Perspectives on Leadership Choices

As children our heroes are spider-man, superman etc. and we are proud of our choices. As adults we believe that we have maturity to select our heroes and leaders, since we are rational and intelligent human beings.

I think somewhere we are making wrong choices without realizing it. For example, in democratic countries the politicians are chosen by the public, however we are completely surprised and dismayed when stories come in media that they have done something unethical.

Our choices for present day role models could improve a lot. For example, Paris Hilton is a celebrity who is most often covered in the media for all the wrong reasons – drug abuse, criminal prosecution, skin show, parties and sex romps. She has the wealth and beauty which the public can never dream of having. However, the messages she is giving are all wrong. If a woman from middle class family would be behaving this way, we would think she needs psychological counseling as her behavior is weird. But Paris Hilton is rich, so she becomes a role model for youngsters.

In this post I am covering three articles, which indicate that we are making somewhat wrong choices, and the reason for the same. Click on the headings to read the article.

1.       Christian Activist Bryan Fischer Blasts ‘Feminized’ Medal Of Honor (via Politics Daily)

Army Sgt. Salvatore Giunta  was awarded the  Medal of Honor. According to the US Army’s officla citation Sgt. Giunta “exposed himself to withering enemy fire” to save other wounded soldiers.

The Washington Post has described the incident as follows:

“Under a bright Afghan moon, eight U.S. paratroopers trudged along a ridge in the Korengal Valley, unaware they were walking right into a trap. Less than 20 feet away, a band of Taliban fighters executed the ambush plan perfectly, enveloping the paratrooper squad in an explosion of bullets and grenades

Salvatore Giunta, a 22-year-old Army specialist from Hiawatha, Iowa, was knocked flat by the gunfire; luckily, a well-aimed round failed to penetrate his armored chest plate. As the paratroopers tried to gather their senses and scramble for a shred of cover, Giunta reacted instinctively, running straight into the teeth of the ambush to aid three wounded soldiers, one by one, who had been separated from the others.

Two paratroopers died in the Oct. 25, 2007, attack, and most of the others suffered serious wounds. But the toll would have been far higher if not for the bravery of Giunta, according to members of his unit and Army officials.”

However,  in Politics Daily Brain Fisher has described the medal of honor as feminized. Read the paragraph below to understand what he means.

“When we think of heroism in battle, we used the think of our boys storming the beaches of Normandy under withering fire, climbing the cliffs of Pointe du Hoc while enemy soldiers fired straight down on them, and tossing grenades into pill boxes to take out gun emplacements,” wrote Fischer, director of issue analysis for the AFA, a longtime lobby on the Christian right. “That kind of heroism has apparently become passé when it comes to awarding the Medal of Honor. We now award it only for preventing casualties, not for inflicting them.”

“So the question is this: when are we going to start awarding the Medal of Honor once again for soldiers who kill people and break things, so our families can sleep safely at night?” he asked.

If I stretch this logic and use Hitler and Gandhi as metaphor, then Hitler was a hero for killing enemies in WW II and Gandhi was a wimp for attempting to save human lives during partition. Is it more important to save lives or kill people? Who do you think is the hero?

2.     The U.S. Epidemic of Workplace Dysfunction Resulting in Unlawful Employer Practices (via Workplace Credible Activist)

Recently in US Dodd-Frank Act was introduced. The Act is being debated as under it has a provision of awarding 10 to 30% of monetary sanctions  to the whistleblowers if the amount of recovery after enforcement action is more than US $ 1 million. The act is introduced to motivate employees to report regarding fraudulent practices being followed by their organization. Ideally all employees and specially risk managers should be reporting these incidents if they maintain moral high ground. However, the risk of retaliation from senior managers and colleagues is so high and damages so severe, that most employees prefer to turn a blind eye.

Read the paragrah below from Workplace Credible Activist. It is a September post which is gathering momentum to get support for employees to do the right thing.

 Given that all government employees are required to report legal and ethical noncompliance, mandatory impartial investigations must be implemented without exception and accompanied by absolute prevention of unlawful retaliation against complaining employees. There must be a freeze on any termination of any complaining employee while a sound, impartial, unbiased and thorough investigation is completed, and even afterwards, retaliation against complainants must be prevented.

Violations of EEO, OSHA, public safety, retaliation protections, whistleblower protections, ADA, union-protections and fraud/corruption prevention laws must be classified as serious crimes that result in prosecution. There is extremely insufficient protection for employees who use appropriate channels to report noncompliance in both government and corporate workplaces.

In case of employees who take moral high ground and report corporate wrong doings, they are protecting the society by safeguarding the interest of  investors and employees. They should be considered as heroes, however the public punishes them severely for following the right path. The top management is cushioned and protected by the colleagues who support the wrong doing. Here do you not think that we are making wrong choices of selecting our heroes?

3.       What motivates us to select wrong heroes?

People would agree when I say that most of us know the difference between right and wrong. Then why do we choose the wrong heroes and is some cases consider the actual heroes to be devil’s incarnation. We consider the real heroes to be monsters and punish them for being heroic. This doesn’t sound rational, and we think we would not do something like that. Philip Zimbardo in this short video regarding Stanford Prison Experiment explains that when we think that we will be punished for someone else’s heroism we instead of appreciating the heroism, attack the person.  This indicates, that we appreciate heroism as long as it makes us feel good, benefits us or serves our self interest.

Amazing isn’t it, that as adults we sometimes can’t make the right decisions on choosing our heroes and leaders. The question is how do we think more rationally and choose our heroes based on their contribution to society as a whole?

What Makes Humans Evil?

The last article “Are Humans Moral?” started an interesting debate on the topic are humans evil or is it the situations which make a normal person evil? What are the underlying factors which make crowds behave aggressively and how should the negative tendencies be controlled?

Geoffrey Morton-Haworth mentioned the video “The Lucifer Effect: Understanding How Good People Turn Evil” by Philip Zimbardo available at  http://mitworld.mit.edu/video/459. It is nearly a two-hour presentation covering the abusive behavior of US army staff in the prison of Abu Gharib. Philip Zimbardo has drawn connections between the prison situation in Abu Gharib and Standford Prison Experiment, to explain the sociological impact of the situations on normal human behavior. He has discussed how the same situation can trigger in one human evil tendencies and in another heroic behavior.

I recommend you to watch the video to understand how irrational emotions of human beings can be triggered to make them behave in extremely negative behavior.

I have below given the link to Part I of the same video on youtube. The video contains explicit and disturbing images, so please be careful.

Are Humans Moral?

The Times of India article – “If it’s too easy, we are likely to cheat” caught my attention today. The article discussed the results of a study conducted by University of Toronto Scarborough, to find the likelihood of people cheating. The research showed that “people will behave badly – if it doesn’t involve too much work on their part.” 

Rimma Teper the lead author of the study made these three statements :

“People are more likely to cheat and make immoral decisions when their transgressions don’t involve an explicit action,”

“If they can lie by omission, cheat without doing much legwork, or bypass a person’s request for help without expressly denying them, they are much more likely to do so.”
 

 “When people are confronted with actively doing the right thing or the wrong thing, there are a lot of emotions involved – such as guilt and shame – that guide them to make the moral choice. When the transgression is more passive, however, we saw more people doing the wrong thing, and we believe this is because the moral emotions in such situations are probably less intense.”

The results indicated that if human beings do not need to work hard for getting an advantage from unethical behavior, they are most likely to resort to immoral behavior. This got me thinking, if comparative mapping is done of gains achieved through hard work by ethical behavior with those achieved through unethical behavior, while ignoring risks associated with unethical behavior, people will mostly find unethical behavior to be more profitable. 

So my rambling thoughts continued. If risk of detection and punishment are the only deterrent to unethical behavior, then can we consider human beings moral?  What role does morality play in relationships and society?    

Bull in his book Moral Education (1969) explains this point thus: ‘The child is not born with a built-in moral conscience. But he is born with those natural, biologically purposive capacities that make him potentially a moral being’

He stated – “All morality consists of relationships between persons; that its three concerns are therefore, self, others and the relationship between them; and that the heart of morality is therefore respect for persons. [The child’s concept of a person] does not have to be learnt as such, [but] it does have to be built up by moral education in terms of knowledge, habits and attitudes.”

The above-mentioned two statements show that human beings need to be trained and educated in moral behavior to develop a moral conscience. This indicates that in the long-term a morally conscious human being is less likely to do unethical activities.

In my view, society is not making significant effort in raising its moral fiber. Without the required moral education, society will continuously witness lack of personal and business ethics. Under these circumstances can we blame anybody but ourselves? Is it not naïve to expect the world to behave morally when we are not willing to contribute towards building a morally conscious society?

Hence, two simple questions are how much focus is put today by parents and teachers to raise morally conscious adults? How much time and effort is spent by adults to morally educate themselves and strengthen their character?

Welcome your honest views here.  😉

Impeccable Integrity

Attorney General of India G E Vahanvati

Attorney General (AG) of India, Mr. G. E. Vahanvati made a statement in Supreme Court yesterday that if “impeccable integrity” was a criteria for selecting candidates for senior level appointments in judiciary, government and politics, most of the present office bearers would be subject to scrutiny. He made this statement in respect to the appointment criteria for Chief Vigilance Commissioner (CVC). The present CVC Mr.  P. J.  Thomas is facing a charge sheet in the 1991-92 scam on the import of palm oil in Kerala when he was the civil supplies secretary. The question is how can the CVC fulfill his responsibilities when his own integrity is being questioned.

The statement is a candid admission of the corruption level in Indian government. An Indian citizen compromises his/her rights granted under the constitution because of the pervasive corruption in law enforcement agencies. Can this statement be seen as a turning point for the judiciary?

In politics, the rot exists at the root level and irrespective of the party selected, the voters see new scams being reported every week. The apathy in urban voters is high,  as they consider all politicians to be corrupt. Indian professionals do not enter politics because of the high level corruption. Do you envisage improvement in Indian political scene if corruption is curbed?

Presently we may not have the right answers, but this statement is a step in the right direction. Collectively we need to find a solution to reduce corruption. The 5 questions which this statement raises in my mind are:

  1. How should impeccable integrity be measured? How should the gray areas be treated?
  2. With the prevailing high corruption level, how many of the senior politicians and bureaucrats will pass such a scrutiny?
  3. If they do not clear the required standards, what should be done with them? Should they be appointed despite the dubious track record or be investigated and penalized for wrong doing?
  4. If most officials are corrupt where do we find people with impeccable integrity?
  5. What measures should be adopted by public to ensure that officials without integrity are not appointed at senior level positions?

This is a critical issue for success of India at a global level. What are the questions in your mind on this issue? What do you think are the solutions to the problem? Do you think Indian politicians and bureaucrats can become ethical? Share your opinion here.

Nassim Taleb’s Interview

Nassim Nicholas Taleb’s new book “The Bed of Procrustes, Philosophical and Practical Aphorisms” New York Times review is excellent. Watch his recent interview to know more about the book and his views of Bernanke’s understanding of risk.

Corporate Lessons from Sports Field

Opening Ceremony

Asian Games are in full swing in China. After the grand opening China is leading in the games tally and is actually way-way ahead of other participating countries. Watching the games, I can’t help comparing the corporate playing field with the sports games field.

In sports, viewers marvel at the dedication, commitment and perseverance of sports person. For the country to lead in an international event, both men and women have to compete and win in nearly equal number of games. A sports person is completely focused on his/her game and has to win by playing according to the rules of the game. If rules are broken, or a sports person takes performance enhancing drugs, he/she is immediately barred. Victory is always based on fair play and great performance.

The corporate games show somewhat different picture. After the financial crises there was a huge cry that CXO’s are rewarding themselves with high pay packets and bonuses though they have jeopardized the organization. The penalties for wrong doing appear to be light and most escape any form of formal punishment. The increasing trend of white color crime indicates a prevailing mind set of “ rules are meant to be broken”. Gender inequality in boardrooms is prevailing despite various efforts, even in developed countries.

Here are three posts which highlight the abovementioned issues of the corporate world. The question is should we spend some time learning to play according to the rules from sport-persons? Click on the headings below to read the full post.

1.    To Dispel or Not Dispel…Legendary Board Myths by TK Kerstetter (via The Board Blog)

This week I was asked to speak at a service club luncheon to a group of about 250 prominent Nashville business people. My topic was corporate boardrooms and I decided to address some of today’s legendary board myths. The following were the myths and my feelings on legitimizing or dispelling them.

Myth #1: CEO and executive compensation is out of control
I was hoping to dispel this myth, but actually, our research shows that this is not just a myth. For the last five years, more than 60% of corporate directors have felt that boards cannot control CEO pay, although interestingly, only a handful think that is the case for their company. Actually, the more I think about this topic, the more frustrated I get. Plain and simple, we still don’t have a good system that truly pays executive management for performance in both the upside—and the downside—of a capital market cycle. Here’s what bugs me: Right now it’s all about optics, not pay for performance. If the stock price and earnings are up, executives get big paydays. It doesn’t matter if they have improved the company or not. From 1990 to 2000 we experienced the longest running bull market since World War II, and stock options made mediocre executives millions even though they didn’t increase market share, improve earnings over average industry performance, or move up in any peer group analysis. So we got spoiled

2.      Women severely under-represented in corporate boardroom by Cathy Rose A. Garcia and Park Min-shik (via Korea Times)

A glaring lack of female directors on a company’s board of directors is a sign that it is not a “healthy business,’’ according to Lucy P. Marcus, founder and chief executive officer of Marcus Venture Capital.Many Asian and Korean corporations have little or no female representatives in boardrooms, but Marcus says this is sadly still an all too common case on corporate boards around the world.

“There is no doubt that women are severely under-represented in the boardroom, and this is not only the case in Asia, but all over the world. The lack of women on boards, however, is a reflection of a wider problem with diversity: it is one of color, age, international perspective, and more,’’ Marcus said in an interview with the Hankook Ilbo, a sister paper of The Korea Times.

Marcus, whose company works with venture capital and private equity funds, institutions and corporations, said that as an investor, the lack of diversity in a corporate board sets her alarm bells ringing.

“When I see a business with a board that has a preponderance of people with similar, if not identical, profiles, this is a signal that it is not a healthy business… Its good corporate governance and good business sense to reflect a range of the organization’s stakeholders,’’ she said.

Data shows the percentage of women board directors in Asia is only 1.8 percent, compared to 20.5 percent in Nordic countries and 14.1 percent in North America. Marcus noted that having diversity results in a more capable and better functioning board that is better equipped to deal with various challenges

3.         A Wave of Bank Prosecutions Is Unlikely by Peter J. Henning (via Dealbook)

The inspector general of the Federal Deposit Insurance Corporation told The Wall Street Journal recently that the agency had opened criminal investigations into about 50 banks that had failed since the financial collapse in 2008. While that makes it sound like prosecutors will soon be filing charges against a number of bank executives, do not hold your breath waiting for a flood of prosecutions.

The last time there was a surge in bank fraud prosecutions was in the early 1990s during the savings and loan crisis that led to the collapse of nearly 1,800 financial institutions. Unlike that era, the number of bank failures has totaled 311 since 2008, and most of those were smaller institutions that got caught up in construction lending.

Although some larger banks did collapse in 2008, like Washington Mutual and IndyMac Bancorp, those failures appeared to be more related to aggressive mortgage operations that fell apart during the collapse of the housing market rather than misconduct by executives. And banks were hardly the most prominent contributors to the financial crisis, with the mortgage lender Countrywide Financial playing a significant role, while the collapse of Bear Stearns and Lehman Brothers triggered much of the upheaval in the bond market.

What do you say, should the corporate world learn some lessons from sports people to achieve performance ethically?

Sonia Gandhi Acknowledges Corruption Problem In India



Sonia Gandhi

Mrs Sonia Gandhi, Congress President during her speech at Teen Murti House on the 10th Indira Gandhi Conference titled ”An Indian Social Democracy : Integrating Markets, Democracy and Social Justice acknowledged the problem of corruption and the moral challenges facing Indian society. Her two significant statements are given below:

“Graft and greed are on the rise. The principles on which independent India was founded, for which a generation of great leaders fought and sacrificed their all, are in danger of being negated.”

“Our economy may increasingly be dynamic, but our moral universe seems to be shrinking. Prosperity has increased, but so has social conflict. Intolerance of various kinds is growing… We are right to celebrate our high rate of economic growth. We must do all that we can to sustain it. However, let us not forget that growth is not an end in itself.”

She stated that India cannot hide behind the growth story. Corruption needs to be addressed to have a balanced growth. If not addressed, it may turn into the biggest blockage in progress of India.

A candid admission on the challenges of Indian economy and society. A significant change in stance. Looks like there is still hope for India.

Can Government Regulate Private Sector?

Ethics Resource Center (ERC) recently issued a white paper titled “Too Big To Regulate? – Preventing Misconduct in Private Sector.” (www.ethics.org) . The title of the white paper addresses the question in mind of every corporate employee – “whether the U.S. government’s regulatory and enforcement mechanisms can keep pace with the lightning fast pace of change and the often complex and vast challenges that change create?”

The views expressed in the paper are quite candid and acknowledge the various problems in building an ethical culture in the private sector. The government and private sector need to partner to improve ethical conduct to build investor confidence. Government’s primary responsibility is to deter misconduct and crime, to enforce the law, and uphold market place integrity. As U.S. Deputy Assistant Attorney General Greg Andres said that “We would rather prevent crime than show up after the train wreck.”

The participants acknowledged that increasing regulations will not deter misconduct if the enforcers do not have the backbone to walk the talk. Hence, vigilance and enforcement are key to curtailing misconduct. The cost of monitoring also should be considered, because some irregularities will escape and that risk will remain. Hence, balance needs to be maintained between cost of enforcement and benefits from the same.

Secondly, the fine line between ethical and legal need to considered. What maybe unethical or considered misconduct may not be illegal. Hence, it would be difficult for government to legally pursue such cases. The participants explained with examples from Wall Street debacle, that sometimes behaving badly may not be against the rules, hence these organizations and people involved would not get prosecuted. Former federal prosecutor David Siegal explained the problem – “You have to prove that somebody intended to defraud their investors as opposed to just being horrible at their jobs.”

The participants indicated that whistle blowing would improve since now there is a financial reward for the same. However, they highlighted the concern that large organizations are going to hire the best defense, hence legal action maybe difficult. This will continue to be a daunting and difficult task for the government.

The other aspect mentioned by University of California criminologist Henry Pontell  was – “A central concern about white-collar and corporate crime is that the risk-reward ratio is out of balance – that is, potential rewards greatly outweigh the risks. Given the low probability of apprehension and the likelihood of no, or light punishment, white-collar crime is seen as a ‘rational’ action in many cases.” Hence, as the stakes are high, where is the right motivation for ethical conduct?

Some recommendations given to improve ethical culture and enforcement are:

  1. Establish rules and regulations which set clear expectations from the private sector. The rules and regulations should give no escape routes and loop holes which can be misused;
  2. Devise and implement penalties for white-collar crime in line with the level of crime;
  3. Government and private sector need to have continuous dialogue and communication; 
  4. Form advisory groups with eminent professionals from government, academics and private sector to have regular discussions and develop best practices;
  5. Private companies and enforcement agencies should share data and case studies which show the benefits of ethical conduct.

The white paper is a good read and discusses relevant concerns of building and enforcing ethics. The issues and recommendations are applicable to all countries.

My question is with the number of scams discussed in Indian media, should Government of India initiate similar steps to reduce corruption and build an ethical culture in the government departments and private sector in India? Share your opinion here.

How to manage multiple compliance regimes

I came across this video on “How to manage multiple compliance regimes” posted on youtube by Helmut Schindlwick. It gives an introduction to present day complexities of running a compliance program and shows the benefits of using technology for integrating various aspects of compliance.

US Outsourcing Risks – An Indian Perspective

President Obama and Prime Minister Singh

Last week President Barack Obama’s visit to India was a much talked about event worldwide as it indicated India’s growing strategic importance to US. President Obama came to India after swallowing the bitter pill of defeat of Democrats in mid-term poll. The US economy is suffering due to high level of corporate frauds, failure of corporate governance, double-digit unemployment percentages, state and country deficits. US President came looking for support from India to boost its economy and reduce unemployment figures.

India’s recent economic success has caught world’s imagination. Since it is a democratic nation, it can also be a good punching bag.

As India’s strategy in Information Technology Enabled Services (ITES) industry succeeded American’s cry for outsourcing jobs to India has become loud. As President Obama said “back home they have a perception problem: his countrymen largely see India as the land of call centers and back offices that cost American jobs.” He didn’t mention though that he has in his many speeches himself contributed to building this image of India. Indian companies are facing backlash as this has become an emotionally sensitive issue with the Americans.

Indians can empathize with Americans as no employee likes losing the financial security a job provides to him/her and the family. Indians have grown up seeing scarcity of financial resources, lack of jobs, and a country ridden in debts.  The present status is improved, but still far behind America. Here are some facts mentioned in the Central Intelligence Agency (CIA) – The World Fact Book site.

1)      Population of US is 310 million and India’s population is 1.17 billion per July 2010 estimates.

2)      Gross Domestic Product (GDP) of US is US$ 14.14 trillion and India is US$ 1.236 trillion. According to purchasing power parity India’s GDP is US$ 3.680 trillion. These are 2009 estimates.

3)      Per capita GDP of US is $46,400 and India’s is $3,100 as per 2009 estimates.

4)      Twenty five percent (25%) of Indian population is below poverty line as per 2007 estimates. This is approximately equal to the total population of US.

While Americans are viewing their current state as deteriorating, Indians are viewing theirs as progress. This indicates the disparity in world income and development. India has gained tremendous ground and come a long way from its independence in 1947. India still has a long way to reach a developed country status. It will take another 10-20 years of hard work

An extract from President Obama’s speech in Indian parliament highlighting the point above – “This is the sturdy foundation upon which you have built ever since that stroke of midnight when the tricolor was raised over a free and independent India. And despite the skeptics who said that this country was simply too poor, too vast, too diverse to succeed, you surmounted overwhelming odds and became a model to the world.

Instead of slipping into starvation, you launched a Green Revolution that fed millions. Instead of becoming dependent on commodities and exports, you invested in science and technology and in your greatest resource-the Indian people. And the world sees the results, from the supercomputers you build to the Indian flag that you put on the moon.”

All countries for their growth leverage their assets in the global market. India’s asset is its urban English-speaking highly qualified population. In urban India, most Indians are trilingual; they speak the national language Hindi, their mother tongue or regional language and English. The second aspect is the focus on studies. Indian middle class parents consider providing a sound education to their children as a ticket to success. The focus on graduation and professional courses is high in India. Leveraging the languages skill and qualifications of Indians in the global market, has resulted in India’s economic growth and global recognition.    

It hurts Indian sentiments when the world holds grudges against India for its success. As Prime Minister Manmohan Singh said “India is not in the business of stealing jobs from US”. Here are some facts which give the Indian viewpoint. The points mentioned below are summarized from various articles of Economic Times:

1)      US unemployment rates in IT sector where the jobs are said to be outsourced to India, is relatively low in comparison to other sectors.

2)      Indian annual IT exports to US is US$ 36 billion. China exported goods and services nearly equal to the same amount in August month alone.

3)      According to NASSCOM reports Philippines is set to overtake India as the world’s back office for voice-based customer support and sales in 2010.

India is facilitating US economy and this was reiterated by President Obama during his speeches in India. According to Indian business chambers Indian investment in USA has increased which has resulted in creating 300,000 new jobs in US during recession. India is the third fastest growing foreign investor in the US. During President Obama’s visit US $10 billion business deals were signed by Indian government and organizations which would create 50,000 jobs in US.

Both countries are democracies hence they can easily collaborate as partners by removing negative perceptions about each other. US and India should plan on building strategic relationships for mutual growth. Instead of attempting to protect their turfs, they should open their markets to each other for economic benefits. Let us look ahead for better relationships between the countries.

Do you think US and India can develop stronger relationship? Will this benefit both the countries? Please share your opinion.