You Can Run the Business, But You Can’t Hide

Is the moral fiber of corporate executives really on a rapid decline? Or are we just privy to more of the details, and therefore in a place of power to impact the outcomes? 

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Almost daily we see yet another example of bad behavior by a CEO outside of the business leading to another kicking and screaming resignation; which of course in the senior ranks of the corporate world really means, “Quit or we will fire you.”

(Actually falling on your sword is not required at the top levels of business otherwise you won’t get to enjoy your juicy severance package and accumulated wealth.)

It used to be that multimillionaire CEOs had real power. They were only marginally accountable to shareholders, often through boards of directors they had themselves recommended. In many cases they also act as Chairman of the Board; so in effect they report to themselves.

If something happened in their personal lives it could be contained. Not a lot of people were paying attention, executives had access to powerful legal counsel, and it was really hard to get the word out for more than the brief attention of the old style print media companies.

The general consensus was, “Wait a while and it will all blow over and we can go back to business as normal.”

But these days, CEOs are being held accountable to the public in ways that just didn’t exist 15 to 20 years ago.

Power has shifted and continues to shift in response to the customer and public opinion.

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An example: recently, the Vancouver based CEO of Centerplate “stepped down” after public backlash from an animal cruelty incident. He was caught on film abusing a young Doberman pinscher. Even after Centerplate ordered the U.S. millionaire to donate $100,000 and complete 1000 hours of community service, the public demanded his ousting to the tune of 200,000 people signing a petition and threatening to boycott the company’s food venues.

The incident was threatening to hit the company seriously in the pocketbook. So whether or not the board truly cares (not saying they don’t) about the crime or felt the matter was resolved, they were forced to take additional action.

You just can’t keep a CEO who turns out to be bad for business; the CEO is hired to make the business better, not hurt it.

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Is the moral fiber of CEOs and senior executives on a rapid decline?

In reality, we are far more aware of everything about people than we have ever been in the past. You might know what your cousin in Timbuktu had for lunch just after watching the video about the local snake charmer’s daughter who plays with live cobras.

So actually our awareness and attraction to news about the bad behaviors of CEOs and senior executives is on the increase… the good ones are boring and thus off our radar.

Why does this happen more today than in the past?

1. People are getting caught in the act a lot more, cameras and recorders are everywhere;
2. The Internet and social media make it easier than ever to mobilize large groups of people to take action; and
3. Society is awakening to the idea that they can make a difference in the outcome through group voice, action and choosing where they spend their money.

Core values, company codes of conduct and authenticity are no longer things that apply to lower level employees; they impact the executive suite more than ever.

In reality, CEOs and senior executives are being held to a higher standard in areas that never used to be considered. And the change is not coming from shareholders and Board members.

The rule is now, unwritten or clearly stated, “If you do something that impacts the bottom line in any significant fashion, you will have to go. It doesn’t really matter if that was part of the job or outside of it. Damage control demands action.”

This is going to affect society as a whole. Your past can come back to haunt you years in the future.

The challenge is going to be balancing the public outcry with due process when accusations are made. Companies and the public are not the judicial system and cannot and should not be expected to act as if they are.

But the public can demand action. The public can vote with their wallets no matter what the courts decide.

The issue becomes what is a crime or genuinely ethically wrong and what is a valid difference of opinion or personal lifestyle choice? Who decides? Is it the squeakiest wheel? Where are the boundaries?

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Of course the danger becomes that instead of finding CEOs that can run the company well, CEOs  get hired because of how they present to the public. A clean and safe candidate beats a high performer with a rough edge or strong opinion.

If you want to get promoted find dirt on your boss and leak it to the public.

If this sounds a little like high school or closer to today’s political arena you are starting to see where it could go.

On the other hand, what gets measured tends to improve. If everything you do could end up in the public domain you can’t be one person publicly and the opposite privately; at least not for very long.

Just maybe the public figures and even the public will live to a bit higher standard.

However this trend plays out over the next 5 to 20 years: ethics, values and everyday decisions inside and outside of the office are going to be more important to businesses. Boards are going to have to take a more proactive role in guiding CEOs in matters they previously ignored.

They are also going to have to do a better job of knowing when to support CEOs and senior executives and when to really cut them loose because they truly violated some core beliefs of the organization; rather than wait for the public.

They have to balance the long-term needs of the organization with short-term public opinion and fickle satisfaction demand.

This will not be easy.

Money talks and people with widely differing opinions control money.

One thing is now true… you can run the business, but you can no longer hide when you mess up.

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Photo: Flickr/Anthony Easton