Joe Paterno, the Public Interest, and Managing Risk - Paul A ...

by Paul A. Argenti??|?? 3:31 PM July 17, 2012

Last Thursday, former FBI head Louis Freeh released a report on the child abuse scandal at Penn State that dealt a devastating blow to the university and to the legacy of the once revered football coach, Joe Paterno. In the report, Freeh's investigators pointed to "a pervasive fear of bad publicity" as one of the main reasons Paterno and former Penn State president, Graham Spanier, allowed such heinous acts to go unreported. How could he have thought that covering up Jerry Sandusky's repeated offenses would help him reach that goal?

After studying the topic of reputation for over a decade, I see Paterno's behavior repeated again and again in the corporate world. Just a few months ago, the New York Times revealed that Walmart senior executives hid evidence of widespread bribery in its Mexican expansion effort. And just this past weekend, the Times reported that the FDA spied on its own scientists to catch whistle-blowers who leaked evidence that the agency had employed faulty review processes that led to the approval of potentially dangerous imaging devices.

Why do otherwise intelligent people seem to believe that they are protecting their reputation by covering up the truth when they are actually making things even worse? And, what can you do to make sure you are assessing reputational risk as seriously you do financial and legal risks to your institution? The three are related, after all. And extensive research from the Reputation Institute, among others, shows that companies with strong reputations can charge more for products and services, pay less to suppliers, hire the best recruits, enjoy more stable revenues, and be given the benefit of the doubt by constituents when things go wrong. The opposite is true for companies with bruised reputations.

That's especially true today because corporations are held in such low regard. Polls show that 70% to 90% of people in the US do not think that business does a good job of balancing profit and the public interest. This means most people, including employees, assume that business leaders are acting out of self-interest and not for the good of society. Many of the executives I interact with think that Occupy Wall Street is a movement confined to a handful of disgruntled hippies. They're wrong.
That said, leaders should make sure that guarding the company's reputation is among the organization's highest priorities. Here are three ways to do that:

• Assess reputational risk: Many of the organizations I work with set up half-day meetings with senior executives or the board quarterly to determine where the possible danger lies. This assessment doesn't have to be complicated. Ask yourself what are we doing that we should stop doing? What aren't we doing that we should be doing? As Warren Buffet often says: "I want employees to ask themselves whether they are willing to have any contemplated act appear on the front page of their local paper the next day, be read by their spouses, children, and friends." Yet, even Buffett did not completely follow his own advice in relation to the Sokol affair last summer.


• Create an atmosphere of trust: "Our assets are our people, capital and reputation," state the business principles of Goldman Sachs. "If any of these is ever diminished, the last is the most difficult to restore." But official pronouncements aren't enough--as the tattered reputation of that once august firm demonstrates, Employees should feel free to raise issues to senior officers about actions that could put the entire organization at risk. This requires leaders who do not retaliate against those trying to hold the organization to the highest standards; an environment where the reputation of the firm is as important ? if not more important--than the short-term focus on profits; and a management team that clearly states its intolerance for such behavior and backs it up with swift and decisive action. Creating and maintaining an atmosphere of trust takes training, time, and a commitment from senior management to not only talk the talk but also walk the walk.


• If a lapse does occur, come clean immediately: If you try to hide ethical lapses, you can be sure that that they ? and your cover-up ? will eventually be broadcast and amplified via Twitter, Facebook, and other digital channels. In the age of social media, communications (and reputations) are impossible to control. Knowing this, you can get out ahead of bad publicity by using those same online bullhorns to come clean as quickly as possible. To delay in addressing the issue only invites speculation and scuttlebutt. Jump on the problem with honesty and humility. That's the only way to demonstrate your commitment to ethical behavior. And it's the only prayer you'll have of salvaging your reputation.

Corporate reputations take years to build and moments to destroy (as a wise person once noted). The commitment to reputational risk management must therefore be unwavering. That doesn't mean that there won't be slip-ups. But candor and determination can save and even burnish a reputation. Near Joe Paterno's statue at Penn State is a quote that says: "I hope they write I made Penn State a better place, not just that I was a good football coach." Had Paterno moved immediately to punish Sandusky as soon as his crimes came to light, that quote would not seem so sadly ironic today.

Source: http://blogs.hbr.org/cs/2012/07/joe_paterno_the_public_interest_and.html

no child left behind no child left behind neurofibromatosis steve jobs fbi file suge knight obama birth control mortgage settlement