Corporate Ethics Rule

"Executive liars on decline," declares a statement about the Liars Index. Yes, there really is such an index. It tracks the percentage of people misrepresenting their academic credentials when applying for executive positions.

According to Jude M. Werra and Associates, a Brookfield, WI, executive search firm that compiles the index semiannually from résumés it receives, data for the second half of 2002 indicate a decrease in such misrepresentations over the past two years. The rolling two-year average is now 13.71%, down from 18.5% in early 2001. The firm speculates candidates are being more honest because of recent media focus on the fabricated résumés and other deceitful acts of some corporate leaders.

Overshadowed by scarier events such as war and terrorism, news of corporate dishonesty and corruption isn't as prevalent these days. But it hasn't gone away completely; new allegations and follow-ups to previous scandals appear regularly. And the ripple effects on employees and investors of the companies taken down by their leaders will likely continue for years.

So it seems particularly appropriate for the new Baldrige Criteria for Performance Excellence to place an increased emphasis on ethics in leadership. Released in January, the 2003 criteria say senior leaders should serve as role models to the rest of their organizations. Questions Baldrige applicants must answer include how senior leaders create an environment that fosters and requires legal and ethical behavior and how the leaders address such governance matters as fiscal accountability and independence in audits.

Leadership does not just mean staying out of trouble. While the root cause of the past year's worst scandals lies in the behavior of CEOs and other top executives, the opposite is usually true, too. Genuine, long-term success and excellence almost always start at the top of an organization.

In profiles of Baldrige winners, the most common theme is that the senior leader drives the commitment to improvement. For example, executives at SSM Health Care, a 2002 winner and the first in the healthcare category, credit CEO Sister Mary Jean Ryan for starting the organization on its quality journey during her first days on the job in 1986 (see p. 42).

The key here is sustainability. Look at the list of past Baldrige winners (not to mention companies previously heralded for success with programs like Six Sigma), and you'll see some that later stumbled. Often the decline could be traced to a change in leadership; the CEO left the organization or altered his or her behavior. Which makes those of us who care about quality and ethics hope the Sister Ryans of the business world stick around, and the Dennis Kozlowskis and Kenneth Lays are more the exception than the rule.

Debbie Phillips-Donaldson

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