Amidst the financial meltdown over the last few years, there has been a seeming breakdown of the ethics of corporate executives. Some observers believed that the regulatory changes under Sarbanes-Oxley legislation passed in 2002 would eliminate illegal and unethical behavior, but is that the case?
Joining Dennis McCuistion to discuss this and other issues surrounding this question are:
- Sharon Allen: Chairman of Deloitte LLP
- Todd M. Bluedorn: CEO of Lennox International,Inc
- Jared Richardson: Sr. Counsel of Energy Future Holdings
Todd Bluedorn tells us that essentially corporate ethics are about basic compliance, “you don’t lie, cheat or steal.” He believes that there is more to this though, “It’s about selfless leadership… and a balance, not just being selfish. It’s also courage and an internal and moral ability and willingness to speak to truth.”
Sharon Allen tells us that the overall outlook for corporate America is good, it’s encouraging. Companies are focused on being good, ethical citizens, extending that to their employees and the individual stakeholders they serve. “It’s important to instill that… It’s too easy to say, ‘that’s business and that’s personal.’ No, ethics are ethics.”
Jared Richardson tells us that in any industry there is a code of ethics. A company is its “Ethos – which develops from the people that make up the organization.”
Dennis mentions Enron, one of the biggest debacles and corporate bankruptcies in history and asks about Enron’s corporate ethics. He mentions that Jeff Skilling had been interviewed by us in 2001 and made a point of referencing the companies 64 page ethics manual. Skilling also spoke to a group at Southern Methodist University that day- and he shows a short clip of that presentation, asking “was a lack of ethics involved in the downturn of Enron?” Todd’s comment: “Skilling would have failed the selfless test!’
The guests agree it’s important to differentiate what has happened in the last 18 months from “just” ethical causes. The meltdown was as a result of much more- structural issues and other fundamantal causes.
As Sharon reminds us regarding Sarbanes-Oxley,
“No oversight will ever solve internal problems… It still comes down to how an organization presents and governs.” Sharon cites a Deloitte study, that employees first look at ”their manager and then their direct supervisor for their moral compass,” before other factors such as positive reinforcement, compensation and their peers.
Todd reminds us that,”It’s important to have structure and compliance and to force people to face commitments. It’s not only relying on good people and leadership.”
Jared agrees, that yes, it’s about the tone at the top and the direction from senior leadership and establishing a culture of ethical compliance. But, he says,
“It goes beyond that, beyond the legal limits, if you will. It’s more than just the folks at the top, it’s at every level. The person you hire today at a starting analyst position may be a senior manager tomorrow.”
In response Dennis introduces a Pinkerton study that says 30% of the population not only will steal if the opportunity arises, they will create an opportunity to do so. Forty percent will steal if there is little danger of getting caught, and 30% won’t steal at all.
The guests discuss the pressure that organizations are under to produce, most especially in business downturns. They touch on the global economy and how there may be “unique practices acceptable elsewhere but not here.” Yes, global organizations are coalescing around acceptable standards.
Statistics on why people make unethical decisions in the workplace are discussed:
- 80% Lack of personal integrity
- 60% Job dissatisfaction
- 44% Financial rewards
- 41% Pressure to meet goals
- 39% Ignorance of code of conduct
They concur that at the end of the day- its still about personal integrity.
Todd Bluedorn leaves us with a thought that summarizes the theme behind this program, “If you live for today, you’re going to lose tomorrow.”
And a special thank you to the Institute for Excellence in Corporate Governance,University of Texas at Dallas, School of Management, (http://som.utdallas.edu/iecg/) for providing the guests for this 4 part series on Corporate Governance.
As always, thank you for joining us to talk about things that matter with people who care,
Niki Nicastro McCuistion
Executive Producer/Producer
***
1808 – 11.15.09
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Join us this Sunday, November 15th at 12 noon on KERA, Channel 13 for McCuistion TV’s episode: Is Corporate Ethics an Oxymoron?
Amidst the financial meltdown over the last few years, there has been a seeming breakdown of the ethics of corporate executives. Some observers believed that the regulatory changes under Sarbanes-Oxley legislation passed in 2002 would eliminate illegal and unethical behavior, but is that the case?
Joining Dennis McCuistion to discuss this and other issues surrounding this question are:
- Sharon Allen: Chairman of Deloitte LLP
- Todd M. Bluedorn: CEO of Lennox International,Inc
- Jared Richardson: Sr. Counsel of Energy Future Holdings
The federal government took many quick actions in the wake of the credit crisis in order to stop the damage. Now it wants to implement new regulations to prevent future problems. In this episode of McCuistion TV, we examine changes in corporate governance.
Joining Dennis McCuistion, for a lively discussion on this issue are guest experts:
Edward J. Durkin - Director of the Corporate Affairs Department of the United Brotherhood of Carpenters and Joiners of America
Francis H. Byrd – Managing Director and Co-Leader for the Corporate Governance Advisory Practice at The Altman Group
Robert Royer – Partner in The McPherson Group and former Legal and Legislative Counsel to the Securities Industry Association and former General Counsel to the Joint Committee on the Library of Congress and Counsel to the House Administration Committee of the United States Congress
Would you have believed me if I had told you in 2007 that these things would happen…
- Bear Sterns and Lehman Brothers disappeared
- Fannie Mae, Freddie Mac and AIG have been nationalized
- Washington Mutual became the largest bank failure in history
- The $300 billion auction rate securities market disappeared
- Merrill Lynch was bought by Bank of America
- Morgan Stanley and Goldman Sachs are now bank-holding companies
- Congress approved a $168 billion economic stimulus package in February 2008, a $300 billion homeowner relief bill, and a $700 billion bailout of the financial system
- The Treasury has guaranteed $1.3 trillion in money market funds
- FDIC has increased deposit insurance to $250,000
- The Federal Reserve has injected over $1 trillion of liquidity into the banking system
…and if you were in DC at the time, what would your response have been?
The discussion on corporate governance focuses on what Government has done thus far and what it is likely to do.
Robert Royer tells us of the mood in Congress and that it (Congress) “is fashioning a broad yet specific approach to the problems of meltdown.” He informs us that there has been some legislation produced by the Administration and the House Banking Committee while while the Senate Banking Committee has been fairly quiet throughout the process. The two banking committees, House Financial Services and the Senate, are “the two principle engines of any change that might take place in this area.”
Ed Durkin tells us about unions, their funds, and how they impact our economy, while Dennis reminds us that union pension funds are huge, saying that “People think of unions, from a ‘40-’50’s perspective.” Durkin addresses this issue by discussing that Unions were the first to put in place employment pension funds.
According to Durkin, “unions are in a unique position to blend the interests of their members as workers as well as the interests of their members as owners.”
He believes we need to come up with a long term approach of value enhancement, reminding us that “the idea of workers owning America is one that people don’t understand.” Presently, there are over 100 pension funds in the country. He says, “we invest in the market.”
Francis Byrd tells us that board governance has now changed dramatically. “Share holders are far more interested in oversight of management and risk, strategic planning. They are on top of management, a huge dramatic change.”
Securities Exchange Commission (SEC)
The Securities Exchange Commission is a government agency. Their role is to protect investors, not just institutions but individuals.
Has the SEC fulfilled its responsibility to its investors?
Royer says, there was a lack of oversight and responsibility under Secretary Christopher Cox citing the SEC’s handling of Madoff. They believe the SEC should have been tougher as the SEC did not have the most capable people with the best knowledge of exotic financial products.
With Chairman Shapiro there should be improved disclosure on companies and they concur that he is the right person for a very big task. They believe that Cox did few good things, such as modernizing disclosure, but the new group will be more aggressive.
Federal Reserve and the Treasury
The panelists talk about the Federal Reserve and the Treasury and the power plays between them, over who is going to be that “over-arching regulator.” The prediction: The Fed will probably continue being in charge as the systemic regulator, despite past missteps.
From the move to control executive compensation to amending proxie votes so brokers can not use shareholder’s votes to elect corporate directors, to proposed new regulations and the political environment – The Government’s Response to the Crisis in Corporate Governance gives us a well rounded education on what we must do to reduce future risk and negligence in corporations today.
Overall the crisis and meltdown may have caused much needed scrutiny. Thus, we are looking at longer term value creation for the good of all concerned.
And a special thank you to the Institute for Excellence in Corporate Governance,University of Texas at Dallas, School of Management, (http://som.utdallas.edu/iecg/) for providing the guests for this 4 part series on Corporate Governance.
Niki Nicastro McCuistion
Executive Producer/Producer
***
1807 – 11.08.09
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In Part One of this program the guests discussed the costs and causes of addiction. One point stood out: that addiction is a chronic brain disease. As such, one time treatment is not going to stop addiction. Dr. Kevin Gilliland makes a key statement, that 80% of those who leave treatment relapse in 2-3 months. Initial treatment is only the start – then it gets tough.
Panelists include:
- Christopher Kennedy Lawford – Actor, Author and Public Advocacy Consultant for Caron Treatment Centers; New York Times bestselling author of Symptoms of Withdrawal: A Memoir of Snapshots and Redemption and Moments of Clarity: Voices from the Front Lines of Addiction and Recovery
- Kevin Gilliland, Psy.D- Clinical Psychologist and CEO of Innovation 360
- Bill Teuteburg – Interventionist associated with The Caron Foundation and a long term residential program known as Renaissance.
Christopher Kennedy Lawford talks about his history: family issues, the brutal assassinations of his famous uncles, John F. Kennedy (JFK) and Robert Kennedy, his parent’s divorce, and how as a 13 year old kid he looked for a way out. He was angry, he was terrified and drugs and alcohol were a way out. He mentions, “drugs allow us to deal with the world, then it takes you down this horrible path.” Chris, successfully in recovery, believes we have a responsibility to look at the disease and treat it. He claims it is often misunderstood and in fact still a stigma we don’t want to deal with. He predicts that someday people will routinely say, “I’m a drug addict or I’m an alcoholic.”
Bill Teuteberg talks about intervention and its many forms. He tells us that intervention used to have a negative connotation and is now developing a positive one. “When you love someone, (intervention) is stepping up to the plate and telling someone, we’re afraid of losing you.” Intervention is many things and more than just about the person needing treatment. It’s also about what to do when there’s nothing left to do, when the pain for everyone is overwhelming, when so many things have been tried and do not work…
Dr. Kevin Gilliland counsels that treatment includes Alcoholics Anonymous (AA), support groups, therapists and physicians. It is not just being sober in between relapses. He believes the way we think concerning addiction is a challenge. Often times people will assume that you can simply stop addiction by making one decision. However, it’s not simply an “episode” that once someone receives treatment, it’s over. In truth, once one gets treatment the chapter is just beginning.
Christopher Lawford Kennedy says, “until they diagnose themselves (an addict), is not going to get sober.” It’s about the addict saying, “I’m an addict. I’m an alcoholic.”
Bill tells us that no one ever does anything about addiction until there is a challenge, a consequence, “there has to be some kind of crisis.”
Chris says, “It’s like an elevator going down. I hit bottom for 9 years before I got sober.”
The guests talk about the psychic change that must occur before one can get sober, that there is a spiritual solution to the disease as well and anything else will fail, without this component. We learn that the family of the addict is sometimes just as sick, if not sicker.
Bill tells us, “I refuse to do an intervention until someone in the family agrees to get treatment.” In fact, he tells us some families enter treatment in the same way the addict does.
Chris emphasizes that, “AA is the biggest social invention since Christ. It has helped more people than any other program combined.”
Bill says,
“It’s the hardest disease to raise money for. No one wants to be the poster child for alcoholism. We learn that 2.2 million people a year seek treatment for their disease- a small fraction of those afflicted. And while there are over 13,000 specialty clinics in the US, 54% have no physician on staff.
Yet, Dr. Gilliland raises some hope,
“In the past 15 years 3 medications for treatment have been approved by the FDA… more than in the last 50 years.” He says that pills are not going to solve everything, “but they help address the symptoms. It adds up to more sober and clean days and the more sober and clean days, the better the prognosis.”
Christopher Lawford counsels that society needs to have compassion. And the panelists tell us that until one is ready to stop addiction, to make a change, and accept responsibility to make that change… nothing will happen.
Bill asserts, “I was in 4 treatment centers in my life. The rooms of AA are where I got sober. You can’t do it alone.”
Tune in for some sound information on what to do about addiction and how to look for help as panelists discuss how to stop addiction and offer hope.
Niki Nicastro McCuistion
Executive Producer/Producer
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