By Hubert Rampersad, Ph.D.
Poor ethical leadership, lack of personal integrity, mismanagement, fraud, corruption, and violation of corporate governance rules are the main contributors towards bankruptcy and financial failures in large organizations. Most of these organizations have comprehensive corporate governance codes in place, implemented by left brain accountancy and law firms, which apparently are not working at all. They made things worse and created a stable basis for more corruption.Some recent rare examples of corporate governance not working the way it should:
- Massive corruption at Wells Fargo, which led to the resignation of its chief executive, John G. Stumpf. In September 2016, Wells Fargo reached a $185 million settlement with federal regulators and acknowledged that thousands of employees, under intense pressure to meet aggressive sales targets, opened as many as two million bogus accounts without customers’ knowledge, in some cases forging signatures. Wells Fargo implemented one of the best corporate programs in America, advised by top Harvard Law School professors.
- Corruption at Apollo Global Settles Securities Case as S.E.C. Issues $53 Million Fine. Apollo misled its investors about two different issues and separately failed to supervise a senior executive suspected of misconduct. Apollo implemented a great corporate program by one of the BIG Four Accounting firms.
- Corruption at Tesco that shocked the markets with an announcement acknowledging their profits for the previous six months were at least £250 million pounds lower than they announced a month ago. Tesco implemented a complete corporate program by one of the BIG Four Accounting firms.
Having great corporate governance programs in place but not complying to these programs has become a normal practice globally. Current approaches to corporate governance are extremely formal, bureaucratic, cosmetic, non-holistic and non-authentic, and therefore provide no protection from potentially catastrophic ethical failures. These great corporate governance programs made things worse. We need a sustainable and innovative solution to this global epidemic urgently.It is time that we become aware that corporate governance cannot be controlled effectively with formal and exhaustive rules, regulations, guidelines, and procedures only. It’s about decency and personal integrity and this must be cultivated from within. Personal integrity has no need of rules and laws. It must be a way of life. Remember what Plato said in 340 BC: “Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws”. Research shows that a large percentage of the world’s population is bad. For example, America has around 5% of the world’s population, and 25% of its prisoners. Roughly one in every 107 American adults is behind bars. Among them are also many executives, leaders and professionals. Most corporate governance programs make things worse, create a stable basis for more corruption and are doomed to fail. Why don’t they learn from Plato and focus on creating a culture of good people, in which personal values are aligned with the laws and embedded in the mind of the people, instead of focusing on laws (corporate governance) only? I picked up where others left off by launching an innovative methodology for creating a culture of good Chairmen, Presidents, CEOs, CFOs, managers and employees, in which high ethical values are aligned with their corporate governance rules, regulations and guidelines and embedded in their mind.
This article introduces an authentic, holistic and sustainable governance system to prevent ethical failures. It’s based on my new books “Authentic Governance; Aligning Personal Governance with Corporate Governance“. Two main endorsements for this book:
1) “Authentic Governance is a systematic, integrated, pragmatic, and innovative approach to corporate governance. By expanding traditional corporate governance concepts and integrating personal integrity and ethical leadership into one overall authentic governance framework, Dr. Hubert Rampersad gives us a new blueprint for sustainable corporate governance in which formal corporate regulations and personal values mutually reinforce each other. By unifying corporate ethics with individual ethics he has written an outstanding synthesis, which is addressed to the corporate challenges of managing in the 21st century.
2) This book makes a most useful contribution to the never ending challenge of protection from potentially catastrophic ethical failures. It serves as a practical guide and a tool kit for executives, political leaders, managers and others who aspire to realize ethical corporate excellence”.
Why Higher Education System Sucks as well
The main underlying reason for most corporate governance failures is the fact that the current higher education system sucks as well. Successful corporate governance implementation requires a multidisciplinary, authentic and holistic approach. Many top Law Schools and Business Schools (Harvard, Stanford, Yale , MIT Sloan, Berkeley-Haas, IMD, London Business School,..) have a mono-disciplinary curriculum with a narrow non-holistic and non-authentic focus. In this way most of these schools destroy creativity and many of their graduates in the corporate governance world (such as lawyers, advisors and executives) miss the bigger picture and do not think holistically. Due to this they focus solely on formal and woolly corporate governance regulations, procedures and guidelines.
Remember: creativity and innovation in the classroom come down to the professor’s creativity, self-innovation and self-knowledge.
Many law, accounting and business management professors at the mentioned top schools are also to blame for most of the above mentioned corporate governance failures. They lack both emotional and spiritual intelligence. This inner process starts with self-knowledge, or knowing, which leads to wisdom. Between knowing and wisdom lies an enormous distance which can be reduced by systematic application of my authentic governance system. This will help them to create balance between the left and right sides of their brain. The left half of their brain has mainly an analytical, logical and quantitative function, while the right half of their brain has an intuitive and holistic function. They do not have a proper balance between the left and right sides of their brain. These professors and most of their graduates use the left side of their brain only; because of this, they miss opportunities that allow them to become more adept at using the right hemisphere of the brain and to deal with complex corporate governance problems in an integrated and authentic way. This is also the main reason why Harvard Business School professor Kaplan’s Balanced Scorecard implementations fail and lack sustainability.
Why don’t you do your own due diligence by analyzing the articles being published frequently in Harvard Business Review, Harvard Law Review, MIT Sloan Management Review, California Management Review, McKinsey Quarterly, Yale Business Review, … and you will find out that almost 80% of the management/corporate governance/leadership theories and concepts being published in these top journals are just BS; not authentic, not holistic, woolly, and therefore cosmetic and not sustainable.
Left brain professors need to be encouraged to start acting intuitively thus making more effective use of their right side of their brain in order help create a better world. Therefore, my main passion is inspiring left brain professors to become innovative, helping them to strengthen their management/corporate governance/leadership concept via my Exclusive Master Class Authentic Governance.
Due to the above mentioned shortcomings most companies’ approaches to corporate governance are extremely formal, bureaucratic, cosmetic, not holistic and not authentic, and therefore fail to address above mentioned shortcomings. Their implementations of corporate governance provide no protection from potentially catastrophic ethical failures. We need a sustainable and innovative solution to this global epidemic urgently.………Read complete article here
Read this related article as well: How to Develop Personal Integrity https://bit.ly/2Hx7Osb
Become a Certified & Licensed Authentic Governance ConsultantTM
Authentic Governance Institute (www.authenticgovernance.org) is an Excellence Center at the Innovation University of Florida. It’s the global not-for-profit membership association for the authentic governance profession. Become AGI member and see what AGI can offer you at every stage of your authentic governance career. AGI also offers a comprehensive Certified & Licensed Authentic Governance Consultant program for accountants, financial consultants, corporate governance practitioners and organizations globally. You will demonstrate your expertise and your commitment to the authentic governance profession with an AGI certification.
Please fill out the registration form below if you are interested in our programs.