What Are the Attributes of the Ethical Executive?

For some time now, I’ve been conducting my own completely unscientific “poll” of senior advisors, asking them, from their experience, to provide up to 10 attributes of executives with integrity. The question I asked was, “What are the characteristics, behaviors, and attitudes of the ethical executive?” I asked each individual for 10 examples. Here’s the list from a superstar mid-30s female:

• Honesty
• Integrity
• Fairness
• Confidence
• Vision
• Ability to view issues through multiple lenses
• Ability to flex communication styles for critical conversations
• Ability to take feedback
• Appreciation/gratitude
• Responsiveness

Then there’s this from a late 40s top-notch consultant:

• Truthful
• Courageous
• Honest
• Respectful
• Compassionate
• Just
• Humble
• Wise
• Responsible
• Reliable

Here’s the list from a Ph.D. college professor:

• Honesty
• Integrity
• Accuracy
• Transparency
• Accountability
• Fair
• Responsible
• Loyalty
• Truthful
• Professional

And, how about this from a late 50s senior agency counselor:

• Honesty
• Moral understanding and conviction
• Uncompromising (re: established standards)
• Versed in acceptable social norms
• Fair
• Unwilling to accept double standards
• Willing to share information (transparent)
• Leads by example
• Believable
• Mature value structure
• Teacher/ethical evangelist

So far, honesty and truthfulness appear on three out of the four lists. Ultimately, I think I’d like to begin creating a roster of executives who meet a great proportion of these attributes, because we only tend to hear about those who succeed or fail in spectacular ways.

My experience is that there are very few lessons to learn from those who fail. The models we need are those who have consistently demonstrated the qualities of ethical behavior, integrity, and credibility as defined by those around them.

What’s your list? Who are your candidates?

Send these to me and I’ll publish them. We’ll create a matrix of ethical executive expectations, and then, the next step will be to ask for nominations of individuals who manage and lead in the space called “integrity.”

The Growing Threat to Trial Lawyers: Apology

An interesting article in the Wall Street Journal recently highlights one of the most interesting phenomena occurring in the legal world. It’s the phenomenal power of apology to avoid litigation, manage legal crises, and be the most powerful crisis management tool.

The article’s title sums it up, “Hospitals Own Up to Errors, Some Find That Confronting Mistakes Reduces Litigation and Future Mishaps.”

Hospitals, especially, and other health care facilities are learning that owning up to their medical mistakes or the perception of poor performance promptly can significantly reduce litigation and, at the same time, prevent future similar mishaps, or perceptions.

The “I’m Sorry” movement in America is long, strong, and growing. Just visit http://www.sorryworks.net/, a Web site devoted to prompt, aggressive, and candid disclosure of medical mistakes and errors. In the Journal article, Dr. Timothy McDonald, a pediatric anesthesiologist and chief safety officer at the University of Illinois Medical Center said: “Since the hospital undertook much more aggressive patient/staff communication, and in 2006, established a policy of fully disclosing medical errors, apologizing when they occurred, and swiftly offering a financial settlement, law suits against the Center are down 40 percent compared to the period between 1999 and 2004.” “Yet,” he said, “the number of procedures increased 23 percent.”

Dr. McDonald said, “While we can’t say for certain that the disclosure program was responsible for the decreases, we can certainly say that it has not caused an increase in law suits or payouts.” I’ve witnessed similar experiences in my health care practice all across America.

The lesson is that the faster we sincerely apologize for mistakes of any kind, while there may need to be claims filed and settlements made, the threat of aggressive, costly, time consuming litigation is significantly reduced or goes away very rapidly.

Many in the legal profession remain against aggressive apologizing, claiming that it will increase lawsuits and payouts. But years of evidence is accumulating that prompt acknowledgement coupled with clear apologies and sensible offers of settlement can eliminate the litigation phase of legal interaction between victim and perpetrator, in favor of an attitude of settlement.

Yes, apologies are legal admissions and they come with a price, but they also have an extraordinary benefit — significantly limiting or eliminating litigation.

My advice to attorneys? Begin learning how to aggressively, constructively, and promptly settle matters rather than rattle the saber, slap victims around, or take an aggressive “blame the victim” posture. Increasingly, my litigation practice focuses on prompt settlements (even within 24 hours) and helping clients manage the victim dimension over the long term.

In America today, fewer than 1 in 100 civil or criminal cases filed ever get to trial. Even when litigation is threatened, the reality is that the vast majority of cases are going to be settled, mediated, negotiated, dismissed, or dropped.

In my experience in these matters for nearly 30 years, the smallest check the perpetrator is ever going to write is the check that is written today. Thirty-three states have passed laws preventing juries from considering voluntary apologies at car accident scenes in awarding damages. Twenty-one states have passed laws providing medical workers with similar protection should their case get to trial.

Will the pushback from attorneys continue? Yes it will. As one general counsel told me recently, “We’re not the empathy department of this company.” Watch for my blog on lawyer empathy coming very soon.

The future for litigation is clear and the trend is down. It all begins with those two little words: “I’m sorry . . . and we’ll make it right.” Attention attorneys: Start practicing these two little words today.

If you’re interested in starting your empathy lessons early, send me an E-mail at jel@e911.com requesting: Empathy Lesson #1, Managing the Victim Dimension.

For Crying Out Loud

When it comes to errors, goofiness, and the insensitivity of top managers, there must be a part of the business school campus that is intentionally avoided—the school of sensible answers and actions.

Case and point: A health care client recently discovered the presence of a mold in one of its buildings, a species that commonly occurs during construction. In another part of the same building, there have been suspicious deaths, although all of the patients involved were already extremely ill. The patients that expired were cared for by two different physicians, both of whom have indicated that the mold may be to blame.

The crucial issue for management seemed to be, rather than dealing with the mold issue directly, was to spend some time (several hours) discussing and debating what their disclosure obligations were. Here are the questions under discussion:

1. How much of this do we have to disclose and to whom?
2. When do we have to disclose it?
3. What should be disclosed first and what can wait?
4. If new facts arise, when do we disclose this newly found information?
5. Are we responsible for balanced disclosure?
6. What are the limits of disclosure we will tolerate before we close this door?
7. Once we start this process, how long do we have to talk about it and keep providing additional information?
8. Won’t too much disclosure discourage and frighten patients and their relatives unnecessarily?
9. Who should make the disclosures? Should this individual be an attorney?
10. What do we not have to tell anyone?
11. Is it possible that some of the information comes under HIPAA regulations and therefore must be kept confidential?
12. How much of this disclosure is a business decision and how much is a moral decision?
13. Should businesses, even health care organizations, be making moral decisions?

The disclosure dilemma occurs frequently in business life. And the habit of over analyzing seemingly simple situations by management is also too common.

What’s your opinion? What should the rules of disclosure be and under what circumstances?

CEO Sissy Factor

The Trouble Your Business School Buddies and Networks Can Get You Into

Recently, I was having dinner with the leadership of a large industrial company and the dinner table discussion turned to crises, reputation, and other kinds of problems I come across in my work. The CEO, someone I just met, asked a really interesting question. “What common leadership factors or threads do you find that might cause the crises management failures you wind up handling?”

While all crises have unique patterns, this is a Chief Executive Officer asking, and his question is really about people like himself. Here’s what I told him and his assembled managers:

There are three common behaviors among top leaders, it seems to me, that either cause, complicate, or contribute to management failures and make problems or crises worse.

1. Predecessor Paralysis

The CEO defers taking action, primarily because it will unduly embarrass or otherwise reverse or repudiate something a key predecessor has accomplished or put in motion. The thinking is, apparently, that the CEO “wouldn’t want to make their predecessors look silly.”

2. The Staff Straightjacket

The senior staff can’t agree on what an appropriate plan of action might be. They seem torn between neither wanting to offend key players or key peers, nor wanting to put themselves in any particular danger. You’ll hear the refrain, “You’ll make us all look bad, probably for no reason.”

3. The Peer or Pal Sissy Factor

This is when a buddy, peer, or pal calls and says, “Don’t give in to those buggers, you’ll look silly and foolish, and you’ll make it much, much harder for the rest of us. Besides, if you’re wrong about this, you’ll make us all look bad and set a precedent we’ll all have to live up to or live down.”

Bonus: The Jerk Factor

Some years ago, I had a client who pled guilty to hundreds of felonies. I worked very closely with the lawyers and corporate monitors to help this company resolve its issues, and to prepare for their new life and the impact of the guilty plea. We briefed managers on the company’s guilty plea the previous afternoon in Boston, by reading and then explaining the plea agreement.

Even after reading and hearing the plea agreement read out loud, the first question from the audience was for “the real story of what happened.” So I spent a little bit of time talking about the importance of understanding that the plea agreement is the story and the new tough rules, regulations, and sanctions under which the company would be operating for a while. At which point, the new president of the company (who really didn’t like me anyway) stood up and remarked, for all to hear, “Jim, when you are talking, it seems a bit like Sunday school around here.”

I responded by saying, “Bill, if my company just pled guilty to nearly three hundred felonies, I would think a little Sunday school is in order.” He didn’t laugh, although almost everyone else did. He was gone in four months, and I still occasionally consultant with the company after all of these many years.

Radical But Necessary: A New Way Forward

The 13 Commandments of Economic Change in America

Ever notice the formula for moving ahead in America? Catastrophe + democracy = progress.

It takes catastrophe to force democracy forward: Black Friday; Pearl Harbor; 9/11; Hurricane Katrina; and the market crash of October 15, 2008, so many were and remain hurt so desperately by so few.

It’s far more than a crisis management or crisis communication problem. The incompetence, ignorance, and political paralysis of government, combined with the implacable gall of America’s Greed Team—real estate, banking, Wall Street, insurance, and the commercial credit industry—has created a fragile but powerful epiphanal moment when real change in America’s economic structure and destiny is possible.

We have a brief chance to recalibrate and reset crucial economic processes that will help us deter, detect, and prevent similar situations from occurring in the future. How will we capture this moment? I believe that what will catalyze the opportunity for change is America’s growing revulsion toward Wall Street and the major economic and financial engines upon which we have relied for the last couple hundred years, and who financially robbed, raped, kicked, and stabbed so many, so easily, for so long.

Since an outbreak of business and leadership integrity is highly unlikely, and President Obama’s amorphous and nebulous quest for “change we can believe in” notwithstanding, Americans now realize that those in charge of our economic institutions (even the “new” people) are the same folks who brought us this catastrophic mess in the first place, and they are simply incapable of getting us out. We need a new strategy, a new roadmap. In the coming days, I’ll be making 13 demands for change that radically depart from the failed old formulas and arrogant greed perpetrators of yesterday and today. Here’s a sample:

1. Tie all investment transactions, of every kind, to real dollars (or currencies) and common sense.
2. Prohibit and eradicate all transactions that fictionally expand (leverage) the value of any underlying investment, including speculations, indexing, and derivatives.
3. Significantly escalate the regulations, oversight, controls, and restrictions on all transactions where any third party is investing, managing, hedging, or otherwise manipulating the financial resources of another party or parties.
4. Require extreme transparency for all transactions and related activities.
5. Completely revise how businesses are established and authorized in law to put greed second (or lower), and the community and protection of citizen wealth first.
6. Establish state-based offices to oversee and regulate Tax Subsidized Organizations (TSOs), currently known as Not-for Profits.
7. Prohibit transactions that bet on America’s failure or loss of value, including bankruptcies and short selling.

We need to break the cycle where one generation of perpetrators remains in place to teach and coach the next generation to conduct ever more sophisticated scams, deceptions, and frauds with greater frequency. This is truly a moment for innovative thinking and the breaking of old, corrupt models. Thus far, it appears very little change will occur. America’s Greed Team is already well on its way to recovery, at the expense of everyone else. All of which means that the next catastrophe will happen sooner rather than later.

I hope you’ll join the conversation and help make some demands or your own.

Boycotts . . . When Are They Real Crisis Management Threats?

Every week I review various boycott threat E-mails and comments, helping clients decide whether to take these issues seriously or not. Whenever a boycott is threatened, I always ask six diagnostic questions:

1. Are customers mentioning it as they come-in or cancel their orders, reservations, appointments, or activities?
2. Is this the subject of conversation among franchisees, related businesses, allies, partners, or employees and their families?
3. Is there chatter, at any level, about it on the Web, YouTube, Twitter, Facebook, or in chat rooms?
4. Have the bloviators, bellyachers, back bench complainers, or cable news fabricators been mentioning it more frequently?
5. Has there been an unexplained blip, positive or negative, in sales, reservations, orders, appointments, or collaboration requests?
6. Does it have or can it gain traction on college campuses? Is there some indication of independent sources of energy and focus, such as labor unions, religious organizations, or national activist organizations (e.g., ACORN and SAFE)?

If even one of these situations is happening, I would take the circumstance more seriously and begin to plan a response. Until one of these five questions gets a “yes,” the odds are that the boycott is just puff.

A little about boycotts:

• They rarely work unless the issue is so inflammatory or so obviously dangerous that a substantial number of people will alter their personal lives to participate.
• Very few people, anywhere in the world, get up in the morning and decide what they’re not going to do today.
• Truly successful boycotts are rare, but one current example is bottled water. Another less current example is activism against sweatshops and labor abuse. Among the current activist movements are several against major food producing companies, like McDonald's and Subway, on the issue of worker slavery, obscenely low wages, and abuse of farm workers.
• For boycotts to be successful, proponents need: (1) a substantive, overwhelmingly compelling issue; (2) a substantially sympathetic audience; (3) younger people or active constituencies for such causes as unions or religion, or some attraction on the college campus circuit; and most importantly, (4) there must be a target organization or industry that deserves to be singled out for punishment. People have to be angry, frightened, or vengeful.
• The most recent successful boycotts have been spontaneous and self-imposed, health focused, and usually against the foods we eat such as lettuce, spinach, tomatoes, peanut butter, asparagus, and ground beef - all due to fear of bacterial contamination.
• Most boycott attempts appear to be random political or highly emotional maneuvers, rarely well orchestrated, and therefore far less likely to succeed.

David Letterman's Crisis Management Failure

David Letterman, second-rate comedian, second-rate jokes, second-rate apologist, a man with an obvious integrity deficit.

Letterman’s silly, stupid, phony, non-apology for trashing the reputation of a 14-year-old girl is about what we would expect from this tired, old, non-talent. Except for the fact that he was sitting down, his four minutes of self-forgiving, excuse filled chitchat, followed by 30 seconds of his, less than serious, so-called apology, was really another old stand up routine, and the audience laughed and clapped. Some apology.

David, here is what an apology is:

The most constructive structure for apology I’ve seen is in The Five Languages of Apology, a book by Gary Chapman and Jennifer Thomas. Here, with some paraphrasing and modification based on my experiences, are the ingredients of the perfect apology.

1. Regret (acknowledgment) - A verbal acknowledgement by the perpetrator that their wrongful behavior caused unnecessary pain, suffering, and hurt that identifies, specifically, what action or behavior is responsible for the pain.
2. Accepting Responsibility (declaration) - An unconditional declarative statement of admission by the perpetrator recognizing their wrongful behavior and acknowledging that there is no excuse for the behavior.
3. Restitution (penance) - An offer of help or assistance to victims, by the perpetrator; action beyond the words “I’m sorry”; and conduct that truly assumes the responsibility to make the situation right.
4. Repentance (humility) - Language by the perpetrator acknowledging that this behavior needlessly caused pain and suffering for which he/she is genuinely sorry; language by the perpetrator recognizing that serious, unnecessary harm and emotional damage was caused.
5. Direct Forgiveness Request - “I was wrong, I hurt you, and I ask you to forgive me.”

The most difficult and challenging aspects of apologizing are the abject and humble admission of having done something hurtful, damaging, or wrong (which he admits he carefully planned) and to request forgiveness (which he carefully avoided). Skip even one step and you fail. Gloss over and trivialize any step and you reveal yourself for who you really are . . . someone unworthy of respect or attention.

Memo to CBS: Suspend him for a month, then probation for a year. If he does it again, kick his butt out the door and hire someone honorable, who is truly funny and the public can respect.

Let’s Keep Gitmo Going

Actually, if you think about it, Gitmo is being underutilized. It’s true that all of those dangerous terrorist types are being held there for the time being and the prison itself has become a political football, but the fact is that Guantanamo is a state-of-the-art facility and we have additional uses for it. There are others who need to be warehoused there.

Let’s use Gitmo as a place to put spammers, hackers, and bad bankers. Bernie Madoff and all of his playmates who defrauded us could be put there. It could become a special prison for those who cause mass misery, fear, or destruction.

Who knows, perhaps Cuba and the U.S. could work out a cooperative arrangement to turn the prison into a famous tourist destination. Marriott could put up a Courtyard or Residence Inn and the U.S. Postal Service could install a special letter cancelling facility. Maybe an adroit entrepreneur could build a casino there to help attract traffic and offset some of the costs of the prison.

We need Gitmo. It ought to stay an active facility for these special kinds of trouble makers and societal miscreants.

Nominate your favorite candidate to occupy the new Gitmo.

Crisis Management Questions: Working With Attorneys (Part 2)

Some things to think about:

1. Only one in every 100 cases (civil or criminal) ever gets to trial. That means the odds are very high that a case will be settled, arbitrated, or dropped. Failure to communicate until the attorneys discover that the case is not going to trial can cause serious customer, employee, victim, and senior management problems.
2. In the new world of the citizen journalist, which virtually nowadays includes employees, friends, and self-appointed bloviators and commentators of afflicted companies and organizations, someone is always willing to tell your story when you hesitate to tell it yourself.
3. Techniques such as crisis Web sites can be very effective in managing much of this extraneous information and activity, ultimately mitigating and often scripting outside chatter.
4. If there’s a question, take it to the boss. Lawyers are staff advisors just like communicators. The ultimate decision is made by the boss. If the boss allows the attorneys to turn you down, then move on to other serious issues. Make your case to the boss sensibly, based on what you know is going to happen and what you know needs to be done. Once the boss makes the decision, you need to move ahead on that decision until the next opportunity to challenge it or amend it arises. Avoid taking these decisions personally. Be professional.
5. A trend in legal practice, occurring for some time, involves the addition of lawyers who were formerly communicators to legal teams to preserve the privilege against the vulnerabilities communications can create for litigation. However, from what I’ve seen thus far, there are two problems. First, one is either a lawyer or a communicator. It’s impossible to be both at the same time. Second, I have yet to meet a lawyer-communicator who really worked for the client as much as they worked as a communicator seeking acceptance from fellow attorneys. The vast majority of communications work is not protectable anyway. Having a lawyer-communicator on the legal team involved in non-protectable activities, threatens the privilege for other legal matters, concepts, or ideas that could be protected. I think plaintiffs attorneys, and prosecutors, know this, too.
   
6. Lawyers need retraining in external communication skills because they learn a combative vocabulary and verbal style that flows through into all their communications. The real benefit of sensitive, compassionate, positive thinking communication inside and outside is often lost through imposing a “legalistic” style. Generally, a very different vocabulary and strategy is required for public communication. The aggressive, adversarial, negative approaches used in courtrooms create the exact opposite impressions in the Court of Public Opinion. Frankly, I don’t believe the combative and negative approaches work in the courtroom either, but that’s an argument for another day.

There are specific instructions I give clients about working with attorneys. It is currently in revision, but look here for news of this interesting document once it’s ready for distribution.

If you need this document sooner rather than later, contact me directly at jel@e911.com.

One of America’s Top 10 Crisis Management Problems

American-based Terrorist Training Camps: U.S. Prisons

The Bronx synagogue/Stewart airbase attackers, whose operation was foiled in its execution, are Americans who have gone through the U.S. prison system.

America currently houses two million men and women in prisons across the land. This is an average of 50,000 prisoners per state. Judging by what we know of the terrorist “cell” broken up in the last couple days in New York, three things become quite apparent (based on the histories of those captured). They are products of the American prison system. This system produces three things:

• Converts to Islam (the fastest growing religion in America and in American prisons)
• Hatred of America
• Criminals with more criminal experience

By the end of this year, 900,000 prisoners will be released back into American society to be replaced by an equivalent or larger number going in for training, indoctrination, and heightened criminal motivation.

Who’s talking about this issue? Shouldn’t someone be talking about this issue?