- October 6, 2015
- Posted by: HPI Admin
- Category: Power Ideas
This may be one of the most important articles we have written. You will not want to miss reading this article because, Strategic Partner, Diane Janovsky, is right on the money about this critical topic in today’s world….do we have Corporate Values that can stand over the lifetime of our businesses, or not? Do we stand behind our products or services, or not? Is our word our bond, or not?
I’ve been struck lately by the constant flow of stories in the media about major corporate wrong-doing. They are glaring examples of leadership failure, whether caused directly by poor decisions at the top, or indirectly by cultivating a culture that allows for unacceptable behavior.
The Volkswagen (VW) scandal is one of the most recent, and frankly one of the most egregious. All indications are that high level leadership at VW was aware of and condoned the installation of “defeat devices” in 482,000 diesel vehicles in order to circumvent U.S. Environmental Protection Agency emissions requirements. VW broke its brand promise to its customers by lying about vehicle performance, and also put the public at risk by subjecting people to highly illegal and unhealthy levels of nitrogen oxides. Fallout will likely include massive fines and recall costs, as well as potential criminal prosecution and the loss of future sales.
This was not a breakdown of process control in the lower levels of a large organization; this was the result of intentional cheating and deception at the highest levels. A similar situation occurred recently with Peanut Corp. of America where two executives were sentenced to 28 and 20 year prison terms for knowingly shipping salmonella-tainted peanut butter, which resulted in over 700 people being sickened in 46 states and possibly 9 deaths in 2008-2009. It is difficult to understand such willful disregard for public health. We can only assume it was motivated by the relentless pursuit of ever higher profits.
In other cases, senior executives could not be directly linked to an intentional decision that caused the initial failure; however, they were indirectly responsible because they allowed a culture of deceit and dishonesty. And when the issues came to light, their responses were characterized by denial and a lack of timely corrective action. For example, in 2014, General Motors (GM) finally admitted to concealing a problem with faulty ignition switches that is blamed for 124 deaths and 275 injuries. GM is settling with the U.S. government for $900 million, and paying another $575 million for civil lawsuits, in addition to recalling hundreds of thousands of affected vehicles.
Also in 2014, Toyota agreed to pay a $1.2B fine for covering up two safety problems that caused unintended acceleration. Toyota began responding to media accusations in late 2009, denying the issue for years, until evidence was irrefutable. As Attorney General Eric Holder said, “Toyota confronted this public safety emergency as if it was a public relations problem.” (ABCNews)
In all of these stories, someone came up with a bad idea, and someone, at the moment of truth, decided to approve it. If you are the owner or CEO of a business and you agree that these types of lapses in integrity are unacceptable, then read our article next week to learn how you can provide the leadership required to help people at all levels make the right decision when the rubber meets the road.
Have a great week!
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