First-Hand Look at a Scandal
Stanford Business magazine
When New Mexico’s governor asked retired business executive Douglas Minge Brown to help sort out a $160 million financial and ethical scandal in the State Treasurer’s Office, he was shocked at what he found. Brown’s conclusion: “While some people have a moral compass that will keep them doing the right things when no one is looking, many don’t.”

Bankers Embracing Transparency
American Banker
In the wake of recent Wall Street declines, many senior banking executives are more receptive to meeting with stock analysts than they were last year when the industry was coming to grips with harrowing credit issues. “Bankers now realize that there is a lack of credibility and transparency, and they’re getting better at addressing it,” said an analyst.

Water Cooler Chats Build Corporate Value
Knowledge@W. P. Carey
Office coffee klatches aren’t wasted time – they are modern tribal gatherings that help bring organizational strategies and mission down to a personal, local level. “How people feel about their employer is largely dependent on how they feel about their tribe…rather than the organization’s larger culture and objectives as dictated by upper management,” reported Knowledge@W. P. Carey.

U.S. Olympic Arm Launches Etiquette Program
Tactics and The Strategist Online
In an effort to avoid past media scandals involving American athletes abroad, the U.S. Olympic Committee required its Olympians attend a course to learn how to behave within China’s system of social customs. Exemplary conduct from the athletes is being viewed as just as important as what they actually do at the Games.

Ethics Committee Raps Senator Delivering Babies
Politico
Sen. Tom Coburn (R-Okla.), who also happens to be a medical doctor, has been told he’ll be in “serious violation of Senate rules” and subject to sanction if he continues…delivering babies, on a pro-bono basis. With the U.S. economy sagging, and foreign policy challenges abounding, is the Senate policy an example of rules trumping principle?

Air Force Chief Wants to Restore Credibility
Washington Post
New Air Force Chief of Staff Gen. Norton A. Schwartz has a new mission: restore the service’s credibility in the eyes of the government and public after a spate of recent security and corruption problems. Schwartz said he plans to bring back integrity “on Capitol Hill one member at a time” and instill a comprehensive compliance culture.

MBA Students Keen on Green, Ethics
MarketWatch
Many MBA students are switching from focusing on profit and stereotypical careers at Wall Street firms to seeking out “green” curricula at school and then jobs after graduation at businesses that effect social change. This shift in consciousness has occurred as the number of corporate social responsibility jobs has increased 37 percent over the past four years, MarketWatch reports. Students are coming to understand that how companies do business is as important as what they produce.

Lack of Transparency Bites GM in Shareholder Suit
Associated Press
General Motors and its auditor, Deloitte & Touche, have agreed to pay $303 million to settle claims that the automaker misled shareholders by misstating its earnings, artificially inflating GM’s stock price, reports the AP. In today’s business environment, companies of all sizes need to know that spinning data to suit their needs can result in unintended – and highly negative – consequences.

Pakastani Companies Short on Understanding CSR
The International News
Companies worldwide are grappling with ways to become more values-driven businesses. According to research performed in Karachi, Pakistan, many Pakistani companies are still trying to understand how corporate social responsibility can give them a competitive advantage. The research found that companies often believe that being socially responsible merely means giving to charities and being compliant.

Companies Value “Soft” Assets in Turning Green
CIO Insight
Many IT companies are launching green initiatives because of environmental concerns and emphasis on “softer elements, such as brand value and meeting corporate social responsibility goals,” said the survey. These assets drive company and reputational value and help businesses do the right thing for the right reasons.

Socially Responsible Companies Attractive to Consumers
Belfast Telegraph
A survey from the U.K. has found that 80 percent of Irish consumer respondents make purchasing decisions based on businesses’ social, ethical and environmental behaviors. In this age of transparency, a majority of the respondents said they value a company’s honesty and openness above the quality of their products.

Businesses Sponsoring Olympics Ducking Social Responsibility
Huffington Post
America’s major corporate Olympics sponsors are reportedly setting aside their public profiles supporting human rights and labor to profit in the “repressive Olympic host” country of China, reports the Huffington Post. If companies only “talk the talk” on values, they end up potentially shooting themselves in the foot with customers and shareholders.

“Greenwashing” is a term that’s being used more frequently these days, and for the most part it’s not a compliment. It refers to the practice by which companies, organizations or individuals with less-than-outstanding reputations on green issues attempt to market themselves as friends of the environment. If a company’s greenhouse gas emission levels have increased dramatically, for example, it might seek to distract attention from that unfortunate fact by launching a program that enables first-grade schoolchildren to plant new trees around the school. With environmental sustainability now dominating so much media buzz, greenwashing is an attractive if unseemly route to improving a questionable public image.

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The Wall Street Journal recently published a fascinating front-page feature story detailing how federal regulators handle the takeover of a bank which is in danger of failing. In this case, it was the tiny First Integrity Bank, in the railroad town of Staples, Minnesota, population 3,200. About 75 federal officials and contractors from the Federal Deposit Insurance Corporation (FDIC) swooped into First Integrity late on a Friday afternoon and revoked the bank’s charter in anticipation of a friendly takeover by another bank. Secrecy was paramount, to prevent panic among the locals and a run on the bank. The regulators worked through the weekend. By Monday morning, the bank had been reopened with a new name, First International Bank & Trust. Depositors were assured their money was safe and went about their business, barely noticing or caring about the change.

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Like a lot of people, I have decidedly mixed feelings about technology. When my PC is firing away, performing all the tricks it’s supposed to, it’s extremely easy to envision myself as a digital trailblazer, pioneering exciting new dimensions of 21st century communications and knowledge. And when my computer seizes up and grinds to a halt, frustrating those world-conquering digital ambitions, I am reminded of the perspective of newspaper columnist Dave Barry: “People in the computer industry use the word ‘user’, which to them means ‘idiot’.”

And so it was with some trepidation that this computer “user” recently accepted an invitation to discuss HOW with a group of executives from the technology industry. In my experience, tech execs tend to be smart, not afraid to challenge and holding strong opinions about what works and what doesn’t – especially in the world of business. But I figured I could hold my own.

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It’s an order parents routinely give their children as a way of mending relationships damaged by a careless or thoughtless act. And centuries of experience demonstrate that the formula actually works.

Now,The New York Times reports, it’s catching on in hospitals: “Doctors Start to Say ‘I’m Sorry’ Long Before ‘See You in Court.’” It seems that even the medical profession is finding advantage by leaning into our new 21st century world:

“For decades, malpractice lawyers and insurers have counseled doctors and hospitals to ‘deny and defend.’ Many still warn clients that any admission of fault, or even expression of regret, is likely to invite litigation and imperil careers. But with providers choking on malpractice costs and consumers demanding action against medical errors, a handful of prominent academic medical centers, like Johns Hopkins and Stanford, are trying a disarming approach. By promptly disclosing medical errors and offering earnest apologies and fair compensation, they hope to restore integrity to dealings with patients, make it easier to learn from mistakes and dilute anger that often fuels lawsuits…”

This story illustrates the benefits of something we like to talk about here — the power in an apology. What these medical institutions are realizing is that apologizing is the ultimate act of transparency, and transparency builds stronger relationships by increasing trust. It also has real business benefits. As the Times notes:

“Malpractice lawyers say that what often transforms a reasonable patient into an indignant plaintiff is less an error than its concealment, and the victim’s concern that it will happen again. Despite some projections that disclosure would prompt a flood of lawsuits, hospitals are reporting decreases in their caseloads and savings in legal costs…At the University of Michigan Health System, one of the first to experiment with full disclosure, existing claims and lawsuits dropped to 83 in August 2007 from 262 in August 2001…The number of malpractice filings against the University of Illinois has dropped by half since it started its program just over two years ago…”

The acknowledgement of errors and accepting of responsibility pays other dividends. As the University of Michigan case shows, a culture of transparency breeds an openness that brings error rates down and also improves the quality of patient care. Doctors no longer have to duck and dodge to avoid the appearance of guilt when errors occur, so they enjoy greater opportunities to explore what went wrong and devise innovative solutions to prevent future occurrences.

Simply put, it’s just good business. No one likes to apologize. But when called for, an authentic “sorry” can do wonders. And if even doctors are beginning to prescribe it, maybe the practice will catch on elsewhere.

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Earlier this month, the FAA notified Southwest Airlines that it was going to fine the company an unprecedented $10.2 million for violating safety inspection rules. Gary Kelly, the company’s CEO, immediately responded, saying the fine was unfair because his company had “acted responsibly.”

As it turned out, that wasn’t the case. In 2006 and 2007, Southwest operated 47 planes – almost 10% of its fleet – without inspecting them for fuselage cracks. The planes flew a total of 61,000 flights before they were finally grounded for inspection. Cracks were discovered in six of the planes, with some of the cracks as long as four inches.

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