The corporate blame game as public spectacle

Written by YRK Reddy | Updated: Apr 28 2007, 05:59am hrs
The chairman of Siemens, Heinrich Von Pierer, has eventually resigned, but clarified that he was doing so out of duty to the company and not as a sign of personal responsibility for his misconduct. His 40-year illustrious career, which included 12 years of stewardship of Siemens, led the company to great heights, as also to crimes that are now reported to have occurred mostly during his tenure. He was reluctant to step down, insisting that he had no knowledge of any illegal activities at the firmwhich included setting up secret funds to pay bribes to secure telecom contracts, participating in price fixing cartels, payments to a minority trade union that backed management, and other such shady things.

Late Kenneth Lay of Enron blamed everyone except himself. He blamed short-sellers for being vultures and attacking the company, just as terrorists had attacked the country. He faulted journalists and the media for a witch-hunt, creating market panic that resulted in a classic run on the bank situation. Most of all, he blamed Andrew Fastow, his chief financial officer. His defence was that he had no knowledge.

Many business leaders are in great hurry to take responsibility and gain all-round sympathy if the misdemeanor, scandal or tragedy would not take away their jobs or money. Owning up responsibility on behalf of ones junior colleagues is meant to show great valour, responsibility and accountability. If the media is supportive, everyone toasts such leadership. But the behaviour changes dramatically once the prospect is one of job loss, property attachment and a jail term.

This behaviour is familiar amongst both political and business leaders. They have something in common with children caught doing something wrong. I didnt do it, I have no idea whodunnit, He did it, not I, You blame me for everything, thats unfair. The behaviour arises from a childish fear even when punishment might be a better option. If the leader is guilty of risky omissions and commissions, he had better be prepared for the consequences, as any gambler indeed should be. All misdeeds get exposedthe statistical issue is the probability of exposure and the time it takes. Such leaders are often blinded so much by their own limelight that they miss the point that shadows are indeed extensions of such light. The brighter the light, the darker and longer might be the shadows. It is only the exceptional who have the courage to own up and show leadership qualities during crises. I have known a senior MNC executive who had to undergo a jail term under the erstwhile Foreign Exchange Regulation Act. He was relieved to own up that he had indeed committed mistakes that he should neverhe felt blessed that he could pay for his sins sooner than later in life and clear his conscience.

If we go by a survey reported in the UK, many business leaders could indeed be a dumb lottheir conversations, statements and gestures are predictable, inane and uninspiring. One wonders if their jobs impose mediocre expectations that lead them to be so unwise
Business leaders appear foolish when they claim innocence and refuse to pay for their negligence, omissions and commissionsafter all, they are paid very well to honour commitments honestly and ethically. If they failed to ensure internal control, monitoring, risk management systems, and end up lending credibility to charges of complicitythey had better pay up. They are meant to use judgment and wisdom, read weak signals from multiple sources, think laterally, assume cross-impacts, reckon risks and contingencies, and act ethically.

Are such leaders too clever by half Or is it that as they grow higher, they indeed lose their skills, judgment and sharpness If we go by a survey reported in the UK, many business leaders could indeed be a dumb lottheir conversations, statements and gestures are predictable, inane and uninspiring. One wonders if their jobs impose mediocre expectations that lead them to be so unwise. The movie, Trading Places, in which Eddie Murphy plays a nobody replacing blue blood, may indeed be closer to truthanyone can be a leader, but not everyone can be wise.