Author: David Gebler

Can there ever be too much transparency? Transparency has been recognized as a vital attribute for organizational health and performance. Organizations that demonstrate transparency give voice for employee concerns.

Leaders that are willing to be vulnerable in sharing even bad news create environments where employees can admit mistakes before crises erupt.

So when is too much transparency?

In the wake of the recent Asiana Airlines Boeing 777 crash in San Franscisco, many observers were praising The National Transportation Safety Board (NTSB) for their outpouring of information about the incident. However, as was reported in The Atlantic the Air Line Pilots Association (ALPA) believed that the NTSB was revealing too much. Were they protecting one of their own, or were they correct in being concerned about the damage “rampant speculation” could generate?

In an era of continuous communication, leaders have every right to be questioning how much information is too much. There is a wide range between hiding information and having a completely open book. Not every employee needs to have access to every piece of corporate information.

In a healthy culture employees can ask legitimate questions and be entitled to get timely responses, even if the response is “here is what we can talk about and here is what we can’t, and why we can’t.” Leaders who are successful in creating a culture of transparency have earned the trust of employees so that no one feels that information is being hidden, but that when information is requested, those requests are handling with respect and due attention.

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David Gebler is the President of Skout Group, an advisory firm helping global companies use their values to clear the roadblocks to performance. David’s book, The 3 Power Values is now available. Send your thoughts and feedback to dgebler@skoutgroup.com.

By David Gebler and Donna Boehme

In the wake of the Penn State child abuse scandal, many in the media were outraged by the NCAA’s decision to instantly vacate the university’s win record from 1998 through 2011. As two ethicists with a combined 40+ years working in the trenches with organizations and their cultures, we’d like to offer the opposite view: the NCAA got it exactly right.

Former FBI agent and assistant US attorney Louis Freeh was unflinchingly stern toward Penn State’s “culture of reverence” for legendary coach Joe Paterno, his coaching staff, and the entire football program in his detailed 270-page independent report. Culture is a dramatic influencer of behavior for better or for worse.

While each individual is personally responsible for his or her actions, the culture we’re immersed in determines how hard it will be to maintain our integrity, and whether our human vulnerabilities will drive us to do things we’re not proud of.

Culture can neither be internally mandated nor externally legislated. In short, culture is “the way things are done around here.” Good or bad, an organization’s culture is grown organically from within and driven by the words and actions of its leaders. At Penn State, that culture was a blind hero worship of all things football, and it permeated every level of the organization and the community, with terrible results.

So entrenched was its hero worship culture that crowds of angry students rioted and women sobbed after the board’s unanimous decision to fire Paterno, even after the shocking revelations of unrestrained child sexual abuse were widely disseminated. That one scene alone said it all about the powerful impact an embedded culture can have on an entire organization.

Healthy organizations have checks and balances to guide how they govern themselves, allocate resources, and make important decisions. It’s the role of boards, internal and external audits, legal and compliance policies, and even individual employees to enforce accountability and serve as controls on the operation of unchecked power. But in some organizations, like Penn State, the entire system of checks and balances can be subverted by culture.

A hero worship culture trumps controls. It creates blinders that can cloud decision-making and destroy any sense of individual responsibility or “the right thing to do”—even for a 28-year-old assistant coach stumbling upon a horrific attack on a child in a locker room shower.

That culture drives an entire university community—from an acquiescent board, to deferential administrative officials, to devoted students and public fans—to create a cult of personality around a legendary coach and an entire football program.

In his report, Freeh describes it as a “culture of reverence for the football program that is ingrained at all levels of the campus community.” In the face of such idolatry, a mere victim, a victims’ family, or an observant employee doesn’t really stand a chance.

Faced with a potential scandal, and influenced by their hero worship culture, Penn State officials repeatedly hid damaging facts, empowering Sandusky to continue his despicable acts. The Freeh report confirms a conspiracy of silence designed to save an institution’s reputation (and lucrative revenue stream) at the cost of young lives, both those who had already been harmed and those who were yet to be harmed.

The independent panel describes “callous disregard for child victims” and “an active agreement to conceal”—all of this to save the institution from scandal and negative press.

Although Freeh may have found elements of a conspiracy, no one had to be told what to do. As one janitor who was an eye witness to the abuse said in his testimony, reporting what he saw to the police “would have been like going against the President of the United States.”

Penn State’s culture acted as an unstoppable force rising up to protect the institution and its officials, with unthinkable, monstrous consequences.

What’s needed at Penn State is a complete blood transfusion of good culture for bad. Joe Paterno’s hero status and the university’s “win at all costs” identity have to be replaced by accountability and transparency.

Presaged by the symbolic removal of Paterno’s iconic statue in the same week, the NCAA’s debilitating penalties have set the table for the institution to spend years, perhaps decades, resetting “the way things are done around here,” initially under the careful watch of a court-appointed monitor.

During what will undoubtedly be a long and painful rebuild, one hopes that a new leadership and a meaningful system of checks and balances will begin to create a new culture of individual responsibility and integrity, ultimately exorcising the hero worship culture that brought a once-great institution to its knees.

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Donna Boehme is Principal, Compliance Strategists LLC, member of the advisory board of the RAND Center for Corporate Ethics and Governance, and former global compliance and ethics officer of two leading multinationals. Learn more at www.compliancestrategists.com.

David Gebler (www.skoutgroup.com) is the principal of Skout Group, LLC, a global firm advising organizations on reducing culture-based risk and is the author of The 3 Power Values: How Commitment, Integrity and Transparency Remove the Roadblocks to Performance (Jossy-Bass, 2012).

What’s at the heart of many of today’s scandals? Legal and even innocent behavior that creates a toxic culture.

Take the recent GSA scandal for example. As quoted today in Forbes:

David Gebler, a whistleblowing expert, lawyer, and author of The 3 Power Values: How Commitment, Integrity, and Transparency Clear the Roadblocks to Performance, says good intentions can lead to bad outcomes in business, and the GSA scandal provides an apt example of this.

“With all the rampant spending at the GSA, one has to ask if employees were afraid to speak up, lest they upset their coworkers,” he said. “Or perhaps they had become complacent in an upbeat, backslapping culture that rewarded everyone early, often, and extravagantly. Time will tell. In the case of the GSA, the good intention of employees—being a team player—led to a very bad result. But it’s poor leadership that created that toxic culture and allowed it to drag good employees down.”

David Gebler is the President of Skout Group, LLC and the author of The 3 Power Values: How Commitment, Integrity and Transparency Clear the Roadblocks to Performance (2012 Wiley)

SAIC, a major government technology contractor, just agreed to pay the City of New York $500 million to settle charges of fraud in the development of an employee timekeeping system. Yes, a couple of employees were the real bad apples, engaging in fraud, kickbacks, and money-laundering.

But SAIC’s real crime, the actions that cost it one-half BILLION dollars, was its inability to deal with this issue when it occurred. SAIC was not aware of its culture-based risks…and it is paying the price.

As quoted in the press:

“Some SAIC managers failed to perceive or ignored significant and pervasive irregularities,” the company said in court papers. “SAIC’s failures resulted, in part, from an overemphasis on the financial and operational success of the project.”

The project’s senior manager, Gerard Denault, has pleaded not guilty to criminal charges. SAIC said that Denault’s managers had missed or ignored his creation of an atmosphere of fear in the office that discouraged subordinates from coming forward.

When some employees went to Denault’s supervisors with concerns, they “reacted with inappropriate skepticism, shifted the burden to the employees to prove their assertions, and failed to pass on the concerns to the proper company personnel for investigation,” the company said.

A “check-the-box” compliance program would not have prevented this problem then, nor will it prevent it from happening again. SAIC must look deeply into its organizational culture: which employees are hesitant or disengaged enough to not report what they see, and why? And if managers are not taking swift enough action to address these risks, then why are more senior leaders not being held responsible.

A $500 million cost is not one that any company should have to pay once…and certainly not twice

David Gebler is the President of Skout Group, LLC, business advisors helping global organizations measure and manage culture-based risks to performance. David’s book The 3 Power Values: How Commitment, Integrity and Transparency Clear the Roadblocks to Performance is available from Jossey-Bass.

In their new book, Repeatability, Bain & Co partners Chris Zook and James Allen show that a small percentage of companies sustained profitability over long periods do so because they are able to control growing complexity which slows them down. These leading companies have repeatable models that allow the company to react to new situations in a systematic way.

Zook and Allen write in the Harvard Business Review:

Our findings show that the simplest strategies, built around the sharpest differentiations, have hidden advantages not only with customers but also internally, with the frontline employees who must mobilize faster and adapt better than competitors. When people in an organization deeply understand the sources of its differentiation, they move in the same direction quickly and effectively, learning and improving the business model as they go. And they turn in remarkable performance year after year.

Easier said than done. The three steps that are the recipe for success: 1) a well-differentiated core that is well understood, 2) a short list of non-negotiable business practices, and 3) robust learning and feedback loops, are the very places where strategy execution breaks down. After the intense efforts to evaluate and refine your company’s strategy for success, leadership often falls short on the implementation. It is in the nuts and bolts of making the plan operational where good strategies get bogged down.

Our work in values and culture has shown that there are three core areas, represented by three critical values, which must be effectively managed if an organization’s strategy will succeed to moving from the boardroom to the field.

Commitment –

Zook and Allen call for a “well-differentiated core.” Whether the strategy is narrowing the company’s focus to sustain strong product and service differentiation, or reorganizing to better manage costs, how much effort has truly been made to ensure that everyone is on board? Research has shown that in the 10 percent of companies that have achieved more than modest levels of profitable growth over a decade, there is clarity from top to bottom as to what the company stands for and how it will succeed. From Apple to IKEA, employees and customers know exactly what the company stands for. What are you doing to ensure that your employees are engaged and committed? Are the values of your people aligned with your organization’s mission and goals?

Integrity –

According to the Bain research, companies with repeatable models translate their strategies into a few simple values and business practices that everyone can understand and use to shape decisions and actions. Discipline in execution requires everyone to be on the same page. Consistency and predictability in how everyone does their job is essential. So make it simple. Work with leaders all the way down to front line supervisors to develop a very short list of business practices that become non-negotiable. There must be clearly understood consequences for not following these steps. Consistency and fairness is a critical foundation for commitment.

Transparency –

Things change quickly and companies must adapt. A learning organization that can gather inputs and self-correct must be built on a foundation of trust. Employees at all levels must first embody values that support collaboration, teamwork and innovation. And then the organization must be self-aware to know where and when those values are repressed and challenged.

Measuring and managing these three “power values” will ensure that great strategies can sustain great companies.

David Gebler is the President of Skout Group, LLC, business advisors helping global organizations measure and manage culture-based risks to performance. David’s book The 3 Power Values: How Commitment, Integrity and Transparency Clear the Roadblocks to Performance is available from Jossey-Bass.

Political scientist James Q. Wilson recently passed away at the age of 80. Wilson and co-author George L. Kelling argued in a landmark 1982 article in The Atlantic that communities must address minor crimes and their effects, such as broken windows, to prevent larger problems from developing. They argued the crime of vandalism wasn’t as damaging as the message the broken window sent about the community, leading to more serious crimes there.

While Wilson’s work has greatly changed policing in America, his insights have great bearing on how leaders should look at issues within their organizations. Whether the leader is looking at the purported big thing, such as an ethics issue or a strategic imperative, it is the small things that will effect the desired change. Big changes will only be implemented successfully if the community is ready to accept it. In blighted communities Wilson saw the power of fixing windows so citizens could begin to feel enough civic pride that they cared about stopping crime. In every organization there is an equivalent hot button like broken windows that needs to be addressed before leadership will have the receptive audience they seek.

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David Gebler is the President of Skout Group, an advisory firm helping global companies use their values to clear the roadblocks to performance. David’s book, The 3 Power Values is now available. Send your thoughts and feedback to dgebler@skoutgroup.com.

The Ethics Resource Center, a Washington DC based ethics research organization, released its 2011 National Business Ethics Survey. The NBES is regarded as the premier survey of ethics issues in the American workplace. This year’s survey identified some interesting trends:

On the one hand, misconduct has reached an historic low and observers of wrongdoing are more willing to report than ever. But with this good news we also see some very ominous signs – ethics cultures are eroding and employees’ perceptions of their leaders’ ethics are slipping. Additionally, pressure from employers to compromise standards is at an all-time high and retaliation has reached an alarming rate.

There are two independent dynamics working at odds here: employees are willing to report misconduct, but that is necessarily due to the ethical climates in which they work. In fact the ethical climates are becoming more challenged:

U.S. employees reported an increase in pressure to compromise their company’s ethics standards or policies, or even break the law. Thirteen percent of employees said they felt pressure to break the rules. That is the highest level since 2000 – just before a wave of corporate scandals triggered a new emphasis on corporate ethics.

The ERC research has shown for over 10 years that there is a strong correlation between the health of the organization’s culture and the number of instances of observed misconduct.

Ethics is a component of culture. The NBES measured critical aspects of ethics culture, including: management’s trustworthiness, whether managers at all levels talk about ethics and model appropriate behavior, the extent to which employees value and support ethical conduct, accountability, and transparency.

The percentage of employees who say their business has a weak ethics culture increased to 42 percent in 2011, a seven percentage point surge and the highest level since 2000.

Of the factors that determine the health of the organization’s culture, there are two that stand out: senior executives and supervisors. Employees’ perceptions of both have declined in 2011.

Confidence in senior leadership fell to 62 percent in 2011, matching the historic low observed in 2000 and down six percentage points from 2009. Far fewer employees believe their direct supervisors act as ethical leaders: one-third of employees (34 percent) say their managers do not display ethical behavior, up from 24 percent in 2009 and the highest percentage ever.

In its recommendations the ERC suggests two areas of focus that have the most impact in creating an ethical culture:

• Invest in building a strong ethics and compliance program; and „
• Commit to ethical leadership and building an ethics-focused business culture.

The challenge for leaders is that many companies lump these two concepts together. However, they are very different factors which require very different interventions. Building a strong program will ensure that employees know what is expected of them. But without leadership deeply committing itself to an ethics-focused business culture, employees just won’t feel comfortable doing what they know they should do.

Two of the key recommendations by the ERC should be top of mind of policy makers as well as corporate leaders:

For policy makers:

Encourage the measurement of ethics cultures. The strength of cultures can and should be evaluated regularly. Public officials should set the expec- tation that companies regularly conduct assessments of their workplaces. Additionally, prosecutors who are considering alternative forms of enforcement against a corporation should insist on seeing data-based evidence that company defendants have taken steps to build a sound program and a strong ethics culture

For Ethics and Compliance Professionals:

„Focus on supervisors who are the critical actors that set expectations for their direct reports, conduct evaluations, and are most likely to receive initial reports of misconduct. Develop specialized supervisor training on how to support ethical conduct by employees, how to properly handle reports of misconduct, and strategies for reducing retaliation. 2011 NBES data show that employees’ confidence in supervisors’ ethics has declined dramatically.

„Help senior executives set a proper tone from the top. Work with corporate communications experts and speechwriters to craft messages and commu- nicate effectively with employees, assuring them that even as the company takes more risks during economic recovery, integrity remains a high priority. Encourage the establishment of performance metrics related to ethical leadership and reward business leaders for talking about the importance of ethics, modeling ethical conduct and holding employees accountable to the standards of the organization.

The ERC has laid out a clear roadmap, as well as the risks of not following it. Let’s see who takes the journey

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David Gebler is the President of Skout Group, an advisory firm helping global companies use their values to clear the roadblocks to performance. Send your thoughts and feedback to dgebler@skoutgroup.com.

At some point in a scandal companies can longer gloss over the trouble with settlements and promises of reform. Curious as to whether News Corp has crossed that line.

From today’s New York Times:

As Mark Lewis, the lawyer for the family of the murdered girl, Milly Dowler, said after Ms. Brooks resigned, “This is not just about one individual but about the culture of an organization.”

Well put. That organization has used strategic acumen to assemble a vast and lucrative string of media properties, but there is also a long history of rounded-off corners. It has skated on regulatory issues, treated an editorial oversight committee as if it were a potted plant (at The Wall Street Journal), and made common cause with restrictive governments (China) and suspect businesses — all in the relentless pursuit of More. In the process, Mr. Murdoch has always been frank in his impatience with the rules of others.

According to The Guardian, whose bulldog reporting pulled back the curtain on the phone-hacking scandal, the News Corporation paid out $1.6 million in 2009 to settle claims related to the scandal. While expedient, and inexpensive — the company still has gobs of money on hand — it was probably not a good strategy in the long run. If some of those cases had gone to trial, it would have had the effect of lancing the wound.

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David Gebler is the President of Skout Group, an advisory firm helping global companies use their values to clear the roadblocks to performance. Send your thoughts and feedback to dgebler@skoutgroup.com.

The Wall St. Journal reported today that Western companies including Cisco Systems Inc. have been contracted to build an ambitious new surveillance project in China —a citywide network of as many as 500,000 cameras that officials say will prevent crime but that human- rights advocates warn could target political dissent.

Should companies be responsible for how countries use their products? Read on for a discussion of how being true to your principles is the only way to proceed…one way or another.

Today’s Wall Street Journal published an excerpt from the forthcoming book by former Chrysler and GM exec Bob Lutz. Lutz says that in the auto industry a knowledgeable autocrat is the successful model for a leader. In critiquing the bureaucracy for which GM has been famous for, Lutz says that the autocrat is the model for leadership that is decisive and can make the tough decisions needed to bring new models to the market.

Yet, Lutz does not offer reasons as to why the only cure for bureaucracy is autocracy. See the rest of the story at skoutgroup.com