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2017 Was Full of Scandals, Take-downs, and Whistleblowers: What Can We Learn From the Failure of Leaders

Posted by Dr. Phil Yaeger on Dec 29, 2017 4:02:46 PM

Whether it be sports, celebrity, business, student life, or community, there is always talk of who will lead. Society needs those who will set the tone, are worthy of followers, and dare to push boundaries while guiding themselves with legal and moral compasses. There are many amazing leaders, but the past few years have shown many take a drastic fall from the glory they earned. Why have we seen leaders from Politics, Hollywood, Comedy, Business... pretty much every facet of society ruin themselves? Many were at the helm of nearly unstoppable forces regarding their enterprises. What led to their personal demise? Was it their success?

We'll start with Joe Paterno, the most tenured coaches in all of college football having the role for 46 years which is 12 years more than second place Bobby Bowden at Florida State University. Paterno touted a record of 409-136 which is good enough to put him at 11th all-time in the category of winning percentage. Then came the final years of his career. The wins and losses were still in the right place, but there was some turmoil withing the ranks at the university. Paterno used his legend status to stay when other coaches may have left. A man who had claim to prestige began gripping onto it too tightly. Then came the event that superseded anything a person could gain for a program. Jerry Sandusky, Paterno's longtime assistant coach, was accused of child molestation. Later, it came to light that Paterno had turned a blind eye to information they had received about the accusations. What followed was nothing less than the utter destruction of a juggernaut. Statues were taken down, murals painted over, and wins vacated. Due to the scandal, Paterno offered to retire at the end of the 2011 season. The legend's proposal was rejected by the University and the once-revered coach was fired.

Next up comes Volkswagen's CEO Martin Winkerton's resignation which was pressured due to the companies emissions-cheating scandal. The automaker knowingly rigged 475,000 diesel vehicles to hide the fact that they didn't pass emissions tests. U.S. District Judge Charles Breyer approved a settlement worth nearly $15 billion. They were required to recall up to 11 million vehicles, public trust tanked, and along with that came a drop in stock prices to the tune of -$30 billion. The overall effect was even felt by other European car makers who's stock collectively dropped $25 Billion, all because some engineers decided to implement technology to fudge the results.

Wells Fargo, one of the oldest banks in the USA, came under fire in 2016 after fake accounts were found being made for clients by employees to secure bonuses. If you bank with them, you may have gotten an email that glossed over the actions, but what really happened was the creation of over 2 million fake accounts. As a result, nearly 5,300 Wells Fargo employees were fired. Eventually, CEO John Stumpf stepped down. He made sure to cash out on his way out to the tune of $133 million dollars. Public rage was justified and the company responded by ensuring clients there would be more diligence on the banks part. There's a new CEO in place, Timothy Sloan, who is taking charge of efforts to restore faith in the companies brand.

Finally, we've seen many men called out, shamed, fired, and resigning due to abuse of their power in the form of inappropriate or illegal sexual behavior. Matt Lauer, Al Franken, Harvey Weinstein, Kevin Spacey, and Louis C.K. are only a few of many to make negative headlines this year. The manipulation and abuse of power here is telling of what has gone on for a long time without consequence. We are sure to see more people come forward the coming year.

What do all of these have in common? Well, they could have been prevented. At times it can become impossible for the head of a company or program to know everything, and at other times it can be easy to ignore what seem to be small noises in a greater machine. The decisions of one coach, of one team of engineers, of many small moves by employees, power plays by agents, or many large sums of monies taken by officials - they each spell disaster deep in the bows of the ship but can't be seen on deck. Word may come up, but why interrupt smooth sailing, especially if the issue has been going on for a long time without negative repercussions?

A fix is what Harvard Business Review wrote about as "The Obligation to Dissent". Basically, you have to be a whistleblower and report what you've seen is going on. The catch is, this means anyone and everyone. There also cannot be a culture where victims fear revealing what someone in power has done. In the HBR article, they quote Victor Ho who learned at blue-chip consulting firm McKinsey & Company, that obligation to dissent “means that the youngest, most junior person in any given meeting is the most capable to disagree with the most senior person in the room.”

This means disagreeing with those above you in the company, stating the potential wrongdoing, suggesting there is a better way or at least what is going on is spelling out disaster. The problem is, this can be a fireable offense at some companies, especially for new employees. Disagreeing with the boss so-to-speak is not looked highly upon a lot of the time. This is especially true if it could get someone high up fired. Imagine if you were a lower level engineer who tried to bring to light the installation of fraudulent emissions readings? Probably wouldn't go over well.

The thing is, it probably wouldn't go over well with a false leader - that desirable person we talked about at the beginning of the article? True leaders set the tone, are worthy of followers and push the boundaries while guiding themselves with legal and moral compasses, remember? True leaders must listen to anyone regardless of their status because leaders help a company rise above rather than cover up the scandal. True leaders emphasize the obligation to have the guts to speak up, and reward rather than reprimand or fire those who do.

As accountants, this means you need to speak up and encourage the higher ups to institute a culture of the obligation to dissent before there is reason to. It must be acceptable and known that there will be checks and balances, that nothing slides, and bad practices will come to light. This helps keep the honest honest and curbs the fear to speak up. It's important for the company and for you because in the future it is likely you may be the one to dissent. Accountants are not the "lowest" employees Victor Ho talked about, but they do have a role where it is likely they could find dishonesty, cover-ups, or reason to blow the whistle.

Tags: CPA Career