You are the CEO. You overhear a “funny story” about your best sales rep taking clients to a strip club. Or your company’s largest order for the quarter comes in on the last day of the quarter and that sale makes your numbers for the quarter.
What do you do – if anything?
Paul Levenson is the US Securities and Exchange Commission (SEC) Regional Director in Boston. Paul was the lead speaker for a Directors Roundtable program I hosted recently. Based on the cases Paul sees, corporate leaders with strong professional credentials and good track records get themselves and their companies into trouble when they make bad decisions in moments of stress. While there are cases of purposeful long-term fraud, the more common case involves a leader who is under pressure to make the numbers, satisfy investors, not rock the boat, not go against peer pressure, or not question past practices.
Your response as CEO in these rare but difficult moments will set the tone and establish practices that will become part of your company’s culture.
• Not questioning the too good to be true last-minute sale can get your company in front of the SEC or an investor lawsuit.
• Remaining silent when an important team member is abusive to his staff or entertains staff and clients at a strip club communicates that this behavior is accepted throughout the organization.
• When you learn that your Mexican subsidiary has bribed local officials to get building permits for a new facility, your response will establish whether that illegal practice is tolerated by your company.
These are hard decisions to make at the critical moment when it counts.
• Making the quarterly numbers can mean bonuses for you and other team members. The rationale is that investors will be happy, your company should be okay in the long run and odds are that no one will find out anyway.
• Speaking up when faced with bad behavior challenges social norms within your core team or with an important contributor to the company’s success.
• Bribes are routine in many parts of the world. Everyone knows it is part of the business.
Getting these moments right is hard to do. I don’t have a glib and easy recommendation. If you find yourself in one of these moments, pause and ask yourself:
What does my team and my company need from me at this moment?
What can I do to best serve my team and my company for the long term?
Post your comments on this blog below. Enrich our community’s discussion of these topics by sharing your experiences and your point of view.
This is a subject that is far too often overlooked. Early in my career, I worked at a company where I soon learned after joining to run a small SBU that the expectation was that you made your numbers or you got shown the door. It was common knowledge that some of my peers stuffed the channel with product during Q4 to supposedly make up for any looming shortfall. I did not need to but soon realized that I did not want to engage in those kind of activities. Higher ups came to view me as not being a team player and were not upset when I departed after about 18 months. I often wondered if I should have brought to light my concerns or suspicions.