The evaluation of C-Suite leadership can be problematic in the best of times. In the compliance world, if a company has a serious violation of the Foreign Corrupt Practices Act (FCPA), it may be due to tone-deafness at the top. Worse than simple tone-deafness, the C-Suite can be an active part of the problem. While not FCPA violations, the criminal prosecutions at the highest echelon at Enron, WorldCom and Adelphia certainly speak to ethical lapses at the top. But the question remains, how can a Board evaluate a company’s top leadership for compliance and ethics?
In a posting on the HBR Blog Network, entitled, “News Corp and Questions Boards Need to Ask” author Rob Kaplan poses an interesting solution to this conundrum. Kaplan phrases the question as “how does a board really know the leadership style of its senior operating management and the culture of the company for which it has fiduciary responsibility?” He acknowledges that Boards often have very little process or procedure in place to judge the leadership style, daily behaviors, and cultural norms being established by their senior operating leadership. This can deprive Boards of sufficient information to make an informed decision and “by the time directors realize there is a culture or leadership style problem at the company, it is too late to have prevented real damage to the business, reputation, and careers of senior executives.”