What do Wal-Mart, Dewey & LeBoeuf and NewsCorp have in common?

Cultural deficiencies manifested in bad judgment, lies and executive shilly-shallying.

What was not previously known until the Times report on the bribery scandal is that at about the same time Mr Scott began the offensive to improve Wal-Mart’s image in the United States, he also rebuked the company’s internal bribery investigation in Mexico for being overly aggressive. The investigation was soon dropped. (Wal-Mart)

“The [compensation] guarantees were extremely corrosive culturally because they were divorced from individual or firm performance, which shatters the whole notion of a partnership,” Mr. MacEwen said. “And they were promiscuously awarded.” (Dewey)

The negotiations were so tightly held that only Mr. Crone, Mr. Myler and Mr. Murdoch knew about them, said two company officials. The officials said that even employees who were typically involved in legal decisions did not learn of the settlement until it leaked in a newspaper. (News Corp)

What does Google have in common with them?

Cultural deficiencies manifested in bad judgment, lies and executive shilly-shallying.

The report, which was first published in its unredacted form by The Los Angeles Times, also states that the engineer, who began the project as part of his “20 percent” time that Google gives employees to do work on their own initiative, “specifically told two engineers working on the project, including a senior manager, about collecting payload data.” (Google)

In a March post I asked, “Does Google’s new approach to privacy violate its ‘don’t be evil’ philosophy?”

I guess that question is answered now.

But I have to say, I find it sad to see Google all grown up and playing in the same class as Wal-Mart, Dewey and News Corp; I honestly thought they were better than that.

Flickr image credit: Djenan Kozic

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Is your company

1. legal or
2. honorable?

Surprisingly, in spite of scandals and lawsuits people still seem to have trouble understanding that they are different—not joined at the hip.

I could write a lot on this subject to go along with all the articles and advice already out there, but I’m a believer that stories, especially true stories, carry more power.

Such is the story of MetLife that, along with Prudential and John Hancock, will pay out more than a billion dollars for their completely legal but totally dishonorable actions.

The difference between an annuity and life insurance is that the former is paid to a live beneficiary, while the latter is paid to the dead beneficiary’s heirs.

A live beneficiary makes a fuss if the check doesn’t arrive on time.

Heirs only make a fuss if they know abut the insurance policy.

MetLife and the others were very careful to check to see if annuity beneficiaries were among the living, since they could stop paying if they weren’t.

But they saw no reason to cross reference deaths with their life insurance holders, because then they would have to pay.

An absolutely legal decision—but…

“There is simply no reason why insurance companies shouldn’t be scrubbing their policy lists,” looking for matches with the Social Security Administration’s master death index. (…)They stressed that insurers had generally checked the Social Security death index regularly to see whether other customers, who bought annuities, had died. In that case, the insurers stopped sending payments.

Stories are powerful teaching mechanisms.

The difference between legal and honorable should be crystal clear.

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In the beginning…

“Don’t be evil” is the informal corporate motto (or slogan) of Google, originally suggested by Google employees Paul Buchheit at a meeting. Buchheit, the creator of Gmail, said he “wanted something that, once you put it in there, would be hard to take out,” adding that the slogan was “also a bit of a jab at a lot of the other companies, especially our competitors, who at the time, in our opinion, were kind of exploiting the users to some extent.” –Wikipedia

Google formalized the idea by making “You can make money without doing evil” the sixth point of its 10-point corporate philosophy.

Fast forward to March, 2012…

“This change [the new privacy policy] violates Google’s prior privacy policies, which deceived and misled consumers by stating that Google would not utilize information provided by a consumer in connection with his or her use of one service, with any other service, for any reason, without the user’s consent,” the three plaintiffs, represented by law firm of Grant & Eisenhofer PA, said in the filing.

Take another look at Buchheit’s words, “in our opinion, were kind of exploiting the users to some extent.”

I’m sure that Google, like everyone else, believes that these and similar actions aren’t exploitation, they are “improving/enhancing user experience.”

The problem, of course, is that phrases, such as ‘don’t be evil; and words like ‘ethical’ are fluid, i.e., their meaning changes in conjunction with various cultures and societal changes within each culture, so there are no absolutes to rely on. (I’ve addressed this quandary and ethical fluidity many times.)

What do you think? Does Google’s new approach to privacy violate its ‘don’t be evil’ philosophy?

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Last December a post entitled Top Ten Reasons Why Large Companies Fail To Keep Their Best appeared in Talent Forbes and about a month later another contributor boiled the 10 reasons down to one (with 2 parts),

1) Create an organization where those who manage others are hired for their ability to manage well, supported to get even better at managing, and held accountable and rewarded for doing so.

2) Then be clear about what you’re trying to accomplish as an organization – not only in terms of financial goals, but in a more three-dimensional way. What’s your purpose; what do you aspire to bring to the world? What kind of a culture do you want to create in order to do that?  What will the organization look, feel and sound like if you’re embodying that mission and culture?  How will you measure success?  And then, once you’ve clarified your hoped-for future, consistently focus on keeping that vision top of mind and working together to achieve it.

Yesterday’s Ducks in a Row focus was Greg Smith and his resignation from Goldman Sachs. Greg resigned because he felt the culture had deteriorated to the point that he could no longer ethically tell candidates that it’s a great place to work—Goldman’s focus is squarely on maximizing their own profit and clients be damned. (The story is all over traditional and social media.)

At the end of his resignation Greg says,

Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.

The bold is mine and that thought fits the “if you learn nothing else…” admonishment.

But I will go a step further—

You can’t attract great clients without great talent, so even if you make money in the short-term you will die in the long-term—bereft of both talent and clients.

Great culture attracts great talent; great talent attracts great clients; great clients spend great money—over and over and over.

Flickr image credit: Samuel Mann

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If you are in touch with any media, traditional, new or social, you are probably aware that Greg Smith resigned last Wednesday from Goldman Sachs; resigned very publicly in the form of an op-ed piece in the NY Times.

The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

Smith was executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa, but for years he was deeply involved with Goldman’s recruiting efforts.

I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.

Because of the recruiting video he wasn’t quite the anonymous 33-year-old midlevel executive described, but now his comments and opinions are on everybody’s mind.

(You can read Lloyd Blankfein and Gary Cohn’s response to the resignation here.)

Backing up one’s ethical beliefs means putting your money where your mouth is, which may be a difficult concept for many players and commentators in the financial world to understand.

Mr. Smith is making a considerable financial sacrifice in publicly criticizing Goldman. Most Wall Street employees sign nondisparagement and nondisclosure agreements before they join a firm. If Mr. Smith did, Goldman may take legal action and refuse to release stock options he has accumulated. Mr. Smith may also find it difficult to find work on Wall Street after such a public resignation.

But if I were an employer I would work particularly hard to bring Smith into my organization.

After all, how often do you have the opportunity to hire a moral compass that has already been tested and proven accurate?

Flickr image credit: Brett Jordan

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The Twitterverse and blogsphere are raging pro and con over the hiring of homeless people to promote mobile wi-fi devices at the South by Southwest conference calling it ‘exploitation’.

It matters not that Mitchell Gibbs, director of development at the Front Steps homeless shelter and involved in setting up the program, believes it has inspired an “entrepreneurial spirit” among its homeless participants, “It’s an employment opportunity, regardless of who is offering it.”

And homeless participant Clarence Jones must be wrong when he says, “Everyone thinks I’m getting the rough end of the stick, but I don’t feel that. I love talking to people and it’s a job. An honest day of work and pay.”

Obviously the pundits know more; they’ve probably spent more time working hands on with the homeless than Gibbs and studied homelessness more than Jones.

These days arrogance knows no bounds and this is a great example of that.

I don’t see this as any different than the human sign holders, many of whom are also homeless, that you see at major intersections promoting everything from mattress sales to cell phones to pizza.

Of course, the products they promote don’t infringe the promised land of tech, so nobody cares.

It’s likely that nobody would care if they hired the homeless as hotspots in other cities or even in Austin when SXSW wasn’t on.

I agree with Adam Hanft, who said that even if the effort was well intended, it seemed to turn a blind eye to that disconnect. “There is already a sense that the Internet community has become so absurdly self-involved that they don’t think there’s any world outside of theirs.”

Talking abut disconnect, perhaps the Internet community is catching up with the financial community.

Can you imagine the backlash if the homeless were hired as sign holders for banks anywhere?

Flickr image credit: Brett Jordan

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Happy President’s Day.

Sad to say that the quality of those in the office over the last 50 years has gone seriously downhill from the quality of the first 50.

Several years ago I wrote

We have no leaders, let alone statesmen, just ideologues, elected by like-minded ideologues, who care only about getting reelected, bringing government money back to their constituency and making lucrative connections in the event they aren’t reelected or are caught by term limits.

and have added to and reposted the full original a couple of times (be sure to check out the link to the original comments).

Based on the current political activity it’s not likely to improve any time soon (this applies to both Houses of Congress, as well as state, regional and local races).

Ideology is the primary lens through which all actions are viewed and any real value to the country and its citizenry is a distant second.

What are your thoughts? What can be done to change this?

Flickr image credit: Kurt Magoon

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

Most people consider it wrong to take something, whether tangible or intangible, from someone’s home without asking—it’s called stealing.

Most people will be highly offended, if not downright pissed off, if someone goes through their cell phone, contacts their friends or reads their texts and emails.

Companies, on the other hand, see nothing wrong with it—unless they are caught.

I’m not referring to sleazy porn sites, but to the biggest names in mobile and social, the ones that are role models; names like Google Android, Twitter, Foursquare, Apple i-Whatever (Apple claims they prohibit it, but Yelp, Gowalla, Hipster and Foodspotting all do it) and a host of startups and app makers.

The address book in smartphones — where some of the user’s most personal data is carried — is free for app developers to take at will, often without the phone owner’s knowledge.

Heck, appropriating data was actually industry standard, until they were caught, that is.

Now they all claim to be changing their practice and giving users notice when they take personal data.

Does that give you a warm feeling or do you still feel violated the way you would if your home was broken into? (Most people spend more time with their phone than their home.)

Do you trust them to be upfront/authentic/transparent/honest in the future?

Or do you wonder what else they are doing that they haven’t mentioned and probably won’t unless/until they are caught.

Trust is fragile and difficult to fix once it’s broken.

Even oblivious Americans are starting to notice.

Option Sanity™  is trustworthy.

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock allocation process; 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.

Flickr image credit: HikingArtist

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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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