of top legal and other vacant jobs throughout the U.S. federal government with senior qualified candidates: “the hiring challenges have sometimes forced the administration to drop down a tier in terms of experience, with younger candidates being considered for top jobs a decade before they would have been in a more normal situation”.[233]
Asked about the unusual vacillation and tumult in the FBI director search process, Paul Rosenzweig said: “It certainly doesn’t help when the stated basis for firing your predecessor is that he was a ‘nut job.’
– Paul Rosenzweig, Lawyer in Department of Homeland Security, under President George W. Bush[234]
Another example of the “tax” may be with respect to trade. The U.S. News and World Report recently published its annual “Best Countries” ranking, based on how thousands of people around the world perceive other nations. A surprise was that the U.S. fell three spots, from fourth to seventh.[235] These results align with another ranking from Forbes showing the U.S. in decline.[236] Reputational rankings and similar “best of” lists make for interesting reading, but does a country’s reputation really matter? According to some experts – as reported in the Conversation and Business Insider – the answer is yes:[237]
“Pew surveyed citizens of 10 European Union countries last year and found that 85 percent of respondents had no confidence that Trump would do the “right thing” in world affairs. And since the election, 75 percent of those surveyed around the world for the Best Countries ranking – which came out in April – said they had lost some degree of respect for the U.S. …
The Trump administration has made stimulating exports a priority and argues that “international trade can be used to grow our economy, return millions of jobs to America’s shores and revitalize our nation’s suffering communities.”
Yet, in his efforts to do this, he appears to be ignoring a meaningful ingredient: reputation.
Our research makes one thing clear: Countries ignore their international reputations at their peril. If Trump is serious about increasing exports, a good place to start would be improving America’s – and his – standing in the world.”
An organization’s (and a leader’s) brand is the values and how the organization and its leaders act on those values. Trust matters. There is a compelling link between trust and the bottom line, an economic relevance. Some organizations – in this case governments – can succeed in the short term without building trust, but over the longer term, growing distrust will have a negative impact. As noted, without trust, institutions falter and people lose faith in their leaders.
If Donald Trump were a CEO of a public company, a number of commentators have suggested that he would likely be terminated,[238] the most recent issues being only “the latest in a long list of apparent transgressions for which a normal CEO might lose his (or her) job”.[239] Boards of directors, institutional investors, governments and the media are holding CEO’s to a far higher level of accountability for their leadership and conduct.[240]
Out of all the ways in which Trump might want to be measured, judging him as a chief executive would seem to be the fairest to him. Forget about ideology, his political agenda, or whether you voted for him; just judge him on whether he has been a competent executive. Would you want to leave him in charge [of your company]? Or would you be calling an emergency board meeting?
– Jack Micklethwait, Editor in Chief, Bloomberg[241]
Final Thoughts: Integrity, Courage and Trust in an Age of Upheaval and Disruption
Integrity is a characteristic or value that many of us cherish in ourselves, and it’s one we look for consistently in our leaders. It does not matters if we talk about individuals or organizations, integrity matters. Trust and integrity are the two most important values in both business and government.[242]
Leaders with integrity will face the truth. This is called the reality principle – or “seeing the world as it really is, not as you wish it to be” – and it is dependent on integrity because it demands truthfulness and honesty. Many business people, lawyers, political leaders, companies, law firms, organizations, and governments fail because they are unable to follow the reality principle.[243]
Integrity
The importance of integrity is not just an impression influenced by front-page headlines, and is championed by many Boards and leaders – across many cultures, countries, and organizations – as the single most important leadership attribute. Research by the Center for Creative Leadership shows that integrity is the key criteria in determining success by top executives.[244]
There should be no exceptions to integrity. Integrity is a state of mind and is not situational. If a leader compromises his or her integrity in small situations with little consequence, or from fear (i.e. losing a client, a promotion, a job, etc.), then it becomes very easy to compromise on the big situations.
Corporations and law firms must by staffed and lead by an executive and leadership team that are seen and perceived to be ethical and trustworthy: [245]
“If we surround ourselves with people who are dishonest and willing to cut corners to get ahead, then we’ll surely find ourselves following a pattern of first enduring their behavior, then accepting their behavior, and finally adopting their behavior. If you want to build a reputation as a person of integrity then surround yourself with people of integrity”.
People want to have confidence and trust in their leaders to guide change and achieve success in our globalized and VUCA world – a “volatile, uncertain, complex and ambiguous” world of disruptive change and upheaval. Not surprisingly, this complex – and scary – environment poses enormous challenges for companies and law firms and their leadership.
Courage
For both business and legal leaders sustainable success for their organizations will require integrity. And courage. The list of characteristics that comprise great leadership is long, but ‘courage’ informs and strengthens all others.
Integrity is doing the right thing even when no one is watching.[246] Character is not only doing the right thing when no one is looking, it’s doing the right thing when everyone is looking. It’s being willing to do the right thing even when it costs more than you want to pay.[247] In a tenuous economy, people tend to keep their heads down and their mouths shut in order to survive, both front line and management. These are the times that call for courageous leadership with integrity. People will take their cue from their leaders who step up to the plate, raising difficult issues and addressing challenging and demanding matters – or not.
Nothing will erode an institution’s confidence in a leader more than failure to maintain integrity and ethical standards. If a leader isn’t setting the right tone, it’s just a matter of time before the organization is undermined.
Courage is rightly considered the foremost of the virtues, for upon it, all others depend.
– Winston Churchill
Accordingly, while integrity is critical, courage is also vital: “the two may go hand in hand. Integrity is needed when deciding what action should be taken. Courage is needed to take actions that might be unpopular”. It can be lonely at the top – or at any level for leaders – and they need the courage to take the lead and avoid shirking their responsibilities. Leaders without integrity (or the courage to express it) cannot be trusted – by their colleagues, their clients, their superiors, or the public – and inevitably that will lead to problems.[248]
In an article entitled “Between a Rock and Hard Place”, Mariann Snyder asked the question, “speak up, or conceal”, and responded as follows:[249]
“Just two choices. Between the proverbial rock and hard place. …
If I were a Volkswagen employee working on the new emission tests, what would speak up or conceal look like? Speaking up could mean clarifying with management whether they mean for me to hit the emissions target no matter what or to aggressively, relentlessly pursue the target within the bounds of the law. I might fear losing my job. Or I might get to be the hero who exposes a misunderstood directive. And saves the company needless embarrassment, grave reputational harm, and a whole lot of money. Concealing happens when I realize the bounds of the law have been breached yet fail to speak up to identify the issue.
It’s tough for us to accept that concealing―hiding, keeping quiet―is the opposite of speaking up. We like to think there’s a safe space of inaction in the middle called self-preservation. We suspect a co-worker is padding expense reports but decide to “mind our own business.” We have reason to believe that a third-party manufacturer is engaging in [inappropriate conduct] but decide we can’t really do anything to change how “they” behave, so why ruffle feathers?….
Concealing. Turning a blind eye. Minding my own business. If I know about it, but don’t expose it, I am concealing it. The thing we conceal is unlikely to go away or get better. It is our speaking up that provides our organizations the best opportunities to learn, course correct, and grow.
Speak up. Be the next PR disaster that never happened because you did.
No one says it will be easy. But you might be the difference between just bad and catastrophic. And odds are good your organization will be a better one because you stood in the gap, between the rock and the hard place, and made the tough choice. To speak up.”
Dishonest, distrustful, deceitful and, indeed, criminal activity at the top of a business, non-profit or government organization may ‘poison’ the entire culture of that organization. ‘Poisons’ in the sense of potentially encouraging or signaling personnel throughout its ranks to engage in wrongful conduct.[250]
The recent Annual Global CEO Survey by PwC showed that more than 50% of CEOs surveyed regard trust as a major concern and a real threat for growth, a sharp rise from 37% who cited concerns last year.
– World Economic Forum[251]
Trust
As referenced, the 2017 Edelman Trust Barometer reveals that trust in business and government around the world has declined broadly.[252] When asked which industries are “generally honest and trustworthy so that you normally believe a statement by a company in that industry” over one third of Americans replied “none”.[253] Not surprisingly, Canadians – as well as many citizens around the world – reflected this distrust of business leaders “and believe government need to step in to more heavily regulate industries so that consumers can be protected against them”.
On an individual level, only 37 percent of people consider CEOs credible today, and Canadians appear to be cynical about business leaders, ranking the CEO of an organization as second-least trusted spokesperson. Unfortunately, corporate boards — whose role it is to oversee the workings of the CEO and C-suite — were trusted only marginally more than CEOs.[254] On top of that, almost no other occupation provokes greater public distrust than lawyers.[255]
We have moved beyond the point of trust being simply a key factor in product purchase or selection of employment opportunity; it is now the deciding factor in whether a society can function. As trust in institutions erodes, the basic assumptions of fairness, shared values and equal opportunity traditionally upheld by “the system” are no longer taken for granted.[256]
Business leaders benefit from focusing on broad scope trust before it gets broken, and before stronger legislation is identified to be the only fix:[257]
“This option is generally least preferred among business leaders because it usually offers them the least control and flexibility. However, when other mechanisms are failing, it is natural for consumers to call for stricter laws.”
Although trust has been elevated to a C-suite issue in many organizations, it is important to understand that just because someone holds a position of leadership, does not mean they should. Not all leaders are created equal. The problem that is sometimes encountered is a “recognition problem” – we don’t always recognize good leaders from bad leaders, those that may have the necessary skill and ability, but lack the important overall qualities of leadership to effectively lead. Leaders who lack character or integrity will not endure the test of time. It doesn’t matter how intelligent, affable, persuasive, or savvy a person is, if they are prone to rationalizing unethical behavior, they will eventually fall prey to their own undoing, ultimately damaging or taking down the organization and its stakeholders with them. Optics over ethics is not a formula for success.[258]
There are no moral shortcuts in the game of business or life. There are, basically, three kinds of people, the unsuccessful, the temporarily successful, and those who become and remain successful. The difference is character.
– Jon Huntsman[259]
Conclusion
Mr. Heineman has said – with some concern – that these are the times that try leaders’ souls.[260] The turmoil that continues to roll throughout the world overlooks many of the truths that are negatively impacting organizations and leadership. Alvin Toffler, the celebrated author of “Future Shock” (1970),[261] presciently forecast how people and institutions of today would contend with the immense strains and opportunities of accelerating (disruptive) change, predicting we would find ourselves living in a state of “future shock,” which he characterized as a paralysis that comes from “trying to absorb too much change in too short a period of time”.[262]
A lack of integrity and trust has negative consequences for society, and ultimately for the applicable organization, as it impacts the reputation and brand of the enterprise and exposes its bottom line. It undermines institutions, and fosters polarization, alienation, and enmity (if not contempt).
Telling the truth is the essence of leadership. If you have integrity, nothing else matters. If you don’t have integrity, nothing else matters.
– Alan K. Simpson, U.S. Republican Senator[263]
Integrity and values (doing the right thing) appear at times to be taking a back seat to ‘winning’ at any cost. This is the wrong path. Leadership is the difference, for good and bad. Misconduct and bad behaviour do not happen in a vacuum. In most scandals, many people knew or ought to have known what was taking place – executives, lawyers, bankers, auditors, and employees. For a strong ethical organizational culture, there is a basic minimum requirement to create the right incentives to ensure people act with integrity, or at least not afraid to speak out.
Integrity is a behavioral code of decency that is the hallmark of living as citizens in the same society.[264] In nearly every aspect, the ability for leaders– whether in business or government – to inspire others within our society is critical. Leaders who trust people with the truth, hard truths, are trusted back.[265]
Peter F. Drucker, having met with thousands of leaders in major organizations, failed to discover a uniform profile of leadership traits. However, “he was dogmatic in insisting on integrity as the one absolute trait of leadership. This characteristic may not lend itself to an easy definition, but its absence should disqualify a person for a [leadership or] management position.” In amplifying this point Mr. Drucker stated that “trust is the conviction that the leader means what he says… It is a belief in something very old-fashioned, called ‘integrity’… Effective leadership—and again this is very old wisdom—is not based on being clever; it is based primarily on being consistent”:[266]
“Bottom line: Without integrity, leadership disintegrates into a farce. Because leadership depends on trust.”
A word of advice to those who are striving for a reputation of integrity: Avoid those who are not trustworthy. Do not do business with them. Do not associate with them. Do not make excuses for them. … If someone is dishonest in any aspect of his life you can be guaranteed that he will be dishonest in many aspects of his life.
– Forbes, Success will come and go, but Integrity is Forever[267]
Increasingly leaders and their personnel are articulating a desire to be identified with an organization that stands for something more than quarterly earnings. They want to work for an organization whose values align with their own. They want to take pride in what they produce. They want to admire the people with whom they work.[268]
Mark Twain was at his finest when he counselled to “always do right. It will gratify some people and astonish the rest.”
Eric Sigurdson
Endnotes:
[1] Ty Kiisel, Without It, No Real Success is Possible, Forbes, February 5, 2013.
[2] 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com; Stuart McNish, Losing Faith in Institutions, Linkedin.com (Conversations that Matter (Host Stuart McNish, Guest Bridgitte Anderson of Edelman), May 19, 2017.
[3] Amina Shahid and Dr. M. Azhar Shahid, Integrity and Trust: The Defining Principles of Great Workplaces, Journal of Management Research, Vol. 5 No. 4, October 1, 2013; 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com.
[4] Stuart McNish, Losing Faith in Institutions, Linkedin.com (Conversations that Matter (Host Stuart McNish, Guest Bridgitte Anderson of Edelman), May 19, 2017. Also see, 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com.
[5] Bill George, VUCA 2.0: A Strategy For Steady Leadership in an Unsteady World, Forbes, February 17, 2017.
[6] Susan Peters, How Will You Lead in the Emergent Era?, Linkedin, May 8, 2017.
[7] Rita Trehan, Avoiding Corporate Scandals, theCsuite.co.uk, November 28, 2016. Also see, Gianfranco Casati and Omar Abbosh, Spotting the danger signs of ‘slow disruption’, South China Morning Post, May 19, 2017:
“Business disruption today can strike companies quickly, with a “big bang” when a product that is better and cheaper than anything else on the market suddenly becomes available.
But it can also creep up on you slowly. And when it hits, it hits hard. …
This gradual-to-sudden decline is exactly the problem we identify in several industries today. Our analysis of the performance of more than 1,200 companies in six of the most asset-heavy sectors – telecommunications, utilities, energy, materials, automotive, and industrials – revealed that incumbents in these industries are falling prey to what we call “compressive disruption”. And the first distinguishing feature of this gradual or “slow” form of disruption is a prolonged decline in profit margins, even as revenue is increasing. …
Stagnant revenue growth … is the second indicator of an industry headed toward potentially rapid decline.
Combine these trends with the potential for industry leaders to believe they are invulnerable to rapid decline – a result of possibly decades of industry stability and perceived high barriers to entry – and you have got a recipe for trouble.
The good news is that companies still have time to act to fend off the potentially devastating effects of compressive disruption.”
[8] Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera, Are CEOs Less Ethical Than in the Past?, Strategy and Business, May 15, 2017:
- Organizational and external influences. Unethical behavior is typically triggered by some kind of pressure or incentive. Financial pressures (such as bonus packages or stock options) are often assumed to be the primary driver of bad behavior. But this is a misconception. Rather, social pressures tend to create larger problems. Employees and managers may be unwilling to admit they can’t meet performance targets. An organization that prides itself on never missing a quarterly earnings target, for example, may inadvertently create this kind of pressure.
- Business processes. Weak business practices or lax financial controls create opportunities for unethical behavior. Most large companies in developed countries have robust financial controls, and these have been strengthened over the last two decades by the requirements of the Sarbanes-Oxley Act in the U.S. and similar laws elsewhere.
- Individual ethical decision making. Employees who break the rules must first convince themselves that their actions are justifiable, a process known as rationalization. In some cases, they feel they have no alternative if they are to keep their job or meet their performance targets. In other cases, they convince themselves that their conduct isn’t really wrong, or that it is justified because the organization’s culture or leadership implicitly condones it.
Also see: Ivy Walker, Ethikos Classic: Following the Boss’s Orders Might Land You in Jail, Compliance and Ethics.org, May 23, 2017 (reprinted from Classic Ethikos, The Journal of Practical Business Ethics, July/August 2016); Michael Hiltzik, At United Airlines and Wells Fargo, toxic corporate culture starts with the CEO, Los Angeles Times, April 11, 2017; Susan Ochs, The Leadership Blind Spots at Wells Fargo, Harvard Business Review, October 6, 2016 (“The post-scandal scrutiny of Wells Fargo’s culture has so far focused on the high-pressure sales environment that drove employees to create as many as two million fake accounts. Former employees have alleged a “soul-crushing” culture of fear and daily intimidation by managers, where they were pressured to reach extreme sales goals, some by breaking the law.”).
[9] Rita Trehan, Avoiding Corporate Scandals, theCsuite.co.uk, November 28, 2016. Also see, Kate Isaacs, David Langstaff, and Russell Eisenstat, 4 Ways CEOs Can Conquer Short-Termism, Harvard Business Review, February 24, 2017; Matt Turner, Here is the Letter the world’s largest investor, BlackRock CEO Larry Fink, just sent to CEOs everywhere, Business Insider, February 2, 2016 (“Today’s culture of quarterly earnings hysteria is totally contrary to the long-term approach we need.”); Dan Cable and Freek Vermeulen, Stop Paying Executives for Performance, Harvard Business Review, February 23, 2016; Greg Keenan, Air Canada stock drops after CEO challenges ‘short-term investors to sell, Globe and Mail, February 17, 2016; Seymour Bruchman and Blair Jones, When Did Long-term Incentives Become so Short-term?, Semler Insight (Semler Brossy), June 2016.
[10] Delotte Development, Tone at the top: The first ingredient in a world-class ethics and compliance program, Deloitte, 2015; 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com. Also see, Frank X. Shaw, Building Trust in a Post-Truth World, Linkedin.com, May 25, 2017.
[11] Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017 – as part of the executive leadership team, the ideal of a modern corporation is that the General Counsel must be part of and help create the trust in the enterprise which is vital to its sustainability and durability.
[12] Camille Jovanovic and Steve Chan, Is Corporate Culture on Your Agenda?, Institute of Corporate Directors, May 8, 2017. Also see, Harvard Business Review, The ‘Business in Society’ Imperatives for CEOs, Global Advisors, December 20, 2016; Jorg Thierfelder, The Role of the General Counsel with the Board of Directors, Egon Zehnder.com, 2017; 2014 Global Risk Survey, Deloitte; Cindy Fornelli, Protecting that ‘Priceless Asset’ – Your Company’s Reputation, LinkedIn, January 3, 2017; Kim Harrison, Why a good corporate reputation is important to your organization, Cutting Edge PR.com; Robert Eccles, Scott Newquist, and Roland Schatz, Reputation and its Risks, Harvard Business Review, February 2007.
[13] David Horsager, The Trust Edge, 2012. Also see, Arthur Gensier, Trust is the most powerful currency in business, Fortune, July 28, 2015.
[14] Eric Sigurdson, Crisis Management and Corporate Wrongdoing: critical steps to crisis management in the 21st Century, Sigurdson Post, September 11, 2016; Eric Sigurdson, Corporate Culture, Leadership and Personal Liability – Ethics and Compliance Programs in the 21st Century, Sigurdson Post, October 5, 2016; Eric Sigurdson, Leadership Qualities: from Wells Fargo to Donald Trump – character, integrity, and ethics are necessities, not luxuries, Sigurdson Post, October 17, 2017; Eric Sigurdson, Corporate Leadership and Culture: United Airlines & the ‘Re-accommodated’ Doctor – guiding principles for Boards, C-suite executives, and General Counsel, Sigurdson Post, May 2, 2017.
[15] John Gerzema and Michael D’Antonio, The Power of the Post-Recession Consumer, Strategy + Business.com, February 22, 2011. Also see, Jessica Rohman, The Business Case for a High-Trust Culture, Great Place to Work.com, 2016.
[16] John Gerzema and Michael D’Antonio, The Power of the Post-Recession Consumer, Strategy + Business.com, February 22, 2011. Also see, Jessica Rohman, The Business Case for a High-Trust Culture, Great Place to Work.com, 2016.
[17] 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com.
[18] David Gergen, Eyewitness to Power (2001) – Quote by Alan K. Simpson, a U.S. Republican Senator from 1979 to 1997: “If you have integrity, nothing else matters. If you don’t have integrity, nothing else matters”. And see, Tim Mak, 9 best Alan Simpson quotes, Politico, May 24, 2012:
“Telling the truth is the essence of leadership. If you have integrity, nothing else matters. And if you don’t have integrity, nothing else matters. It would be good when the vice president remembers that.” — Slamming Vice President Al Gore on the campaign trail, Oct. 2000, to the Dallas Morning News.
[19] Camille Jovanovic and Steve Chan, Is Corporate Culture on Your Agenda?, Institute of Corporate Directors, May 8, 2017.
[20] Tiffani Alexander, Q&A with the EIC: Ben Heineman on Leadership in Times of Disruptive Change, Docket (ACC.com), April 4, 2017.
[21] Donald J. Polden (Dean and Prof of Law, Santa Clara University), Leadership Matters: Lawyers’ Leadership Skills and Competencies, Santa Clara Law Review, Vol. 52, No. 3, September 21, 2012. Also see: Eric Sigurdson, Lawyers and Leadership: effective and ethical judgement and decision-making required to address societal and professional challenges, Sigurdson Post, September 5, 2016; Eric Sigurdson, Corporate Culture, Leadership and Personal Liability – Ethics and Compliance Programs in the 21st Century, Sigurdson Post, October 5, 2016.
[22] Rita Trehan, Avoiding Corporate Scandals, theCsuite.co.uk, November 28, 2016. Also see, Jordan Maglich, On Fifth Anniversary of Rothstein’s $1.2 Billion Ponzi Scheme, Questions Remain, Forbes, October 31, 2014; The Volkswagen Scandal: A mucky business, Economist, September 26, 2015 (“Why did VW take the risk of cheating, given the devastation that has followed? … Apparently some people at VW thought they could get away with it.”); Reuters, Volkswagen Pleads Guilty to 3 Felony Counts in Diesel Emissions Scandal, Fortune, March 10, 2017; Eric Sigurdson, Corporate Leadership and Culture: United Airlines & the ‘Re-accomodated’ Doctor – guiding principles for Boards, C-suite executives, and General Counsel, Sigurdson Post, May 2, 2017; Avi Selk, United CEO Oscar Munoz: The rise and fall of a ‘Communicator of the Year’, Washington Post, April 12, 2017; Ben Dipietro, Crisis of the Week: United Fights for its Reputation, Wall Street Journal, April 24, 2017; Eric Sigurdson, Corporate Culture, Leadership and Personal Liability – Ethics and Compliance Programs in the 21st Century, Sigurdson Post, October 5, 2016; Gillian B. White, The Toll of Wells Fargo’s Account Scandal: fallout implications for bank’s reputation and bottom line, The Atlantic, April 19, 2017; , Kevin McFarland, Everything you need to know about FIFA’s Corruption Scandal, Wired, May 27, 2015; Buddle Findlay, FIFA scandal: The sport of White Collar Corruption, Lexology, June 23, 2016; Matthew Goldstein, Deal Means No Fraud Retrial for Ex-Chairman of Dewey & LeBoeuf, New York Times, January 8, 2016; Matthew Goldstein and Liz Moyer, Former Dewey & LeBoeuf Executive Convicted in Split Verdict, New York Times, May 8, 2017; Jennifer Peltz, 3 ex-leaders of major NYC law firm charged with committing fraud as it fell into bankruptcy, National Post, March 6, 2014; Jordan Maglich, On Fifth Anniversary of Rothstein’s $1.2 billion Ponzi Scheme, Questions Remain, Forbes, Oct. 31, 2014; Adrian Humpreys, TD Bank to pay US$52.5 million in settlements over Florida Ponzi scheme, Financial Post, Sept. 23, 2013.
[23] Christine Lagarde, The Role of Business in Supporting a more Inclusive Global Economy, Conference on Inclusive Capitalism, New York, International Monetary Fund, October 10, 2016; Klaus Schwab, Five Leadership priorities for 2017, World Economic Forum, January 2, 2017; Richard Edelman, A crisis of trust: A warning to both business and government, Economist, The World In.com, 2016; Jim Norman, Americans’ Confidence in Institutions Stays Low, Gallup.com, June 13, 2016; Clare Malone, Americans Don’t Trust Their Institutions Anymore, FiveThirtyEight, November 16, 2016; Jake Johnson, As Millions of Workers Face Pension Cuts Thanks to Wall Street Greed, Executive Benefits Remain Lavish, Common Dreams.org, April 29, 2016; Matt Taibbi, Looting the Pension Funds, Rolling Stone, September 26, 2013; M.B., Busted Trust: Faith in world leaders, Economist, January 23, 2012; James Crisp, Juncker admits Europeans have lost faith in the EU, EurActiv.com, April 19, 2016; Nathaniel Persily and Jon Cohen, Americans are losing faith in democracy – and in each other, Washington Post, October 14, 2016; Richard Edelman, A crisis of trust: A warning to both business and government, Economist, The World In.com, 2016.
[24] 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com; Ty Kiisel, Without It, No Real Success is Possible, Forbes, February 5, 2013.
[25] Holly Green, The Decline of Trust (and What We can Do About It), Forbes, February 12, 2013; Richard Edelman, An Implosion of Trust, Edelman.com, January 15, 2017. Also see, How Rand is Responding to Truth Decay: Q&A with Michael Rich and Jennifer Kavanagh, Rand.org, May 5, 2017:
“I believe that Truth Decay and the polarization that drives it are grave threats to America—to our politics, our values, and ultimately our democracy. It’s rotting away our public discourse, undermining our civic literacy, and we’ve even seen it inspire violence”. – Michael Rich, RAND President and CEO
[26] Reputation strategists often liken brand to a promise and say reputation is what you earn by keeping the promise (or what you lose by breaking it). A respected brand can burnish a company’s reputation. But when a brand sours, reputation suffers. – Building a Corporate Reputation of Integrity, Ethics Resource Center (www.ethics.org/fellows), 2011.
[27] WEF Leadership (Trust and Performance Equation Project prepared in collaboration with PwC), The Evolution of Trust in Business: From Delivery to Values, World Economic Forum, January 2015; David Horsager, Trust Edge, 2012; Joachim Klewes and Robert Wreschniok, editors, Reputation Capital: Building and Maintaining Trust in the 21st Century, 2009. Also see, Leeora Black and Sara Bice, Defining the Elusive and Essential Social Licence to Operate, ACCSR.com.au, 2011.
What is the definition of the ‘social licence to operate’? At ACCSR we use the definition developed by Robert Boutilier and Ian Thomson, a Canadian consultant. The social licence is the level of acceptance or approval continually granted to an organisation’s operations or project by local community and other stakeholders. It has four levels from lowest to highest: withdrawal, acceptance, approval and psychological identification. Most companies or projects are in the acceptance or approval range most of the time. It can vary across time or between stakeholder groups in response to actions by the company and/or its stakeholders.
What’s the difference between the social licence and reputation? The social licence is a perception of legitimacy – does the company go about its business in a proper way? Reputation is the overall favourability of the image of a company or project. Think of reputation as more ‘affective’; it’s more of an emotional like and dislike. But the social licence and reputation operate through the same channels; they spread in the same ways, through interactions with and between stakeholders. …
Does the idea of the social licence embody a fundamental shift in the power relationship between companies and communities? The social licence to operate reminds communities that they do have collective power. When companies use the term, ‘social licence’, they are acknowledging the power communities have. When communities talk about a company’s social licence to operate, it makes their power more explicit. What’s interesting is that, although the social licence has only recently materialised in the mainstream amongst major companies, it’s an idea which has been central to the success of democratic societies since at least the 18th century, so perhaps it’s uptake is not so much about a power shift as an active recognition of what we’ve known for a very long time.”
Also see, Building a Corporate Reputation of Integrity, Ethics Resource Center (www.ethics.org/fellows), 2011 – “Some commentators have suggested a good reputation provides a company with the social license to operate.”
[28] Company stakeholders: A stakeholder is a party that has an interest in a company, and can either affect or be affected by the business. The primary stakeholders in a typical corporation are its investors, employees and customers. However, the modern theory of the idea goes beyond this original notion to include additional stakeholders such as a community, government or trade association. [Investopedia.com and Wikipedia]
Primary Stakeholders – usually internal stakeholders, are those that engage in economic transactions with the business. (For example stockholders, customers, suppliers, creditors, and employees).
Secondary Stakeholders – usually external stakeholders, are those who – although they do not engage in direct economic exchange with the business – are affected by or can affect its actions (for example the general public, government, communities, activist groups, business support groups, and the media).
[29] Stephen Covey, The Business Case for Trust, Chief Executive.net, June 4, 2007.
[30] 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com. Also see, Daniel Tencer, Canada’s Most and Least Trusted Professions: Sorry CEOs and Politicians, Huffington Post, January 20, 2015; Jeff Kauflin, The Most Loved and Hated CEOs in America, May 26, 2017.
[31] Jessica Rohman, The Business Case for a High-Trust Culture, Great Place to Work.com, 2016.
[32] Building a Corporate Reputation of Integrity, Ethics Resource Center (www.ethics.org/fellows), 2011. See, Gillian B. White, The Toll of Wells Fargo’s Account Scandal: The fallout has implications not just for the bank’s reputation, but also its bottom line, The Atlantic, April 19, 2017:
“And the bank has plenty of challenges to work through at the moment. This lackluster performance isn’t especially surprising given the issues that have plagued the company over the past year. First there was the revelation that employees of Wells Fargo’s Community Bank had created as many as 2 million fake accounts in order to meet sales quotas. …
In October, shortly after the fake-accounts scandal became public, a consulting firm, cg42, put together a report on the anticipated fallout. By their estimates, the company stood to lose around 14 percent of its customers, who said they’d already decided to switch banks. And 30 percent of the Wells Fargo customers who were surveyed reported shopping around for banking services elsewhere. That’s despite the fact that the fake accounts reportedly affected fewer than 3 percent of customers. Altogether, the report estimated that Wells Fargo stood to lose around $99 billion in deposits and $4 billion in revenues within a year-and-a-half of the fake-accounts revelation.”
[33] Raf Weverbergh and Kristien Vermosen, Warran Buffett on reputation: the economic value of values, integrity and corporate culture, Finn.
[34] Company stakeholders: A stakeholder is a party that has an interest in a company, and can either affect or be affected by the business. The primary stakeholders in a typical corporation are its investors, employees and customers. However, the modern theory of the idea goes beyond this original notion to include additional stakeholders such as a community, government or trade association. [Investopedia.com and Wikipedia]
Primary Stakeholders – usually internal stakeholders, are those that engage in economic transactions with the business. (For example stockholders, customers, suppliers, creditors, and employees).
Secondary Stakeholders – usually external stakeholders, are those who – although they do not engage in direct economic exchange with the business – are affected by or can affect its actions (for example the general public, government, communities, activist groups, business support groups, and the media).
[35] David Horsager, The Trust Edge, 2012; WEF Leadership (Trust and Performance Equation Project prepared in collaboration with PwC), The Evolution of Trust in Business: From Delivery to Values, World Economic Forum, January 2015.
[36] David Horsager, Trust Edge, 2012; WEF Leadership (Trust and Performance Equation Project prepared in collaboration with PwC), The Evolution of Trust in Business: From Delivery to Values, World Economic Forum, January 2015:
“Research across the world and statements by business leaders show consistently that, while trust may not always be front of mind, it is the foundation of doing business. Some businesses can succeed in the short term without building trust. But over the longer term, a business without trust eventually loses its licence to operate – in some cases irrevocably.”
… “Trusted companies have taken a long-term perspective in their thinking, and have used their fund of trust to create a buffer of credibility and sound reputation against potentially damaging events. When a crisis has struck, stakeholders have given these businesses more time, leeway and benefit of the doubt to respond and put things right.”
Also see, Amina Shahid and Dr. M. Azhar Shahid, Integrity and Trust: The Defining Principles of Great Workplaces, Journal of Management Research, Vol. 5 No. 4, October 1, 2013; Building a Corporate Reputation of Integrity, Ethics Resource Center (www.ethics.org/fellows), 2011.
[37] Fred Kiel, Return on Character: The Real Reason Leaders and their Companies Win, April 2015; Neal St. Anthony, Consultant: CEOs with integrity produce better returns, Star Tribune, May 15, 2015; Measuring the Return on Character, Harvard Business Review, April 2015; Jessica Rohman, The Business Case for a High-Trust Culture, Great Place to Work.com, 2016.
[38] Building a Corporate Reputation of Integrity, Ethics Resource Center (www.ethics.org/fellows), 2011; Edelman 2011 Trust Barometer, “Trust Has Tangible Benefits,” (video), http://www.youtube.com/watch?v=viXTQBBY258, January 2011; Elizabeth Garcia, Top Five reasons customers trust businesses, WHNT News.com, August 9, 2016.
[39] Amina Shahid and Dr. M. Azhar Shahid, Integrity and Trust: The Defining Principles of Great Workplaces, Journal of Management Research, Vol. 5 No. 4, October 1, 2013.
[40] Kent Grayson, Broad-Scope Trust: The Trust Problem Many Business Leaders Ignore, Linkedin, April 27, 2017.
[41] Remi Trudel and June Cotte, Does Being Ethical Pay?, Wall Street Journal, May 12, 2008.
[42] Patricia Lotich, 6 Ways to Demonstrate Ethics and Integrity in Your Business, Thriving Small Business.com, August 24, 2016. Also see, Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017. Also see, Through the Looking Glass: General Counsel Report 2016, KMPG, September 2016.
[43] Wayne Brody and Mark Rowe, Corporate Culture and Compliance in the 21st Century, New York Law Journal: Compliance, October 27, 2014. Also see, David Greenberg, Ethics and Compliance in the 21st Century, Abbc.org (LRN corp), September 2015; Michael Rasmussen, Compliance Risk Management in the 21st Century, Corporate Integrity, September 2011.
[44] Joyce E. A. Russell, Career Coach: Are you an ethical leader?, Washington Post, March 23, 2014.
[45] Building a Corporate Reputation of Integrity, Ethics Resource Center (www.ethics.org/fellows), 2011 – “…overriding consensus that trust and ethical conduct [integrity] are at the heart of reputation….”
[46] Amina Shahid and Dr. M. Azhar Shahid, Integrity and Trust: The Defining Principles of Great Workplaces, Journal of Management Research, Vol. 5 No. 4, October 1, 2013.
[47] Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017. Also see, Through the Looking Glass: General Counsel Report 2016, KMPG, September 2016.
[48] Ben Heineman, Jr., Only the Right CEO Can Create a Culture of Integrity, Harvard Law School Forum on Corporate Governance and Financial Regulation, June 5, 2013; Ben Heineman, Jr., High Performance with High Integrity, 2008. Also see, Susan Gunelius, Brand Trust and Integrity Starts with the CEO, Corporate Eye, June 12, 2013; Nan S. Russell, Reality Check: Do you know the impact of Trust: Ways to consider the trust-effect, Psychology Today, October 31, 2012.
[49] Nan S. Russell, Reality Check: Do you know the impact of Trust: Ways to consider the trust-effect, Psychology Today, October 31, 2012.
[50] Center for Regulatory Strategy, Managing Conduct Risk: Addressing Drivers, Restoring Trust, Deloitte, 2017.
[51] Delotte Development, Tone at the top: The first ingredient in a world-class ethics and compliance program, Deloitte, 2015.
[52] The Importance of Integrity in Business, Equinix, August 24, 2012; Raf Weverbergh and Kristien Vermosen, Warran Buffett on reputation: the economic value of values, integrity and corporate culture, Finn (citing Warren Buffett: “A promise is no better than the person or institution making it.”).
[53] Building a Corporate Reputation of Integrity, Ethics Resource Center (www.ethics.org/fellows), 2011; Frank X. Shaw, Building Trust in a Post-Truth World, Linkedin.com, May 25, 2017.
[54] Rob Peters, Standard of Trust Leadership: A Clear Business Case for Trust (Part 1), Medium.com, February 1, 2016.
[55] Significant corporate scandals and organizational crisis from 2001 to 2017: Enron (2001), HIH Insurance (2001), WorldCom (2002), Freddie Mac mortgage scandal (2003), AIG accounting scandal (2005), Lehman Brothers investment bank and subprime mortgage crisis (2008), Libor (London Interbank Offered Rate) fixing scandal and Barclays Bank (2012), Volkswagen DieselGate (2015), Wells Fargo banking scandal (2016), United Airlines (2017), as well as the 2008 credit markets’ disintegration that cascaded into the global financial meltdown that significantly threatened global capitalism. See for example, Corporate/business scandals – Top 10 CEO Scandals, Time, August 10, 2010; Syed Balkhi, 25 Biggest Corporate Scandals Ever, List25.com, July 15, 2014; Top 10 Worst Corporate Accounting Scandals of All Time, Accounting-degree.org, 2009; List of corporate collapses and scandals, Wikipedia.org; Coquina Investments v. Scott Rothstein and TD Bank, Omnibus Order on Motions for Sanctions, US District Court, Southern District of Florida, Judge Marcia G. Cooke, August 3, 2012, p. 23-27; Caroline Van Hasselt, US Federal Judge Sanctions TD Bank over Rothstein-Related Trial Documents, Euroinvestor, April 8, 2012; Benchslap of the Day: Judge Cooke Sanctions Greenberg Traurig and TD Bank, Above The Law, August 7, 2012; David Voreacos, TD Bank, Greenberg Traurig Sanctioned Over Documents, Bloomberg, August 12, 2012.
[56] Matthew Goldstein, Deal Means No Fraud Retrial for Ex-Chairman of Dewey & LeBoeuf, New York Times, January 8, 2016; Matthew Goldstein and Liz Moyer, Former Dewey & LeBoeuf Executive Convicted in Split Verdict, New York Times, May 8, 2017; Philip Slayton, Lawyers Gone Bad: Money, Sex and Madness in Canada’s Legal Profession, 2007; Jennifer Peltz, 3 ex-leaders of major NYC law firm charged with committing fraud as it fell into bankruptcy, National Post, March 6, 2014; Theresa Teesco and Brian Hutchinson, How Heenan Blaikie’s stunning collapse started with a rogue African arms deal, National Post, February 14, 2014; Jeff Gray and Sophie Cousineau, Death of a law firm: Behind the collapse of Heenan Blaikie, Globe and Mail, February 7, 2014; Jordan Maglich, On Fifth Anniversary of Rothstein’s $1.2 billion Ponzi Scheme, Questions Remain, Forbes, Oct. 31, 2014; Adrian Humpreys, TD Bank to pay US$52.5 million in settlements over Florida Ponzi scheme, Financial Post, Sept. 23, 2013; Summary:
Scott Rothstein was the managing shareholder and chairman of the 70 lawyer law firm Rothstein Rosenfeldt Adler. Rothstein’s investment scheme involved purchasing fabricated ‘structured settlements’, in which plaintiffs sell large settlements in legal cases for lump sums of cash. The investors made up front cash payments to individuals owed money from the court cases to buy the right to collect the full amount of the settlements later. Investors were guaranteed a minimum of 20% investment returns.
Rothstein was convicted of a US$1.2 billion Ponzi scheme, recognized to be the 4th largest financial fraud. Rothstein stated “it was ego fueled. We were rolling, you know … we were living like rock stars; private jets, massive amounts of money” [2011 deposition testimony].
Scott Rothstein received a 50 year prison sentence. More than two dozen of Rothstein’s acquaintances, co-workers and family members served a combined 60 plus years of federal prison sentences. The law firm was dissolved.
The Court appointed trustee obtained the unprecedented result that the financial victims recouped 100% of their losses. Rothstein’s “testimony colorfully illustrated the extraordinary role that TD Bank played in the Ponzi scheme”. The TD Bank “has since paid dearly; it has paid out hundreds of millions of dollars to investors that sued the bank, and its large settlement with the court-appointed bankruptcy trustee was a significant factor in fully compensating Rothstein’s victims”.
[57] See for example, re political scandals – Bob Cesca, Trump’s Russia scandal keeps getting deeper: At this point, campaign collusion might be the least of his problems, Salon, May 15, 2017; Sofia Mayer, Top 12 Biggest U.S. Political Scandals, The Odyssey, December 26, 2016; List of political scandals in the United Kingdom, Wikipedia.org; List of political scandals in Canada, Wikipedia.org; List of political controversies in Australia, Wikipedia.org; 11 Major International Political Scandals, CNBC.com, February 18, 2011.
[58] Delotte Development, Tone at the top: The first ingredient in a world-class ethics and compliance program, Deloitte, 2015. Note: Scandals and organizational crisis that trace back to the early 2000s: Enron (2001), HIH Insurance (2001), WorldCom (2002), Freddie Mac mortgage scandal (2003), AIG accounting scandal (2005), Lehman Brothers investment bank and subprime mortgage crisis (2008), Libor (London Interbank Offered Rate) fixing scandal and Barclays Bank (2012), Volkswagen DieselGate (2015), Wells Fargo banking scandal (2016), United Airlines (2017), as well as the 2008 credit markets’ disintegration that cascaded into the global financial meltdown that significantly threatened global capitalism. Also see, Chris Matthew and Matthew Heimer, The 5 Biggest Corporate Scandals of 2016, Fortune, December 28, 2016; Geoffrey James, Top 10 Brand Scandals of 2015, Inc., September 26, 2015; Syed Balkhi, 25 Biggest Corporate Scandals Ever, List25.com, July 15, 2014; Top 10 CEO Scandals, Time, August 10, 2010. Also see, Philip Slayton, Lawyers Gone Bad: Money, Sex and Madness in Canada’s Legal Profession, 2007; Peter Lattman, Lawyers are Rats, Eh?, Law Blog, The Wall Street Journal, August 6, 2007; Coquina Investments v. Scott Rothstein and TD Bank, Omnibus Order on Motions for Sanctions, US District Court, Southern District of Florida, Judge Marcia G. Cooke, August 3, 2012, p. 23-27; Caroline Van Hasselt, US Federal Judge Sanctions TD Bank over Rothstein-Related Trial Documents, Euroinvestor, April 8, 2012; Benchslap of the Day: Judge Cooke Sanctions Greenberg Traurig and TD Bank, Above The Law, August 7, 2012; David Voreacos, TD Bank, Greenberg Traurig Sanctioned Over Documents, Bloomberg, August 12, 2012; Robert Lenzner, Bernie Madoff’s $50 Billion Ponzi Scheme, Forbes, December 12, 2008; Stephanie Yang, 5 Years Ago Bernie Madoff Was Sentenced to 150 Years in Prison – Here’s How His Scheme Worked, Business Insider, July 1, 2014.
[59] David Dayen, Some top banking executives still see the law as an obstacle rather than a boundary, Business Insider, April 11, 2017. Also see: Ivy Walker, Ethikos Classic: Following the Boss’s Orders Might Land You in Jail, Compliance and Ethics.org, May 23, 2017 (reprinted from Classic Ethikos, The Journal of Practical Business Ethics, July/August 2016). Also see, Geoff Colvin, The Wells Fargo Scandal is now Reaching VW Proportions, Fortune, January 26, 2017; Richard Griffith, Wells Fargo – Lessons Learned, Impact on Integrity, May 2017; Matt Egan, Wells Fargo Scandal: Where was the board?, CNN, April 24, 2017; Jeff Spross, The agonizingly familiar problem with Wells Fargo’s board of directors, The Week, September 29, 2016; Gretchen Morgenson, By Taking the Money, Wells Fargo’s Board Seems to Recall Its Role, New York Times, September 27, 2016; Doron Levin, Volkswagen’s new CEO must tackle the ‘culture of arrogance’, Fortune, September 27, 2015; Jason Kirby, Volkswagen was undone by Wall Street-style arrogance, Canadian Business, September 24, 2015.
[60] Delotte Development, Tone at the top: The first ingredient in a world-class ethics and compliance program, Deloitte, 2015.
[61] Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera, Are CEOs Less Ethical Than in the Past?, Strategy and Business, May 15, 2017; Terry Carter, Will those who led the financial system into crisis ever face charges?, ABA Journal, February 1, 2016. Also see, Sam Ro, Bernanke: The DOJ should’ve locked up more people for causing the financial crisis, Business Insider, Oct. 5, 2015; Don Pittis, From Bell to VW, shareholders pay for executive sins, CBC News, Oct. 19, 2015 – With respect to the 2008 financial disaster, when asked “should somebody have gone to jail”, former U.S. Federal Reserve Chair Ben Bernanke famously said “Yeah, I think so”, stating that there should have been “more accountability at the individual level”. The 2008 disaster required “massive government bailouts and emergency stimulus programs” to “stabilize the system” – but “only after many lost their jobs and wellbeing”.
[62] Terry Carter, Will those who led the financial system into crisis ever face charges?, ABA Journal, February 1, 2016.
[63] Delotte Development, Tone at the top: The first ingredient in a world-class ethics and compliance program, Deloitte, 2015.
[64] Simon Johnson, Trump’s deregulation of banks will unleash the financial fire next time, Market Watch, March 1, 2017; Barbara Shecter, Donald Trump’s move to unwind bank regulations exposes fault lines in global financial stability, National Post, February 9, 2017:
“The European Central Bank warned that the deregulation discussions in the United States could lay the groundwork for the next financial crisis.
“The last thing we need at this point in time is the relaxation of regulation. The idea of repeating the conditions that were in place before the crisis is something that is very worrisome,” ECB president Mario Draghi told the European Parliament’s committee on economic affairs in Brussels.”
[65] PwC 2016 CEO Success Study, strategyand.pwc.com; Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera, Are CEOs Less Ethical Than in the Past?, Strategy and Business, May 15, 2017.
[66] Remuneration Principles: clarifying expectations, Hermes Investment Management, November 2016; WEF Leadership, Trust and Performance Equation Project prepared in collaboration with PwC, The Evolution of Trust in Business: From Delivery to Values, World Economic Forum, January 2015; Jill Treanor, Rising executive pay threatening reputation of big business – report, The Guardian, November 14, 2016:
“The phenomenon of rapidly rising rewards for top talent, while not limited to corporate executive pay, is beginning to threaten the public company’s licence to operate and thus potential long-term value.”
[67] Kate Isaacs, David Langstaff, and Russell Eisenstat, 4 Ways CEOs Can Conquer Short-Termism, Harvard Business Review, February 24, 2017; Matt Turner, Here is the Letter the world’s largest investor, BlackRock CEO Larry Fink, just sent to CEOs everywhere, Business Insider, February 2, 2016 (“Today’s culture of quarterly earnings hysteria is totally contrary to the long-term approach we need.”); Seymour Bruchman and Blair Jones, When Did Long-term Incentives Become so Short-term?, Semler Insight (Semler Brossy), June 2016; David Beatty, How activist investors are transforming the role of public-company boards, McKinsey.com, January 2017; American Prosperity Project (an initiative spearheaded by the Aspen Institute – aspeninstitute.org – to encourage companies and the nation to engage in more long-term thinking):
“The American Prosperity Project is a nonpartisan framework for long-term investment to support our families and communities and reinvigorate the economy to create jobs and prosperity. There is no viable model under which either business or government can or should shoulder the responsibility for long-term investment alone; both are required.
The time is right for a national conversation about long-term investment in infrastructure, basic science, education and training for workers who feel the brunt of globalization and technology. We need to focus on the critical levers for economic growth along with sources of revenue to help pay for it, as well as ways to overcome the short-term thinking currently baked into government policy and business protocols.
The ideas offered here have been developed under the auspices of the Aspen Institute in consultation with a non-partisan working group of experts in public policy formation, tax and regulation, business, and corporate law and governance….”
[68] WEF Leadership, Trust and Performance Equation Project prepared in collaboration with PwC, The Evolution of Trust in Business: From Delivery to Values, World Economic Forum, January 2015; Eric Sigurdson, Global Populism: Corporate Strategy, Engagement & Leadership in 2017 – ‘the year of living dangerously, Sigurdson Post, January 18, 2017. See, John Simons, CEOs Should Focus on Long Term, Study Says: Authors contend that switching from short-term gains to a long view improves profits and sales, Wall Street Journal, December 27, 2016; Bill Snyder, Pepsi CEO: Break with the Past, and Don’t play too Nice, Stanford Business.edu, May 31, 2016; Alana Semuels, How to Stop Short-Term Thinking at America’s Companies, The Atlantic, December 30, 2016; Elena Lytkina Botelho, Kim Rosenkoetter Powell, Stephen Kincaid, and Dina Wang, What Sets Successful CEOs Apart, Harvard Business Review, May-June 2017; Mark Murphy, Wall Street Just Exposed Why Employee Engagement is Such a Joke in some Companies, Forbes, April 30, 2017; Jill Treanor, Rising executive pay threatening reputation of big business – report, The Guardian, November 14, 2016.
[69] Sisi Wang, Four ways CEOs can win back the public’s trust, Canadian Business, February 26, 2016; 2016 Edelman Trust Barometer, Global Annual Study, Edelman.com. Also see, Dan Cable and Freek Vermeulen, Stop Paying Executives for Performance, Harvard Business Review, February 23, 2016.
[70] Kate Isaacs, David Langstaff, and Russell Eisenstat, 4 Ways CEOs Can Conquer Short-Termism, Harvard Business Review, February 24, 2017.
[71] Richard Edelman, A crisis of trust: A warning to both business and government, The Economist, 2017.
[72] Holly Green, The Decline of Trust (and What We can Do About It), Forbes, February 12, 2013; Richard Edelman, An Implosion of Trust, Edelman.com, January 15, 2017.
[73] Richard Edelman, An Implosion of Trust, Edelman.com, January 15, 2017.
[74] David Horsager, Trust Edge, 2012; WEF Leadership, Trust and Performance Equation Project prepared in collaboration with PwC, The Evolution of Trust in Business: From Delivery to Values, World Economic Forum, January 2015.
[75] Holly Green, The Decline of Trust (and What We can Do About It), Forbes, February 12, 2013; Richard Edelman, An Implosion of Trust, Edelman.com, January 15, 2017.
[76] Ty Kiisel, Without It, No Real Success is Possible, Forbes, February 5, 2013.
[77] 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com.
[78] 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com.
[79] How Rand is Responding to Truth Decay: Q&A with Michael Rich and Jennifer Kavanagh, Rand.org, May 5, 2017.
[80] 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com.
[81] Bill George, VUCA 2.0: A Strategy For Steady Leadership in an Unsteady World, Forbes, February 17, 2017; Susan Peters, How Will You Lead in the Emergent Era?, Linkedin, May 8, 2017.
[82] Rita Trehan, Avoiding Corporate Scandals, theCsuite.co.uk, November 28, 2016. Also see, Gianfranco Casati and Omar Abbosh, Spotting the danger signs of ‘slow disruption’, South China Morning Post, May 19, 2017:
“Business disruption today can strike companies quickly, with a “big bang” when a product that is better and cheaper than anything else on the market suddenly becomes available.
But it can also creep up on you slowly. And when it hits, it hits hard. …
This gradual-to-sudden decline is exactly the problem we identify in several industries today. Our analysis of the performance of more than 1,200 companies in six of the most asset-heavy sectors – telecommunications, utilities, energy, materials, automotive, and industrials – revealed that incumbents in these industries are falling prey to what we call “compressive disruption”. And the first distinguishing feature of this gradual or “slow” form of disruption is a prolonged decline in profit margins, even as revenue is increasing. …
Stagnant revenue growth … is the second indicator of an industry headed toward potentially rapid decline.
Combine these trends with the potential for industry leaders to believe they are invulnerable to rapid decline – a result of possibly decades of industry stability and perceived high barriers to entry – and you have got a recipe for trouble.
The good news is that companies still have time to act to fend off the potentially devastating effects of compressive disruption.”
[83] Tiffani Alexander, Q&A with the EIC: Ben Heineman on Leadership in Times of Disruptive Change, Docket (ACC.com), April 4, 2017.
[84] Ivy Walker, Ethikos Classic: Following the Boss’s Orders Might Land You in Jail, Compliance and Ethics.org, May 23, 2017 (reprinted from Classic Ethikos, The Journal of Practical Business Ethics, July/August 2016). Also see, John Laidler, When the law and conscience intersected: At Harvard Law School, Sally Yates explains why she refused to enforce travel ban, even if it cost her job , Harvard Law Today, May 25, 2017:
“Over the course of your life and your career, you too will face weighty decisions where the law and conscience intertwine,” Yates told students. “And while it may not play out in such a public way, the conflict that you’ll feel will be no less real, and the consequences of your decision also significant.”
[85] Note: Drivers and root causes of misconduct and poor behaviour and practices within a corporation include and are inter-related with corporate culture and leadership. These may include, for example:
- Disparate subcultures or problematic prevailing culture.
- Individuals and leadership are not responsible or held to account for poor conduct.
- Complex, disconnected or ‘growth at all costs’ business model.
- Conflicts of interest are not identified or managed.
- Product is not guided by customer needs and suitability.
- Weak systems of monitoring and surveillance.
- Manual and complicated processes and procedures.
- Decisions are not based on a ‘balanced scorecard’.
[86] Center for Regulatory Strategy, Managing Conduct Risk: Addressing Drivers, Restoring Trust, Deloitte, 2017.
[87] Associated Press, Corporate Darwinism: Only the strong survive, NBC News, January 2, 2009.
[88] Jessica Rohman, The Business Case for a High-Trust Culture, Great Place to Work.com, 2016.
[89] L. Guiso, P. Sapienza, L. Zingales, The value of corporate culture, Journal of Financial Economics, at 60-76 (2015); H. Nold, Using knowledge processes to improve performance and promote change: The continuous loop model and cultural enablers, The International Journal of Knowledge, Culture, and Change in Organizations: Annual Review, 12, at 53-70 (2012); Jessica Rohman, The Business Case for a High-Trust Culture, Great Place to Work.com, 2016; Amina Shahid and Dr. M. Azhar Shahid, Integrity and Trust: The Defining Principles of Great Workplaces, Journal of Management Research, Vol. 5 No. 4, October 1, 2013 (“productivity, income, and profits are positively or negatively collided depending on the level of trust in an organization”).
[90] L. Guiso, P. Sapienza, L. Zingales, The value of corporate culture, Journal of Financial Economics, at 60-76 (2015); Jessica Rohman, The Business Case for a High-Trust Culture, Great Place to Work.com, 2016.
[91] D.H. Simon, J. DeVaro, Do the best companies to work for provide better customer satisfaction?, Managerial and Decision Economics, 27, at 667-683 (2006); Jessica Rohman, The Business Case for a High-Trust Culture, Great Place to Work.com, 2016.
[92] Michael Volkov, Trust and Integrity: The Value of a Company’s Reputation – building a culture of ethics yields a high ROI, Corporate Compliance Insights, May 19, 2016; Simon Cole, The Impact of Reputation on Market Value, World Economics, Vol. 13, No. 3, July-September 2012.
[93] Building a Corporate Reputation of Integrity, Ethics Resource Center (www.ethics.org/fellows), 2011.
[94] Lisa Eadicicco, 11 Sergey Brin quotes that reveal how Google became one of the most powerful companies in the world, Business Insider, July 24, 2014; L. Kim, 25 billionaire quotes about success in business and life, Inc., April 15, 2015; Jessica Rohman, The Business Case for a High-Trust Culture, Great Place to Work.com, 2016.
[95] Delotte Development, Tone at the top: The first ingredient in a world-class ethics and compliance program, Deloitte, 2015; 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com.
[96] 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com (see Executive Summary etc.).
[97] Center for Regulatory Strategy, Managing Conduct Risk: Addressing Drivers, Restoring Trust, Deloitte, 2017.
[98] Nathaniel B. Davis, If War Can Have Ethics, Wall Street Can, Too, New York Times, October 3, 2016.
[99] The Fourth Industrial Revolution, or 4IR, is the fourth major industrial era since the initial Industrial Revolution of the 18th century. The Fourth Industrial Revolution can be described as a range of new technologies that are fusing the physical, digital and biological worlds, and impacting all disciplines, economies and industries. At its core is the combination of big data, analytics and physical technology – providing increasingly enhanced, customized offerings to help meet the needs of organizations and individuals that can adapt and evolve to changing situations and requirements over time. Central to this revolution are emerging technology breakthroughs in fields such as artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3D printing and nanotechnology. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance. Business leaders and senior executives and their trusted business and legal advisors need to understand their changing environment, challenge the assumptions of operating teams, and relentlessly innovate. See, Klaus Schwab, The Fourth Industrial Revolution: what it means, how to respond, World Economic Forum, January 14, 2016; Irving Wladawsky-Berger, The Fourth Industrial Revolution: Risks and Benefits, Wall Street Journal, February 24, 2017; Ernst & Young, What is the Fourth Industrial Revolution? How will it affect business and society, EY (betterworkingworld.ey.com); Hugh Son, JP Morgan Software Does in Seconds What Took Lawyers360,000 Hours, Bloomberg, February 27, 2017; Alex Gray, The 10 skills you need to thrive in the Fourth Industrial Revolution, World Economic Forum, January 19, 2016.
[99] Graham Richardson, Navigating a Brave New World: Eversheds innovates, The Practice (Vol. 2, Issue 2), Harvard Law School: Center on the Legal Profession (thepractice.law.harvard.edu), January 2016.
[99] Graham Richardson, Navigating a Brave New World: Eversheds innovates, The Practice (Vol. 2, Issue 2), Harvard Law School: Center on the Legal Profession (thepractice.law.harvard.edu), January 2016. – See, Tabby Kinder, Boutiques will benefit from Brexit as big firms struggle to future-proof, The Lawyer, February 22, 2017.
[99] Altman Weil, 2016 Chief Legal Officer Survey [http://www.altmanweil.com/dir_docs/resource/e32f33b3-eeb3-4af6-82c8-4f6f7d9824f6_document.pdf]. Also see, Mitch Kowalski, McGill study reveals the ‘illusion’ of innovation at Canadian law firms, National Post, January 26, 2017; Aly R Haji, The Illusion of Innovation at Canadian Law Firms, McGill University (Faculty of Management, Supervised by Prof. Karl Moore, mentorship support and guidance from Mike Ross and strategy consultant Juniper), jnper.com, January 2017; Mark Cohen, ‘Legal Innovation’ is not an Oxymoron – It’s Farther Along Than you Think, Forbes, March 14, 2017 (“The legal industry is known for adherence to precedent, not innovation. … Legal innovation has lagged compared with other industries”).
[100] Ben W. Heineman, Jr., GC’s Critical Public Policy Role in an Age of Upheaval, Docket (ACC.com), March 22, 2017.
[101] Chris Newton, The Importance of Leading by Example, Smallbusiness.chron.com.
[102] Bill George, VUCA 2.0: A Strategy For Steady Leadership in an Unsteady World, Forbes, February 17, 2017.
[103] Amit Mukherjee, Why We’re Seeing So Many Corporate Scandals, Harvard Business Review, December 28, 2016.
[104] Anthony Davis, The Role of Law Firm GCs is Expanding, Bloomberg, May 22, 2017:
“Indeed a number of the larger international and global firms now recognize the “Office of General Counsel.” Even mid-size firms, commonly have GCs, sometimes serving in that role on a part time basis. Initially, these developments were driven in significant part by the need to manage the client intake process to avoid conflicts of interest. Today, the role and scope of the responsibilities of the occupants of these positions have expanded enormously. Now, just like their counterparts in the corporate world, these roles are really about helping law firms to address the panoply of enterprise risk management issues — the threats that pose potentially existential risks to their firms.”
[105] Survey: The Rise of the GC Report 2016: From Legal Adviser to Strategic Adviser, NYSE Governance Services / BarkerGilmore Survey Report; Eric Sigurdson, General Counsel, Chief Legal Officers & In-House Counsel: Five New Year’s Resolutions – Leadership, Operations, Metrics, Technology, and External Counsel, Sigurdson Post, December 13, 2016.
[106] Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017
[107] Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017.
[108] Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017.
[109] PwC 2016 CEO Success Study, strategyand.pwc.com; Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera, Are CEOs Less Ethical Than in the Past?, Strategy and Business, May 15, 2017; Canadian Press, More North American CEOs leaving posts due to ‘ethical lapses’, study says, Toronto Star, May 15, 2017.
[110] Company stakeholders: A stakeholder is a party that has an interest in a company, and can either affect or be affected by the business. The primary stakeholders in a typical corporation are its investors, employees and customers. However, the modern theory of the idea goes beyond this original notion to include additional stakeholders such as a community, government or trade association. [Investopedia.com and Wikipedia]
Primary Stakeholders – usually internal stakeholders, are those that engage in economic transactions with the business. (For example stockholders, customers, suppliers, creditors, and employees).
Secondary Stakeholders – usually external stakeholders, are those who – although they do not engage in direct economic exchange with the business – are affected by or can affect its actions (for example the general public, government, communities, activist groups, business support groups, and the media).
[111] See, Eric Sigurdson, Corporate Culture, Leadership and Personal Liability – Ethics and Compliance Programs in the 21st Century, Sigurdson Post, October 5, 2016; Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera, Are CEOs Less Ethical Than in the Past?, Strategy and Business, May 15, 2017:
“2. Business processes. Weak business practices or lax financial controls create opportunities for unethical behavior. Most large companies in developed countries have robust financial controls, and these have been strengthened over the last two decades by the requirements of the Sarbanes-Oxley Act in the U.S. and similar laws elsewhere. Make sure your processes and controls are strong and up-to-date by following three steps:
- Determine your unique threat profile.Are you aware of the full range of potential threats that exist in places you operate or plan to operate, and the political and economic climate in those places? Consider all third parties to which you may have exposure.
- Take a close look at your existing compliance program.Are your current controls sufficient to mitigate the threats across all operations? They should be updated and tested to deal with any changes to your business strategy, your operating model, and the laws and regulations spanning your geographic footprint.
- Assess your employee reporting systems.Is an employee hotline or similar feedback mechanism in place that employees can use to ask questions or discreetly report issues — and if so, are your employees aware of it?”
[112] Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera, Are CEOs Less Ethical Than in the Past?, Strategy and Business, May 15, 2017; Canadian Press, More North American CEOs leaving posts due to ‘ethical lapses’, study says, Toronto Star, May 15, 2017.
[113] Marcel Schwantes, 3 Huge Reasons Why Integrity is so Important, Linkedin.com, January 20, 2015.
[114] Andrea Bonime-Blanc, Getting to a Culture of Integrity: The Role of the CEO, the Board and Risk Strategy, ECI Connects, December 16, 2013.
[115] William Gentry, Kristin Cullen, and David Altman, The Irony of Integrity: A Study of the Character Strengths of Leaders, Center for Creative Leadership, March 2016.
[116] Center for Regulatory Strategy, Managing Conduct Risk: Addressing Drivers, Restoring Trust, Deloitte, 2017.
[117] Introduction to Jon Huntsman, Winners Never Cheat: Even in Difficult Times, 2008; William Gentry, Kristin Cullen, and David Altman, The Irony of Integrity: A Study of the Character Strengths of Leaders, Center for Creative Leadership, March 2016.
[118] Scandals and organizational crisis that trace back to the early 2000s: Enron (2001), HIH Insurance (2001), WorldCom (2002), Freddie Mac mortgage scandal (2003), AIG accounting scandal (2005), Lehman Brothers investment bank and subprime mortgage crisis (2008), Libor (London Interbank Offered Rate) fixing scandal and Barclays Bank (2012), Volkswagen DieselGate (2015), Wells Fargo banking scandal (2016), United Airlines (2017), as well as the 2008 credit markets’ disintegration that cascaded into the global financial meltdown that significantly threatened global capitalism. See, Chris Matthew and Matthew Heimer, The 5 Biggest Corporate Scandals of 2016, Fortune, December 28, 2016; Geoffrey James, Top 10 Brand Scandals of 2015, Inc., September 26, 2015; Syed Balkhi, 25 Biggest Corporate Scandals Ever, List25.com, July 15, 2014; Top 10 CEO Scandals, Time, August 10, 2010; William Gentry, Kristin Cullen, and David Altman, The Irony of Integrity: A Study of the Character Strengths of Leaders, Center for Creative Leadership, March 2016.
[119] Sam Ro, Bernanke: The DOJ should’ve locked up more people for causing the financial crisis, Business Insider, Oct. 5, 2015; Don Pittis, From Bell to VW, shareholders pay for executive sins, CBC News, Oct. 19, 2015. Also see, Eric Sigurdson, Crisis Management and Corporate Wrongdoing: critical steps to crisis management in the 21st Century, SigurdsonPost.com, September 11, 2016.
[120] 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com. Also see, PwC 2016 CEO Success Study, strategyand.pwc.com; Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera, Are CEOs Less Ethical Than in the Past?, Strategy and Business, May 15, 2017.
[121] Bob Moritz, Four Concerns that keep CEOs awake at night, CNBC.com, January 18, 2017.
[122] Deloitte CEO Stresses Integrity, Ethics in Commencement Speech, AccountingWeb.com, May 12, 2003.
[123] VUCA – “managerial acronym for volatility, uncertainty, complexity, and ambiguity, and a catchall for “Hey, it’s crazy out there!” It’s also misleading: VUCA conflates four distinct types of challenges that demand four distinct types of responses. That makes it difficult to know how to approach a challenging situation and easy to use VUCA as a crutch, a way to throw off the hard work of strategy and planning – after all, you can’t prepare for a VUCA world, right?”. See, Nathan Bennett and G. James Lemoine, What VUCA Really Means for You, Harvard Business Review, January-February, 2014; Bill George, VUCA 2.0: A Strategy For Steady Leadership in an Unsteady World, Forbes, February 17, 2017; Sean Farrell, The world’s biggest accounting scandals, The Guardian, July 21, 2015; Eric Sigurdson, Crisis Management and Corporate Wrongdoing: critical steps to crisis management in the 21st Century, SigurdsonPost.com, September 11, 2016.
[124] The biggest collective financial scandal is the credit crisis of 2007 and 2008 but the leaders of banks such as Royal Bank of Scotland and Lehman Brothers were deemed to be incompetent, deluded or victims of events: Sean Farrell, The world’s biggest accounting scandals, The Guardian, July 21, 2015. Also see, Glen Greenwald, The Real Story of How ‘Untouchable’ Wall Street Execs Avoided Prosecution, Business Insider, January 23, 2013 (“Alan Greenspan, the former Federal Reserve Chair, said in Congressional testimony that “a lot of that stuff was just plain fraud”); J.R., Why have so few bankers gone to jail?, The Economist, May 14, 2013 (“Although the bosses may create or perpetuate a culture in which those lower down the ranks feel entitled or expected to abandon morality, there is seldom a chain of e-mails or other direct instructions that actually advocates wrongdoing. A second reason for the paucity of prosecutions is that in capitalist societies where risk-taking is seen as a necessary part of business, it is not actually illegal to run a bank, or any other company, into the ground”.); Sam Ro, Bernanke: The DOJ should’ve locked up more people for causing the financial crisis, Business Insider, Oct. 5, 2015; Don Pittis, From Bell to VW, shareholders pay for executive sins, CBC News, Oct. 19, 2015 – With respect to the 2008 financial disaster, when asked “should somebody have gone to jail”, former U.S. Federal Reserve Chair Ben Bernanke famously said “Yeah, I think so”, stating that there should have been “more accountability at the individual level”. The 2008 disaster required “massive government bailouts and emergency stimulus programs” to “stabilize the system” – but “only after many lost their jobs and wellbeing”.
[125] Amit Mukherjee, Why We’re Seeing So Many Corporate Scandals, Harvard Business Review, December 28, 2016.
[126] Scandals and organizational crisis that trace back to the early 2000s: Enron (2001), HIH Insurance (2001), WorldCom (2002), Freddie Mac mortgage scandal (2003), AIG accounting scandal (2005), Lehman Brothers investment bank and subprime mortgage crisis (2008), Libor (London Interbank Offered Rate) fixing scandal and Barclays Bank (2012), Volkswagen DieselGate (2015), Wells Fargo banking scandal (2016), United Airlines (2017), as well as the 2008 credit markets’ disintegration that cascaded into the global financial meltdown that significantly threatened global capitalism. See, Chris Matthew and Matthew Heimer, The 5 Biggest Corporate Scandals of 2016, Fortune, December 28, 2016; Geoffrey James, Top 10 Brand Scandals of 2015, Inc., September 26, 2015; Syed Balkhi, 25 Biggest Corporate Scandals Ever, List25.com, July 15, 2014; Top 10 CEO Scandals, Time, August 10, 2010.
[127] One need only consider the recent self-inflicted crises at Wells Fargo (a banking scandal where two million accounts were illegally opened without customers’ knowledge), FIFA (soccer’s global governing body engulfed in widespread corruption involving bribery, fraud and money laundering), Volkswagen (where emissions data was falsified in a global scandal fittingly referred to as DieselGate), United Airlines (where a 69 year old doctor was assaulted, physically injured, and dragged from an overbooked airplane to make room for a company staffer), BigLaw Dewey & LeBoeuf (involving accounting fraud by two ex- executive leaders), defunct law firm Rothstein Rosenfeldt Adler (a $1.2 billion Ponzi scheme by the ex-managing partner involving fabricated ‘structured settlements’), or even News Corp (where editors illegally hacked cell phones to publish private information.
[128] Introduction to Jon Huntsman, Winners Never Cheat: Even in Difficult Times, 2008.
[129] PwC 2016 CEO Success Study, strategyand.pwc.com; Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera, Are CEOs Less Ethical Than in the Past?, Strategy and Business, May 15, 2017.
[130] Bob Moritz, Four Concerns that keep CEOs awake at night, CNBC.com, January 18, 2017.
[131] Kent Grayson, Broad-Scope Trust: The Trust Problem Many Business Leaders Ignore, Linkedin, April 27, 2017.
[132] Remi Trudel and June Cotte, Does Being Ethical Pay?, Wall Street Journal, May 12, 2008
[133] Brian Tracy, The Importance of Honesty and Integrity in Business, Entrepreneur, December 7, 2016.
[134] Wayne Brody and Mark Rowe, Corporate Culture and Compliance in the 21st Century, New York Law Journal: Compliance, October 27, 2014. Also see, David Greenberg, Ethics and Compliance in the 21st Century, Abbc.org (LRN corp), September 2015; Michael Rasmussen, Compliance Risk Management in the 21st Century, Corporate Integrity, September 2011.
[135] Joyce E. A. Russell, Career Coach: Are you an ethical leader?, Washington Post, March 23, 2014.
[136] Eric Sigurdson, Corporate Culture, Leadership and Personal Liability – Ethics and Compliance Programs in the 21st Century, Sigurdson Post, October 5, 2016.
[137] Ty Kiisel, Without It, No Real Success is Possible, Forbes, February 5, 2013.
[138] Jim Clemmer, Honesty and Integrity Build a Foundation of Trust, Clemmer Group; Ralph E. James, Ph.D., The Integrity Chain, 2009; Michael Volkov, Trust and Integrity: The Value of a Company’s Reputation – building a culture of ethics yields a high ROI, Corporate Compliance Insights, May 19, 2016.
[139] Nan S. Russell, Reality Check: Do you know the impact of Trust: Ways to consider the trust-effect, Psychology Today, October 31, 2012.
[140] Andrew Winston, Pepsi, United, and the Speed of Corporate Shame, Harvard Business Review, April 12, 2017.
[141] Center for Regulatory Strategy, Managing Conduct Risk: Addressing Drivers, Restoring Trust, Deloitte, 2017. Also see, for example: Gillian White, The Toll of Wells Fargo’s Account Scandal: the fallout has implications not just for the bank’s reputation, but also for its bottom line, Atlantic, April 19, 2017:
“Aside from reputational damage, the trouble has had actual hard costs, too. The company has been fined around $185 million, clawed back around $200 million in compensation, and will pay around $110 million to settle a class-action lawsuit related to the fake accounts. The firm reportedly spent around $80 million during the last quarter for outside professional services related to the fake-accounts scandal. And in that same conference call, the company’s CFO said that he estimates Wells Fargo will have to shell out similar sums for fake-account-related costs for some time.
In October, shortly after the fake-accounts scandal became public, a consulting firm, cg42, put together a report on the anticipated fallout. By their estimates, the company stood to lose around 14 percent of its customers, who said they’d already decided to switch banks. And 30 percent of the Wells Fargo customers who were surveyed reported shopping around for banking services elsewhere. That’s despite the fact that the fake accounts reportedly affected fewer than 3 percent of customers. Altogether, the report estimated that Wells Fargo stood to lose around $99 billion in deposits and $4 billion in revenues within a year-and-a-half of the fake-accounts revelation.”
[142] Ben Heineman, Jr., Only the Right CEO Can Create a Culture of Integrity, Harvard Law School Forum on Corporate Governance and Financial Regulation, June 5, 2013; Ben Heineman, Jr., High Performance with High Integrity, 2008. Also see, Susan Gunelius, Brand Trust and Integrity Starts with the CEO, Corporate Eye, June 12, 2013.
[143] Natalie Campbell-Rodriques, Setting the tone at the top, The New Times, February 15, 2017.
[144] Center for Regulatory Strategy, Managing Conduct Risk: Addressing Drivers, Restoring Trust, Deloitte, 2017.
[145] Delotte Development, Tone at the top: The first ingredient in a world-class ethics and compliance program, Deloitte, 2015.
[146] Michael Volkov, Trust and Integrity: The Value of a Company’s Reputation – building a culture of ethics yields a high ROI, Corporate Compliance Insights, May 19, 2016.
[147] Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017. Note: The general counsel and inside lawyers, have taken on strategic direction of major matters affecting the corporation — ranging from, among other things, consequential public policy debates to building a culture of integrity:
“The general counsel must forge an unbreakable bond between performance, integrity and risk on a set of core corporate issues: business strategy, culture, compliance, ethics, risk, governance, citizenship and organization. In so doing, the general counsel must help create the trust in the enterprise which is so vital to its sustainability and durability: trust among employees, shareholders, creditors, customers, suppliers, regulators, media, NGOs and communities.”
[148] Ben Heineman, Jr., Only the Right CEO Can Create a Culture of Integrity, Harvard Law School Forum on Corporate Governance and Financial Regulation, June 5, 2013; Ben Heineman, Jr., High Performance with High Integrity, 2008. Also see, Susan Gunelius, Brand Trust and Integrity Starts with the CEO, Corporate Eye, June 12, 2013.
[149] Enron accounting scandal: Enron was an energy, commodities and services company. It was based in Houston and was the sixth largest company in the United States. Through creative accounting, the CEO (Jeff Skilling) and former CEO (Ken Lay), with several key executives, lead the organization in its inflation of assets and profits, and concealing risky investments and financial losses. Arthur Anderson was the accounting firm for Enron. The company’s fraudulent activities were made public by an internal whistleblower. The company filed for bankruptcy. At that time, it was the largest corporate financial bankruptcy in the world. Jeff Skilling and Ken Lay were convicted of conspiracy and fraud (note: Jeff Skilling was sentenced to 24 years in prison, reduced on appeal to 10 years. Ken Lay died prior to sentencing. Two other executives received sentences of 6 and 7 years). Shareholders lost $74 billion, and employees lost pensions worth billions of dollars. See, Enron Fast Facts, CNN, April 27, 2017; Enron Scandal: The Fall of a Wall Street Darling, Investopedia, December 2, 2016; Jean Folger, The Enron Collapse: A Look Back, Investopedia, November 30, 2011. See, Enron Fast Facts, CNN, April 27, 2017; Enron Scandal: The Fall of a Wall Street Darling, Investopedia, December 2, 2016; Jean Folger, The Enron Collapse: A Look Back, Investopedia, November 30, 2011.
[150] Note: There are opportunities for external counsel and in-house counsel to be trusted advisors, and this would be best achieved with strong external counsel working in a strategic partnership with the General Counsel / Chief Legal Officer (who has become a core member of top corporate executive leadership teams). Currently, strong ethical General Counsel are well positioned in national and multinational corporations where the role is recognized by the Board and CEO as important to the organization’s success. See, Through the Looking Glass: General Counsel Report 2016, KMPG, September 2016; Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017:
- The general counsel has often replaced the senior partner in the outside law firm as a primary counsellor for the CEO and the board of directors with very broad scope beyond law that includes: ethics; reputation; governance; communications; public policy; enterprise risk; crisis management; and, ultimately, corporate citizenship.
- The general counsel is now often a core member of the top management team and participates in discussion and debate — not just about defence but also about offence, not just about risks but also about opportunities, not just about black and white lines which may not be crossed by also about different choices in areas of grey, not just about law and related matters, but also about corporate strategy on basic issues like capital allocation, competitive strategy, new products, emerging technologies and new geographies.
- The general counsel now often has a broad organizational and leadership role beyond the legal department — in such areas as tax, trade, environment, security, real estate, customer care, community relations and public affairs. She can have operating responsibilities over diverse units which require broad managerial skills and which, in many instances, make her the final decision-maker in a corporation.
- The general counsel is seen as having importance and stature comparable to the chief financial officer by directors, CEOs and business leaders because the health of the corporation requires that it navigate complex and fast-changing law, regulation, litigation, public policy, politics, media and interest group pressures across the globe.
- General counsel and inside lawyers are increasingly advocates, points of contact or negotiators with important public and private parties outside the corporation in both developed and developing economies. Because governments affect markets in all nations — along a spectrum from the state capitalism of former communist states to the variety of “mixed economies” in traditional “liberal” democracies — the “business in society” issues in these diverse global economies pose serious risk and significant opportunity. Boards and business leaders now delegate major responsibility to the general counsel to help the corporation reach its commercial objectives across a minefield of policy, law, regulation and public scrutiny. The general counsel and inside lawyers increasingly have direct relationships with key actors in both the public sector and the private sector on matters ranging from major legislation to major deals.
- The general counsel and inside lawyers, rather than just throwing issues over the transom to law firms, have taken on day-to-day management and strategic direction of major matters affecting the corporation — ranging from cross-border transactions to multi-front litigation to international enforcement investigations to consequential public policy debates to building a culture of integrity.
- All these developments have combined to increase dramatically the expertise, quality, breadth and compensation of the general counsel and inside counsel, with a company’s lawyers now being hired from the highest reaches of government, from leading law firms, and from a growing pool of highly qualified inside counsel.
[151] Ben Heineman, Jr., Only the Right CEO Can Create a Culture of Integrity, Harvard Law School Forum on Corporate Governance and Financial Regulation, June 5, 2013; Ben Heineman, Jr., High Performance with High Integrity, 2008. Also see, Susan Gunelius, Brand Trust and Integrity Starts with the CEO, Corporate Eye, June 12, 2013.
[152] Camille Jovanovic and Steve Chan, Is Corporate Culture on Your Agenda?, Institute of Corporate Directors, May 8, 2017.
[153] Ben Heineman, Jr., Only the Right CEO Can Create a Culture of Integrity, Harvard Law School Forum on Corporate Governance and Financial Regulation, June 5, 2013; Ben Heineman, Jr., High Performance with High Integrity, 2008. Also see, Susan Gunelius, Brand Trust and Integrity Starts with the CEO, Corporate Eye, June 12, 2013.
[154] Andrea Bonime-Blanc, Getting to a Culture of Integrity: The Role of the CEO, the Board and Risk Strategy, ECI Connects, December 16, 2013.
[155] Leslie Gaines-Ross, Who is Responsible for Corporate Reputation?, EthiSphere.com, May 8, 2015.
[156] Leslie Gaines-Ross, Who is Responsible for Corporate Reputation?, EthiSphere.com, May 8, 2015.
[157] Raf Weverbergh and Kristien Vermosen, Warran Buffett on reputation: the economic value of values, integrity and corporate culture, Finn; Kristien Vermosen and Raf Weverbergh, Should your CEO be the face of the company? And if so: how, when, and why, Finn; Lawrence Cunningham, Berkshire Beyond Buffett: The Enduring Value of Values, 2014.
[158] Kenneth A. Latronico, age 66, died peacefully on May 15, 2015. He was born in Chicago, IL, on October 25, 1948. He grew up in Chicago and worked as a teacher in the Chicago School System for 11 years. He received his Master’s Degree in Education from the University of Illinois and later earned his J.D. from Loyola University in 1980. Ken worked for Liberty Mutual Insurance Company for over 30 years, and retired as the Regional General Attorney for the New England Region. He was a respected American lawyer and leader. He was a respected member of the Boston Bar. He was a man of integrity. He was my friend.
[159] Micheal Coates, Five Ways to set the tone from the top, Globe and Mail, March 12, 2014.
[160] Micheal Coates, Five Ways to set the tone from the top, Globe and Mail, March 12, 2014.
[161] Terri Williams, Why Integrity Remains One of the Top Leadership Attributes, Economist.
[162] Amy Rees Anderson, Success will Come and Go, but Integrity is Forever, Forbes, November 28, 2012.
[163] Michael Volkov, Trust and Integrity: The Value of a Company’s Reputation – building a culture of ethics yields a high ROI, Corporate Compliance Insights, May 19, 2016.
[164] Enron accounting scandal: Enron was an energy, commodities and services company. It was based in Houston and was the sixth largest company in the United States. Through creative accounting, the CEO (Jeff Skilling) and former CEO (Ken Lay), with several key executives, lead the organization in its inflation of assets and profits, and concealing risky investments and financial losses. Arthur Anderson was the accounting firm for Enron. The company’s fraudulent activities were made public by an internal whistleblower. The company filed for bankruptcy. At that time, it was the largest corporate financial bankruptcy in the world. Jeff Skilling and Ken Lay were convicted of conspiracy and fraud (note: Jeff Skilling was sentenced to 24 years in prison, reduced on appeal to 10 years. Ken Lay died prior to sentencing. Two other executives received sentences of 6 and 7 years). Shareholders lost $74 billion, and employees lost pensions worth billions of dollars. See, Enron Fast Facts, CNN, April 27, 2017; Enron Scandal: The Fall of a Wall Street Darling, Investopedia, December 2, 2016; Jean Folger, The Enron Collapse: A Look Back, Investopedia, November 30, 2011.
[165] Brian Tracy, The Importance of Honesty and Integrity in Business, Entrepreneur, December 7, 2016.
[166] Dov Seldman, Why Companies Shouldn’t ‘Do’ Compliance, Forbes, May 4, 2012.
[167] Jack Ewing, Faster, Higher, Farther: The Volkswagen Scandal, May 2017; David Kiley, VW Settles DieselGate for $15 Billion, But More Shoes to Drop, Forbes, June 28, 2016; The Volkswagen emissions scandal explained, The Guardian, September 23, 2015.
[168] Melissa Eddy and Amie Tsang, German Prosecutors Search Daimler Offices in Diesel emissions inquiry, New York Times, May 23, 2017.
[169] Geoffrey Smith and Roger Parloff, Hoaxwagen: How the massive diesel fraud incinerated VW’s reputation – and will hobble the company for years to come, Fortune, March 7, 2016.
[170] Ivana Kottasova, Dieselgate isn’t over: Volkswagen’s CEO is now under investigation, CNN, May 17, 2017.
[171] Ivana Kottasova, Dieselgate isn’t over: Volkswagen’s CEO is now under investigation, CNN, May 17, 2017.
[172] Ivana Kottasova, Dieselgate isn’t over: Volkswagen’s CEO is now under investigation, CNN, May 17, 2017.
[173] Geoffrey Smith and Roger Parloff, Hoaxwagen: How the massive diesel fraud incinerated VW’s reputation – and will hobble the company for years to come, Fortune, March 7, 2016.
[174] Melissa Eddy and Amie Tsang, German Prosecutors Search Daimler Offices in Diesel emissions inquiry, New York Times, May 23, 2017.
[175] Tima Bansal, Michael King, and Gerard Seuts, The Volkswagen emissions scandal: A case study in corporate misbehaviour, Globe and Mail, September 26, 2016.
[176] Alex Gray, The world’s 10 biggest economies in 2017, World Economic Forum (weforum.org), March 9, 2017; Prableen Bajpai, The World’s Top 10 Economies, Investopedia, February 8, 2017.
[177] Tim Padgett, Brazil’s Car Wash Scandal Reveals a Country Soaked in Corruption, Bloomberg, May 25, 2017.
[178] Samantha Pearson, Brazil’s corruption probe means a boom time for lawyers, Financial Times, June 20, 2016; Antonio Batista da Silva Junior, Leadership lessons from Brazil’s anti-corruption judge, Financial Times, May 14, 2017.
[179] Samantha Pearson, Brazil’s corruption probe means a boom time for lawyers, Financial Times, June 20, 2016; Antonio Batista da Silva Junior, Leadership lessons from Brazil’s anti-corruption judge, Financial Times, May 14, 2017.
[180] Tim Padgett, Brazil’s Car Wash Scandal Reveals a Country Soaked in Corruption, Bloomberg, May 25, 2017.
[181] Ciara Long, High Level corruption scandal threatens Brazil’s political stability, CBC News, April 16, 2017.
[182] Antonio Batista da Silva Junior, Leadership lessons from Brazil’s anti-corruption judge, Financial Times, May 14, 2017.
[183] Civilian Review and Complaints Commission for the RCMP, Report into Workplace Harassment in the RCMP, April 2017.
[184] Jeff Sallot, Allegations of misconduct pile up against RCMP, Globe and Mail, April 16, 2007.
[185] For example: Canadian Press, ‘We failed. We hurt you’: RCMP commissioner apologizes in landmark settlement for harassment lawsuits, National Post, October 6, 2016.
[186] Civilian Review and Complaints Commission for the RCMP, Report into Workplace Harassment in the RCMP, April 2017.
[187] Douglas Quan, Retiring RCMP commissioner draws praise, criticism for leadership during difficult period, National Post, March 6, 2017.
[188] Civilian Review and Complaints Commission for the RCMP, Report into Workplace Harassment in the RCMP, April 2017.
[189] Alison Crawford, Toxic culture, harassment issues overshadow RCMP commissioner’s tenure, CBC News, May 17, 2017.
[190] Civilian Review and Complaints Commission for the RCMP, Report into Workplace Harassment in the RCMP, April 2017.
[191] Civilian Review and Complaints Commission for the RCMP, Report into Workplace Harassment in the RCMP, April 2017.
[192] Civilian Review and Complaints Commission for the RCMP, Report into Workplace Harassment in the RCMP, April 2017.
[193] Civilian Review and Complaints Commission for the RCMP, Report into Workplace Harassment in the RCMP, April 2017.
[194] Civilian Review and Complaints Commission for the RCMP, Report into Workplace Harassment in the RCMP, April 2017.
[195] Alison Crawford, Toxic culture, harassment issues overshadow RCMP commissioner’s tenure, CBC News, May 17, 2017.
[196] Canadian Press, ‘We failed. We hurt you’: RCMP commissioner apologizes in landmark settlement for harassment lawsuits, National Post, October 6, 2016:
“RCMP Commissioner Bob Paulson delivered an abject apology Thursday to hundreds of current and former female officers and employees who were subjected to alleged incidents of bullying, discrimination and harassment dating back 42 years.
Paulson made the apology as he announced the settlement of two class-action lawsuits stemming from the harassment allegations, some of which date back to September 1974. He said the federal government has earmarked $100 million for payouts.
“To all the women, I stand humbly before you today and solemnly offer our sincere apology,” an emotional Paulson told a news conference in Ottawa. “You came to the RCMP wanting to personally contribute to your community and we failed you. We hurt you. For that, I am truly sorry.”
[197] Alison Crawford, Toxic culture, harassment issues overshadow RCMP commissioner’s tenure, CBC News, May 17, 2017. See, Ken MacQueen, The RCMP: a Royal Canadian Disgrace, Maclean’s, November 18, 2011; Nancy Macdonald and Charlie Gillis, Inside the RCMP’s biggest crisis, Maclean’s, February 27, 2015; Canadian Press, Public Safety Minister expresses ‘outrage’ at RCMP’s ‘toxic workplace’, Maclean’s, February 19, 2016;
[198] Nancy Macdonald and Charlie Gillis, Inside the RCMP’s biggest crisis, Maclean’s, February 27, 2015.
[199] Ken MacQueen, The RCMP: a Royal Canadian Disgrace, Maclean’s, November 18, 2011.
[200] Douglas Quan, Retiring RCMP commissioner draws praise, criticism for leadership during difficult period, National Post, March 6, 2017.
[201] Ken MacQueen, The RCMP: a Royal Canadian Disgrace, Maclean’s, November 18, 2011.
[202] Kevin McFarland, Everything you need to know about FIFA’s Corruption Scandal, Wired, May 27, 2015; Buddle Findlay, FIFA scandal: The sport of White Collar Corruption, Lexology, June 23, 2016.
[203] Rory O’Callaghan, FIFA president Gianni Infantino attacks ‘self-professed governance gurus’, Sky Sports, May 11, 2017.
[204] Rob Harris, Ousted FIFA ethics prosecutor says ‘several hundred’ cases ongoing, Globe and Mail, May 10, 2017; Rob Harris (Associated Press), FIFA Judge, Prosecutor decry ousting, future of ethics cases, Washington Post, May 9, 2017.
[205] Rory O’Callaghan, FIFA president Gianni Infantino attacks ‘self-professed governance gurus’, Sky Sports, May 11, 2017.
[206] Associated Press, FIFA Boss won’t say why he fired ethics judge, prosecutor amid mounting criticism: President Gianni Infantino has declined to discuss the reasons for not handing new terms to FIFA’s ethics prosecutor and judge, Toronto Star, May 10, 2017.
[207] Jacquelyn Smith, This CEO Learned Her Hiring Strategy from Warren Buffett, Business Insider, October 2, 2014; Adam Bryant, Penny Herscher of FirstRain: What Parents Can teach a CEO, New York Times, September 27, 2014; Joyce E. A. Russell, Career Coach: Are you an ethical leader?, Washington Post, March 23, 2014.
[208] Wayne Brody and Mark Rowe, Corporate Culture and Compliance in the 21st Century, New York Law Journal: Compliance, October 27, 2014.
[209] Susan Page, Donald Trump has biggest credibility gap of any president since Nixon, USA Today, May 15, 2017.
[210] Julian Zelizer, Trump thinks he can get away with anything, CNN, May 13, 2017.
[211] David Graham, The Many Scandals of Donald Trump: A Cheat Sheet, The Atlantic, January 23, 2017; David Graham, The Scandals of Donald Trump: Presidential Edition, The Atlantic, May 15, 2017.
[212] Rachael Bade and Burgess Everett, GOP leaders play it safe as Trump scandals grow, Politico, May 25, 2017; David Graham, The Scandals of Donald Trump: Presidential Edition, The Atlantic, May 15, 2017. Also see, Tom LoBianco, Ted Barrett, and Manu Raju, Graham believes Russia probe ‘considered a criminal investigation’, CNN, May 18, 2017; Jennifer Williams, The new special counsel investigating Trump: who he is, what he can do, what comes next, Vox, May 17, 2017.
[213] Matt Zapotosky, Everything you need to know about the Russia investigation’s ‘special counsel’, Washington Post, May 17, 2017; Rebecca Ruiz and Mark Landler, Robert Mueller, Former F.B.I. Director, Is Named Special Counsel for Russia Investigation, New York Times, May 17, 2017.
[214] Is This a Constitutional Crisis? Legal Experts size up the Comey firing: Robert Post (Professor Yale Law School), The Rule of Law will Disintegrate, Politico Magazine, May 9, 2017.
[215] Esme Cribb, GOP Senator: Trump’s Firing of Comey Worsens ‘Erosion of Trust’ in Government, Talking Points Memo.com, May 14, 2017; Mallory Shelbourne, GOP Senator: Comey firing ‘exacerbates the erosion of trust in our institutions’, The Hill, May 14, 2017.
[216] Thomas Ricks, General McMaster, Step Down – and Let Trump be Trump: Save your reputation while you still can, Politico, May 28, 2017. Also see, Ben Doherty, John McCain urges allies to stand by US during ‘troubled times’, The Guardian, May 30, 2017; Paul Mason, We need a new defence strategy – Donald Trump has hung Europe out to dry, May 29, 2017; Michael Birnbaum and Rick Noack, Following Trump’s trip, Merkel says Europe can’t rely on ‘others’. She means the U.S., Washington Post, May 28, 2017; Samuel Osborne, Angela Merkel says Germany can no longer rely on Donald Trump’s America: ‘We Europeans must take our destiny into our own hands’, Independent, May 28, 2017; Laura King, Trump returns to an increasingly troubled White House and criticism from allies, Los Angeles Times, May 28, 2017; Rachael Revesz, Donald Trump acted like ‘a drunk tourist’ on Europe trip that led Angela Merkel to proclaim end of US alliance, Independent, May 29, 2017; James Masters, Trump’s actions have ‘weakened’ the West, German foreign minister says, CNN, May 29, 2017; David Frum, Trump’s Trip Was a Catastrophe for U.S. – Europe Relations, The Atlantic, May 28, 2017; Hans-Jurgen Jakobs, Merkel’s Trust in US Crumbles, Hadelsblatt Global, May 29, 2017;
[217] Editorial Board, Trump’s ‘dark brilliance’ explains why he keeps getting away with lies: Editorial, The Star, February 26, 2017 (“Donald Trump lies. He lies constantly, compulsively, brazenly”.); David Frum, How to Build an Autocracy, The Atlantic, March 2017 (“…demoralize potential opponents by nurturing the idea that everybody lies and nothing matters”.); Richard Cohen, Will Trump’s health-care plan cover congenital lying?, Washington Post, March 24, 2017; Charles Blow, Birth of the Biggest Lie, New York Times, March 23, 2017 (“Trump’s strategy for dealing with a lie is often to tell a bigger lie … The Trump presidency is a corruption that flows from corruption. It is damned by its own lies”.); David Leonhardt, All the President’s Lies, New York Times, March 20, 2017 (“… the current president of the United States lies. He lies in ways that no American politician ever has before. … Trump sets out to deceive people. As he put it, “I play to people’s fantasies”); David Barstow, ‘Up is Down’: Trump’s Unreality Show Echoes His Business Past, New York Times, January 28, 2017; Editorial, A President’s Credibility: Trump’s falsehoods are eroding public trust, at home and abroad, Wall Street Journal, March 21, 2017 (“Two months into his Presidency, Gallup has Mr. Trump’s approval rating at 39%. No doubt Mr. Trump considers that fake news, but if he doesn’t show more respect for the truth most Americans may conclude he’s a fake President”); Ezra Klein, Trump Promised to protect the sick and poor. He lied: Trump’s health care plan and budget show the scandal hiding in plain sight, Vox, May 24, 2017; Cover, Grin Reaper: Trump Cheers as House votes to strip 24M of Bamcare, New York Daily News, May 5, 2017; David Choi, ‘Grin Reaper’: New York Daily News rips Trump over Obamacare repeal, Business Insider, May 5, 2015; Mark Landler, Trump’s Falsehoods Make Foreign Leaders Ask: Can we Trust Him?, New York Times, January 31, 2017.
[218] Susan Page, Donald Trump has biggest credibility gap of any president since Nixon, USA Today, May 15, 2017. Also see, Sonam Sheth, The White House has a credibility crisis – and it’s started to engulf one of its most independent voices, Business Insider, May 27, 2017.
[219] Jen Psaki, Trump’s credulity is shot, CNN, March 22, 2017.
[220] Editorial, A President’s Credibility: Trump’s falsehoods are eroding public trust, at home and abroad, Wall Street Journal, March 21, 2017.
[221] Michael Birnbaum and Rick Noack, Following Trump’s trip, Merkel says Europe can’t rely on ‘others’. She means the U.S., Washington Post, May 28, 2017:
“Merkel’s comment about what she has experienced in the past few days is a clear reference to President Trump’s disastrous European tour. Her belief that the United States is no longer a reliable partner is a direct result of Trump’s words and actions. The keystone of NATO is Article 5, which has typically been read as a commitment that in the event that one member of the alliance is attacked, all other members will come to its aid. When Trump visited NATO, he dedicated a plaque to the one time that Article 5 has been invoked — when all members of NATO promised to come to the United States’ support after the terrorist attack on Sept. 11, 2001. However, Trump did not express his commitment to Article 5 in his speech to NATO, instead lambasting other NATO members for not spending enough money on their militaries. …
This cements the impression of the United States as an unreliable partner. Trump has ostentatiously refused to express his commitment to an agreement that has been the bulwark of Europe-U.S. security relations over the past three generation. … While many authoritarian states are cheered by Trump’s election and actions, since he is unlikely to press them on human rights and other sore points, traditional U.S. allies are enormously disheartened.”
[222] Sonam Sheth, The White House has a credibility crisis – and it’s started to engulf one of its most independent voices, Business Insider, May 27, 2017; Mark Landler, Trump’s Falsehoods Make Foreign Leaders Ask: Can we Trust Him?, New York Times, January 31, 2017.
[223] Mark Landler, Trump’s Falsehoods Make Foreign Leaders Ask: Can we Trust Him?, New York Times, January 31, 2017.
[224] Esme Cribb, GOP Senator: Trump’s Firing of Comey Worsens ‘Erosion of Trust’ in Government, Talking Points Memo.com, May 14, 2017; Mallory Shelbourne, GOP Senator: Comey firing ‘exacerbates the erosion of trust in our institutions’, The Hill, May 14, 2017.
[225] Richard Edelman, An Implosion of Trust, Edelman.com, January 15, 2017.
[226] Holly Green, The Decline of Trust (and What We can Do About It), Forbes, February 12, 2013.
[227] How Rand is Responding to Truth Decay: Q&A with Michael Rich and Jennifer Kavanagh, Rand.org, May 5, 2017.
[228] Elliot Hannon, Trump and Priebus Reportedly Pushed Comey to Publicly Clear Trump in Russia Investigation, Slate, May 18, 2017.
[229] Bryan Logan, Trump ‘essentially declared war’ by firing James Comey, but the worst may be yet to come, Business Insider, May 11, 2017; Editorial, The Guardian View on Trump’s Behaviour: tyrannical not presidential – man in White House governing like president of a banana republic, not leader of oldest constitutional government in modern times, The Guardian, May 10, 2017.
[230] Editorial, The Guardian View on Trump’s Behaviour: tyrannical not presidential – man in White House governing like president of a banana republic, not leader of oldest constitutional government in modern times, The Guardian, May 10, 2017.
[231] Susan Page, Donald Trump has biggest credibility gap of any president since Nixon, USA Today, May 15, 2017.
[232] Margle Warrell, The Trust Deficit: The Price We Pay When Power Trumps Principle, Forbes, March 28, 2017.
[233] Josh Gerstein, Russia Scandal ices government lawyer hiring: …as scandals have spread, the candidate pool has shrunk, Politico, May 28, 2017; Andrew Restuccia, Russia probe scares off potential appointees, Politico, May 31, 2017; Peter Baker and Maggie Haberman, As Trump Weighs Shake-up, He Faces Recruiting Challenge, New York Times, May 30, 2017.
[234] Josh Gerstein, Russia Scandal ices government lawyer hiring: …as scandals have spread, the candidate pool has shrunk, Politico, May 28, 2017.
[235] Daniel Korschun, Boryana Dimitrova, and Yoto Yotov, America’s worsening global reputation could put billions in US exports at risk, Business Insider, May 25, 2017.
[236] Daniel Korschun, Boryana Dimitrova, and Yoto Yotov, America’s worsening global reputation could put billions in US exports at risk, Business Insider, May 25, 2017.
[237] Daniel Korschun, Boryana Dimitrova, and Yoto Yotov, America’s worsening global reputation could put billions in US exports at risk, The Conversation, May 24, 2017 and Business Insider, May 25, 2017.
[238] John Cassidy, If Donald Trump Were a CEO He’d Probably be fired Today, The New Yorker, May 16, 2017; John Micklethwait, Would You Let Trump Run Your Company? Of all the ways to measure Trump, judging him as a chief executive would seem to be fairest, Bloomberg, May 18, 2017; Jena McGregor, Trump invited the CEO comparisons, and now he’s being held to them, Washington Post, May 19, 2017; Lacey Rose, Marisa Guthrie, Billy Bush Breaks his Silence on Trump, the ‘Access Hollywood’ Tape, NBC and a Comeback Plan, Hollywood Reporter, May 21, 2017; Alexander Nazaryan, Billy Bush on Infamous Donald Trump Tape: The Broadcaster Talks about President’s Lewd Remarks for First Time, Newsweek, May 22, 2017; David Graham, The Many Scandals of Donald Trump: A Cheat Sheet, The Atlantic, January 23, 2017.
[239] John Micklethwait, Would You Let Trump Run Your Company? Of all the ways to measure Trump, judging him as a chief executive would seem to be fairest, Bloomberg, May 18, 2017.
[240] PwC 2016 CEO Success Study, strategyand.pwc.com; Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera, Are CEOs Less Ethical Than in the Past?, Strategy and Business, May 15, 2017; Canadian Press, More North American CEOs leaving posts due to ‘ethical lapses’, study says, Toronto Star, May 15, 2017. Also see, George Petras, CEOs depart after bad behaviour, USA Today, April 28, 2016; Sam Thielman and Rupert Neate, Roger Ailes ‘to be fired’ from Fox News amid sexual harassment claims, The Guardian, July 18, 2016; Agustino Fontevecchia, Lockheed CEO- Elect Kubasik Fired Over Improper Relationship with Female Subordinate, Forbes, November 9, 2012; Eric Sigurdson, Leadership Qualities: from Wells Fargo to Donald Trump – character, integrity, and ethics are necessities, not luxuries, Sigurdson Post, October 17, 2016.
[241] John Micklethwait, Would You Let Trump Run Your Company? Of all the ways to measure Trump, judging him as a chief executive would seem to be fairest, Bloomberg, May 18, 2017.
[242] Michael Volkov, Trust and Integrity: The Value of a Company’s Reputation – building a culture of ethics yields a high ROI, Corporate Compliance Insights, May 19, 2016; Brian Tracy, The Importance of Honesty and Integrity in Business, Entrepreneur, December 7, 2016.
[243] WEF Leadership, Trust and Performance Equation Project prepared in collaboration with PwC, The Evolution of Trust in Business: From Delivery to Values, World Economic Forum, January 2015.
[244] Harvey Schachter, Why leaders need to have integrity, Globe and Mail, September 8, 2013. Also see, Center for Creative Leadership, ccl.org.
[245] Amy Rees Anderson, Success will Come and Go, but Integrity is Forever, Forbes, November 28, 2012.
[246] George Van Valkenburg: “Leadership is doing what is right when no one is watching”.
[247] Michael Josephson, Whatwillmatter.com.
[248] Harvey Schachter, Why leaders need to have integrity, Globe and Mail, September 8, 2013; William Gentry, Kristin Cullen, and David Altman, The Irony of Integrity: A Study of the Character Strengths of Leaders, Center for Creative Leadership, March 2016.
[249] Mariann B. Snyder, Between a Rock and a Hard Place?, Compliance and Ethics Blog, May 8, 2017.
[250] Peter Goldman, The Trump Administration and Tone at the Top, Linkedin, January 25, 2017.
[251] White Paper on Decoding the Complexity of Trust – Leadership, Trust and Performance Equation Project Phase II (2014-2015) Key Findings, World Economic Forum, April 2015.
[252] 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com.
[253] Harris Poll, Oil, Pharmaceutical, Health Insurance, Banking, Tobacco and Utilities Top the List of Industries That People Would Like to See More Regulated, prnewswire.com, Dec. 15, 2011; Harris Poll, Oil, Pharmaceutical, Health Insurance, Tobacco, Banking, and Utilities Top the List of Industries That People Would Like to See More Regulated, prnewswire.com, Dec. 15, 2012.
[254] Dan Ovsey, Canadians say more government regulation of industry is needed despite relatively high trust of business, study shows, Financial Post, January 30, 2014; 2017 Edelman Trust Barometer, Global Annual Study, Edelman.com. Also see, PwC 2016 CEO Success Study, strategyand.pwc.com; Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera, Are CEOs Less Ethical Than in the Past?, Strategy and Business, May 15, 2017.
[255] Deborah L. Rhode (Stanford law professor), Lawyers as Leaders, 2013; Tristin Hopper, Campaign aims to boost Canadians’ plummeting trust in lawyers, but is that even possible?, National Post, July 31, 2013; Staci Zaretsky, Scientific Study Concludes No One Trusts Lawyers, Above the Law, Sept. 24, 2014; Susan Fiske and Cydney Dupree, Gaining trust as well as respect in communicating to motivated audiences about science topics, Proceedings of the National Academy of Sciences of the United States of America, April 3, 2014; Catherine Baksi, Lawyers ‘not trusted’ by majority , says consumer watchdog, The Law Society Gazette (UK), June 21, 2011.
[256] Richard Edelman, An Implosion of Trust, Edelman.com, January 15, 2017.
[257] Kent Grayson, Broad-Scope Trust: The Trust Problem Many Business Leaders Ignore, Linkedin, April 27, 2017.
[258] Mike Myatt, 15 Ways to Identify Bad Leaders, Forbes, October 18, 2012. Also see, Eric Sigurdson, Leadership Qualities: from Wells Fargo to Donald Trump – character, integrity, and ethics are necessities, not luxuries, Sigurdson Post, October 17, 2016.
[259] Jon Huntsman, Winners Never Cheat: Even in Difficult Times, 2008; Brian Tracy, The Importance of Honesty and Integrity in Business, Entrepreneur, December 7, 2016.
[260] Thomas Paine, The Crisis No. I (written 19 December 1776, published 23 December 1776); Steve Straub, Thomas Paine, These are the times that try men’s souls, Federalist Papers Project, July 16, 2012; Tiffani Alexander, Q&A with the EIC: Ben Heineman on Leadership in Times of Disruptive Change, Docket (ACC.com), April 4, 2017 (“To paraphrase Tom Paine, these are times that try CEOs — GCs’ — souls.”).
[261] Keith Schneider, Alvin Toffler, Author of ‘Future Shock’, Dies at 87, New York Times, June 29, 2016.
[262] David Harder, The Wake-Up Call: Why Our Country Is At Each Other’s Throats, Linkedin, May 6, 2017.
[263] David Gergen, Eyewitness to Power (2001) – Quote by Alan K. Simpson, a U.S. Republican Senator from 1979 to 1997: “If you have integrity, nothing else matters. If you don’t have integrity, nothing else matters”. And see, Tim Mak, 9 best Alan Simpson quotes, Politico, May 24, 2012:
“Telling the truth is the essence of leadership. If you have integrity, nothing else matters. And if you don’t have integrity, nothing else matters. It would be good when the vice president remembers that.” — Slamming Vice President Al Gore on the campaign trail, Oct. 2000, to the Dallas Morning News.
[264] Jayne R. Reardon, Civility as the Core of Professionalism, American Bar Association, 2014.
[265] WEF Leadership, Trust and Performance Equation Project prepared in collaboration with PwC, The Evolution of Trust in Business: From Delivery to Values, World Economic Forum, January 2015.
[266] Editor’s Note, Willaim Cohen, Why Integrity and Trust are the Most Important Attributes of Leadership, Management Matters Network, October 17, 2016.
[267] Amy Rees Anderson, Success will Come and Go, but Integrity is Forever, Forbes, November 28, 2012.
[268] Delotte Development, Tone at the top: The first ingredient in a world-class ethics and compliance program, Deloitte, 2015.
