Authentic Governance: Aligning Personal Governance with Corporate Governance

253 Pages·2014·3.17 MB·English

by  Hubert Rampersad

Management for Professionals
Hubert Rampersad
Saleh Hussain
Authentic
Governance
Aligning Personal Governance
with Corporate Governance
Management for Professionals
For further volumes:
http://www.springer.com/series/10101

Hubert Rampersad (cid:129) Saleh Hussain
Authentic Governance
Aligning Personal Governance
with Corporate Governance
Hubert Rampersad, Ph.D. Saleh Hussain, MBA
Business School of the Americas Saleh Hussain Consultancy
and TPS International, Inc. Manama, Bahrain
Miami Beach, Florida, USA
ISSN 2192-8096 ISSN 2192-810X (electronic)
ISBN 978-3-319-03112-5 ISBN 978-3-319-03113-2 (eBook)
DOI 10.1007/978-3-319-03113-2
Springer Cham Heidelberg New York Dordrecht London
Library of Congress Control Number: 2013956619
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Pref ace
“Integrity is not a commodity. It’s the most rare and precious
of personal attributes. It is the core of a person’s — and a
company’s — reputation”.
—John Stumpf, Chairman and CEO Wells Fargo
Over the past years, we have heard and read plenty about how Boards of Directors
should behave more responsibly in the light of corporate governance. Despite all
these efforts, many implementations of corporate governance provide no protection
from potentially catastrophic ethical failures.
The situation at JPMorgan Chase, the world’s largest bank, early this year is an
interesting case with regard to corporate governance. Government investigators
have recently found that JPMorgan Chase devised “manipulative schemes” that
transformed “money-losing power plants into powerful profi t centers” and that one
of its most senior executives gave “false and misleading statements” under oath.
JPMorgan executives also ignored a series of alarms that went off as the bank’s
Chief Investment Offi ce breached one risk limit after another. Rather than ratchet
back the risk, JPMorgan personnel reengineered the risk controls to silence the
alarms. In a previously undisclosed case, prosecutors examined whether JPMorgan
failed to fully alert authorities to suspicions about Bernard Madoff. And nearly a
year after reporting a multibillion-dollar trading loss, JPMorgan did face a criminal
inquiry over whether it lied to investors and regulators about the risky wagers.
T his case pinpoints that JPMorgan’s corporate governance code and exhaustive
regulations do not provide adequate protection. A recent study conducted by
Labaton Sucharow, a New York City law fi rm, suggested that Wall Street still has a
shaky grip on its ethical compass. Despite the fi nancial changes enacted after the
2008 fi nancial crisis, improper and even illegal activity is perceived as common
among traders, brokers, portfolio managers, and bankers. Some other examples are
the following: (a) US Treasury estimated that if Apple had more honestly assessed
v
vi Preface
what percentage of its profi ts were generated by its US operations, it would have
owed $2.4 billion more in federal taxes last year; (b) Wal-Mart’s often criticized
treatment of employees as a commodity and its sometimes inhuman business ethics;
and (c) Chevron has been accused of tax evasion as well a number of environmental
infractions in several countries and hiring military force for use on native peoples.
All above-mentioned organizations have comprehensive corporate governance
codes in place, implemented by the left brain Big Four accountancy fi rms (PwC,
KPMG, Ernst & Young, and Deloitte), which apparently are not working at all.
Harvard Business School professor Bill George outlined in his article W hy
Leaders Lose Their Way why powerful and talented leaders often misbehave and
how they lose their moral bearings, such as Hewlett-Packard CEO Mark Hurd who
resigned for submitting false expense reports concerning his relationship with a
contractor; US Senator John Ensign (R-NV) who resigned after covering up an
extramarital affair with monetary payoffs; and Lee B. Farkas, former Chairman of
giant mortgage lender Taylor, Bean & Whitaker, who was found guilty for his role
in one of the largest bank fraud schemes in American history. According to Bill
George, they can avoid these pitfalls by devoting themselves to personal leadership
development that cultivates their inner compass, based on self-refl ection. This pro-
cess requires thought and introspection because many people get into leadership
roles in response to their ego needs.
Unethical behavior of top executives, poor ethical leadership, lack of integrity,
mismanagement, fraud, corruption, and violating corporate governance codes are
the main contributors towards the above-mentioned scandals. We urgently need a
sustainable and innovative solution to this global epidemic.
Most companies’ approaches to corporate governance are extremely formal,
bureaucratic, cosmetic, not holistic, and not authentic and therefore fail to address
above-mentioned shortcomings. It is time that we become aware that corporate gov-
ernance cannot be controlled effectively with formal and exhaustive rules, regula-
tions, guidelines, and procedures only. It is about decency and personal integrity,
and this must be cultivated from within. As demonstrated by the examples given
above, traditional corporate governance codes provide no protection from poten-
tially catastrophic ethical failures. Company integrity must be a continuous infor-
mal learning process, based on alignment with yourself and alignment with your
company. This ethical process must be promoted and communicated within the
whole company to all stakeholders consistently. In this way, ethical behavior will
become a routine in the whole organization, and leaders and employees will gain
more understanding about their responsibility with regard to ethical behavior. They
will understand that it is their responsibility to act ethically, on duty as well as off
duty. This is a more sustainable, comprehensive, and holistic approach to ethics and
social responsibility.
S ustainable corporate governance starts with personal leadership development,
based on self-refl ection and introspection and embedding personal values in the
mind of the Chairman, President, CEO, CFO, managers, and employees and coach-
ing them to refl ect on these values honestly. In this way, good corporate
Preface vii
governance will be characterized by trust, credibility, transparency, personal and
social responsibility, open communication, and a continuous learning process,
embedded in an ethical culture. This cultural shift will also have a positive impact
throughout society.
Against this background, we propose an organic and holistic approach to corpo-
rate governance, by integrating personal values and integrity into one overall
authentic governance framework, in which formal corporate regulations and personal
values mutually reinforce each other. This new theory h as been borne out of our
leadership experiences in the corporate world. In this theory, we have defi ned gov-
ernance in holistic and authentic terms, namely the systematic process of continu-
ous, gradual, and routine improvement, steering, and learning that lead to sustainable
high performance and ethical excellence.
T his groundbreaking authentic governance method differs from traditional cor-
porate governance concepts, which focus mainly on bureaucratic regulations, pro-
cedures, and policies and which insuffi ciently consider the importance of
authenticity, holistic approach, and alignment with human capital, needed to achieve
ethical corporate excellence. Our innovative corporate governance approach is com-
bined with powerful tools to deliver peak performance and to create a stable basis
for trustworthiness, credibility, and personal and corporate responsibility. It places
more emphasis on understanding yourself and the needs of others, meeting those
needs while staying true to your personal and corporate values, improving your
personal integrity continuously, making ethics a way of life, and aligning these with
formal corporate regulations, procedures, and guidelines. This integrated gover-
nance system, developed and globally trademarked by Dr. Hubert Rampersad, will
create a paradigm shift in organizations and will work as a catalyst to accelerate the
transformation of the personnel into committed and ethical executives and
employees.
Based on this new concept Dr. Rampersad has established the Authentic
Governance Institute (AGI) in the United States (www.authenticgovernance.org),
which is the global not-for-profi t membership association for the authentic gover-
nance profession. AGI’s worldwide advocacy for authentic governance is reinforced
by our globally recognized standards, certifi cation and licensee programs for
consultants and organizations, extensive academic programs, eLearning programs,
chapters of practice in 50 countries, and professional development opportunities.
Become a member and see what AGI can offer you at every stage of your authentic
governance career. Discover more about what our AGI membership is and what
benefi ts it offers, and choose the type of membership that’s best for you. As an AGI
member, you gain exclusive access to AGI publications and our global standards,
networking options with our global chapters and online communities of practice,
and career opportunities. AGI also offers a comprehensive authentic governance
certifi cation program for accountants, fi nancial consultants, corporate governance
practitioners and organizations globally. You will demonstrate your expertise
and your commitment to the authentic governance profession with an AGI
certifi cation.
viii Preface
This book is an essential reading for executives and managers in all industries,
not only in the banking business. We therefore welcome the global publication of
this book by Springer USA. Thanks are due to Abdullah Wallace for his editorial
assistance. We also would like to express our thanks to our families, who have
inspired and stimulated us to take this challenge to write this important book. We
hope you will enjoy this new governance concept as much as we love bringing it to
you. Your feedback is welcome via [email protected] and
[email protected].
Miami Beach , Florida , USA Prof. Hubert Rampersad , Ph.D.
Chairman, Authentic Governance Institute
Manama , Bahrain Saleh Hussain , MBA
Contents
1 Introduction ............................................................................................. 1
2 Authentic Governance Model ................................................................ 5
Part I Authentic Personal Governance
3 Personal Ambition................................................................................... 13
Personal Mission ....................................................................................... 24
Personal Vision ......................................................................................... 25
Personal Key Roles ................................................................................... 26
4 Personal Balanced Scorecard ................................................................. 29
Personal Critical Success Factors ............................................................. 31
Personal Objectives ................................................................................... 31
Personal Performance Measures ............................................................... 32
Personal Targets ........................................................................................ 32
Personal Improvement Actions ................................................................. 32
5 Personal Governance .............................................................................. 39
Plan ........................................................................................................... 39
Deploy ....................................................................................................... 40
Act ............................................................................................................. 41
Challenge .................................................................................................. 42
6 Alignment with Yourself ......................................................................... 47
Aligning Personal and Corporate Ambition with Ethics .......................... 51
ix