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In 2008, McKinsey surveyed some 3,200 executives around the globe and found that only about one third of all change initiatives succeed.

In fact, it can be argued that this number is probably even lower, since “success” means different things to different people and humans are not terribly forthcoming with acknowledging failures.

I believe that most fiascos are attributable to the lack of accountability, a key ingredient of leadership. Being an instigator of change is not a comfortable position, as change itself is uncomfortable and, often, disruptive. To instigate change means abandoning the safety of the status quo, something that only strong leaders who feel responsible for the end result can be motivated to do on their own. Accountability can also be imposed externally (e.g. by the owner making the CEO responsible for the end result).

Strong leadership is always in short supply. The ownership of large corporations is dispersed among many shareholders who cannot demand accountability on their own, while corporate boards have proven to be ineffective. In public sector, taxpayers, likewise,  have few means of instilling the sense of accountability.

And since the perfectly effective governance is probably an utopian notian at this point, yet again it all seems to boil down to the question of strong leadership.

Perusing newspapers this morning, I came across an article in Globe and Mail from one of my favourite Canadian journalists, Christie Blatchford. It is on sponsorship for police events, ineptness of boards and people good enough to stick to their principles.

Why does it consistently remain so difficult for people and organizations to make ethical decisions? Why is it so obviously easy to spot the conflict of interest, the inappropriateness or the nepotism looking at the situation from the outside, but not from the inside?

Here are the three  questions I always ask myself and advise my clients to, to make ethical decisions?

  1. Is the considered course of action legal? (there is no point in talking ethics before this point is cleared)
  2. Does it pass the newspaper test? (would you be comfortable reading about it on the front paper of a national daily?)
  3. Is it right for us? (is it congruent with our image, image of our partners, suppliers, customers, etc?)

Why is it so difficult?

The state of the business environment today can be a source of severe cognitive dissonance.

On the one hand, many a large and famous company find themselves reduced to rubble, struggling to survive, ostensibly cutting all but unavoidable expenses, laying off scores of people, radically changing their operations or pleading for financial help.

On the other hand, I get anecdotal evidence on a daily basis that if you were to look closer at the very same organizations, you would see money and time wasted everywhere in inordinate amounts. I am convinced today that the major source of this waste is middle management.

A Saturday evening outing with friends yielded several examples of such waste:

  • IT department of one of the major Canadian banks (we only have a handful of them). A manager keeping contractors on staff for months without anything for them to do. Managers and directors not communicating with their staff  at all and having no idea what their reports are working on.
  • Another large financial organization. Nepotism. People without the requisite skills hired as a courtesy to other managers for no apparent need, at the expense of shareholders.
  • One of the largest municipalities in Canada – middle management engaged in turf wars, projects in a stalemate as a result. Contractors kept on a payroll in the meantime. Millions are wasted.

When a C-level executive makes a serious mistake or commits malfeasance, or when a major project blows up, the public learns about it, laments over the waste and demands punishment. However, middle management is a much bigger crowd and while the magnitude of any given misdeed is not as large, the much greater number of occurrences creates an avalanche of waste.

If you are a senior manager, you simply must be aware of how your subordinates manage their departments and teams. This is not micromanaging or meddling, this is your direct responsibility. Are you too far removed ? Fix it today.

… is to disregard or let your employees disregard the basics of business ethics.  Promise a client to call but don’t bother, don’t return calls from your business partner and certainly do not respond to emails from you vendor – that should do it, more swiftly now than before the economy went into the tailspin.

I respond to all emails and phone calls (less the obvious spam), despite my busy schedule, because I am running a consulting business.  I am not sure why others find it to be a problem.

Earlier today, I was driving to a lunch appointment, already once rescheduled. It is 120km drive for me one way, which I was gladly taking. About 75km in and just 1hr from the time I should be in the restaurant studying the menu, my Blackberry reports an email message. It is my counterparty’s assistant asking to reschedule. They both know I am coming out of town.

I’ll give it a benefit of a doubt and say, ok, there may have been an emergency, in which case a phone call would be appropriate. Sending an email which I may or may not receive is just  plain disrespect. The outcome is simple – it is unlikely, at this stage, that this company will be benefiting from my smarts.

Showing common courtesy and adhering to some basic rules of business ethics is not rocket science. It is good for business, it is good business.

Why not do it?

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