It wasn’t so long ago—just 10 years ago, in fact—that we were all trying to understand what happened with the high-profile failures of WorldCom and Enron. While both of those companies collapsed, and a great number of innocent people suffered lasting damage as a result, the true failure there was not only financial, but from a lack of true of leadership. It is apparent now that strong and ethical corporate leadership and notions of personal responsibility simply vanished beneath a wave of sustained corporate greed.
To me, the real question is this: what have we learned as a nation and as a professional business community about the importance of ethics and corporate governance? Sure, we have taken some steps, perhaps most notably the much-discussed and debated Sarbanes-Oxley legislation. While Sarbanes-Oxley was largely passed in response to the Enron scandal, and its attempt to provide additional oversight to corporate accounting (in part by establishing a Public Company Accounting Oversight Board to oversee auditing professionals at publicly traded companies), the recent banking scandals and financial meltdown of a few years ago have confirmed what many already suspected: that the law does not go far enough.
I’d take it a step further and suggest that no regulation could be 100% effective; and all the regulation in the world doesn’t make up for ethical individual leadership. In that sense, one of the most important pieces of Sarbanes-Oxley was Section 404, which requires company decision-makers to evaluate and personally sign off on in-house oversight and internal controls. While that certainly doesn’t eliminate the problem of morally bankrupt or unethical leadership, it does put the spotlight where it belongs: on the folks in charge. In the end it comes back to people: It’s important to demonstrate that quality behavior starts at the top.
If corporate leaders bully, make excuses, and establish a culture of profitability at all costs, we end up with Enron and WorldCom. But if business leaders provide principled, ethical guidance and show true leadership and character, they will set a positive example that is built on the real bottom line, and build the foundation for sustained growth and success.