Corporate boards are facing dramatic challenges in assessing both systemic and individual organizational risk. The Ethics Center and the National Association of Corporate Directors, Silicon Valley, recently sponsored a panel that addressed three questions: how did we get here, what can we learn, and what changes might allow us to better assess and mitigate risk. The role of the Audit Committee in risk oversight was the chosen starting point, as the Audit Committee appears to have been ground zero for some of the failures in oversight.
Here, Center Executive in Residence Jim Balassone interviews panelist Robert Finocchio. Finocchio sits on the boards of Altera and Echelon Corporations, and CaseCentral, Embrane, JustAnswer, Tripwire and Silver-Peak (private companies). He chairs Santa Clara University's Board of Trustees where he is also a Dean's Executive Professor.
Eric, a graduating senior, gets a job offer from a company that is not his first choice. Should he take it and keep looking?
This ethics case is the latest addition to The Big Q, the Center's blog about the typcial ethical dilemmas facing college students. The best student response received by midnight Sunday, May 29, wins a $50 Amazon gift certificate.
The second multi-stage educational seminar for teachers and practitioners of business ethics in East and Southeast Asia will be held August 19-20, 2011, at the Ateneo de Manila University.
The seminar is sponsored by the Center for International Business Ethics (CIBE) in Beijing, in cooperation with the Asian Jesuit Universities and Colleges, the Gov Jose B Fernandez JR. Ethics center at the Ateneo, and the European Chinese Center for Responsibility and Leadership.
CIBE, a key Markkula Center partner, sponsors three major conferences per year. The Manila Educational Seminar for faculty who teach business ethics in Asia is the second annual conference on this topic. The first, held last year, drew 30 scholars from across Asia.
Join us for "A View from the Audit Committee: Risk Oversight and Assessment" a panel discussion May 19, 7:30-9:30 a.m., at Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, CA 94304. Panelists are Robert Finocchio, Board Member - CaseCentral, Embrane, JustAnswer, Tripwire and Silver-Peak (private companies), and Chair - Santa Clara University's Board of Trustees; Deirdre Flaherty, founding partner of the StoneTurn Group; Darryl Rains, partner at Morrison & Foerster; and James Balassone, Executive in Residence at the Markkula Center for Applied Ethics, Santa Clara University.
7:30-8:00 Continental Breakfast
This event is co-sponsored by the Markkula Center for Applied Ethics and National Association of Corporate Directors, Silicon Valley Chapter, Inc.(SVNACD)
Are there special ethical challenges in starting a company as opposed to managing an existing operation? Meghan Skarzynski, an SCU senior finance major and Hackworth Fellow, made that question part of her fellowship work this year.
Skarzynski invited Bryan Wargo, CEO, and Kevin Beals, CFO of Nearbuy Systems, to campus to talk with business students about their ethical experiences as entrpreneurs. In this video, they discuss fairness in compensation structures, honesty in dealing with investors, and setting an ethical tone at the top.
As part of a "short course" on introductory business ethics, Center Executive Director Kirk O. Hanson explores the question, "Am I responsible?" The video offers five tests for business people to determine whether, in any particular case, they are responsible for acting.
Three CEOs from high tech companies talked about "tone at the top," and how leadership can impact the ethical culture of an organization at the February meeting of the Center's Business and Organizational Ethics Partnership.
Radha Basu, chair and CEO of Support Staff , Ken Denman, CEO of Openwave Systems, and Robert "Bo" Ewald, CEO of Silicon Graphics discussed the importance of modeling ethical behavior and dealing with employees who stray from company values. The panel was moderated by Ken Lonergan whose firm, Lonergan Partners, specializes in CEO and board placements in technology companies.
While corporate social responsibility and compliance are common terms associated with business ethics, the idea of human rights is less often yoked to business. Ursula Wynhoven, policy and legal head for the UN Global Compact, argues that there are many natural intersections. Wynhoven visited the Center's Business and Organizational Ethics Partnership this week to discuss the UN's "Protect, Respect, and Remedy" Framework for addressing human rights issues for transnational companies.
If, as Lord Acton tells us, "power tends to corrupt, and absolute power corrupts absolutely," then what effect does power have on the ethics of C-level business executives? Dennis Moberg, Wilkinson Professor of Management and Ethics at SCU, reviewed recent research on how power impacts behavior at the February meeting of the Markkula Center for Applied Ethics Business and Organizational Ethics Partnership (BOEP). The partnership includes business executives who are tasked with ethics and compliance in their organizations as well as business ethics scholars from Bay Area universities.
Moberg cited four different areas of difference between powerful and powerless people—inhibition, rules, hypocrisy, and “sucking up”—and led the group in exploring the implications of this research for businesses.
A study by Keltner and Gruenfeld in the Psychological Review (2003) found that when powerful people communicate with their subordinates, they are often uninhibited. They may fail to exercise self-control, with frequent outbursts and violations of social norms. Moberg discussed how businesspeople could apply this information in their organizations to control this potential abuse of power. He suggested:
Reminding the powerful about the consequences of overly candid or inappropriate communications, such as leaks and false innuendos
Making sure the CEO has subordinates who are willing to call executives on inappropriate behavior and recall them to their better selves
In a finding that surprised many of the attendees, Lammers and Stapel reported in The Journal of Personality and Social Psychology (2009) that powerful people rely on rules, policies, or codes when deciding right from wrong, while powerless people rely on “consequences, outcomes, and results.” Moberg pointed out that both these modes of ethical reasoning are legitimate, but that the different approaches may cause misunderstandings between bosses and employees.
Several participants noted that in their own experience, powerful people tended rather to bend the rules or to think that the rules did not apply to them, which proved a perfect segue to Moberg’s next area of difference, hypocrisy.
Another study by Lammers and Stapel (Psychological Science, 2010) found that while powerful people condemn other people’s cheating , they themselves may be guilty of this behavior,” Moberg said. So, while C-level executives may be strict when dealing with rule violators, they “tend to be oblivious to their own rule violations.”
As one of the partners noted, that description probably applies to most people, although the study’s findings suggested hypocrisy is a particular problem for the powerful. Since no one likes to see him or herself as hypocritical, the group discussed ways to approach executives about the problem, including talking about the double standard as if it had been noted by others or telling stories about other executives who had acted hypocritically in the hope that the boss would recognize the application of the story to him or herself.
Many executives think they are immune to flattery, but Moberg described the results of a study that suggested powerful people can be swayed by “sophisticated interpersonal influence behavior,” which Moberg rechristened, “sophisticated sucking up.” The research, by Stern and Westphal (Administrative Science Quarterly, 2010), looked at who was appointed to boards of directors at companies and what behaviors led to that result. Where outright flattery might be perceived as insincere, framing flattery as advice-seeking or complimenting the person to a colleague who would pass on the flattery can be very effective. Where being a “yes man” might be seen as manipulative, arguing prior to agreeing or agreeing “referencing common social affiliations” before agreeing seemed to massage the ego of the person in power and left a positive impression. In the business context, Moberg suggested that organizations alert the powerful to these tactics to make them more aware of when they are being manipulated.
Although acknowledging the difficulty of fostering a work environment where criticism is welcomed, many of the BOEP members saw “speaking truth to power” as critical to maintaining an ethical organizational culture where the tendency for power to corrupt is held in check.