Conflicted Self-Interest Causes Business Irresponsibility

rkg-crop--sales-marketing-newIf you closely examine corporate disasters—so often in the news these days—such as products or accidents that injure or kill people, environmental messes, and public relations nightmares, you will usually find a common culprit: bad decision-making caused by conflicted self-interest. Even short of all-out disasters, conflicted self-interest is responsible for many awful business decisions.

Very simply, conflicted self-interest causes business irresponsibility.

What is conflicted self-interest? It is a situation where the expected outcome of a decision puts the decision maker in a different position than significant stakeholders in the decision, and where the decision maker has a duty or obligation to those stakeholders.

An example: A company based in Minnesota is planning to move headquarters to be closer to one of its two main factories. One factory is in California, and the other is in Florida. The California location is close to the CEO’s vacation home, a place he likes to spend a lot of time at. But a move to California is far more expensive for the company than a move to Florida.

If the CEO is the decision maker in the move-to-California or move-to- Florida decision, he is in a position of conflicted self-interest. Selection of the California location for the new headquarters will have a positive outcome for the CEO (the new location is close to his vacation home,) but a negative result for the shareholders (more expense than the California location.)

The CEO in this example has a duty to serve the best interests of the stockholders. But his natural bias will be to favor his own interests, and natural biases are often very hard to overcome.

Favoring one’s self-interest is essential to survival, well-being, and comfort. We are all hard-wired with the instincts—derived from our cavemen ancestors—to place our interests above the interests of others.

Actions and decisions based on self-interest are natural and pervasive in all aspects of life and commerce. That is not necessarily a bad thing. Self interest is the fuel that feeds the engine of free enterprise. Innovations, invention, and discovery in large measure result from activity motivated by advancement of one’s interests.

Adam Smith, the eighteenth century philosopher-economist, recognized this when he wrote, “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.” More recently, Stanford School of Business Professor Jeffrey Pfeffer, in his new book, Leadership BS, put it more bluntly. He counsels us that since bosses generally make decisions based on their self-interests, we should too.

Most of the time balance is achieved among competing interests. The plumber who unclogs your kitchen sink at double time rates on a Sunday night has his interests served by the rate he has set. Your interests are served by having him fix your sink so you can have a long-planned dinner party that evening. There is harmony because there is an alignment of interests.

Things break down when decision making involves conflicted self-interest, with good outcomes for decision makers and bad outcomes for stakeholders. Under those circumstances, bad decisions are inevitable, often causing corporate irresponsibility and even disasters.

Conflicted self-interest is insidious because it robs decision makers of objectivity, and blinds them to this impairment. Studies have demonstrated, for example, that physicians receiving perks from drug companies prescribe those drugs more than drugs from competing brands, even while the physicians claim that their professional judgment is unaffected by receipt of the perks.

Responsible decision-making requires recognition of conflict situations, and recusal of conflicted decision-makers from decisions. If the decision-maker is unable or unwilling to recognize the conflict, the organization’s decision-making culture must allow others in the decision-making process to speak up and step in to inject unconflicted objectivity.

A culture of responsible decision-making is one which has an awareness of conflicted self-interest, and its impact on decisions.


About the author: Bob Greisman is a business growth adviser and coach, and speaks and writes on business decision-making. He may be reached at


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Culture, Habits, and Irresponsibility

Corporate cultures and habits are powerful forces which rkg-coporate-cultureinfluence companies to behave wonderfully, and sometimes—unintentionally—terribly. Positive behavior produces profitable, responsible, valuable companies. Negative behavior does not. When wondering why a company has acted irresponsibly, remember that culture, habits, and irresponsibility go together.

Often it takes someone from outside the culture to recognize the impact of the culture, and the degree to which it leads to positive or negative behavior. Those inside are too close to be independent and objective in their assessment.

How does culture impact behavior? Jim Dougherty, a senior lecturer at MIT Sloan School of Management, tells the story of seeing a New York City food vendor’s delivery cart accidentally turned over, spilling packages all over the sidewalk. A group of young business people, obviously visiting New York together, rushed to help the man right the cart and gather the packages.

When thanked for being helpful so quickly, one member of the group responded that they worked for a company where the culture is one of “drop everything to help a colleague in need.” The reaction was natural, they explained. The power of corporate culture in this case had a meaningful impact on behavior outside of the office.

As the story illustrates, closely related to corporate culture, but subtly different, are corporate habits. Corporate habits are the building blocks of corporate culture. Both culture and habits influence corporate behavior and corporate responsibility.

Peter Duhigg, in his book Power of Habits, writes about habits as natural, unthinking responses to cues. Habits are routines, and when presented with the triggering cue, become routine. They serve to satisfy a need or a craving, and result in a reward. Habits derive from the basic “want-routine-reward” loop but have an important role in determining how responsible companies behave.

Some iconic examples of corporate culture and habits corrupting behavior are GM and Enron. GM’s longstanding culture of “not my job”, which contributed to its safety problems, is well-documented in the Valukas Report, commissioned by GM to study the causes of the company’s safety scandal. Enron’s culture of arrogance, which is in part responsible for its spectacular crash and burn, is compellingly recounted in Bethany McLean’s The Smartest Guys in the Room. For a more recent example, we can look to VW.

But culture causing irresponsibility is not limited to stories in headlines. It happens every day in companies everywhere.

The reason corporate culture so strongly influences behavior is basic: The workplace is a social community. Advancement and acceptance accrue to those who conform to corporate culture, and adopt corporate habits. When corporate ethics, morals, and standards of behavior are lower than those of individual executives, the individuals tend to accommodate to the corporate culture. Sociologist Robert Jackall’s 1988 book, Moral Mazes, is as relevant now as when it was when it was written, and documents how corporate culture corrupts middle-management ethics.

Investors, board members, architects of corporate governance, outside advisers, auditors, and managers at every level need to access, probe, and monitor the culture and habits of their companies.  In the end, culture and habits are about behavior. And so are corporate responsibility, profitability, and value creation.


About the author: Bob Greisman is a business growth adviser, coach, and consultant, and speaks and writes on business decision-making. He may be reached at


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Did Corporate Culture Cause VW Crash?

rkg-VW-LinkenIn-imageWith news breaking over the past several days, we all now know that Volkswagen is suffering a major corporate disaster. Not the equivalent of a reputational fender-bender, but an all-out drive into a wall. This is a corporate disaster that could and should have been avoided.

While the investigations and probes are only getting underway, it is a good bet that when the autopsy on this corporate disaster is complete, corporate culture will be revealed as the culprit.

This much is known: Volkswagen has admitted that for years it has cheated on emission tests for several of its diesel engine models across several brands. Software was programmed to allow cars to pass emission tests, when in fact the vehicles were spewing significantly higher levels of greenhouse gases under normal driving conditions.

The company—Germany’s largest auto firm—has set a charge of $7 billion to cover costs of recalls to fix the cars. It faces a reported $18 billion in fines and penalties by the U.S. government, is under scrutiny all over the world, and its reputation has taken a huge blow.

Yesterday, the company sacked its CEO. More terminations are likely to follow. Criminal investigations are getting underway in various countries. The U.S. Department of Justice recently announced new guidelines for corporations to avoid prosecution. These guidelines require companies to serve up individuals. One thing is for sure: some VW executives will see the inside of a federal prison. This will turn out to be a corporate disaster of epic proportions.

How could it happen? A look at two other corporate disasters in the news this past year offers a clue. At GM, its own internal investigation determined that a corporate culture dominated by silos and an attitude of “it’s not my job” was largely responsible for its disastrous handling of the defective ignition switches, which caused several deaths and injuries.

And in Atlanta earlier this year, in a non-profit setting, a culture that exalted improvement in standardized test results above all else was largely responsible for a widespread teacher cheating scandal.

Did corporate culture cause VW crash? Looks like a it did.

Board members and top execs at big companies, many with MBAs from prestigious B schools, can be unknowingly blind to warning signs in their company cultures. Obviously, that was the case at GM and now VW. But owners and managers at smaller companies need to be mindful of culture as well.

The VW disaster should be a wakeup call for executives at companies of all sizes to spend some time assessing their cultures. Corporate culture is a double-edged sword. It can make companies very successful, and builds powerhouse brands. But it can also lead historically ethical and honest executives and employees to unknowingly and unintentionally cross ethical and even legal lines.

Signs of silos, aggressive alpha cultures, and toxic cultures should be pursued for the potential disasters that lurk within. When it comes to corporate culture, leaders should run to, not from, problems.

-Bob Greisman

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A Corporate Disaster Is Corporate Irresponsibility

(The first of a six part series.)

Natural disasters—hurricanes, tornadoes, earthquakes—are unavoidable. Prudent, responsible companies in disaster-prone locations make contingency plans to mitigate the impact of a natural disaster, even if the likelihood of one occurring is small.

Man-made corporate disasters—products or accidents that injure or kill customers or employees, environmental messes, public relations nightmares, and even criminal prosecutions—are, however, avoidable. Yet, companies which otherwise act prudently and responsibly fail to take steps to prevent corporate disasters. This failure is corporate irresponsibility.

Avoidable corporate disasters are the result of flawed decision-making. Some business decisions appear to be reasonable ones when made, but due to inadequate information, changes in market conditions, technology, or regulations, or other unforeseeable events turn out to be bad decisions. These decisions are only recognized as bad decisions with the benefit of hindsight.

Other decisions are bad decisions from the moment they are made. These decisions result from flawed decision-making processes. Although they can and should be seen as bad decisions from the outset, they often go unrecognized.

Iconic examples of avoidable man-made disasters are the sinking of Titanic and the loss of space shuttle Challenger. The decisions to allow Titanic to sail without adequate lifeboats and to launch Challenger in cold weather with the knowledge that “O” ring seals degrade in cold temperatures were the results of flawed processes. Those decisions could have been recognized as bad at the moment they were made. The failure to do so was irresponsible.

Examples of avoidable corporate disasters include the Enron scandal, the collapse of MF Global, the Massey Mining disaster, and GM’s failure to recall. In each of these cases, objective, independent parties looking at the same facts as those making the decisions would have recognized the decisions as bad ones. The decision makers failed to see that the decisions were bad because they were blinded by corporate culture, habits, expectations, or individual or corporate self-interest. The bad decisions resulted from blind spots.

Compounding the danger of decision blind spots is overconfidence—usually a good trait in business leaders—and the black swan effect: the belief that because the unthinkable has never happened before it never will.

Often, avoidable corporate disasters occur under circumstances giving warning signals of potential disaster. Investors, board members, and managers need to be alert to the warning signs. Among problematic decision-making circumstances: Cases where the interests of the decision makers are in opposition to the interests of major stakeholders (situations called conflicted self-interest); companies facing desperate situations; and, companies in industries regulated by ambiguous rules susceptible to loop-hole finding. Decisions in these and other circumstances have a greater risk of being flawed and require extra scrutiny.

Decision-making flaws that lead to corporate disasters can be ferreted out by board members, managers, and employees attuned to the issues and warning signs. Because proximity to the decision making usually robs decision makers of objectivity, those with some distance from the decisions are best suited to the task.

Just as a rising tide raises all boats, the quest to avoid corporate disasters improves decision making across the board. As all decision making is made better, companies can improve both profitability and responsibility.

Focus on responsible decision making to avoid corporate disasters. A corporate disaster is corporate irresponsibility.

–Bob Greisman







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United CEO Fired: Decision-Making Off Course

As collateral damage from the government probe into the New Jersey urlBridgegate scandal, United Continental Holdings Inc. CEO Jeff Smisek and two top lieutenants have been permanently grounded, told by United to resign following an internal investigation.

While all of the facts of this matter are not publicly known, this much is. The United States Attorney’s Office for New Jersey has expanded its probe of the politically motivated lane closures on the George Washington Bridge, which occurred in September, 2013. The investigation now includes looking into other possible misdeeds by officials at the Port Authority of New York and New Jersey, including the former head of the agency, David Samson.

It appears that in negotiations for a favorable extension of lease terms at Newark Airport, United created a once-a-week non-stop route from Newark to Columbia, South Carolina, where Samson had a vacation home. After Samson resigned in late 2014, United cancelled the route. The indications are that United created the route just for Samson, to gain favor in its negotiations.

We can only guess at how all of that led to the career terminations of three promising and talented executives. The odds are that United’s internal investigation revealed approval or knowledge by Smisek and the others of a deal by United to get a sweet airport deal by doing a favor for Samson.

Whether that conduct was illegal on the part of the airline executives will be for the U.S. attorney and the judicial system to decide. It is possible, but unlikely, that the ousted executives considered their conduct to be a bribe—an explicit understanding that addition of the route was in exchange for a benefit—but did it anyway because it was unlikely to be discovered.

More likely is that the executives decided the favor to Samson to be an act more in the nature of normal business activity, like taking a prospective client to a ballgame or to dinner, hoping it puts the prospect in a better mood for negotiations.

But if that is what occurred, the decision making was certainly irresponsible and flawed. And it got the United CEO fired.

So why do smart people at a brand-name company like United make that kind of bad from-the-moment-it-was-made decision?

The answer: a conspiracy of human nature flaws and cognitive and psychological traps that we humans are prey to, and which cause executives in zealous pursuit of their employers’ interests to sometimes unintentionally and unknowingly cross lines.

If we speculate that the United executives had to decide the propriety of adding a route as a favor for an airport executive in order to get a better lease deal, we can imagine a thought process like the following: Since the route could have been added for legitimate business reasons and is available to the public at large, adding it to gain favor with Sampson could not have been unethical or illegal.

But what that thought process—if that was the thought process—ignores is that if the only real reason for adding the route was to benefit David Sampson, it looks scarily close to a bribe. In our highly overlegalized and overcriminalized business environment, anything that smacks of quid pro quo with a public official is the equivalent of touching the third rail.

Why didn’t the United executives see this? Likely, they suffered from overconfidence bias—a human condition which tends to cause us to overstate our ability in certain areas—in their ability at being able to discern acceptable conduct from unacceptable conduct.

Also, there was a dose of conflicted self-interest involved. In balancing the interests of their employer (to get a favorable lease) with the interests of the public at-large (having a bribe-free administration of airports,) the executives favored their employer’s interests. It is human nature, and the way our brains are wired, to favor our own interests when they conflict with the interests of others. This happens naturally, and often unconsciously.

How can executives combat this decision-making flaw? By engaging in an active process of evaluating all of the impacts on all of the stakeholders to a decision, even those not in the room. This exercise has a tendency of making decision makers conscious of the impact of conflicted self-interest, allowing them to steer away from bad decisions.

If decision makers sat around a table and ticked off the impact on the public, they would have a better chance to see a potential bribe for what it is.

The practice of responsible decision-making can help decision makers navigate around the unfriendly skies that got Jeff Smisek and his colleagues off course.

-Bob Greisman

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Who Owns Your Company’s Culture?

rkg-culture-edit-3The main character in Patrick Lencioni’s wonderful book, “Getting Naked,” is named Jack Bauer. Not to be confused with the Jack Bauer who saved the world from terrorists—one hour at a time—in the Fox television series “24,” this Jack Bauer is a management consultant, struggling to save his career.

At one point in the story Bauer is asked what the culture at his consulting firm is like. He responds that it is very collegial, professional, and client focused.

When asked to elaborate, Bauer shudders inwardly, hoping that he would not be asked that question. The reason: He didn’t really know what any of that meant, and just said it because it was printed in his firm’s brochures and on its website.

One might chuckle because the comment rings true. But if you are the owner or manager of a business, big or small, that line is not so funny if it’s being made by one of your executives or employees.

That’s because you know (or should know) that company culture is way too important to your business’s success. As the legendary management guru Peter Drucker once wrote, “Culture eats strategy for breakfast every day.”

While many people talk or ask about company culture, the term “corporate culture” has many definitions. I tend to think of culture as shared values, beliefs, and behavior that shape and define a company’s character and soul, which in turn influence company performance at every level.

Just as the Jack Bauer character in Lencioni’s fable was asked what his company culture was like, it is a question often asked by job candidates and prospective customers and clients.

But the better question is: “Who owns your company’s culture?”

Who owns your company’s culture is an important question to managing culture for improved business performance at every level.

The answer to that question should offer clues as to how important culture is to any given company, and what that culture is like. If for example, a candidate for a sales position at a company that produces precision-made industrial components learns that the engineering group “owns” the corporate culture, that may say something about how sales and business development rate at the firm.

Big companies have the luxury of having boards of directors who can ask the cultural ownership question. By their selection criteria and annual evaluations for CEOs, boards can assure that CEOs’ ownership of corporate culture is enthusiastic, complete, committed, and effective.

Smaller companies do not have that luxury. Often the CEO is the founder. Some people get and are good at corporate culture, and some are not. In smaller businesses it is critical that CEO’s recognize the importance of culture—and the impact that culture has on business performance at all levels—and that they be prescient enough to recognize that if they are not effective at creating and managing culture, they surround themselves by a lot of people who are.

Ultimately, however, it cannot be the CEO alone who owns company culture. Company culture has to be understood and owned by everyone. That ownership should not sit on people as a burden or a responsibility, but as a privilege and a pleasure. And it should be a shared ownership that reflects the welfare of the company, its customers, and employees as a whole.

So, who owns the culture in your company?


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Business Growth and Personal Growth: Five Tips

rkg-linkin-1If you manage a business, or only part of a business, growth is on your agenda every day. Small business growth is just as important as big business growth. Even if you sit far from the corner office, or don’t run anything, growth should be on your daily to-do list.

Not everyone comes to thinking about business growth naturally. And some think that if growth is not under their personal control it is not part of their job responsibility. Wrong. Everyone can contribute to a company’s growth, and everyone can grow personally and professionally.

So here are five quick tips to help keep business and personal growth in focus and top-of-mind every day.

Love Your Key Performance Indicators (KPIs): Every business leader and every employee should have his or her personal set of KPIs (Key Performance Indicators.) KPIs are, of course, metrics that measure business (or personal) performance in critical areas.

The trick in selecting or constructing KPIs is finding those that are most closely aligned with functions that contribute to and support growth. And it is a real plus if you can find some leading KPIs, which are predictive of the future, rather than just relying on laggings KPIs, which only look in the rearview mirror.

Select your KPIs with care. But don’t become too attached to them. If they don’t work well for you it means it’s time for a change. Experimentation is not a bad thing.

Think Value: A constant focus on value is critical to both personal and business growth. Trying to connect every undertaking and activity to making your company—and yourself—more valuable to customers, clients, other employees, and the community is a driving force behind attaining sustainable growth. Allow the pursuit of value to get into your veins, until it becomes second nature and unconscious.

Pass the Passion: Being passionate about growth doesn’t have to be hokey. It means feeling strongly about something, acting on those feelings, and letting it show. It is so dull to be passion-less, especially since so much of your time is invested in work.

Business leaders who are passionate about their companies have a positive impact on everyone, and set the stage for business growth. But passion should not be reserved for the boss. Infecting your co-workers with a little excitement and energy boosts company performance in multiple ways.

Team Commitment: Related to passing the passion is being a committed team member. That means giving commitment, and expecting it in return from others. Team commitment requires a lot of trust and communication. For many teams, trust building might be a first step. But it can pay long-term dividends.

Teach, Learn, Teach, Learn: There is a strong correlation between growing businesses and learning businesses. Just one example: A Harvard Business School study earlier this year showed a direct correlation between manager training in sales pipeline management and revenue growth. But this works both ways. Companies have to value teaching and training, and personnel have to crave it.

So whatever your position is in a company—big or small—a daily focus on personal growth and company growth is needed to produce results. Growth rarely happens by accident, and if it does, not for long. But those who accomplish steady personal and business growth will tell you it is worth the effort.

 By: Bob Greisman

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Business Decisions: The Good, The Bad, and The Responsible

business-decisions-crop-1Jack Welsh, the legendary former General Electric CEO, once said that the difference between great leaders and average ones is that great leaders make far more good decisions than bad ones. But all leaders, including great ones, make bad decisions. So do all employees and executives at every level.

In the end, we are all paid to make good business decisions. So maybe it is worthwhile to spend a few moments pondering the nature of decisions, good and bad. And to think about a new dimension in business decision-making which has the potential to bring more value to our companies and to our careers than decisions that are merely good: the responsible business decision.

Good decisions are seemingly easy to recognize. They are the ones that appear to achieve a company’s goals, at least in the short-term. They make bosses happy, appear to make or save money, and get people promotions and raises.

Bad decisions get a little trickier because there are two kinds of bad business decisions.

The first type of bad decision looks like a winner when made, but only after the fact can be recognized as bad. Unexpected events or forces intervene to change the calculus that went into the decision.  These decisions can only be known to be bad with the passage of time and the benefit of hindsight. This is the most common type of bad business decision and is hard to avoid.

The second type of bad decision is an evil one. It is the decision that was bad from the moment it was made, yet is failed to be recognized as such. These bad decisions could have been avoided, which is what makes them so insidious.

There are a myriad of reasons some obviously bad decisions fail to get called out before they can cause damage. Some of the reasons have to do with what happens inside people’s heads. These are the cognitive flaws and traps that humans are susceptible to. Some of the reasons have to do with what happens in corporate cultures, or messages that come down from the top.

Either way, with understanding of the decision-making process the “bad-from-the-moment-made” decisions can be avoided.

I advocate less focus on thinking about decisions in terms of good or bad, and instead thinking about decisions as responsible or not. A responsible business decision is one that genuinely and sincerely takes into account the interests of all stakeholders to the outcome of the business decision, whether they are at the table or not. This means thinking about the impact of decisions on customers, employees, the brand, corporate reputation, vendors and partners, and the community at large.

Responsible decision-making is at the core of corporate social responsibility. But it needs be thought about in every decision, and in every context.

Ultimately, responsible decision-making goes to the heart of a company’s value, and its values. While I don’t have any study to back this up, I am willing to bet the farm that long-term the most valuable and sustainable companies will be the most responsible ones.

Taking that model a step further and making it personal, employees can think in terms of becoming more valuable to their bosses, colleagues, customers, and clients, by practicing responsible decision-making.

One can help one’s career, and certainly their peace of mind, by thinking about decisions in terms of responsible business decisions, rather than merely good or bad decisions.

By Bob Greisman

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Making Employee Corporate Social Responsibility Personal

Corporate-Social-Responsibility-1In 1970 the most influential economist of the day, Milton Freidman, wrote what became a famous article for The New York Times Magazine. In “The Social Responsibility of Business is to Increase its Profits” Friedman asserted that beyond operating ethically and legally, companies should only concern themselves with making more money.

In Friedman’s view, if companies did a good job of making piles of money, there would be plenty of taxes paid to the government, salaries paid to employees, and dividends paid to shareholders. Out of that money, Friedman argued, the government, employees, and shareholders could attend to the welfare of society and the planet.

Friedman’s views were widely accepted at the time. In 1976 he won the Nobel Prize for economics. But today, hardly anyone would agree with Freidman. Companies large and small embrace corporate social responsibility as a business strategy, leveraging it to gain brand recognition, customer loyalty, and employee engagement.

Cynics could be forgiven for believing that corporate America’s love affair with CSR has more to do with making money than with saving the world. But motivations aside, if the end result is a greater acceptance by business of responsibility for community interests beyond the bottom line, why question the outcome.

An important component of CSR is recognition of a company’s responsibilities to its employees.

Employees have come to expect their employers to consider their interests as stakeholders in business decision-making. And they expect a balancing of profit making with employee satisfaction.

Overlooked, perhaps, are the employee’s responsibilities to their employers and their communities. It may well be time to challenge employees to step up to the plate. To paraphrase President Kennedy, ask not what your company can do for you; ask what you can do for your company.

We have come to know what a responsible company looks like. What does a responsible employee look like? Perhaps this short list will help in making employee corporate social responsibility personal.

Community service and volunteerism: In Milton Freidman’s era, and before, no matter how busy people were at work, they made time for community. Volunteer activities were more prevalent than they are today. If you want to make a socially responsible statement, do it with your time in your community. If your company does not have a corporate community volunteer program, start one. If they do have one, be sure to participate. To really make it personal, pick a cause that has meaning for you. Your donated hours often will become as important and fulfilling to you as your work hours. Maybe more.

Consider the interests of others: A cornerstone of corporate social responsibility is taking the interests of all stakeholders in a decision into account. Since your employers are expected to do it, be sure you are doing so also in all of your business (and personal) decision making. Always ask yourself how customers, suppliers, fellow-workers, shareholders, and the community are affected by your decisions. It is a good habit to get into, as it will help assure habits of responsible decision making.

Cultivate a culture of respect: In a world in which irreverence prevails, it is easy to become caustic and disrespectful of customers, clients, colleagues, and bosses. Ask yourself: Does your attitude and behavior square with standards of social responsibility? If not, time for an attitude adjustment. If you need a little extra motivation to change your act, be selfish. You can give yourself a career boost by showing some respect. You don’t get to the top, (or if you do, last there very long) by bad-mouthing others.

This is just a start. Add to the list in ways that make it personal and meaningful to you. Remember, if you want to work for a responsible company, you need to work at being responsible.

By Bob Greisman

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Dangerous Leadership Blindness

blind_0614Leaders from all walks of life should take note of three recent stories in the news. Behind the headlines are important management lessons about the dangers of leadership blindness.

In April a Georgia state court judge slapped several former Atlanta school teachers with stiff prison sentences. The educators had been found guilty of participating in a widespread scheme to change students’ answers on standardized performance tests.

In the New Jersey bridge scandal, one state official pleaded guilty last week, while two others were indicted. The allegation is that they caused the massive traffic jam on the George Washington Bridge to punish a mayor who failed to support their boss, Governor Chris Christie. Also last week, an investigation commissioned by the NFL found that members of the New England Patriots staff likely were responsible for deflating footballs, in violation of league rules.

These three scandals arose in very different contexts, yet share a disconcerting similarity: Apparently otherwise honest, ethical people fell down a slippery slope while trying to advance their employers’ causes. And in each case, leaders were blind to the fact that they created the conditions for scandal.

Any organization, no matter how robust its ethics programs or how upright its leaders, can fall prey to scandal. CEOs and board members need to worry about hidden or mixed messages, especially in highly competitive or heavily regulated environments. They should be concerned about unintended consequences. And they need to be mindful of the fact that people do what they are paid to do.

Atlanta School Superintendent Beverly Hall was obsessed with improving scores on performance tests. She built her core strategy, created a corporate culture, and structured performance compensation around achievement of better test results. Just as many corporate leaders do, she set goals, measurement tools, and rewards.

But too often the train goes off the track, as was the case in Atlanta, when the goals set are unrealistic and unreasonable. And when the punishment for failure to achieve goals is overly severe. It is unlikely that Superintendent Hall ordered teachers to cheat. It almost never happens that explicitly. But she created an environment that made cheating all but inevitable, and then she looked the other way.

As for the dozens of teachers who participated in the cheating, most were hard-working, dedicated educators. Just the kind of people you would trust with your child’s well-being. What went wrong?

Based on published reports, many of the teachers felt the pressure of a corporate expectation to go along, or not be thought of as a good team player, too strong to resist. Some of the teachers reported that they rationalized the cheating at first. “It will only be this one time,” some thought. Or, “It helps the students, so how bad can it be?” But once started down that road, there was no turning back.

In New Jersey, everyone knows Governor Christie’s management philosophy: be tough, take no prisoners, and win at all costs. Less widely known but well-documented is the Governor’s penchant for using his power to punish and embarrass rivals and those who offend or disobey him.

The Christie punishment is often petty. Reported examples include: In a snit over a comment by a predecessor, Christie stripped a former governor of his body guard. He disinvited a state senator to a political event in his home district, and he cut off funding for a college professor who disagreed with him on a policy matter.

Just as children learn by example, so do employees. “If the boss is doing it, it must be okay,” they think. Especially if the boss is someone they admire and respect. Christie’s aides, by all accounts, were reputable, capable people. The former U.S. Attorney didn’t hire scoundrels. But that didn’t prevent them from falling off the edge of a cliff trying to do what they thought would please their boss. Closing lanes on the world’s busiest bridge is going a bridge too far when it comes to punishing an opponent.

The three aides doubtlessly will pay a heavy price for their naiveté: Prison time, ruined careers, and felony convictions which will remain with them the rest of their lives. But Mr. Christie should have known better. As U.S. Attorney he doubtlessly saw many instances of CEOs setting a tone at the top that inspired underlings to overreach to curry favor with the boss.

While so far as we know no crime has been committed in Deflategate, the cheating has resulted in reputational and financial damage to the parties involved. What was behind this bone-headed scheme? Football, like many professional sports, is all about gamesmanship: Stretching, bending, and skirting the rules, and getting away with whatever you can get away with, all for the sake of getting a leg up on the opponent.

The line between legitimate stretching and bending, and outright breaking of rules is often thin. Most people suffer the human nature flaw of being overconfident in their abilities. It is the way humans are wired. One of the skills we are wrongly overconfident about is the ability to clearly see the line between bending the rules and breaking them. Business leaders need to understand this. Employees should never be put in the position of having to bend rules. Never.

Reading this you are likely to think, “That’s the other guy, the other company. It can’t happen to me, or at my company.” Wrong. Human nature has endowed driven, successful people with the ability to be blind to obstacles to achieving goals. Often, great successes could not be accomplished without this blindness. But also, often, the obstacles to achieving particular goals include rules, laws, and ethics.

The most important lessons from these stories: It could be you, and it could be your organization. Leaders need to recognize this and take compensating action. Board members need to be truly independent, accessing culture and risk. Corporate cultures need to encourage challenge. And decision makers need to motivate and then listen to dissenters.

A final lesson. By the time gamesmanship gone too far gets to a whistleblower or a lawyer, it is too late. By then the harm to people, businesses, and reputations has already been done.

By Bob Greisman

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