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Chaos to Order

December 19th, 2011 | Posted by Peter in Business Strategy | Miscellaneous | Nonprofit | Small Business - (Comments Off)

I have been mulling over how to create a graphic or diagram that adequately describes my core expertise. Distilling down the value people get when hiring you into a single image is a complicated challenge, I found. Nonetheless, I think the exercise was well worth it. Here’s what I came up with:

Overly simplistic? Perhaps. Annoying colors? That was intentional. Too cryptic? Hopefully not…

Making order out of chaos, in a nutshell, is my expertise. The nature of the chaos does not matter much, nor does the scope. Everything can ultimately be organized, prioritized, made more efficient, aligned appropriately, and ordered in a logical and sensible manner.

I get a kick out of this sort of a challenge and love helping organizations transition from a place of chaos and disorder, to clarity and order. If that sounds like an unmet need at your organization, please get in touch with me!

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MBA Ethics

May 4th, 2007 | Posted by Peter in Business Ethics | Miscellaneous - (1 Comments)

An interesting ethics-related article in Business Week has been available for a few days (Duke MBAs Fail Ethics Test) though I only just now have had a moment to read it. While the information presented is nothing new (cheating among highly competitive graduate students…really?!) the statistics are shocking nonetheless.

“Fifty-six percent of graduate business students admitted to cheating one or more times in the past academic year, compared to 47% of nonbusiness students, according to a study published in September in the journal of the Academy of Management Learning & Education (see BusinessWeek.com, 10/24/06, ‘A Crooked Path Through B-School‘).”

Okay, sweet. And we wonder why there is a distinct lack of ethics in business… Clearly, if today’s business students are tomorrow’s business leaders, it seems as if the future will get worse, not better, as far as business ethics are concerned.

So if the picture is so bleak, what steps can be taken to move the statistics in the other direction? Two of the primary reasons are easy to spot, and are hopefully, by extension, easy to combat:

Culture and general consensus
Strength and consistency of ethics initiatives

I have posted on both issues in the past (most recently, see Speak Up and The Validity of Ethics Codes) and feel that the corrective mechanisms are straightforward and attainable. Rather than repeat myself regarding solutions, I would emphasize the importance of tackling ethical issues now — the longer they have to fester and grow, the greater the difficulty in getting rid of the issue in the future.

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Great Leaders

July 31st, 2006 | Posted by Peter in Business Ethics | Corporate Governance | Corporate Social Responsibility | Miscellaneous - (Comments Off)

If you have ever tried to put into words what makes a good leader and have struggled a bit, take a gander at The Magic of a Great Business Leader. Jeannine Bauer does a great job of introducing some of the qualities of a great leader and also touches on ethics:

“These leaders have one primary and broad-based goal — that is, to do the right thing for their organization. In general, this means to pursue the success of the organizations according to the goals set for it. But on a more subtle level, doing the right thing will also be reflected in how this leader treats customers, employees, and suppliers. This leader’s underlying sense will be that using a win-win approach with every level of stakeholders will always lead to greater net results for the organization. Thus, the daily life in such an organization, in both its internal and external interactions, will feel positive, ethical and satisfying to all involved.”

I think she is spot on in her overview of great leaders, but I would take the ethical angle a bit further even. In my idealistic world view, great leaders have to be the most ethical individuals you have ever met, whom are not willing to compromise on moral issues for the sake of making a few bucks. Further, they need to be consistent in their representation of their ethical framework and how it comes into play during the regular mix of daily business. Employees, peers, customers, and any other stakeholders, should all have a relatively strong certainty that the leader will or will not jive with a certain scenario based upon their ethical framework. Such consistency removes uncertainty and doubt, and also sets a good example for everyone.

As a practical example, imagine you are in the finance department of a company with a great leader, whose actions have established a clear precedent for what to do in questionable situations. You come across a journal entry that is an error but makes the company look more profitable. You realize that your boss is responsible for the error and know that correcting it, or pointing it out might negatively impact your career. However, you also know that the great leader whom has exemplified strong ethics (let’s assume he or she is the CEO or CFO in this situation) would unwaveringly expect you to correct the error and identify it to prevent future errors. Your ability as an employee to do the right thing is greatly increased by the ethical example set by the company’s great leader.

I would also argue that companies lead by great ethical leaders have a greater propensity for stronger overall business ethics and a desire to pursue corporate social responsibility initiatives than those lead by less ethical leaders.

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csr, ethical, ethics, integrity, leadership

Sergey Brin Talks About China Censorship

The Business Ethics Blog discusses Sergey Brin’s recent comments regarding Google’s decision to enable censorship in China: Google on Google in China. While his candor is admirable, I’d be curious to hear if anyone feels there are corporate governance issues that may stem from Sergey’s openness.

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censorship, china, csr, ethics, google

Tiananmen and the Catholic Church

June 4th, 2006 | Posted by Peter in China | Interesting News | Miscellaneous - (2 Comments)

Image Source: Wikipedia

The New York Times has really been pumping out a considerable number of China-related articles recently, many of which deal with the country’s darker underbelly. Today’s edition offers a very interesting look at the relationship between China and the Catholic church, specifically in relation to the 1989 Tiananmen Square tragedy: Church Official Calls for Review of Tiananmen Killings.

I have done little research into the current state of religious freedom in China, though I find it somewhat surprising that there is any relationship between the Vatican and the PRC. Accordingly, the following statement surprised me even more:

“The criticism by Cardinal Joseph Zen is the latest sign that the Vatican may not be willing to compromise on human rights in order to establish diplomatic relations with mainland China.”

Is the Vatican really balancing human rights and diplomatic relations? Somehow I don’t see how considering diplomatic relations, especially to the detriment of human rights issues, is an option at all. Very interesting.

The author makes a very succinct statement about the dynamic that permits such discrepancies as economic prosperity and rampant abuses to coexist:

“The Chinese Communist Party now bases its legitimacy to a considerable extent on the material prosperity it has brought to many of China’s 1.3 billion people.”

How true. Wealth and an advancement in standard of living can prompt almost anyone to let go of the past.

“‘Yes, the economy has improved and some people have earned lots of money, but corruption abounds, the gap in wealth is huge, mines keep swallowing workers and fake milk powder and fake medicines are flooding the market – is this considered an improvement?’ he asked. ‘If they had listened to the kind advice of the students and workers, would today’s country be a better country?’”

I hope to find an answer, or at least a little insight, to the last question during my travels through China in a few weeks. It should be an interesting trip.

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SRI Overview & Calvert

May 30th, 2006 | Posted by Peter in Corporate Governance | Corporate Social Responsibility | Miscellaneous | Socially Responsible Investing - (Comments Off)

I recently completed a paper on Socially Responsible Investing (SRI) and Calvert (best known for their Calvert Mutual Funds) and include a slightly modified version here for anyone interested in SRI, Calvert, or CSR. The paper provides an introduction to SRI for the uninitiated and also takes a close look at Calvert’s rating system to determine qualifying companies in which to invest. As a brief introduction, I’ve included the executive summary below (download the SRI paper [PDF]).

. . .

Executive Summary

Corporations are entering an exciting stage in history—profits, once the focal point of all corporate actions, are beginning to make room for another business priority: social responsibility. Corporate social responsibility (CSR), or the prioritization of societal concerns in addition to maximizing shareholder wealth, has been gaining momentum over the past few decades, enjoying a recent surge following the various Enron-era corporate scandals.

Much of the acceleration in interest can be attributed to the growing popularity of socially responsible investing (SRI), which seeks to evaluate companies as investment candidates that not only meet certain financial performance baselines, but also show a commitment to corporate integrity. Asset management firms such as Calvert have popularized SRI through the use of SRI mutual funds and simple, easy to understand rating systems (e.g. the Calvert Ratings^TM). Nothing is perfect, however, and while it is easy to identify the strengths and shortcomings of the various rating schemes, additional rating criteria such as disclosure, product/service safety and purpose, and commitment to and the impact of corporate social responsibility, would make the system more solid.

Unfortunately, there are a few factors impeding SRI’s growth. First, there is a misconception that SRI investments provide lesser returns than non-SRI investments. Second, a corporation’s governance structure is inherently in conflict with the pursuit of social concerns. A corporation’s fiduciaries have duties of loyalty and care to the corporation and it’s shareholders, which typically leads to the prioritization of profits over any other concern. Placing corporate integrity and social concerns first, or even in addition to profit maximization, may cause the fiduciaries to be in breach of one or both duties. Introducing additional fiduciary duties, such as duties of citizenship and humanity, which stipulate a greater social concern by the corporation, may alleviate this conflict.

. . .

Please feel free to download the full SRI paper [PDF].

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Home Depot: CEO Pay

May 25th, 2006 | Posted by Peter in Business Ethics | Corporate Governance | Corporate Social Responsibility | Miscellaneous - (1 Comments)

The New York Times had quite a meaty article on the front page today: With Links to Board, Chief Saw His Pay Soar. If you have any interest in executive compensation, corporate governance, or business ethics, this is an exceptional article to read.

Centered on the astronomical compensation of Home Depot CEO Robert Nardelli, the article touches on many corporate governance issues. One of the particularly interesting topics discussed is the conflicting presence of a sort of CEO’s club at the director level. It seems that many of the individuals on Home Depot’s board are currently, or were in the past, CEOs of fairly large companies. In fact, one of the board members enjoys a higher compensation package than Mr. Nardelli. Apparently many conflicts arise from these kinds of relationships:

“Two of those members have ties to Mr. Nardelli’s former employer, General Electric. One used Mr. Nardelli’s lawyer in negotiating his own salary. And three either sat on other boards with Home Depot’s influential lead director, Kenneth G. Langone, or were former executives at companies with significant business relationships with Mr. Langone.

“…Governance experts say people who are or have been in the top job have a harder time saying no to the salary demands of fellow chief executives. Moreover, chief executives indirectly benefit from one another’s pay increases because compensation packages are often based on surveys detailing what their peers are earning.”

Hmmmm.

Home Depot shareholders are a bit miffed at Mr. Nardelli, and rightly so:

“The Home Depot board has awarded him $245 million in his five years there….Yet during that time, the company’s stock has slid 12 percent while shares of its archrival, Lowe’s, have climbed 173 percent…. Even last year, when Home Depot’s stock was unchanged, the board raised his salary 8 percent, to $2.164 million, and increased his bonus 22 percent, to $7 million.”

Is there a conflict with the CEO’s compensation and in prioritizing shareholder returns? How does this all fit into exemplary corporate governance? The short answer is that it doesn’t. It gets a bit worse:

“He also received perks like use of a company plane for personal trips; a new car every three years, one similar in price to the Mercedes Benz S series; and a $10 million loan with an annual interest rate of 5.8 percent that would be forgiven over five years. That $10 million loan wound up costing shareholders $21 million after the board agreed to pay all taxes on it, a so-called gross-up.

“…And when it appeared that Mr. Nardelli might not hit one of the few performance goals the board had set to cause payment of a long-term incentive plan, the board lowered the goalposts, according to the Corporate Library.”

There is a lot more juicy content in the article. I highly recommend taking the time to read it.

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PWC Corporate Responsibility

May 15th, 2006 | Posted by Peter in China | Corporate Social Responsibility | Miscellaneous - (Comments Off)

In performing a bit of background research for some of the firms I will visit on my upcoming trip to China, I stumbled upon PricewaterhouseCoopers’ Corporate Responsibility publication (download on this page). The publication is very well put together and quite informative. I skimmed most of it, but read the portion about China closely. Here are a few clips that I found interesting and pertinent:

“China’s economic expansion heralds a significant rise in demand for consumer and industrial goods, from today’s already high levels. However, the downside is the surge in its use of natural resources and the impact on the environment. China is already the world’s second largest consumer of energy; it uses more than 1.6 trillion kWh of electricity a year and about five million bbl/day. Even so, demand for oil is forecast to rise 250% by 2025. It also suffers from a chronic shortage of water. Half of China’s nearly 1.3 billion citizens do not have access to clean water supplies, and it is less efficient in its use of water than most other nations, consuming an extra 135,000 cubic feet of water for every $10,000 it adds to its GDP.

“…Meanwhile, the leading multinationals are raising local standards by adopting clean and safe technologies in their own Chinese operations and encouraging their Chinese suppliers to manage the supply chain more ethically. As a result, the most prominent Chinese companies are rapidly improving their behavior and a growing number of them are disclosing environmental information.”

While the first portion is fairly alarming, the second clip seems to offer signs of improvement. I wonder how accurate the second statement is and how much of it is feel-good puffery.

TAGS: China | PWC | CSR | Big Four

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Business Repression: A Shareholder Directive?

Over the past few months, I have been mulling over the various stories regarding Google, Yahoo!, Cisco, and other companies about how they have aided China’s government in suppressing her people. The facts of the stories as well as the corporations’ responses to criticism have always bothered me. I have a very firm set of morals with which I do my best to guide my daily actions, and accordingly, nearly every element of the various news stories mentioned is in conflict with my view of “right” and “wrong.” (If it is not clear, my intention is to establish that my morals work for me, but I don’t expect everyone to agree with them.)

I made a comment on the China Blog for my MBA program in relation to the issue and think it sums up fairly concisely many of the issues I have been grappling with. Following is a portion of my post (the remainder isn’t relevant to this topic):

“…While the public and the press may put a great deal of effort into deriding US multinationals for subjugating to the Chinese government, presumably in an effort to increase profit and shareholder wealth, corporations at the focal point of the issue routinely offer the same justification: they are subject to and must abide by the laws of the country within which they operate.

“While this ‘canned’ corporate response has begun to lose its staying power, the response is valid nonetheless. Indeed, corporations are subject to the laws of the countries within which they operate.

“But isn’t such response a bit of a cop out? Is anyone forcing Google, Yahoo!, Cisco, and others to do business in China? One could always argue (and I’m sure many executives have used such a justification) that shareholders, in their demand for ever-increasing profits and wealth, essentially force the corporation to seek out markets where such issues come into play. …’Don’t blame us, our shareholders demand growth and an astronomical return on their investment! China’s our only option!’

“I’m being a bit sarcastic here, but truthfully, if there is blame to pass around, I believe the bulk of it rests with shareholders, then consumers, and then executives. If the masses truly cared about human rights and freedom of the press in China, they would immediately stop using Yahoo! and Google, and force the company to act. Similarly, if shareholders truly cared about such issues, they would communicate as much to the Board of Directors, even if it meant a decrease in the value of their shares. A corporation’s leadership, at least in theory, is simply following the directives of its owners.

“That said, I firmly believe that everyone has a responsibility to stand up for their personal convictions, even if they are in direct conflict with the company they work for, the government that protects them, or the society within which they live. I imagine such brashness is a product of having never been politically repressed, and perhaps a bit naïve, but that is simply the way I choose to live my life. Is it appropriate to not speak out when your company aids a foreign government in the persecution of an individual, simply because they are critical of the government’s policies? If we will not tolerate such injustices within our own borders, what reasonable logic can justify operating in such a manner abroad? I hesitate to draw correlations between this type of behavior and more reprehensible instances of oppression (Stanley Milgram…) but if simplified to a base level, there isn’t much difference.”

I welcome your comments.

TAGS: China | Google | Yahoo | Cisco | Freedom

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Chaos to Order

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Tiananmen and the Catholic Church

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