Tuesday, March 29, 2011

Why do corporate scandals continue to happen and how can good leadership prevent or minimize these scandals from happening?


In Rise of the Rogue Executive, Sayles introduces the 1980s as a “decade of greed” and the 1990s as a decade of “excessive greed and arrogance”. In continuation perhaps the 2000s are the decade of supreme greed, arrogance, and stupidity. In the 2010s we will see CEO’s be even more greedy and arrogant. Since every human being has the capacity to err or act inappropriately in the hopes of not being caught, corporate scandals are bound to exist as long as corporations do. Good Leadership can minimize these scandals by providing the honest and effective guidance that ensures good decisions are made and organizations are honest about their failings when mistakes are made.

The Enron case illustrates that Good Leadership needs a good environment. While Skilling, Lay and many other members of Enron’s leadership were crooks, it would be tough to prove that every single member of the Board of Directors, every trader that fudged their numbers to appear profitable, every lawyer and accountant involved in the cover up, were members of a cabal of thieves that shared equal culpability for the crime in question. It is very apparent that Enron’s culture and organization gave people, who would have otherwise acted in accordance with the law, the incentive not to do so.

In light of what we know about human nature it is unreasonable to expect Good Leadership to happen when there is little or no accountability. We can maximize Good Leadership by continuing to expect our leaders to be moral, but be smart enough to know that at times they won’t be and have checks and balances in place to minimize the damage. Leaders and followers bear the responsibility of facilitating an atmosphere that promotes critical thinking.

1 comment:

  1. I agree with Diarra's comments. We can't go into a situation expecting perfection from a leader, but at the same time, that leader should be conscious of decisions that will affect the group positively or negatively.
    Followers should do their part as well by fostering a good environment that encourages characteristics of good leadership such as trust, the ability to speak up, and mutual respect.

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