Corporate Leadership:
In addressing the issue of corporate leadership, I am confining my remarks to the state of corporate leadership in the United States. My observation is that the predominant influence on executive behavior, and therefore leadership style has been the focus on managing to the corporation’s stock value. In my role as an executive with a global financial institution I would spend much of the first half of any given month explaining variances to the prior month’s financial performance, and the second half of the month forecasting how such variances would be corrected. Such a focus had some very key impacts.
· Long term planning was significantly disadvantaged given such a short-term focus on results. This was in great contrast to our clients’ and competitors’ focus, particularly in Asia where planning covered decades, not months
· Staffing costs and decisions were invariably made around where the greatest short-term growth could be achieved, or the greatest and most immediate cost reductions realized. The ethical dilemma of the former involved the emphasis on achieving results at any cost, and in supporting the focus on stock price, which sometimes meant manipulating the quarterly numbers that would be reported. In watching large cutbacks, it was not uncommon to see older, more expensive staff being removed in favor of younger, less experienced people. There did not appear to be much attention given to the possibility that some of the best human assets were being let go.
At the heart of corporate leadership are the chairman, and the chief executive officer. All ethical decisions flow down from the top of the organization, both in terms of their behavior, and the demands they make for ethical behavior, and their intolerance of unethical behavior. While it has become increasingly popular for corporations to maintain an ethics policy, and to require at the least, all managers to sign annually, such policies and requirements must be seen in action, not merely as words on paper. Trust is a critical component in the realizing of an ethics policy becoming an ethical corporation. Leadership style is also critical, and “Ivory Tower” leaders, those who manage from high office, quickly have little credibility as they tend to manage by edict rather than by example. Conversely, “Servant Leaders” lead by example, and by being highly visible to employees and lower level managers alike. Such leaders inspire and demonstrate the characteristics they expect in others. A great example of this was seen in Herb Kelleher, one of the founders and CEO of Southwest airlines. He spent as much time out of his office as he could, and every week he would a join a Southwest flight, personally serving passengers and talking with them about how Southwest could improve its service. He would also work a ticket counter, or sling bags alongside the baggage handlers. Everyone from managers, staff, customers, and shareholders saw what he believed the airline should stand for, whether in its service offering, its corporate conduct, or its charitable work.
Conversely, I have seen poor examples, leaders who say one thing, and promptly do the opposite. The example of a major utility CEO who was cutting back staffing to meet a quarterly goal, in announcing the cutback, stressed how it grieved him to have to make such a decision, and that this cutback would be the only one. Over the next months he would institute two more severe cutbacks. The ‘pink slips’ flowed liberally and his credibility with staff went to zero!
The current pandemic has placed horrible choices on corporate leaders and furloughs have been one of the more difficult decisions they have to make, even though enhanced financial support has been forthcoming from the government. For the company I have worked with for some thirty years this has been particularly the case. A private family-owned company originated in 1897, the fourth generation CEO wears the stress and pain of all actions visible in his personal addresses to the staff. People have always been made to feel that they are a part of a family, and as a consequence the level of trust that this leader was doing everything to minimize the suffering of the people who are so obviously valued, remained very high.
Ethical standards must be enforced, and violations addressed quickly, and visibly. While consideration might be given to the historical performance of a manager or employee, and current personal circumstances considered, warning protocols should be strict, and in the case of sever infractions, termination should ensue. Executives must consider several impacts.
1. The message that is being communicated to other managers and employees
2. The message that is communicated to customers, if it is appropriate to share any information
3. The message that is communicated to shareholders again, if it is appropriate to share such information
While it is true that in the case of public corporations there are oversight bodies such as the Securities and Exchange Commission, internal actions that are taken quickly speak louder than external corrective actions that typically take longer to enact.
Above all, acting ethically as leaders, and by leading by example as in Servant Leadership styles will, absent uncontrollable market forces, lead to a flourishing and successful enterprise with strong prospects for long term growth.
Political Leadership:
The current political climate in the United States is unquestionably at its nadir since the founding of the Republic. Certainly, there have always been differences between the two parties that make up the bulk of constituent populations allegiance, but I think it fair to say that the country has not been so divided since the Civil War. However, this is not the result of some recent event, or election; it is a problem that has been developing for decades and has its roots in socialist sentiment. In its earliest iteration it was at least understood by a working class who were fighting for better wages and conditions and were largely led by workers in the automotive production sectors. The most vocal protest today appears to be coming from the younger population who seem unable to even express an understanding of what socialism is, let alone recognize the consequences readily evident in places like Cuba, Venezuela, or the update versions of Russia and China. It strikes me that the contributing factors fall into several categories.
· Life-long politicians in both the House and the Senate who have become increasingly under the influence of lobbyists and corporation-funded Political Action Committees, as well as large doners both here and from abroad
· A very large Civil Service with representative unions who have a vested interest in maintaining the status quo, and who are susceptible to the promises of politicians committed to maintaining same
· A Supreme Court, and regional courts which have been inclined to write law as opposed to interpreting it in the context of the Constitution
· Politicians voting salaries and benefits for themselves which are not available to the common man
· Profligate spending while raiding funds reserved to Social Security, Road and Air systems, and more
· Massive failures of personal integrity and law-breaking seemingly without consequences. Issues where the average person would be promptly jailed
· Failure to keep election promises
· Distrust of the integrity of the vote
No doubt there are other, entrenched issues, but these are certainly at the forefront of what we hear the electorate most vocal. It would also appear, at least from the 2015/16 election period on to the present, that there is significant organization around stirring up discontent. Authenticity and credibility in political leadership, with few exceptions, would seem to be in short supply, while pandering to the lowest needs of the masses dominates. Such a leadership style can only lead to one outcome, and that is the failure of a Democratic Republic. This impending failure, if nothing changes, will come in the forms of increasing violence, growing financial failure of States that are degrading from years of mismanagement, and the collapse of the voting system integrity. Taken to the extreme, it is possible we will see another civil war in the United States.
One of the more alarming factors in all of this has been the loss of integrity in the traditional media, and the rapid emergence of a social media mechanism through which the ability for manipulation to be exercised, both internally and externally, exists on a massive scale. No democracy of any form, Republic or pure, can stand absent a fair and balanced media that operates from a place of integrity, and a commitment to the truth as a foundational principle. The politics of race, class, and economic disadvantage have become fires fueled by the gasoline of lies and disinformation; tactics we have seen historically in Nazi Germany, Soviet Russia, Communist China, Venezuela, Cuba, and anywhere tyrants have sought power through the gullibility of people.
Where Are Ethics in All This?
While the Constitution supports a framework of Justice or, Fairness Ethics, the manner in which it would appear to have become distorted over time would seem to have brought us to the point where an inflamed, but poorly informed mob mentality has created little interest in the underlying rights, value and importance of the commitments enshrined therein. Certainly, the rights of the unborn have become subverted to the almost whimsical rights of “mothers” to terminate babies up until the moment of birth. Abortion has become a go-to last ditch form of contraception. Of course, there are exceptions, but abortion has become a business with well-funded support across ethnic and economic lines. The laws of Man are demonstrating the expected frailty that comes in the absence of any absolutes. Whether we are talking about what constitutes the state of marriage, sexual orientation, the value of life, or any other topic that morality would once call into question, and censure. If our standards of morality are based on the slippery slope of popular culture, how can there be any ethical standard which the society is willing to uphold? We are wholeheartedly embracing relativism on a massive scale from which surely social anarchy must inevitably evolve.
Ayn Rand, who came from a communist state to the seeming freedom of the West, and who grew up with a decidedly atheist viewpoint from the age of nine, believed that no one should be able to impose their beliefs on anyone else, and that a person’s commitment to themselves and their beliefs, and their ability to be happy was supreme above all else. She opposed taxation, subscription-based military service, and all forms of government regulation that would restrict or impede the individual’s ability to do what they wanted to do in the pursuit of their dream. I’m not sure how she would expect a government to exercise its responsibility to protect and safeguard the country and its citizens in the absence of the funding necessary to do so, but I also believe that no government will voluntarily exercise spending restraint when it is able to utilize a confiscatory taxation policy. Nor would I expect the governed to voluntarily give of its income and wealth, even though America and Americans have been the most charitable country in the world. Finding the balance is a multi-faceted challenge which we have yet to demonstrate the ability to meet.
Virtue ethics with its emphasis on character would seem to be hard-pressed to succeed amid a society which has devolved increasingly to a ‘me’ emphasis. If our first thought is “how can this benefit me”, or “how can I get more, even if its at the expense of others,” then we have little hope of a move towards the moral or ethical state. Here is where we hear the cries of “the rich are getting richer and the poor are getting poorer” without regard to the reality of what emerges from “to each according to his ability, to each according to his needs.” In this life we can at best expect equal opportunity to education, to work, to justice, but we cannot be promised equal physical, or intellectual ability and skill. Any society has a responsibility to assist those who cannot help themselves, but it also has an obligation to see that all contribute what they can, to the best of their ability.
Kant’s Deontological Ethics is appealing on every level, but fails when the society, and its political leaders, fail or refuse to so engage given their propensity to act in their own self-interest, and in the interest of sustaining their political position. In this country, such a dilemma might be eased with the imposition of term limits, but that would require a Constitutional Amendment; not impossible, but a very high hurdle indeed! In addition, how can the common man act in such an ethical manner if the political system does not?
Utilitarianism and Confucianism would likewise offer great appeal; seeking the greater good or doing no harm should certainly apply to the individual level, but modern society seems to show little interest, here again. In my lifetime I have been able to observe what I consider to be the most efficient and effective form of government, a Beneficial Dictatorship. Of course, where do you find a beneficial dictator, it seems to be a contradiction of terms. Singapore, in the 1970s was ruled by Lee Kuan Yew who was Prime Minister from 1959 to 1990. He ruled by an absolute set of laws which were rigorously enforced, a fact I would observe in my travels there between 1968 and 1980. Drugs were prohibited, and unknowing travelers from the West who wanted to smuggle even a personal stash of pot into the country quickly found themselves in a very uncomfortable jail. Littering was an offence, and Singapore became the cleanest city in Asia. As a visitor, locals would caution me not to drop any trash, especially a cigarette butt. As a small island nation, land was a premium, and population size a large factor in providing housing. Consequently, citizens were encouraged to limit the number of children they would have. To accomplish this, a wide array of services from housing to other social supports scaled down based on the number of children you had. If you wanted the maximum, you made sure you had the minimum suggested family size. A perfect situation? No system involving humans can be, but he managed a tri-cultural (Malay, Chinese, and India) nation successfully for three decades, and took Singapore from being an economy based on tourism and denim production, to one engaged in high tech manufacturing, services, and one of the largest financial and business centers in the world.
Conclusion:
I find it difficult, if not impossible to find any one ethical approach to even be possible in today’s world where morality has become a matter of personal opinion and desire, and where the social discourse has become uncivil and divisive. Secularism has all but swamped Christian religious tradition, and faith traditions have succumbed to the demands of the popular culture, while at the same time corruption within the church has reached alarming and publicly displayed levels that seems to rival Rome and the Vatican in the time of Leo X. While the church exhibits robust growth in Africa and India, the inexorable growth of Islam into new territories, and the minority status of Christians (India) present increasing levels of persecution, church and home burnings, and bloody executions. We should all aspire to living a moral and ethical life, but I believe our hope is in the saving Grace of Christ only, and a better life eternal.