In 1992 the SEC investigated a Madoff feeder fund.

In May, 1999 and again in 2005, Harry Markopolos, money manager and investment investigator, presented his research on the Madoff Hedge Fund to the SEC in which he concluded that the fund was a giant Ponzi scheme…

“I used the Mosaic Theory to assemble my set of observations. My observations were collected first-hand by listening to fund of fund investors talk about their investments in a hedge fund run by Madoff Investment Securities, LLC, a SEC registered firm. I have also spoken to the heads of various Wall Street equity derivative trading desks and every single one of the senior managers I spoke with told me that Bernie Madoff was a fraud.”

Nothing happened.

In Warren Buffet’s 2002 letter to his stockholders he said,

“We try to be alert to any sort of mega-catastrophe risk, and that posture may make us unduly appreciative about the burgeoning quantities of long-term derivatives contracts and the massive amount of uncollateralized receivables that are growing alongside. In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

Nothing happened.

But you know all this; you’ve been reading and hearing about it for weeks, so why am I bringing it up yet again?

Because the lesson we all need to learn from this is not to ignore the stuff that makes us uncomfortable; the information that doesn’t fit with our world view; the messy stuff; the unhappy stuff. Large, small or miniscule, it needs to be dealt with, not left alone to grow larger and larger until it overpowers everything around it.

Because when stuff is ignored it doesn’t go away, it gets worse.

Because that’s what leaders do, they deal.

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Phil Gerbyshak over at Slacker Manager has a great post yesterday; talking about how your presence is the best present you can give your team and three ways to do it.

I agree with everything Phil said, but I think presence should be taken a step farther and woven into the fabric of your corporate culture.

Your undivided presence when interacting with your people is an absolute necessity when managing today’s workforce if you have any interest in improving productivity and increasing retention.

But what about your team’s interactions with each other and with other parts of the company?

If presence is about paying attention, paying attention is about respect.

Respect is what people should have for each other.

Respect doesn’t just travel down, it travels in all directions.

Respect has nothing to do with position, title, degrees, seniority, salary or other business trappings.

Multitasking when you are interacting is about disrespect.

Which does your culture endorse?

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I was going through some old files and came across one from 1998 that I thought was fitting to share with you today. It had no attribution, but a little time with Google and it seems to be a product of Ralph Marston.

You

You are always you, no matter what kind of car you drive or what size house you occupy. You are always you, no matter what color your hair is, or how much you weigh. Inside, it is always you.

You are not your job. You are not the clothes you wear. You are not the body in which you live. You are more. You are you. There is no one else like you anywhere. You are unique. You have a special contribution to make, not in the distant future, but right now, today.

There is something you can do right this moment, for which you are absolutely the most qualified, the most appropriate, the best suited person to do it. You are better at being you than anyone else in this world. It is your grand, glorious responsibility and the best opportunity anyone could ever hope to have.

You are you. Make the most of that and you’ll understand how very special it is.

I’ve written on and off that your MAP (mindset, attitude, philosophy™) is unique and, like a snowflake, no two are alike.

Today is a holiday and holidays are good days to take a bit of time just for yourself, kick back and cogitate about who you are, where you’re going, how you’re going to get there, who you’ll be when you arrive and, most of all, what you will leave in the wake of your travels through life.

I hope you take the time to do it.

Have a wonderful holiday, filled with all the things that matter to you.

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What else NOT to do

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One of the most important things to keep in mind as you study and work to develop your personal leadership abilities, the ones you’ll use throughout your life, whatever you’re doing and no matter the position, is that they’re neutral.

That’s right, leadership skills and abilities are without prejudice, neither good nor bad—you might say they swing both ways.

According to Warren Bennis, a leader innovates, develops, focuses on people, inspires trust, has a long-range perspective, keeps an eye on the horizon, originates, and is his own person.

Does that sound like someone you’d like to emulate? Because it’s a perfect description of Bernie Madoff.

Leadership actions are a MAP (mindset, attitude, philosophy™) function. In other words, it’s not the actions that are worth emulating, but the MAP.

Notice I said emulating, not copying.

Consider those people you respect, as well as those lower on your list. Even when you disagree with parts of their MAP, you may agree with others, which means you can draw from many sources, but in the end it’s your MAP and that makes it absolutely unique to you.

During this holiday season, think about it. The economic mess with which the world is dealing was created by people with great skills and, to be polite, challenged MAP.

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An excerpt at HBS Working Knowledge from the newly published Ownership Quotient: Putting the Service Profit Chain to Work for Unbeatable Competitive Advantage by James L. Heskett, W. Earl Sasser, and Joe Wheeler gives good food for thought this holiday.

As stated, a strong culture outlasts any charisma offered up by the so-called leaders; in fact, it’s the foundation of any company’s success.

Here is the short version of ten reasons why it’s worth the effort to build a great culture.

1. Leadership is critical in codifying and maintaining an organizational purpose, values, and vision. Leaders must set the example by living the elements of culture…
2. Like anything worthwhile, culture is something in which you invest.
3. Employees at all levels in an organization notice and validate the elements of culture.
4. Organizations with clearly codified cultures enjoy labor cost advantages for the following reasons…
5. Organizations with clearly codified and enforced cultures enjoy great employee and customer loyalty…
6. An operating strategy based on a strong, effective culture is selective of prospective customers.
7. The result of all this is “the best serving the best…”
8. This self-reinforcing source of operating leverage must be managed carefully to make sure that it does not result in the development of dogmatic cults with little capacity for change.
9. Organizations with strong and adaptive cultures foster effective succession in the leadership ranks.
   
10. Cultures can sour.

Read the article; consider the book.

Culture matters and it’s worth your time!

Image credit: Amazon

Egoship. I doubt that I coined the term, but I did think of it independently. It’s been popping into my head for a number of years now as I read stories of astronomical pay packages for business leaders.

It didn’t take a business guru to start noticing that along with those salaries seemed to come an ermine cloak, although some were sable and others only mink, and the egos that went with them.

And considering what’s happening, things aren’t changing as much as you’d think—or like.

“Six top money managers of Harvard University’s endowment, which has lost $8.1 billion since the summer, earned $26.9 million in compensation in its most recent fiscal year.”

“Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year, an Associated Press analysis reveals.”

“Six financial firms that received billions in bailout dollars still own and operate fleets of jets to carry executives to company events and sometimes personal trips, according to an Associated Press review.”

“The highest-ranking executives four firms have agreed under pressure to go without their bonuses, including John A. Thain, who initially wanted a bonus this year since he joined Merrill Lynch as chief executive after its ill-fated mortgage bets were made. And four former executives at one hard-hit bank, UBS of Switzerland, recently volunteered to return some of the bonuses they were paid before the financial crisis. But few think others on Wall Street will follow that lead.”

Of course not. Wall Street egoships aren’t going to give back anything, they had to be forced to forgo what they did. Why should they take a hit for the trouble they caused? It would be almost un-American.

And as Michelle Singletary said today, “Who in their right mind thinks a chief executive earning a $1 a year is actually making a sacrifice?”

Of course, Wall Street sticking to its ways as much as possible should have been expected. The great thing about egoship is that it knows it can do no wrong, so it never needs to apologize or take responsibility.

And if the reformers show up at its door egoship knows exactly what to do:

• Say all the right things;
• make impressive, empty gestures;
• be patient until they forget and go away; and then
• return to business as usual.

Are we going to forget this time? You tell me.

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Why bother with better products, efficient manufacturing and good business process when you can have a bribe budget instead? It’s simpler and almost guarantees that your company wins the bidding.

Ask Siemens, who just paid a $1.6 billion fine, with more to come.

The bribe budget for Siemens’ telecom unit ran $40-50 million a year and was professionally managed by Reinhard Siekaczek, the accountant who ran the slush fund from 2002-2006, although it neither started nor ended with him.

Bribery is nothing new, companies and individuals have been doing it for centuries, so why does this one bother me so much?

It’s not that Simens’ ex-presidnet landed on his feet—don’t they almost always?

“Klaus Kleinfeld, the company’s C.E.O., resigned in April 2007. He has denied wrongdoing and is now head of Alcoa, the aluminum giant.”

But the following really makes my blood boil…

“Although court documents are salted throughout with the word “bribes,” the Justice Department allowed Siemens to plead to accounting violations because it cooperated with the investigation and because pleading to bribery violations would have barred Siemens from bidding on government contracts in the United States. Siemens doesn’t dispute the government’s account of its actions.”

Got that? Siemens admits what it gave bribes, but our government doesn’t want to prevent a corporation that cheated dozens of American companies out of hundreds of millions of dollars of possible business from being able to bid on US government contracts.

How’s that for a warm and fuzzy feeling at Christmas?

Image credit: flickr

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