A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

I seem to write too many stories about bosses who don’t walk their talk, which, I realize, is an overused, hackneyed expression.

But that doesn’t mean it’s not an accurate one.

Here’s the background and I have to admit it really floored me.

“Mark” is a thirty-something engineer and was the third person to join 23 year old “Jim’s” startup early in 2011.

Out of several offers he chose Jim’s. He’d read and heard a lot about the values that Millennials demanded and Jim’s description of his values and the culture he was building based on them closely matched Marks own.

Things were going well and they had grown to 6 people when they landed on the radar of a major corporation.

Near the end of the year Mark heard a rumor that the company was being acquired.

When he asked Jim if it was true he said it was and that they hoped to keep the staff.

Mark was flabbergasted; not because Jim was selling, but because the acquiring company’s culture was known to be diametrically opposed to almost all of Mark’s stated values.

When Mark said as much Jim said that it was an amazing offer and that he would be a fool to turn it down. Although they could easily raise an investment round, his holdings were far more valuable with the acquisition than if they were diluted by new investors.

Mark asked Jim if he had meant anything he said during the interview or if it was all just BS.

Jim’s response really blew me away.

Mark said he shrugged and said “that was then and this is now.”

What do you think? Was Jim justified? What would you do?

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In a series of studies, Francesca Gino and Dan Ariely found that inherently creative people tend to cheat more than noncreative people. Furthermore, they showed that inducing creative behavior tends to induce unethical behavior. HBS Working Knowledge

Not good news when your goal is to increase creativity in your people, but not really surprising.

When we think actively, we see more possibilities, and that includes ways to gain an advantage – a survival mechanism. When we think passively, we don’t see the possibilities, so we follow the rules. –Deb Pekin, Change Manager, Kraft Foods Inc (from a comment)

Creativity isn’t a faucet that can be turned off when it’s inconvenient—it’s part of a person’s MAP; it’s who they are, so they will apply it across the board.

“Dan and I are of the hope that managers will start thinking about how to structure the creative process in such a way that they can keep ethics in check, triggering the good behavior without triggering the bad behavior.”

That’s one approach.

Perhaps a better one is to build a strong ethical culture first and overlay it with a culture that encourages creativity and innovation.

One of the most important things is to make sure that unethical behavior is not tolerated, let alone rewarded; in fact, in some cases it should be terminated.

Of course, that means ethics would trump expediency; not the most common scenario in modern business.

Flickr image credit: zedbee

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Have you been following the News Corp phone hacking scandal?

Obviously, as a corporate culture maven I find New Corp’s endemic culture fascinating—in much the same way that a snake fascinates a bird.

The phone and email hacking, dumpster-diving and snooping are disgusting in themselves, but it is Rupert and his son James’ denial of any knowledge despite extraordinary proof and testimony to the contrary that amazes me.

Moreover, I find the idea that ignorance excuses bosses from responsibility for the actions of their organizations to be ludicrous, whether country, conglomerate, company or team.

I felt that way when Nixon denied knowing about Watergate; when Reagan denied knowing about Iran-Contra; and when Beech-Nut President Niels L. Hoyvald denied knowing about the fake apple juice; the list goes on and on.

In my mind it doesn’t matter if the top person knew or not, because as top person he (a pronoun of convenience) should have known.

Claims of ignorance mean one of two things,

• the boss isn’t doing his job; or
• the boss is lying.

Either way, that person shouldn’t be boss.

Flickr image credit: rstrawser

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A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Do you dream of following in the footsteps of Mark Zukerberg and Reid Hoffman?

Will you follow their path blindly or seek to avoid their errors?

Do you plan to treat your customers/community with respect and be transparent in your dealings with them?

Facebook’s oft-changing and opaque privacy policy in the name of “better customer experience” has brought howls of rage and government scrutiny from around the world.

Now it seems that LinkedIn is following suite.

Apparently, LinkedIn has recently done us the “favor” of having a default setting whereby our names and photos can be used for third-party advertising.

As you might guess, LinkedIn’s action isn’t engendering a lot of love.

Google, too, is getting hammered in the name of privacy for some of its actions.

Opaque processes have long been the bane of customers, but they’re usually attributed to “bad” corporations as opposed to “good” startups.

Which begs the question: at what point does a company cross the line?

And which side of the line will you be on when your company succeeds?

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

For those of you who want to opt out of LinkedIn’s “favor” I’m including a screen to show you where, as well as exactly what it says. I think it’s a bit clearer than the one shown at the link above.

Hat tip to Dennis D. McDonald via LinkedIn Bloggers for the heads-up.

Option Sanity™ is transparent.
Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  It’s so easy a CEO can do it.

Warning.
Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Image credit: Bun in a Can Productions

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With News Corp’s culture making headlines around the world (and links to plentiful to choose) I was reminded of something I read recently about a new ethics compliance study (free registration required).

The new outlook has permeated the boardroom. In fact, only 22% of ethics and compliance leaders worry about senior management’s ability and desire to demonstrate and promote ethical conduct. Sixty-eight percent of the respondents stated that promoting an ethical culture creates long-term value for the business.

In fact, 45% of respondents are concerned that middle managers are not as invested in ethics initiatives as their superiors.
Think about this; senior management is ethical, but the guys in the middle area are the problem.

Funny, in almost all the ethics cases over the last few decades it’s been senior management that was the driving force and found to be at fault.

Most people respond to the tone and example set by their leaders.

But too often the goals and the pressure to achieve them reflect an unwritten message from senior executives—use whatever means necessary, just get it done.

I’ve never seen any statistics, but I’ll bet that if middle managers are guilty of anything it’s going too far to produce the results demanded of them by their bosses who are, in turn, responding to Wall Street.

Flickr image credit: ZedBee | Zoë Power

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Gilbert Fiorentino may not be a household name, but millions of online shoppers recognize the name Tiger Direct.

In a nod to the corporate excess and bad culture, as represented by John Thain and disgraced CEO Dennis Kozlowski, we now have Fiorentino.

The truly shocking part of this story is found in the comment section; the stories from employees whose descriptions of their work environment will raise your hackles even as they make you cringe.

Dell sued TigerDirect for trademark infringement for “repeated and blatant” violations regarding the resale of its computers and in 2008 the Florida Attorney General’s office sued for failing to pay advertised rebates to consumers.

But this isn’t just another CEO running amok.

Fiorentino may have founded Tiger Direct and be CEO of CompUSA (bought out of bankruptcy), but Systemax owns the whole shebang.

And it is Systemax that turned a blind eye for all those years as Fiorentino created and maintained a culture of intimidation and abuse of both employees and vendors for more than a decade.

“He was making a lot of money for the company and I think people looked the other way for a long time. … If he wanted it, he took it, for whatever reason,” –William “Cully” Waggoner, a former employee who was fired in 2009 after five years with the company, but won a court settlement challenging the action. A blind eye until a worm turned and made that fateful whistleblower call.

Now Systemax claims it wants to change its corporate culture.

A memo last week to employees talked about embracing changes like a more “open management style” and elimination of competitive postings of hours worked by each employee. “The prior management regime was not the reason for the Company’s success – you were.” –Systemax Executive Committee

This is the same executive committee that was blind all those years.

If you believe them I have a great buy on a gorgeous orange bridge that would look terrific on your front lawn.

Flickr image credit: http://www.flickr.com/photos/salim/402620871/

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How can a week of discussion focused on ethics and cheating not touch on politics? Especially when it’s that time of year and media is filling the air with conversation, clamor and rants by and about those running for public office.

It’s a frustrating time for those who don’t blindly vote an ideological ticket; frustrating because most campaigning is focused on trashing the opponent as opposed to anything constructive.

I listen to people complain about the negativity when it’s aimed at their candidate, while sagely nodding at its appropriateness when coming from their side.

I listen to the rants against incumbents, but hear little about what should be done, other than ideological platitudes.

They all talk of the importance of leadership, while demonstrating none.

In a post a couple of years ago I wrote, “Sadly, the oxymoronic coupling of ‘leader’ and ‘politician’ usually is just plain moronic.”

Proof of that is showcased in an analysis of how Rod Blagojevich got elected.

How did we, the people, end up with this mess?

It can’t just be blamed on Obama or even on Bush—it’s been developing for more than seven decades.

It stems from our collective MAP and the arrogant world-view we developed after WWII; the abandonment of our melting pot roots; the entitled mindset that taught generations of Americans to covet and indulge in unsustainable lifestyles and, more recently, the replacement of thought by ideology.

How can we, the people, clean it up? How can we find more statesmen and fewer politicians?

Flickr image credit: http://www.flickr.com/photos/quinnanya/2244832648/

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Cheating was in the spotlight in a recent NY Times Room for Debate, which includes opinions from a professor, author, recent grad and high school teacher, along with reader comments on each.

The opinion that drew the most comments was from Mark Bauerlein, professor of English at Emory University and the author of The Dumbest Generation: How the Digital Age Stupefies Young Americans and Jeopardizes Our Future. He pinpoints two causes, 1) pressure to achieve has made cheating a “survival skill” and 2) they don’t know it’s cheating because concepts such as plagiarism and attribution are foreign to them as a result of Web 2.0 and social media’s interactive nature, mashups, file sharing, etc.

I didn’t read all the comments, but #2 from George Canada was especially interesting.

I doubt that anything has changed. At Berkeley in the academic year 1952-53 my teaching assistant in an American History course said “Mr C—-, if you don’t start bringing cheat notes to the exams, you’ll get a B in this course.” I looked as astonished as I was, I suppose, since he went on to say something like ” don’t you know that everyone else is bring in notes and cheat sheets?” I didn’t know and I didn’t act and I did get a B in that course. In a psychology course I apparently got the highest or very high mark: the professor said “you must have brought in the perfect cheat sheets.”

Perhaps what we are seeing today is the cumulative effect of cheaters raising cheaters, so that the act itself is becoming more pervasive, more blatant, more socially acceptable, technology-enabled and therefore much easier.

Perhaps it really is no big deal, as we keep being told by those who do it; perhaps it has always been pervasive, as George Canada’s experience leads us to believe.

Perhaps I’m behind the times and test scores are more important than learning; perhaps cheating is a necessary skill in today’s world.

What do you think?

Image credit: Hariadhi on Wikipedia Commons

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IT’S FOR REAL

NOT A JOKE

The Office of Government Ethics

Ethics in Government Act of 1978 (read the PDF file or click the Flickr link for a summary)

Flickr image credit: http://www.flickr.com/photos/caveman_92223/3781992502/

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According to a post in Forbes by Gregory Unruh, citing one at Motley Fool, many corporations include “ethical waivers” in their corporate Ethical Codes of Conduct, including Goldman Sachs, ExxonMobil, Citigroup, Altria and many others.

Waiver clauses leave the door open for companies to violate their own code of ethics if executives and the board decide it’s a “good” idea. In effect, waivers are a “code of ethics safety valve,” the metaphorical opposite of a blow-out preventer. Why have them? Waivers will just cause problems; a corporate code of ethics is created and designed to limit management decision options to ethical choices. Usually it’s not a problem, but ethics can sometimes impinge on profits. Corporations and their shareholders don’t like to miss out on profits, so the safety valve allows them to sacrifice their ethics if the price pressure is high enough.

Why am I not surprised?

Both authors do an excellent job lambasting the idea that if it pays enough ethics can be waived, so I’m not going to restate the obvious.

Granted, it does take Board approval to use the waiver clause, but that doesn’t seem to be a problem.

Enron’s Board waived the Code of Ethics that prohibited self-dealing by corporate officers and approved off-balance sheet “special purpose entities” and we all know the result of that.

Again, no surprises; not when so many companies put profits, share price and looking good ahead of everything.

What did surprise amaze flabergast, me was that the Goldman Board has issued no waivers.

Confronted about this waiver, a Goldman spokesman responded to blogger ZeroHedge by saying: “The ethics code, including waiver provision, was required under [Sarbanes-Oxley] (Note: It’s not.). No waivers have been requested.”

Isn’t it nice to know that Goldman considers all their actions over the last few years to be ethical.

Wow! I’m not just surprised, I’m speechless.

Flickr image credit: http://www.flickr.com/photos/saeba/3479264260/

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