Ineffective governance can breed an unethical culture
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Barbara Brooks Kimmel compiles “Tuning In to Trust & Ethics,” a monthly column of Trust Across America-Trust Around the World’s Trust Alliance.

As Trust Across America’s column has discussed in the past, organizations and their leaders often find themselves caught in “trust and ethics traps.” This week’s “biggest catch” was Mylan and its CEO, Heather Bresch. Very simply, the CEO hiked Epipen prices 400 percent in the past decade while simultaneously awarding herself a 671 percent salary increase. Given the opportunity to justify these actions, Bresch may best be remembered for this quote during an interview on CNBC; “I’m running a business.” Unfortunately, Bresch’s actions are all too commonplace. In fact, they mirror that of other CEOs in her industry faced with similar integrity breeches. No apology, no remorse, deflect blame and hope the “crisis” passes quickly.

We asked our Trust Alliance members to weigh in on Mylan’s actions and what the company’s next steps should be to rebuild trust and ethics.

Charlie Green at Trusted Advisor Associates was first to respond with a macro perspective:

“Where is legislation preventing this outrage? Who in Congress is on point to do something about corporate inversions, to reign in price increases, to challenge the far-too-long patent laws on pharma companies? Where is the industry association? Where are the competitors who should be decrying this sort of activity?

There’s not much point in telling the snake it should be less snake-like. The real questions are for those who feed snakes, who enable snake habitats and who make it possible for snakes to prosper.” 

Bob Vanourek, a former corporate CEO who now runs Triple Crown Leadership had this to say:

“The outrageous price gouging of Mylan’s Epipen is a classic example of business greed while falsifying their public face. Mylan’s website shows corporate values and governance practices that sound wonderful, just as Enron’s did back before the wizard’s curtain was drawn back to reveal the sham they were.

There is only one way to address this corporate malfeasance and that is through a special committee of the board of directors. The board currently consists of 13 members, many of whom are not independent. The truly independent directors must be energized to call for wholesale reform in how Mylan operates. They should form a special “ethical practices” committee and engage an independent, outside consulting firm to review the operating practices of the firm within 90 days. Then that committee must mandate wholesale reforms in how the firm operates to include terminations of executives who cannot comply with those practices.”

And finally, Bill Benner reminds us where trust must start in all institutions.

“In many businesses, the practice of maximizing personal gain by senior leaders overtakes any sense of ensuring the “public good” and weaves its way like a meandering river following the path of least resistance, affecting nearly every nook and cranny of an organization, negatively influencing anyone who comes close, thereby creating more supporters and “enablers” for the ongoing acceptance and continuance of such behavior. It’s as though as employees, consumers and the public in general, we have come to accept with greater tolerance that untrustworthy behaviors are simply an increasingly growing part of our daily experiences and the world we live in.  

Likewise, this same condition shows up in the actions of politicians and their supporters and enablers every day.  Like in chess, it’s about protecting the King and Queen, and the rest of the players are sacrificed along the way. What about reversing that concept and having the corporate Kings and Queens watch out for the best interests and well-being of their employees, customers and the public, while still making a very respectable and highly livable profit.  In many circles, that’s referred to as servant leadership and social responsibility. What a novel idea!  The fact that many senior corporate leaders either can’t or won’t accept the truth and value of practicing trust and doing what’s right tells me that greed, corruption and disrespect for others for personal gain, power and influence will continue to prevail unless we call it out for what it is and do so every time it rears its ugly head.”

Similar to Mylan, many organizations find themselves caught in trust traps because they fiercely hold on to the misconception that trust and ethics are “soft skills,” and/or interfere with meeting those quarterly earnings expectations. And because trust is ignored or taken for granted, its decline continues across all major institutions. Some of the warning signs of low trust include:

  • Ineffective board governance and oversight
  • Frequent crises
  • Short-term profit maximization at all costs
  • Compensation packages tied to quarterly earnings
  • Increasing scrutiny and regulation

Fortunately, the most progressive companies have come to recognize the strategic advantages of a high-trust culture, including:

  • Fewer crises and the ability to recover more rapidly
  • A large trust “bank account”
  • Greater innovation (high trust fuels high innovation, not the other way around)
  • Increased long-term profitability and sustainability.

Mylan’s “crisis” is symptomatic of a larger disease in its industry. It will not end, nor should it, until:

  1. Insiders, starting at the board level, not only accept blame and take responsibility, but also put actionable measures in place to clean up the culture.
  2. External stakeholders demand change.

Copyright © 2016, Next Decade, Inc.


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Barbara Brooks Kimmel

Barbara Brooks KimmelBarbara Brooks Kimmel is the CEO and Co-Founder of Trust Across America-Trust Around the World whose mission is to help organizations build trust. Now in its sixth year, the program’s proprietary FACTS® Framework ranks and measures the trustworthiness of over 2,000 U.S. public companies on five quantitative indicators of trust. Barbara is also the editor of the award-winning TRUST INC. book series and a Managing Member at FACTS® Asset Management, a New Jersey registered investment advisor.

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