Unfit to Lead

The defense always seems the same.

Enron’s Jeff Skilling: “I didn’t get the memo… notes… e-mails,” “I do not recall.”

BP CEO Tony Hayward reacting to the worst oil spill in U.S. history: It’s “relatively tiny” compared to the “very big ocean.”

Robert Murdoch tweeted: “No excuses for phone hacking. No argument. No excuses either for copyright stealing, but plenty of ignorant argument!”’

The message from Murdoch, CEO of the second-largest media conglomerate would seem to suggest that he was ignorant: ignorant of phone hacking, ignorant of the cover-up of phone hacking, ignorant of any wrongdoing that was going on within his own company News Corporation for years, possibly decades.

In Britain, a Parliamentary panel report said, “On the basis of the facts and evidence before the committee, we conclude that, if at all relevant times Rupert Murdoch did not take steps to become fully informed about phone hacking, he turned a blind eye and exhibited willful blindness to what was going on in his companies and publications.”

“This culture,” the report said, “we consider, permeated from the top throughout the organization and speaks volumes about the lack of effective corporate governance at News Corporation and News International,” its British newspaper subsidiary.

“We conclude, therefore, that Rupert Murdoch is not a fit person to exercise the stewardship of a major international company.”

While several members of the committee felt that the last statement “was wildly outside the scope of a select committee,” my reaction was that the statement cuts to the critical issues of leadership. How can an individual run a multi-billion dollar communications organization who admits that he was ignorant of the wrongdoing that was going on within his own organization? More importantly, how can you trust working with an individual who appears to be willfully ignorant.

In its Federal Sentencing Guidelines, the U.S. government defines “willful ignorance” as follows: “An individual will be said to have been willfully ignorant of an offense if ‘the individual did not investigate the possible occurrence of unlawful conduct despite knowledge of circumstances that would lead a reasonable person to investigate whether unlawful conduct had occurred.’ ”

Further evidence in support of the panel’s statement came in Wall Street’s reaction. The New York Times (May 1) reported that, “The British panel’s negative opinion of Mr. Murdoch’s role as chairman and chief executive of News Corporation sent positive signs to Wall Street. The company’s share price rose about 1.25 percent in early afternoon trading. Many shareholders, weary of the Murdoch family’s disproportionate control over the company, viewed the British report as further evidence that a change of leadership is needed.”

The Times added that the “ethics inquiry threatens global expansion plans” by News Corp.

If there is one message I could give to corporate presidents and CEOs as a business model, it would be this mission statement:

Our Company’s integrity is demonstrated in our ethical conduct and in our respect for the values cherished by the society of which we are a part.

We will always strive to create and maintain a working environment that fosters honesty, personal growth, teamwork, open communication, and a dedication to our overall vision.

We will always strive to maintain fair, legal and ethical business practices, and when we are wrong, we will promptly investigate and correct all wrongdoing, as well as settle any claims quickly and fairly.

Short version: It’s ethics, stupid!

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