Corporate (un)Accountability

A Prison Scene by Francisco de Goya

Last week I had the opportunity to watch the phone-hacking committee hearing (carried out by the Culture, Media & Sports Committee, at the parliament, in London) and it made me ponder on the level of responsibility of a CEO or any other leader of a company.

The head of a small business manages a small operation with a low-numbered staff; therefore it is easy for him to know everything that goes on in his company and also to be held accountable for any wrongdoing.
The chairman of a medium-sized business already has quite a few number of people to whom he can delegate some of his responsibilities. Nevertheless, he is still quite capable of knowing what happens in his company and, thus, he too can still be held responsible for any business-mischievousness.
The president of a big business delegates the “burden” unto his managing directors, his financial managers, HR managers, Union managers, general managers etc; which could lead us into asking what on earth a president of a company does exactly.
A CEO of a corporation has, under his orders, a deputy CEO; a COO, a deputy COO; a CFO, a deputy CFO (he also has a president and a vice-president for each company the corporation owns, and sometimes a Pres. and a Vice-Pres. for each profitable department) and personal assistants, of course. Knowing that the COO is responsible for other directors and managers; and that the CFO, in turn, is the head of all financial managers; we can imagine how easy it must be for the CEO to shrug off any accountability for the corporation’s misdeeds. So, we could also wonder what the bloody hell a CEO does.

A president/CEO is like the parent of any business institution; meaning that (like a father/mother who is supposed to know, and is responsible for, everything going on inside its family – be it either small or large) any president/CEO, worthy of such epithet, should be aware of every single business operation and how those operations are carried out. For that reason, he should be held accountable for any corporate misdemeanour.
A company, a corporation or a holding should not be a free zone for unethical CEOs/presidents. Delegating responsibilities does not mean unaccountability. Au contraire: it signifies double-accountability since the head of the institution (or even department) selected the individual to whom duties were delegated.

It is quite disturbing when a leader, of any sort, stands before authorities and/or lawmakers and shamelessly states “I don’t know...I am not aware...I was betrayed by those entrusted!” particularly when his job is to know every single thing and every little detail.

Not knowing, not being aware of any given fact that led to the generation of millions, billions, of pounds/dollars/euros constitutes fraud; and fraudulent CEOs/presidents should take the responsibility for their incompetence and resign; and/or be incarcerated in order to reflect upon the ethics in Business Administration.


Comments

  1. "The man who complains about the way the ball bounces is likely to be the one who dropped it."
    — Lou Holtz

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  2. Hey Rummy :D!

    «"The man who complains about the way the ball bounces is likely to be the one who dropped it." — Lou Holtz»

    If we apply this to a certain CEO and deputy CEO that testified last week....everything is settled.

    Rummy, thank you so much for your input :D.

    Cheers

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  3. Hi Max,

    Welcome back. As usual you bring up valid points. I am amazed that it went on for so long without anyone finding out.

    Though I didn't watch the hearing, I did enjoy the fine skills of Wendi Murdoch as she successfully slapped the pie thrower like he was a volleyball before the pie reached her husband. Isn't it always about the pie?

    Such a feat was worth the replay over and over on various websites thereafter.

    Just Say No To Pie (except coconut) Cheers!

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  4. Max, I also watched the committee hearing and it nearly made me vomit (and mind you, it was the 17th of Tammuz so I was fasting): the nerve of the Murdochs (Senior and Junior) to lie the way they did...come on, it was obvious that they knew everything about it and couldn't care less.
    Mr. Murdoch Senior had the audacity to talk about his father and his journalistic inheritance while at the same time finding poor excuses to close a 168 year-old cultural and traditional British inheritance. This is why I am against selling certain national assets to foreigners - they have no respect for tradition; they only revere money and hypocrisy.
    As for the corporate world: it is time to wake up and smell the coffee. Times are changing, people! Unethical business behaviour is to be fought against and I'm not talking about CEOs/presidents only - I am including the unethical-money-hungry-investors. They're all nauseating.

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  5. Now this one is one topic which I have also thought a lot of times whenever I read these kind of incidents in newspapers or media. I completely agree with your thoughts but I will classify corporates into two groups one the small ones and the other the very big ones. I say this because there are many times I feel that blaming a managing director of a company who may be sitting in another part of the world is not completely justified for another employee who may have done the personal mischeif in another part of the world which may be settled in the local level and didn't reach its headquarters at all.

    Now here a question may be raised as to building a very robust system where the MD/CEO shall have access to each and every event occurring within the company and that will involve scaling of man-power to a great extent, which any non-government organisation dreads, as profitability is the main objective for them.

    So on this issue my point is first about a proper independent inquiry/ investigation into any serious lapse and then fix responsibilities accordingly by studying past precedents on the entire decision making process in the organisation. And on any decision whether verbal or written, where there is approval of the president/top boss or any other member in the hierarchy, the very first person to be questioned should be the person at the top as it more often than not happens that he wields the power and the influence on his sub-ordinates.

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  6. I have had two titles of note in my corporate life. The first is "Principle Investigator" in an R&D company. People asked me what this meant and I explained that it was to distinguish me from an unprincipled investigator.

    Then there was the position of "Vice President", which is obviously the person who is in charge of the corporate vices.

    My theory is that we are all guilty. The question is whether or not the specific crime that we are being prosecuted for is among the many that we have actually committed.

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  7. Hello Max!

    Indeed, that hearing should make us rethink the way of making business.
    I'm all for making money but not at the expense of others; I mean have the Murdochs think of what would become of the NOTW's employees? Yes, they said they'd find jobs for those considered not guilty, but we all know how it works. Mr and Mr Murdoch were irresponsible (for laying off those people in this economy, thus increasing the pressure on an already in crisis government); unethical (for claiming not to know what was going on); criminal (for committing perjury) and pathetic (for having put themselves in that kind of position in the 21st century). I agree that investors are also accountable for this sort of demeanour because their stance says something like "As long as I get my proceeds, do what you have to do and don't tell me about it!".

    Tchau

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  8. Hey Lady A :D!

    "Welcome back. As usual you bring up valid points. I am amazed that it went on for so long without anyone finding out."

    Thank you *bowing*. I think most of the people are amazed at that...

    "Though I didn't watch the hearing, I did enjoy the fine skills of Wendi Murdoch as she successfully slapped the pie thrower like he was a volleyball before the pie reached her husband. Isn't it always about the pie?"

    LOL LOL that lady is dangerous...that's all I'll say.

    "Such a feat was worth the replay over and over on various websites thereafter."

    I confess I was too focused on her husband's and step-son's act.

    Lady A, thank you so much for your input (you made me laugh, girl) :D.

    Just Say Yes To Apple Pie Cheers

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  9. Hi Ana :D!

    "I also watched the committee hearing and it nearly made me vomit (and mind you, it was the 17th of Tammuz so I was fasting): the nerve of the Murdochs (Senior and Junior) to lie the way they did...come on, it was obvious that they knew everything about it and couldn't care less."

    LOL oh for the love of God, Ana...you kill me. But I must agree with you that the Murdochs were shocking in their performance; their deceit was so blatant...I expected better from them for I thought they could lie better than that.

    "Mr. Murdoch Senior had the audacity to talk about his father and his journalistic inheritance while at the same time finding poor excuses to close a 168 year-old cultural and traditional British inheritance."

    It was a rather sad affair indeed *nodding*. Couldn't they just re-structure the whole thing? Or was it so deep in the mud that keeping it operating would bring everybody down? The authorities should probe it...

    "As for the corporate world: it is time to wake up and smell the coffee. Times are changing, people! Unethical business behaviour is to be fought against and I'm not talking about CEOs/presidents only - I am including the unethical-money-hungry-investors. They're all nauseating."

    When a company goes public it is almost the same as kicking ethics out the door; since profits become the main (if not sole) goal; meaning that they'll do anything at any cost to achieve it.

    Ana, thank you ever so much for your comment, girl :D.

    Cheers

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  10. Hi Kalyan :D!

    "I completely agree with your thoughts but I will classify corporates into two groups one the small ones and the other the very big ones. I say this because there are many times I feel that blaming a managing director of a company who may be sitting in another part of the world is not completely justified for another employee who may have done the personal mischeif in another part of the world which may be settled in the local level and didn't reach its headquarters at all."

    That is a very good point. But again, that kind of corporation usually has a person to oversee transcontinental operations...so, when things go sour, who's responsible?

    "Now here a question may be raised as to building a very robust system where the MD/CEO shall have access to each and every event occurring within the company and that will involve scaling of man-power to a great extent, which any non-government organisation dreads, as profitability is the main objective for them."

    Again, excellent point.

    "So on this issue my point is first about a proper independent inquiry/ investigation into any serious lapse and then fix responsibilities accordingly by studying past precedents on the entire decision making process in the organisation. And on any decision whether verbal or written, where there is approval of the president/top boss or any other member in the hierarchy, the very first person to be questioned should be the person at the top as it more often than not happens that he wields the power and the influence on his sub-ordinates."

    Absolutely correct!

    Kalyan, outstanding thought, man. Thank you so so much for your input :D.

    Cheers

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  11. Hey Looney :D!

    "I have had two titles of note in my corporate life. The first is "Principle Investigator" in an R&D company. People asked me what this meant and I explained that it was to distinguish me from an unprincipled investigator."

    LOL LOL that was a good reply. Only you...

    "Then there was the position of "Vice President", which is obviously the person who is in charge of the corporate vices."

    So they say...

    "My theory is that we are all guilty. The question is whether or not the specific crime that we are being prosecuted for is among the many that we have actually committed."

    You have said it all, man!

    Looney, thank you ever so much for presenting such great points... :D!

    Cheers

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  12. Hey Celeste :D!

    "I'm all for making money but not at the expense of others; I mean have the Murdochs think of what would become of the NOTW's employees? Yes, they said they'd find jobs for those considered not guilty, but we all know how it works."

    It seems like top executives forget to put themselves in the shoes of those who generate their wealth. I also wonder about the destiny of the people working for NOTW *nodding*.

    "Mr and Mr Murdoch were irresponsible (for laying off those people in this economy, thus increasing the pressure on an already in crisis government); unethical (for claiming not to know what was going on); criminal (for committing perjury) and pathetic (for having put themselves in that kind of position in the 21st century)."

    Very well said! And what is more shocking is James Murdoch's attitude: he is young and thus he was supposed to be more modern (i.e. going along with the Modern Management thinking) but no...he chose to be as obsolete as his father (with all due respect).

    "I agree that investors are also accountable for this sort of demeanour because their stance says something like "As long as I get my proceeds, do what you have to do and don't tell me about it!"."

    Oh yes, most investors are irresponsible. A decent investor besides being concerned with making profit (which is valid) should make his due diligence: how does corporation A make its money; it is socially responsible or not etc? And they should be more involved....no doubt.

    Celeste, awesome comment, dear. Thank you so much for sharing your thoughts with us :D.

    Cheers

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  13. Hello Max>!

    I didn´t watch it. Unfortunately, I don´t understand anything at all about CEO.
    Oh, yes!!!!The photos that You´ve saw on the header of my blog are the photos of a boy from Nacala, Mozambique, Africa.
    I´m so happy that you came back to us!
    At the moment, I´m preparing to stay one month in the Balkan and Baltic countries.It will be the first step of my Master´s degree.
    See you!
    take care, Swetheart!

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  14. you´ve seen



    CAN YOPU CHANGE THE EXPRESSION YOU´VE SAW TO

    YOU´VE SEEN


    I THOUGHT YOU SAW

    But if I write ´ve there isn´t sense.

    thanks

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  15. Hi! Just a flying visit this time around but I'll be back!

    I see you joined Google Plus. Most important: Plus gets its images from your Picasa web albums. If you delete them from Plus, as have others (many), you'll delete them from Picasa Web, and your images will dissappear from your blog.

    Take Care,
    Peter

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  16. Hey Grace :D!

    "I didn´t watch it. Unfortunately, I don´t understand anything at all about CEO."

    I appreciate and admire your honesty *bowing*.

    "Oh, yes!!!!The photos that You´ve saw on the header of my blog are the photos of a boy from Nacala, Mozambique, Africa."

    It is a lovely photo; that boy is so cute and serene. Yes, one can tell it is Mozambique right away :).

    "I´m so happy that you came back to us!"

    Thank you, darling :D. I couldn't live long without you guys ;).

    "At the moment, I´m preparing to stay one month in the Balkan and Baltic countries.It will be the first step of my Master´s degree."

    Fantastic! I wish you all the best, girl and have a safe trip.

    Grace, thank you so much for your words :D.

    Cheers

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  17. Grace,

    I would have to delete your whole comment and do like the last time...

    Anyway, don't worry about it; during the learning process we do make some mistakes ;).

    Cheers

    ReplyDelete
  18. Hi Peter :D!

    "Just a flying visit this time around but I'll be back!"

    We'll be here :D.

    "I see you joined Google Plus. Most important: Plus gets its images from your Picasa web albums. If you delete them from Plus, as have others (many), you'll delete them from Picasa Web, and your images will dissappear from your blog."

    Yes, I did. I know, I read it on your post earlier this week; but you do well to repeat it so that others read it too...so, thank you *bowing*.

    Peter, it was super great hearing from you, mate :D! Have a great weekend.

    Cheers

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  19. Ana/Max, what is the significance of "the 17th of Tammuz so I was fasting"?

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  20. Rummy,

    "Ana/Max, what is the significance of "the 17th of Tammuz so I was fasting"?"

    Ana is Jewish and the 17th of Tammuz is a Jewish holiday (the Children of Israel fast in order to commemorate the breach of the walls in Jerusalem before the destruction of the Second Temple). Tammuz is the 4th month of the Jewish calendar, and this particular date marks the beginning of 3 weeks of mourning for Jerusalem/destroyed temple that culminates with the 25 hour-fast on the 9th of Av (the 5th month of the Jewish calendar), which is next week.

    I hope this helped...

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  21. While I can agree it doesn't look good for them, the odd adage must still be maintained and shouted from the tallest buildings “Innocent until proven guilty”.

    Heaven help the victims and other aggrieved persons if the hysterical mobs went about sacking heads of the company before finding out who the guilty ones were.

    It's easy to say that they should fall on their swords, but what if they're innocent?

    There will be time for that and for guilty ones to languish in goal after due process has been served.

    Take Care,
    Peter

    ReplyDelete
  22. Hi Peter :D!

    "While I can agree it doesn't look good for them, the odd adage must still be maintained and shouted from the tallest buildings “Innocent until proven guilty”."

    lol yes, they should praise the Lord everyday for not being in Portugal, where people are guilty until proven innocent (Roman Law).

    "Heaven help the victims and other aggrieved persons if the hysterical mobs went about sacking heads of the company before finding out who the guilty ones were."

    It has happened...

    "It's easy to say that they should fall on their swords, but what if they're innocent?"

    Are they (in this particular case)?

    "There will be time for that and for guilty ones to languish in goal after due process has been served."

    The problem is: when the guilty ones walk and justice is not served.

    Peter, excellent comment for which I thank you a million times :D.

    Cheers

    ReplyDelete

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