Steven's Blog

The Ethics of Symbolism

There is nothing inherently wrong with symbolism. It is only symbolism that masquerades inaction that is unethical and destructive.

To enter the upper floors of many office buildings in Tokyo, you have to present a form of ID, or otherwise, two business cards. I don’t know why two business cards are viewed as an equivalent to a passport or driver’s license, but no matter. The whole exercise is nothing more than a symbolic show of taking building security seriously. It is meant to benefit the building’s management, not its occupants. Every time I pass through security at an airport in the United States, I wonder about the energy and resources that are poured into symbolic gestures of security, to the exclusions of procedures that might actually work.

The managers of the Japan subsidiary of a European company were recently found to have been demanding suppliers to overpay invoice amounts in order to create discretionary slush funds hidden to the mother company. The practice was widespread and had been going on for years. Yet no one has been fired.

The leaders of the mother company reasoned that if the perpetrators of the fraud were fired, there would no longer be enough managers to run the business. So they opted instead to demote the managers involved, strengthen governance procedures, and provide staff with training. Kobe Steel implemented similar measures in response to corporate fraud exposed last year in its business.

Yet, such measures are merely a symbolic show of taking fraud seriously. The cause of corporate malfeasance is never deficits in individual performance management, corporate governance, or staff training. I have not once ever known a manager’s behavior to improve after having been demoted. Corporate governance is never a solution of first instance for corporate malfeasance, and only the last defense against it. The strength of corporate governance never thwarts those most determined to do wrong. And do you actually believe that somehow staff need to be “trained” so they understand that lying on financial documents in order to steal money is wrong?

Managers who have committed fraud cannot remain. There is no exception, no extenuating circumstance. Think about what keeping such managers means to others in the business who have committed no fraud. What about the best candidates who are considering employment in the company? Would you want to work under a manager who is known to have committed fraud of any kind? Would you want to be mentored by such a manager? Do you believe that development of the next generation of mid-level and senior leaders can be entrusted to managers who have committed fraud? We are talking serious long-term damage here.

And if managers were fired, would there really not be enough people to run the business? It is unlikely that a company needs the number of managers it has. By the mother company’s leaders’ own assessment, productivity in the subsidiary is lagging behind the norms of its other subsidiaries around the world. There is ample room for improvement, should leaders in the mother company choose to take productivity improvement seriously. Symbolic measures of fraud prevention crowd out any real efforts for reform.

The leaders in the mother company believe symbolic measures are their only viable option. However, I have never known this to be the case.

Innovation always trumps symbolism, especially when doing the right thing is “impossible.” Click To Tweet

Such is the exigence of leadership, when leadership counts the most. Don’t let anyone convince you of something different.

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