Aug 12 2014
As we enter the third week of the sensationalistic corruption trial of Former Virginia Gov. Bob McDonnell and his wife – an event worthy of a “5 wackiest” list from MSNBC – testimony has revealed numerous “irregularities.”
So far, none of the testimony in the Richmond Federal Courthouse has linked these irregularities with political favors from the government. But in the court of public opinion, the jury is likely already in, and McDonnell’s once bright political star is likely on its way to becoming a black hole.
As is so often the case in scandals and crises, the appearance of irregularity – and the subsequent cover up activity – is the smoke that requires no fire to scorch personal and organizational reputations.
Here are five lessons that every executive and every organization can learn from this unfortunate situation.
Ethics are not situational. Testimony indicates that the McDonnells accepted loans and gifts worth more than $165,000 from the executive of a dietary supplement company seeking to launch a product. The loans were not campaigns loans. They were personal loans and gifts (including a Rolex watch) to a standing state governor. Whatever the extending circumstances, there is no rationalization or situation that could make this appear ethical. If it’s not right, don’t do it. If you have doubts, ask yourself if you’d be comfortable with the situation appearing in a headline someday.
Secrets are bad. The McDonnells never told their staff about the loans and gifts. The executive never told other executives at his company about the loans or gifts. Sometimes, we have to keep information confidential until the appropriate time, as in the case of mergers or acquisitions or material information about a public company. Proprietary information or trade secrets are designed to maintain a competitive advantage (at least until the patent expires). Secrets are different. Usually being secretive means we know the information could be damning. As we all learned in middle school, secrets eventually get out, and when they do, someone usually gets hurt. Be smarter than a fifth grader.
Greed and desperate need fuel bad decisions. If power corrupts, greed and desperation are the stuff that make ethics situational, (and as noted, ethics are never situational). Testimony in the McDonnell trial indicates that the family had financial troubles, and that Mrs. McDonnell had expensive taste without the expense budget. Personally, as an executive in my firm, I have seen perfectly ethical business people lose their ethics as their companies go belly up. I also have seen perfectly ethical executives lose their ethics as they get a company ready for a sale or to go public. Whether it is greed or need, questionable personal or organizational actions should not be justified by the extenuating circumstances of the moment. The moment will change; the decision will be judged separately. Make sure it can stand up to the scrutiny.
Hire good people, then listen them. Successful individuals and organizations are successful because they bring together talented people around a common goal. In the case of the McDonnells, testimony indicates they were surrounded by top-notch advisors, who warned them that their association with the business executive and his product didn’t look right. In some cases, the advisors outright stopped some potential damaging actions, like purchasing the First Lady an Oscar de la Renta dress for the inaugural ball. (By the way, these trusted advisors were kept in the dark about the loans and gifts. Why keep these items secret if there were really no concerns? See secrets above).
Don’t risk your good name. You’ve heard it before, but it bears repeating. Reputations take a lifetime to build and are destroyed in mere moments. I doubt anyone would value the rising political career of a current state governor at $165,000. Mathematically, it is an easy formula to assess. But math is insufficient here. I would argue that reputations are priceless. As a business person, I am willing to accept financial risk to grow my company, hire great people and expand our footprint and capabilities. But I am never willing to risk my personal reputation or my company’s reputation. We should never put a price tag on items that intrinsic.