Why Corporate Governance Fails and Lacks Sustainability (3)
FOLLOWING up on our previous article, it is time that we become aware that corporate governance cannot be controlled effectively with formal and exhaustive rules, regulations, guidelines, and procedures only. It’s about decency and personal integrity and this must be cultivated from within.
Personal integrity has no need of rules. It must be a way of life. Remember what Plato said in 340 BC: “Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws”. Most corporate governance programs make things worse, create a stable basis for more corruption and are doomed to fail. Why don’t we learn from Plato and focus on creating a culture of good people, in which personal values are aligned with the laws and embedded in the mind of the people, instead of focusing on laws (corporate governance) only? Dr. Rampersad picked up where others left off by launching an innovative methodology for creating a culture of good Chairmen, Presidents, CEOs, CFOs, managers and employees, in which high ethical values are aligned with their corporate governance rules, regulations and guidelines and embedded in their mind. As demonstrated by Enron and others, traditional corporate governance codes (corporate laws) provide no protection from potentially catastrophic ethical failures. Company integrity must always start with personal integrity. It must be an informal learning process and a way of life, based on alignment with yourself and alignment with your company. This ethical process must be promoted and communicated within the whole company to all stakeholders consistently. In this way ethical behavior will become a routine in the whole organization, and leaders and employees will gain more understanding about their responsibility with regard to ethical behavior. They will understand that it is their responsibility to act ethically, on duty as well as off duty. This is a more sustainable, comprehensive and holistic approach to ethics and social responsibility.
Against this background, Dr. Rampersad proposes an organic and holistic approach to corporate governance, by integrating personal values and integrity into one overall authentic governance framework, in which formal corporate regulations and personal values mutually reinforce each other. This theory has been borne out through his leadership experiences in the corporate world globally in the past 30 years. He was also inspired by the leadership vision of Harvard Business School professor Bill George, who outlined in his article ‘“Why Leaders Lose Their Way’” why powerful and talented leaders often misbehave and how they lose their moral bearings, such as: Hewlett-Packard CEO Mark Hurd who resigned for submitting false expense reports concerning his relationship with a contractor; US Senator John Ensign (R-NV) who resigned after covering up an extramarital affair with monetary payoffs; and Lee B. Farkas, former Chairman of giant mortgage lender Taylor, Bean & Whitaker, who was found guilty for his role in one of the largest bank fraud schemes in American history. According to Bill George, they can avoid these pitfalls by devoting themselves to personal leadership development that cultivates their inner compass, based on self-reflection. This process requires thought and introspection because many people get into leadership roles in response to their ego needs.
Sustainable corporate governance starts with personal leadership development, based on self-reflection and introspection and embedding personal values in the mind of the Chairman, President, CEO, CFO, managers and employees, and coaching them to reflect on these values honestly. It’s about values-based Leadership. Steve Jobs once remarked, “The only thing that works is management by values”. This is done, according to the authentic governance method Rampersad has launched in his new book; by coaching the Chairman, President, CEO, CFO, managers and employees to reflect on their “personal ambitions and their alignment with their behavior and actions.” In this way good corporate governance will be a way of life, characterized by trust, credibility, transparency, personal and social responsibility, open communication and a continuous learning process, embedded in an ethical culture. This cultural shift will have a positive impact throughout society. This article will be continued next week.
Prof. Hubert Rampersad is President of the Technological University of the Americas and Abiodun Kayode Fawumi is the Publisher of Ekocity Magazine.