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When it comes down to it, good corporate governance is simply good manners.
With the messes produced at Enron, WorldCom, Global Crossing, and far too many other companies, we are learning about some very arrogant, greedy, and downright rude people.
Sadly, these rude individuals - the corporate executives, directors, lawyers, accountants - need to be reminded of noblesse oblige, or that rank, their rank specifically, compels obligation. Remembering this would help bring into focus their duties and responsibilities. |
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| Good manners are about treating others the way we want to be treated. An individual with good manners is responsible for his conduct and the consequences of his behavior. Individuals with good manners define themselves by their actions. |
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| Is it not rude to think only of oneself? |
Yet is that not what happens when corporate officers report inaccurate financial results, engage in self-dealing, and are less than candid with the board, outside constituents, etc.?
The damage from bad governance is direct and swift:- Stockholders, who through their elected directors chose the executives leading the companies whose shares they own, stand to lose on their equity investments.
- Employees, whose jobs, work environment, and life security are entrusted to the executives, pay for the executives' lack of good manners with their jobs, their pensions, or sometimes even their lives.
- Directors, who are financially and personally responsible for the business conduct of the executives, lose when the bad judgments and their consequences surface.
- Suppliers' businesses and financial stability are damaged by the actions of the executives who rudely ignore the obligations imposed by the code of noblesse oblige.
- Retirees who depend on the good governance of the corporation may lose pension benefits, their personal retirement investments in their company's stock, and retiree medical plans when rudeness rules.
- Communities in which a corporation has offices, plants, or other facilities stand to lose a significant corporate citizen, employer, and taxpayer when the company's leaders fail to understand or choose to ignore noblesse oblige.
- Other investors, such as bondholders, partners in joint ventures, and franchise holders, all depend on good governance to protect and enhance their investments - and rudeness will negatively impact each of them.
- Consultants are subject to financial loss and professional destruction when their clients are governed without regard to good manners and when the resulting misinformation, fraud, and collapse are laid at their doors.
- Banks and other financial institutions may sink under the weight of bad loans, bad accounting, corrupt business practices, and fraud upon their institutions brought on by bad client governance - again, a denial of the obligations of rank to practice integrity.
- Management itself ultimately pays for its rude behavior through stock options that can become worthless, lost employment for themselves, criminal prosecution or civil lawsuits, and private civil actions for damages.
- Customers (including the U.S. government) depend on companies to provide uninterrupted services, and serious consequences may result from bankruptcies caused by the arrogance of accounting fraud.
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| Our Acts, Not Our Words, Define Us |
| The consequences of the lack of ethical standards and infectious greed are reported daily in the financial press: plunging stock prices, bankruptcies, government investigations, congressional hearings, and legislative proposals. Bu congressional actions, criminal punishments, civil fines, or regulatory fiats never truly will change the system. |
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What about considering this solution? Each individual is responsible for his conduct and its consequences. We are what we do. Our actions speak louder than our words. Our acts, not our words, define and reveal us. Or, simpler still: Do unto others as you would have them do unto you. We trust individuals who treat others the way they wish to be treated.
The corporate governance culture must be reborn with respect for truth, accountability, integrity, accuracy, and honor. As long as we chase the paradigm of greed, avarice, and fraud, rude corporate governance will flourish. How very sad. Consider the new paradigm: Bad corporate governance is, in fact, corporate rudeness. And good corporate governance is, in fact, good manners.
A Class Act corporation is trusted by all the people whose lives it touches.
This article was adapted by Ms. Mitchell from her book, Class Acts: How Good Manners Create Good Relationships and Good Relationships Create Good Business. It was also published as a column in Directors and Boards magazine. |
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