Character and Competence
So, is ‘corporate integrity’ an oxymoron? Consider Merriam-Webster’s definition of ‘integrity:’
1 : firm adherence to a code of especially moral or artistic values : INCORRUPTIBILITY
2 : an unimpaired condition : SOUNDNESS
3 : the quality or state of being complete or undivided : COMPLETENESS
synonym see HONESTY
Wow! Firm adherence… morals… values…incorruptibility… unimpaired… honesty…
Key words: ‘firm adherence.’ If they didn’t already have one in place, the Sarbanes-Oxley Act of 2002 (SOX), Section 406 now basically requires that all public companies have a code of ethics. Enron had a code of ethics. Problem was, top executives didn’t adhere to it. Harvard Business School (HBS) professor Malcolm Salter is quoted in an article titled Enron’s Lessons for Managers, as saying, “…you can have great values, but if you don’t have the competence [to implement them], forget it. You need both character and competence.” The same story repeats itself with WorldCom, Tyco, HealthSouth… All had codes of ethics that were nothing more than words on a page because their top executives lacked the character and competence to ensure adherence to the codes.
So, unless the enactment of SOX section 406 somehow magically endows all corporate executives with the ‘character and competence’ required for firm adherence to a company’s code of ethics, it does absolutely nothing to prevent fraudulent activities. It does, however, increase accountability and liability for executives in the event that something does go wrong. Time will tell whether other rules and regulations set forth in SOX and elsewhere will be enough to prevent such a rash of corporate scandals as we’ve seen over the past few years. If anything, maybe it will at least be enough to scare some away from positions of significant fiduciary responsibility, realizing that they lack the proper character and competence to restore and maintain corporate integrity.
In light of the above definition, I would feel very uncomfortable answering ‘yes’ to the question, “Do you feel that, overall, corporate integrity exists in the U.S.?” But, that’s just me. By nature and profession, I tend to be a bit skeptical. How would you answer the question?
posted by Kathleen @ 1:38 PM
1 comments
1 Comments:
I believe that there is a great deal of corporate fraudulent activity in the U.S. and that most people do not want to be pulled into a firestorm by doing the right thing and alerting authorities.
I know of an indiviual that has had his motorcycle design stolen by Harley-Davidson, which went ahead and produced it as a factory model.
This individual has received no formal acknowledgment or payment for his creative work, just stonewalling.
When he was asked to seek legal remedies, he shudderred at the prospect of taking on a large corporation.
"My name is not David" he said, "besides, I will probably lose anyway and go bankrupt trying to defend what's right" "It's not about right or wrong, he went further, "it's about money, and people do not matter anymore".
I hear this a great deal from people, and we have fostered a culture where people have seen over the years that big business (big money) can manipulate the law and eventually win.
If the culture is one of "I don't want to get involved and become a martyr and lose my life savings"
how do we police and enforce corporate immorality and the loss of integrity?
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