When Leadership Fails

The recent revelation of VW’s emissions test scandal, GM’s criminal wrongdoing in the ignition-switch defect and the conviction of a former peanut executive for the cover-up of a salmonella outbreak, are just the latest reminders of the need to teach corporate ethics and social responsibility in MBA programs. The financial consequences of these corporate failures are measured in billions of dollars but the more consequential impact is measured by the death toll that resulted from these corporate cover-ups and inaction and the loss of faith in free market capitalism.

Business executives are not the only ones being called out for their ethical and moral lapses. The recent fine and suspension of the Rutgers Football Coach for intervening on an academic matter regarding one of his players, pales in significance but provides evidence that human frailties are not just reserved for corporate executives. And the near simultaneous suspension of five Rutgers football players for a range of criminal misdeeds, speaks to a larger cultural issue regarding respect for law and order.

Every successful endeavor, from raising a family, running your own business or being a corporate executive of a Fortune 500 company, requires leadership of some kind. Regardless of one’s status in life, we are all regularly confronted with moral and ethical dilemmas – many of which never rise to the level of front-page news. But it is in these small, seemingly inconsequential moments, that one’s true character is defined and refined.

Overtime, behavior becomes second nature so that by the time you reach a position of responsibility, you no longer stop to weigh the consequences of your actions. Instead, we plow ahead as if on automatic pilot, foregoing the critical thinking steps that are key to good decision making. The process has come to be known as the Bernie Madoff effect, a reference to the largest Ponzi scheme of all time, which may have started with a seemingly innocent decision to alter a single monthly statement instead of delivering bad news. The end result was a loss of billions in investor savings and a number of suicides, including Madoff’s son.

Rarely is one born with all the requisite skills to be a successful leader. Instead, we learn by doing; we learn from observing others and from the outcomes of the countless decisions that we make each day. Take a moment to reflect on the recent rash of corporate wrongdoing and on the critical thinking steps that would have kept you from making the same mistakes.

Categories: MBA