July 19, 2012

Penn State Lesson: Today’s Cover-Up was Yesterday’s Opportunity

The most damaging portion of former FBI Director Louis Freeh’s comprehensive report on the Pennsylvania State pedophilia scandal is his conclusion that four senior university officials concealed football coach Jerry Sandusky’s child abuse from 1998 to 2011, even from its board of trustees, because they wanted “to avoid the consequences of bad publicity.”

In so doing, these officials—including legendary head football coach Joe Paterno and President Graham Spanier—placed their own reputations ahead of the harm that Sandusky did to young boys for the next 14 years.

Ironically, had Penn State turned Sandusky over to legal authorities in 1998, the public would have viewed its actions as protecting the victims, thereby enhancing the University’s reputation. Instead, these men caused grave damage to a great university while allowing Sandusky free reign to destroy lives.

Sadly, the Penn State situation is not unique. Consider these other cases:

  1. Had President Richard Nixon acknowledged his role in the Watergate scandals, he could have saved his presidency and his legacy.
  2. Had the hierarchy of the Roman Catholic Church acknowledged its pedophilia scandals, it would have protected victims and its moral authority.
  3. Had President Bill Clinton admitted his relationship with Monica Lewinsky, the scandal would have subsided, enabling him to focus on his pro-growth policies to balance the budget and create jobs; instead, he had to fend off impeachment.
  4. Had Martha Stewart and Rajat Gupta admitted their roles in insider trading, they could have plea bargained, moved past their ethical lapses, and possibly avoided prison time.
  5. Had Best Buy founder Richard Schulze not covered up CEO Brian Dunn’s improprieties, he could have retained Best Buy’s reputation for sound values (and his own).

Contrast these actions with JPMorgan CEO Jamie Dimon, who took immediate responsibility for his firm’s recent trading losses, calling them “stupid and egregious.” While Dimon has taken considerable heat during the past month, his reputation as a “truth teller” remains intact. Eventually, JPMorgan will be restored and corrective actions put in place to mitigate future risks.

The deeper question raised by these examples is this: What causes leaders to cover up inappropriate actions instead of acknowledging them immediately?

Many leaders strive for such a high degree of perfection that they are unwilling to admit mistakes. They feel tremendous external pressure to be perfect, but in reality they are far more successful when they areauthentic. Were they to think rationally and consult with others about what to do, they would see it is better to acknowledge the truth, no matter how painful, because the truth will surface eventually. More importantly, they can prevent further harm to the victims. While leaders may rationalize that a cover-up protects the interests of their organizations, the damage of one typically harms their institutions far more than the direct admission of a mistake.

The Greatest Generation, venerated for placing stewardship and institutional trust ahead of self-interest, contrasts starkly with those in this generation of leaders who believe that putting self-interest first is acceptable. The cardinal responsibility of leaders is to always put their organizations first. As leaders become increasingly successful, their reputations soar and they begin to think they have to be perfect, contributing to their inability to acknowledge mistakes. Or they conflate their interests with the institution, thinking “I am the institution.”

In doing so, they head for a fall—often taking their organizations down with them. Meanwhile, the public loses trust in them, and everyone associated with the organization gets hurt. This problem is compounded when many leaders fail, further alienating the public.

Reversing this loss of trust will require a concerted effort to develop a new generation of responsible leaders. No longer can leaders be chosen strictly for their abilities. In the future they must also be selected for their sense of institutional responsibility, based on their performance under stressful conditions. They must be bound by a sound governance system and constraints that require them to acknowledge their responsibilities to their organizations.

Developing this new leadership generation will require programs that focus on their inner sense of responsibility, their integrity and purpose in leading, and accepting themselves as imperfect human beings striving to do their best to help their organizations. An integral part of their development is gaining the self-confidence to acknowledge mistakes and make their actions transparent. Many leaders fear showing their vulnerabilities, but actually gain power and respect in being authentic.

Improving leadership development and selection won’t prevent all failures, but it will go a long way toward minimizing them and restoring trust in our leaders.