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.”

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.

Crisis Questions: Working With Attorneys (Part 1)

Among the most frequent questions I get concern crisis management and legal situations that require working with attorneys. Here’s one example:

What is the best way to handle a crisis when you’re involved in impending litigation? That is, you’re not allowed to speak to the press and they’re writing negative articles about your company, because the other company involved is being interviewed and they talk. I’m actually being told to say, “No comment.”

Answer:

First, tell the boss he or she may need to hire better attorneys. Today’s defense lawyers must know how to operate in an environment of openness and almost constant chatter. The bigger profile a case has, the more people are communicating (especially insiders), and the more quickly one’s reputation and, perhaps, one’s career is defined by silence. Silence is the most toxic strategy in communications. Things happening outside the courtroom can affect what goes on in the courtroom. This is one of the reasons attorneys want so much control. Increasingly, though, these external communications and situational factors must be managed as well. Failure to respond or inform creates a perception of guilt. In this era where, increasingly, everyone is connected, many are journalizing. Failure to speak can be a very toxic strategy indeed.

Second, my attitude with all non practitioners, including lawyers, is that one of my most important responsibilities is to transfer what I know about how communications works in these special circumstances to those who have key roles to play in the scenario. I am teaching constantly. And, of course, the lawyers play an extraordinarily crucial role. What I’m saying is, ditch the attitude. Instead, gain some significant altitude. Look at the value you bring to the entire transaction and all the players, and work to make it work. Attorneys are used to being in control of everything in litigation. It’s pretty hard to challenge that. You have to be pretty good, pretty smart, and ready with some really useful, helpful, new information and approaches to have significant impact.

My goal is that everyone, especially attorneys, learn from what I recommend and talk about. During a recent meeting discussing a complex Web site for a defendant client, as the discussion ended, the lead attorney looked up and somewhat surprised said, “I think I have my opening argument ready now.” My response was, “Before we’re done you’ll have your closing argument, as well.” Arrogance? No, I knew I would help him; and so can you.

More later . . . .

Bad Advice: Even a Dying Newspaper Can Throw a Knock-Out Punch When Threatened

When the New Jersey Hackensack University Medical Center learned that a very negative story was going to run in their local paper (The Bergen Record), just before the article appeared the hospital contacted the newspaper and told them that if the story ran the paper could no longer be sold at the hospital gift shop or in newspaper boxes; subscriptions would be ended; the hospital’s ads were to be removed from the media group’s Web site; and the advertising contract canceled.

Even a nine-year old can figure out how this story ends.

The article appeared, including commentary on the hospital’s preemptive actions and by noon, the newspaper was receiving apology phone calls from the hospital’s Board of Directors. Seems these stalwart gentlemen from the community accustomed to entertaining suck ups, naïvely believed that at most, the newspaper would knuckle under and, at the very least, would keep their names out of the paper. There was neither sucking nor anonymity.

Bad thinking. Dumb advice. Self-inflicted crisis creation, rather than crisis management. Predictable bad result.

Ironically, the daughter of the North Jersey media group’s chairman, Malcolm Borg (they own The Record), serves on the hospital’s Board. According to an account in The New York Times she had recused herself from most decisions having to do with newspaper.

In more than three decades of practice, every time I have seen this tactic tried, it blew up in the faces of the perpetrators, triggered longer-term damage and sanctions, and forced significant management change at the top of the organization. Reminds me of the story of the kid holding up the dairy store. He had a gun, he pulled the trigger, nothing happened. He looked down the barrel and pulled the trigger again. This time the weapon took his head off. The clock is ticking on whose head will role for this gaffe.

If you’d like more details, see The New York Times, May 4, 2009, “A battle with a New Jersey Newspaper Backfires.”

Watch Your Language: A Lesson for Callous, Arrogant, and Insensitive Attorneys

What happened:

A Bridgeport, Connecticut federal judge awarded a teenager who had been victimized in a child pornography situation $200,000 for what the local newspaper called a, “well-heeled professional who downloaded images of her being sexually abused” (The News-Times, Tuesday, February 24, 2009, page A5; The Associated Press contributed to this story).

The defense attorney’s response to the ruling:

The first of its kind ruling drew this response from the defendant’s attorney, Jonathan Einhorn:

“It’s not a reasonable award when you consider the injuries this victim suffered related to what my client may have caused,” Einhorn said. “An award like this will probably open the floodgates.”

What this defense attorney might have meant:

“This kid is probably responsible for being in the circumstance she found herself in. She shouldn’t have been there in the first place. Where were her parents when all of this was going on?

My client is the innocent victim of readily available material on the Web. Those who produced it should be punished rather than my client, who had virtually nothing to do with it. This woman was not damaged enough to receive an award like this.”

What the defense attorney should have said:

“We abhor the abuse of any individual, for any reason. My client is already being punished by the court for his actions in this matter, adding this new burden will simply encourage others to attempt to do the same.

We will appeal this decision.”

Watch Your Language: C&NC Railroad

What happened:

“Rail Cars Have Towns Singing Freight-Train Blues” blares the headline in The Wall Street Journal, Monday, February 23, 2009 (page 1, jumps to A12). It seems that, with the huge slowdown in the economy, there’s also a slowdown in the need for rail cars. Most railroads have few places to store extra cars except on sidings spread all across America, for example, the small town of New Castle, Indiana. The train tracks often run within 25 feet of homes. Now those tracks are filled with empty, seemingly abandoned rail cars and the neighbors aren’t happy.

What C&NC said:

The WSJ contacted Spencer Wendelin, an executive with C&NC Railroad, who, according to the news article, has “little sympathy for the angry residents.” “The railroad, I’ll guarantee you, was there a long time before they bought their houses,” he [Wendelin] says.

The WSJ notes that “some folks have begun to worry that some of the rail cars appear to be listing and might tip over.” To which, according to The WSJ, Mr. Wendelin dismissed the fears as “completely unfounded concerns, based on both history and physics.”

Pressed for some kind of answer about the cars, which were becoming targets for vandals and roaming children and adults, and upon being asked when the cars were to be moved, Mr. Wendelin was quoted as saying, “If you can tell me when the economy is going to turn around, then I can give you an answer to that question.”

It appears to be no more Mr. Nice Guy for the town of New Castle, Indiana.

What C&NC meant:

Up yours . . . New Castle, bird to follow. Can’t you see that we’ve got problems? We were here first. You knew what you were doing when you put your house next to the railroad track.

We’ll move these cars some place else when we can. In fact, now that you’ve griped publicly, you can bet that we’ll clear out Ponsford, Minnesota before we’ll clear out New Castle, Indiana.

What C&NC should have said:

First, let me apologize on behalf of C&NC Railroad for inconveniencing those along our rights of way, where these surplus rail cars are now being temporarily stored. Clearly, we would much rather have the cars in service, moving goods and products to markets across America.

We have established a toll free telephone number, 1-555-SO-SORRY (1-555-767-6779), for residents in the various towns where cars are currently stored to contact us regarding excessive graffiti and cars that may appear to be leaning or becoming unstable. We have several teams of inspectors who will go to those sites, assess the situation, and meet with home owners to explain what actions, if any, can be taken, or what may actually be transpiring.

This railroad has had these tracks in place for seven decades, well before any of the houses that currently lie along them were built. We recognize that we are interfering with what used to be the normal lives of our neighbors and we’ll do what we can, under the circumstances, to alleviate their concerns. The reality, though, is that, in fact, these cars must be stored somewhere and mostly in places like New Castle and other smaller towns. We know this is a difficult request to respond to, but we are asking every community along our lines to bear with us as we move through the economic dislocation we and all of America are now experiencing.

You can believe me when I tell you that our number one goal is to get those cars filled with merchandise, products, produce, livestock, or manufactured goods, and get them on the move to future customers. Perhaps, on this, we can all agree.