True North - Leadership and Ethics By Bill Catlette and Richard Hadden
February 2006

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  • Featured Article - True North - Leadership and Ethics
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  • Featured Article - True North - Leadership and Ethics

    By Bill Catlette and Richard Hadden

    Last month, smack in the middle of a keynote speech on Discretionary Effort to a management group, an audience member raised his hand and asked me to back up to the previous slide, one that provided a visual summary of some of our thoughts on leadership morality, as it pertains to discretionary effort. One of the notes on that slide suggested that, as a fundamental element of trust, "Truth is essentially a black and white issue." He then asked me to explain my thinking, which I was more than happy to do. I told him what I thought, and moved on.

    Unfortunately, in retrospect, I didn't answer his question very well, owing perhaps to the fact that my little pea brain was fully consumed at the moment with retaining and ordering the next thirty minutes of stuff I really wanted them to hear. My bad. Herein is what I hope is a better answer to his question, which I intend to send him. You may ride along.

    No Ethics, No Effort
    People don't ordinarily commit chunks of their Discretionary Effort without cause, or on behalf of those they find lacking in some important respect. More to the point, they won't follow them period, let alone part with Oomph (our chosen word for 'Discretionary Effort.') That is especially the case when it comes to those who lack, or have lost touch with the essential, character-related qualities of leadership. If your job is to get people to dispense Discretionary Effort in pursuit of your organization's goals (as we suspect it is), some self-evaluation, vis- -vis your own character-related qualities of leadership might be in order.

    One of those qualities - indeed the very foundation on which this thing called leadership rests, is the expectation that a leader has an accurate moral compass, and can be trusted by those who would follow him or her to reliably do the right thing, even in the absence of guidelines or laws. Make that especially in the absence of guidelines. When these un-anticipatable situations present themselves, are you guided by your internal, and highly reliable sense of what's 'right'? Or by office politics and short-term self-interest?

    We're not talking about do-gooders, but ordinary people who, when under the pressure of danger, threats, or temptation, manage to maintain an abiding sense of right and wrong. They are comfortable within their own skin. They will take a stand, and they tell the truth - each time, every time.

    Moral Anchors
    Are there people you've known who could always be counted on to find their "True North", and act accordingly? We call these people 'Moral Anchors'. Think about them. How would they respond to that ethical dilemma you're faced with? How have things turned out for them?

    Years ago (as in before kids), my wife and I used to get together with a group of friends, and often, we would play the board game 'Scruples' (still available, at www.scruplesg ame.com), in which players are asked to name their response to various moral and ethical dilemmas, and, even more tellingly, to guess how the other players would respond. This group, which we came to call the 'Scruples Group' still gets together occasionally, and we decided that at our next gathering, set for next month, we're going to break out the old game again. (Someone's dog has chewed on our 1985 edition, and so we've ordered the new Millennium edition.) If you want to test your 'scruples', you may want to consider playing the game...at the office. In fact, we've used it as a teaching tool in the corporate classroom.

    Right is Right
    One of the reasons most of us have so little faith in our political 'leaders' is that nearly all of them seem perfectly capable of rationalizing any position on just about any subject in order to inflate their appearance, advance an agenda, or save their own skin. Truth to them is a relative matter, based more on polls, votes, or weasel words than an internal compass.

    This is often manifest through the careful parsing of words, or 'dancing on the head of a pin' if you will. Whether it has to do with what "the meaning of the word 'is' is," as one former resident of 1600 Pennsylvania Avenue put it, or another's difficulty in characterizing the pre-2003 relationship between al Quaeda and Iraq, we are all too familiar with the condition.

    Sadly, this notion of shading (if not inventing) the truth, and attempting to redefine the boundaries of right and wrong resides in the business world as well.

    An Accumulation of Little One-Off Decisions
    For years, Canadian born Bernie Ebbers was viewed as a wonder boy as he grew a tiny Mississippi phone company into a telecommunications powerhouse through a series of highly leveraged acquisitions.

    With commercials featuring basketball uberstar, Michael Jordan, and the $40 billion acquisition of MCI in 1998, WorldCom was the darling of Wall Street. Things seemed great until June 25, 2002, when Ebbers' MCI WorldCom announced that, due to what later proved to be fraudulent accounting irregularities of gargantuan proportion, the company would need to restate earnings. When the dust finally settled, the restatement amounted to $11 billion, and MCI WorldCom's subsequent bankruptcy filing wiped out thousands of jobs and billions in shareholder wealth.

    In July 2005, Ebbers was forced to surrender much of his personal wealth, and sentenced by a federal judge to spend effectively the rest of his life in prison.

    What happened? What went wrong? Though it is difficult to ever really know what is in a person's heart, there is a pretty good trail of behavior to suggest that Bernie Ebbers didn't wake up one morning and decide to pull off one of the greatest train robberies in history. No, it seems far more probable, that Ebbers, the former basketball coach, Sunday school teacher, and gentleman farmer, had succumbed to the accretive influence of what former Schwab CEO, David Pottruck called a bunch of little one-off decisions.

    Speaking of difficulties his own firm had encountered during his tenure as CEO, Pottruck allowed that, "Firms like Schwab don't get into trouble because somebody at the top decided one day that conflicts of interest are okay... but because of an accumulation of little one-off decisions." Whether the cheating started as a result of a little white lie to investment bankers, a little something extra on an expense report, or the tendency to start believing one's own marketing hype, chances are, the great WorldCom meltdown started low and slow, and worked its way up from there.

    The lesson for the rest of us who would accept the mantle of leadership is that when it comes to doing the right thing, there is no middle ground; there can be no equivocating. This is not 'horseshoes and hand grenades.' Little sins of omission have a nasty habit of growing into big sins of commission. A little fudging on an expense report or performance review is the same as digging into the corporate till with a big Caterpillar 972H wheel loader, and should be treated in the same manner.

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