THE CHALLENGE OF MORAL LEADERSHIP

James R. Fisher, Jr., Ph.D.

© December 1, 2011

I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country.  As a result of the war, corporations have been enthroned, and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working on the prejudices of the people until all wealth is aggregated in a few hands, and the Republic is destroyed.  I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war.

Abraham Lincoln, 1864

The structure of work determines the function of work; the function of work creates the work culture (values); the work culture dictates organizational behavior; organizational behavior determines whether moral leadership will take hold or it will be replaced by corruption.

James R. Fisher, Jr., Leadership Manifesto: Typology of Leaderless Leadership, AQP Journal, Winter 2002

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We are struggling to do the right thing when we are organized to do the wrong thing.  We are organized for another time, place and space, another situation and value system.  We are organized for an agrarian-industrial society that is long past.  We are in the Internet Age and are overwhelmed with complexity.

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My grandson, Ryan Carr is a senior at Tampa Preparatory School in Tampa, Florida.  He has been studying leadership, specifically moral leadership.  He knew I had written on the subject and asked if he could share some of my works with his teacher. 

The teacher read these works and shared them with Ryan’s class.  He asked Ryan if I would speak to the class on the subject.  It is Ryan’s first class in the morning.  I am not a morning person.  In fact, I am writing this on Friday, the day after Thanksgiving at three in the morning, and will be writing until the sun comes up. 

I have a tendency to be wordy.  What is more, there are many ways to look at leadership, especially moral leadership, that I thought I should compose this draft of the subject.  This is my take on the subject along with troubling disturbances that have occurred.  Students may not be familiar with these or the impact they have had.  It is my hope that this discussion will encourage further exploration.

Abraham Lincoln, our great moral leader, was weary at the height of the Civil War that our moral fabric might unwind.  Many writers have addressed this problem, which is a system’s problem.  They claim our system has become ossified controlled by special interests.  Writers don’t unshackle us from a problem but create awareness of its existence.  Awareness is the necessary, but not sufficient condition to generate change.  Change takes action.  Action takes the will of moral authority.  Have no doubt you will be called on to display moral leadership in your professional careers.    . 

THE MORAL CHALLENGE

We live today in a climate of gray, not black and white, not right and wrong.  We push the limits of what is legal without a backward glance at what is ethical.  Those in positions of leadership worry more about how to finesse the system than to reduce its toxicity, more about competitive advantage than serving the customer, more about exploiting than developing trust.  The evidence is overwhelming. 

Lost in this declining moral climate is this: The purpose of an organization is not to preserve the status quo at the expense of its function but to honor its function.  It is why it exists.

Cover-ups are founded in confusing survival with function.  You can see this clearly in William Livingston’s “The New Plague” (1985).  The purpose of an organization is what it does, not what it says it will do or hope to do, but what it is doing now.  “The quantity of scientific facts is now doubling every seven years,” he writes, “we are not structured to deal with this complexity,” and so we often go off the rails focusing on secondary problems leaving primary problems unattended. 

We live in a declining moral climate.  Rhetoric competes with reality, telling takes precedence over listening; knowing over learning; posturing over doing, credentials over people with answers.  Christopher Lasch in “The Culture of Narcissism” (1978) claims that we have retreated into a cosmetic culture.  This has the appearance of dealing with problems while dealing with them only cosmetically, as window dressing.

Abraham Lincoln saw moral leadership requiring courage, not hope to penetrate the natural resistance to change.  Courage is active; hope is passive. 

We live in an existential age.  This is displayed in having little patience with delayed gratification, that is, a disinclination to spend sufficient time, energy and treasury on the front-end of problems, which is the problem defining stage.  We prefer to avoid complexity, which demands a great deal of front-end attention, settling on reacting to the consequences of our misspent actions in crisis management. 

We solve problems we believe we can solve, while complexity whirls around us unattended causing us to be stuck in forward inertia.  Metaphorically, this is like having the foot to the accelerator and brake at once burning up rubber and going nowhere.  It is why corruption happens.  What you see is not what you get.  That is what happened in the 1970s, 1980s, and 1990s, and is a clear and present danger in the twenty-first century. 

We are committed to circular linear logic, cause-effect cyclic resolution of problems, while ignoring the impact of deviant behavior, what I have called “Six Silent Killers” (1998).  Deviant behavior is as invisible in the organization as social termites are in the woodwork.  Moral leadership eradicates this by listening and positive intervention.

Nothing changes without structural change.  Leadership, as I point out in “Corporate Sin” (2000) has been reduced to leaderless leadership.  Compensation bonuses for successful crisis management have compounded the problem.  Crisis managers solve the problems they create.  Gridlock exists in institutions because of this narrow-mindedness.

There are two obvious problems here.  Management is not leadership.  Management deals with things to be managed.  Leadership deals with people to be led.  Leadership is a moral and morale problem because it deals with behavior.  When behavior is treated as a thing to control, problems fester, bubble and eventually burst, throwing everyone and everything into chaos.  This is what we have experienced since 2008 in the economic meltdown and the subsequent recession.  Economics is all about behavior.

If moral leadership could be established by only treating symptoms, there would be no point in this discussion.  The cause of our moral dilemma is a combination of ossified institutions and exploitation of them by special interests.  These institutions, as William Livingston points out, operate with infallibility, dogmatic authority, and impunity.  We see this with BP in the aftermath of the oilrig disaster in the Gulf of Mexico, the high bonuses on Wall Street after the malfeasance leading to the 2008 economic crash, and now “business as usual” after the pedophile scandal at Penn State.  Institutions return to operations as if these disturbances had not taken place.  If there is no self-evident correction to flagrant violation of social norms, no learning has taken place. 

The problem goes deeper.  We “are” the institutional system.  We cannot separate ourselves from it.  Our passivity, dependence and counterdependence on institutions are manifested in our inclination to comfort and complacency at the expense of contribution.  Stated another way, behavior is in the mind of the times, and a company, community and country get the behavior it deserves.  Pointing fingers is irrelevant and counterproductive

At this point, it would be fair for you to ask, what has this to do with me a high school senior?  I would suggest, “Everything!” 

Ordinary people make history while society treats some as extraordinary.  This is unfortunate.  It is safe to say nearly every person who rises to a position of trust, responsibility, accountability, and authority has every intention of doing the right thing.  The fact that so often they fail is indicative of the tenuous climate of moral leadership.  Not only is life hard, but also the temptation to deviate from social norms has never been greater.  Lord Acton was correct: Power corrupts and absolute power corrupts absolutely.

A CASE IN POINT

Imagine a person who came from humble circumstances and rose to a corporate executive position barely in his thirties with solid ethical training in his culture, but with an extreme level of trusting naiveté. 

Picture him in a foreign country forming a new company.  In the process, he discovers his American company CEO has taken an illegal “finder’s fee” in the equivalent of seven-figures (2011) from this venture, which is unreported in expense allocations, but hidden. 

At the same time, this young executive’s wife overdraws his personal account in this foreign bank to the tune of $40,000 (2011 evaluation).  Because of his executive status the bank allows this overdraft to grow to this figure before reporting it to him.

The managing director of the foreign operation, knows he is troubled with this “finder’s fee,” but sees a way to deal with it by offering to pay the overdraft, no questions asked, and to duplicate his already generous salary if he would forget about the “finder’s fee.” 

The venture is an extremely sensitive enterprise with no upside to a possible scandal involving three multinational firms.  The merger largely eliminates competition in the marketplace.  There are no anti-trust regulations in this foreign country with which to deal. 

What does this young man do?  He resigns, takes a two year sabbatical although he has a wife and four small children, and then goes back to school for six years to earn a Ph.D. in another discipline.

TIME LINE OVER THE PAST 80 YEARS

When Adolf Hitler came to power in Germany in 1933, the “Jewish Question” tested the moral leadership of the Roman Catholic Church.  Cardinal Pacelli was papal nuncio in Munich at the time.  He would later become Pope Pius XII.  In those two roles, historians suggest he was negligent in displaying moral leadership as the Holocaust took root (see “Hitler’s Pope” by John Cornwell 1999). 

Moral leadership involves ordinary people as well as leaders.  Some historians see the German people complicit in the Holocaust by their tacit behavior (see Hitler’s Willing Executioners by Daniel Jonah Goldhagen 1996).  Commission and omission is often a tangled web in moral dilemma.  We don’t know how we would act until faced with it.

Early in WWII, President Roosevelt knew of the Holocaust and was encouraged to bomb the railroads that linked to some 20,000 concentration camps, and at the same time, to accept Jewish refugees with due haste.  He did neither, and justified dragging his feet (see “Traitor to His Class” by H. W. Brands 2000) because Soviet Russia, America’s ally, was alleged to be involved in similar activities.

After WWII, the United States was the only viable industrial nation as bombing had leveled cities and factories across Europe, South East Asia and Japan.  Post WWII produced economic boom.  It also saw the corporate structure grow from four levels of management during the war to as many as twelve levels by the 1960s.  Moreover, top management went from earning 30 - 40 times what line workers earned in the 1950s and 1960s to earning several times that differential by the 1970s and 1980s.  Today, executive compensation has risen as high as 400 times what line workers earn.   

Shame and social norms controlled compensation in the 1950s and 1960s.  That shame diminished in the 1970s and 1980s to be nonexistent today. 

Arrogance and hubris, a belief in being invincible and untouchable, developed in CEOs and corporate Boards of Directors to become a law unto themselves.  CEO Charlie Wilson of General Motors said in the 1950s, “As GM goes so goes America.”  This mantra was challenged in the 1970s by a 25-year-old Lebanese American lawyer, Ralph Nader, who wrote a book that the GM Corvair was “Unsafe at Any Speed” (1959).

Rather then listen and probe the validity of the charge, GM set an army of private investigators on Nader to dig up dirt to neutralize him and his critical study of the automobile. 

Nader proved to be sparkling clean no matter how many attempts to impugn his moral character.  Eventually, this came to haunt GM as the press got wind of the harassment.  Nader became a celebrity of consumer rights, while Corvair production was terminated.

MORAL TURPITUDE ON STEROIDS

In the 1970s and 1980s and now being mirrored in the new century, accountants held no one accountable, governments abandoned their regulatory functions, media turned blatant cheaters into superstars, and a culture of self-righteous mendacity was allowed to flourish as long as the stock prices were high.

Jeff Miller, April 27, 2005

This is representative of what Jeff Miller is referring:

ENRON

Fortune Magazine (2000) “Enron Best Managed and Most Innovative Company”

Enron people indicted and sentenced to prison terms:

(1)   Jeffrey Skilling

(2)   Kenneth Lay

(3)   Andrew Fastow

(4)   Bernard Ebbers –WorldCom

(5)   Dennis Koslowski (TYCO)

(6)   Samuel Waksal (IMCLONE)

(7)   John Rigas – Adelphia

(8)   Martha Stewart

December 2, 2001

Enron files for bankruptcy, 4,000 employees fired, 20,000 other workers lose their jobs, $73 billion in stock value – gone!

What happened?  Enron used thousands of off-the-books entities to overstate corporate profits, understate corporate debts, and inflate Enron’s stock price.

WORLDCOM

(1)   $3.9 billion in expenses hidden

(2)   $3.3 billion in accounting irregularities

(3)   Company applied for bankruptcy

(4)   Market value lost: $100 billion

TYCO

(1)   Tax evasion

(2)   Evidence tampering

(3)   1,500 jobs lost

(4)   4,500 laid off

(5)   Down $86 billion in one year from peak share price

WALL STREET ANALYSTS

(1)   Investment banking firms biased research

(2)   10 firms fined $1.4 billion by SEC.  Among them:

Citigroup Salomon Smith Barney

            Credit Swisse Groups CSFB

Merrill Lynch

            Goldman Sachs

Morgan Stanley

The list goes on and on and on, and this is only during the last decades of the twentieth century.  Many of these same firms repeated the corrupt behavior leading to the economic collapse of 2008, including Fannie Mae and Freddie Mac.  Merrill Lynch even provided deceptive books when merging with Bank of America, while Lehman Brothers disappeared totally.  Bank of America is in a tenuous state today for this among other reasons.

Media financial superstars during the 1970s and 1980s such as Ivan Boesky and Michael Miliken went to prison, while Charles Keating never recovered from the Savings & Loan debacle after losing $200 million of investors’ money.  This seems like peanuts as companies and brokerage houses lose $ billions today for reckless abandon practices.

WHERE DOES THIS LEAVE US?

It proves moral leadership is personal and individual, corporal and organizational.  A community, company, state, and the nation are connected and inner connected morally and ethically in values.  Culture is an expression of values.  Values dictate behavior in terms of honesty, integrity, truth and trust. 

Technology and complexity have outstripped our grasp of our values and our common civility.  Moral leadership is needed to restore the balance.

We have gone through an eighty-year patch of moral decline as our values have eroded into the cynicism of:

(1)   “It’s not my job.”

(2)   “Just do it even if it is wrong.”

(3)   “It’s just business as usual.”

(4)   “Too big to fail.”

(5)   “Greed is good.”

(6)   “Let the stick and carrot extract maximum performance.”

(7)   “Do the job any which way to put the best face on it.”

(8)   “Man is rational so forget about feelings.”

(9)   “Fear sells, intimidation sells better.”

Dov Seidman has captured this theme in his “How” (2011).  This book presents a positive platform to deal with cynicism by reestablishing our core values. 

Seidman is a moral philosopher who has turned his attention to changing the mindset from:

(1)   Greed is good to good is good.

(2)   Man is rational to man is in search of meaning and happiness.

(3)   Just doing it to doing it right. 

David Brooks references scientists who show how important feelings are in behavior (see “The Social Animal” 2011).  William L. Livingston sees retreat from natural law at our peril.  Our intellectual, psychological, economic, and social behavior are subject to natural law.  Optimism and pessimism are not methods.  They are culture or values.

That is to say we are not happy campers.  We have lost our moral compass and our way.  Our values have a hole in them, and only we can individually and collectively repair that damage through moral leadership.  Books and ideas can provide incentive but we must define and frame the problem to exercise behavioral change.

Occupy Wall Street (OCW) is an eclectic, spontaneous eruption out of the angst with the status quo.  It would be unwise to dismiss it as deviancy but better to see it as an attempt to reestablish social norms beginning with one’s inalienable rights.     

A polarity has developed in America with little patience to understand why.  Seidman says OCW movement is all about meaning and a perceived sense of injustice.  Occupiers feel they played by the rules, got an education, did what was expected, but are not on track to participate in society, and they have done nothing wrong.

Onlookers may see OCW as angry when they are in anguish.  They want to play, to participate but cannot.  They see the institutional system as the culprit and they want to tear it down.  President Ronald Reagan went to Berlin, and said, “Mr. Gorbachev, tear down this wall!”  OCWs cry differs little with this.  David Brooks sees institutions ossified including the government.  OCWs see it the same way.

The problem with OCW is that they have no idea what they are for but only what they are against.  Should our institutional system collapse releasing freedom without a suitable alternative, then a moral, political and economic vacuum would result.  Seidman sees the new day requires a system of values based on principles and a workable framework guided by moral leadership.  That takes work and patience, but most of all a viable methodology.

Brooks, Seidman, Livingston and others are not suggesting a retreat from hard work, struggle, disappointment, failure, but resilience to deal with collapse and catastrophe.  The irony is that the one percent that the ninety-nine percent so despise, have displayed the work ethic, dealt with scarcity, demonstrated resilience in disaster, and kept economically afloat under the most trying circumstances.  Many have worked in factories, something few OCWs are likely to have experienced.  The ninety-nine percent haven’t avoided social norms (values), but have used them to soar.  The fact that these values are in tatters and need to be revised is the basic justification for the Occupy Wall Street movement.

A LOOK BACK TO SEE AHEAD

Immediately after WWII, people had the attitude I’m no better than anyone else and nobody is better than me.  They weren’t impressed with the celebrity or exhibitionist.  They would think “Reality Television” and the “Celebrity Culture” crass and wasteful.  They wouldn’t brand themselves with body billboards of tattoos to declare their identity or to establish inclusion.  They would be embarrassed by such a display as few scarred their bodies in that manner.  Nor were they into displaying or broadcasting themselves.  They would find it hard to fathom why tens of thousands wanted to appear on “American Idol” to become famous; being famous would not have occurred to them.

In 1950, a Gallup Poll asked young people if they thought they were a very important person: 12 percent said they thought they were.

In 2005, Gallup asked the same question of young people: 80 percent said they were.

In a recent Time magazine article, people were asked if they considered themselves in the top 1% of earners: 19% claimed they were.

“Who we really are” has gone from being taken for granted six decades ago, to what Christopher Lasch calls “a narcissistic preoccupation with the self.”  A child born into the world is demanding, feels it is the center of the universe that everything revolves around it, that nothing is more important than its demands.  In a strange way, this juvenility has become society’s norm.  Few people want to grow old and therefore to grow up.  They desire pleasure without pain, immediate gratification, while retreating from guilt and embracing anxiety.  They personify the Test for Narcissism:

(1)   I’m a very impressive person.

(2)   I like to show off for other people.

(3)   I can manipulate people to fulfill my needs and demands.

Studies show test results for narcissism have increased 30 percent since 1990.

Likewise, executive compensation in 1950 was 43 percent of the Gross Domestic Product (GDP).  In 2005, it ballooned to 143 percent of GDP. 

1950 executives would be ashamed to ask for compensation more than 30 to 40 times that of the lowest paid person in operation as it was against the prevailing social norms.  Today, in 2011, top executives and Wall Street CEOs demand compensation packages in excess of $20 million per year. 

Corruption was rampant in the 1970s to 1990s, long before the economic meltdown of 2008 and the crash on Wall Street.  Inside trading and circumventing the law became common practice as outlined above.

At the same time, there was a communications breakdown and cultural polarization. 

(1)   In the 1950s, people in positions of trust and power recognized they had an imperfect grasp of reality that their opinions were weak or only partially right, and therefore needed the input of different views to compensate for possible error.  FDR, during his first administration (1933 – 1937) in the midst of the Great Depression, tried countless ideas to move the nation economically forward, many generated by adversaries.  He never actually uncovered the key, as WWII lifted the American economy out of its economic doldrums.

(2)   The Nixon administration, believing it had the absolute solution to Vietnam and the national economy, hunkered down against mounting protests, treating those who disagreed as part of its “enemies list.”  Watergate followed.  True believers thought anything goes that stood in the way.

Unfortunately, the problem cannot be made exclusively a government problem.  People retired now in their seventies will have put into the system, on average, $150,000 to cover the cost of social and medical benefits, but will take out, on average, $450,000 in their lifetime.  We don’t want to be reminded of this, or to have these benefits reduced.  We just don’t want to pay for them.  It is a “Catch 22.”

Dov Seidman points out when people are looking to blame they should keep in mind, “We now live in a corporate theatre, and we ought not to shout, fire!” 

The challenge of moral leadership is therefore caught in a moral dilemma.  We all want to continue with all the benefits that accrue to our society, but we don’t want to pay for them.  We want elected officials to be miracle workers, when they are only citizens like ourselves, and have no more leverage than that provided by what we are willing to do.

Consequently, many retreat into optimism no matter how pessimistic the climate.  Those that exploit us depend on this.  There is evidence we have lost our capacity to struggle, believing we can somehow get to where we want to go without hard work, pain, failure, inadequacy or self-doubt.  History suggests we are wrong.

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Note: “A Look Back To See Ahead” (2007) by the author covers this segment in some detail.