Corporate Structure and Governance

Reflecting on recent corporate failures, Banking and other industry, the charges of accounting fraud make me think of the current environment and how improvements in management structure could help mitigate some occurrences. Considering the enormity of the impact that finance has on the economy within all industries, there appears to be more tolerance for ethical lapses and sole autonomous leaders. Current incentives have encouraged immediate results at almost any cost. The end result in these cases has been the enrichment of the executive class in the short-term, growing societal inequality, and corporate failures endured by the rest of the employees in the longer-term.

Some failures that come to mind include Enron, WorldCom, Lehman, and AIG. While the causes of failure are quite different among various industries, banking has a greater economic impact in terms of asset losses. Moreover, the reasons for failure among the other industries differ dramatically and in a 2004 paper, McKinsey and Company suggested changes that would improve corporate governance. The report is entitled “Investor perspectives on corporate governance – a rapidly evolving story” and lists 6 themes of importance:

1. Rapid extension of worldwide governance codes;

2. Increased focus on board professionalism;

3. Selective redesign of corporate leadership roles;

4. Re-assessment of corporate reporting needs;

5. More intensive external scrutiny of governance; and

6. Increased attention to corporations’ impact on society.

An addendum to the McKinsey list, or even within, I propose a greater check/separation of the CEO-CFO relationship. The CFO would also report to the Board of Directors through the Audit Committee to minimize the possible influence to alter the appropriate reporting of performance results and financial/strategic risks. This organizational structure is no different than the Matrix Management structure used by most large corporations usually at mid- to low-level management and can be applied at the Executive level. The BOD’s Audit Committee would serve as a steering council to ensure effective financial reporting recognition of activity and risks in addition to improved strategic decision making. However, no corporate hierarchical, structural change will matter if no one knows the true value or risk of the assets on the books (mortgage backed securities).

Current State of the Union?

Here are a few excerpts from American Theocracy by Kevin Phillips, a former Republican Strategist, published in 2006. I find his assessments compelling and insightful into the current political protesting and outcries.

In Fundamentalisms Observed, Marty and Appleby had explained the “family resemblances” between the different strong religions around the world. To begin with, “Fundamentalisms arise in times of crisis, real or perceived. The sense of change may be keyed to oppressive and threatening social, economic or political conditions, but the ensuing crisis is perceived as a crisis of identity by those who fear extinction as a people.”

Ch 6, The United States in a Dixie Cup. P205.

Bruce Lawrence emphasized five symptoms of fundamentalism. Among them were a predilection to impose God’s will – the one true faith – on other peoples, an intolerance of dissent, and a central reliance on errant scripture for ideology and authority. These, too, seemed characteristic of the post-September 11 White House.

Charles Kimball identified five principal perverse fundamentalist tendencies: (1) claiming absolute truth (when “people presume to know God, abuse sacred texts and propagate their particular versions”); (2) seizing upon an “ideal time,” as in claims for imminent cataclysms or fast-approaching end times; (3) fostering blind obedience; (4) using ends to justify means (as deaths or acceptance of collateral damage); and (5) pursuing “holy war” as in Crusades (and to some extent the 1991 Gulf War).

Ch 6, The United States in a Dixie Cup. P205.

The Southern Baptist Convention, as we have seen, is regarded by some as more or less the unofficial state church in Dixie… Moreover, since the 1990s the SBC’s moderate-liberal opposition faction has criticized the dominant conservatives for getting too close to Washington and soft-pedaling the church’s historic commitment to separation of church and state.

Ch 6, The United States in a Dixie Cup. P213.

The SBC, Mormon, and Lutheran churches are the three Protestant denominations in the United States with the sort of strong regional preeminence that in itself breeds a powerful clerical closeness to everyday community governance and political authority. It is in their core strongholds … that U.S. churches have their highest ratios of adherence. Community pressure and conformity would be substantial.

Ch 6, The United States in a Dixie Cup. P214.

A cultural adjunct to these ambitions, end-times theory and literature, with its audience of fifty to one hundred million Americans, emerged as a big business in the United States during the 1990s, turning dozens of fundamentalist and charismatic preachers into multimillionaires, thanks to their best selling books, video, televised sermons and Bible hours, TV stations, and broadcast networks. Not surprisingly, most are ardent supporters of tax cuts and reduced economic regulation, as their faithful flocks concentrate on morality, salvation, biblical guidance, a possible rapture, and the countdown to Christ’s return. These believing constituencies, in turn, want more of their “government” – over whatever time may be left – to come from religious institutions…

Ch 6, The United States in a Dixie Cup. P217.

Judgments and Character

What was your first impression upon seeing the photo?


Are you uncomfortable seeing this?


Is it considered art or an expression of a taboo worthy of an art museum?


A threat to cultural heritage?


Would it matter if the ethnicities were opposite?


How about two women? Two men?


What do you think about me for posting this?


Would this photo make you more or less inclined to purchase the music?


The photo is of Joss Stone from her CD Introducing Joss Stone.

Many are probably already familiar with her and her work, but for those that are not, do you know who the executive producers on the album are? The world renowned songwriter of one of my favorite songs on the CD? The guitarist on many of the songs?


The answers to any of these questions provide insight into how we see and understand the world around us. The CD was released in 2007 and I am upset that I only just recently purchasing it because, in my opinion, it is her best release yet.

Pictures create powerful images in the brain and can promote powerful symbols. The fact that we now have a bi-racial President of the U.S. strongly identified by the African-American community has impact. Would it have made a difference if the president was not married to another African-American? Much of the perspective on this momentous American occasion is built upon the struggle for inclusion as is the history of the country. It is evidenced in the social and religious structures of the society. Most of all the social organizations of which people spend a big portion of their lives affiliated, particularly Fraternities and Sororities, are based upon ethnicity and self-identification.

Within the African-American community, the election of a Black President has been profoundly inspiring and encouraging for unlimited aspirations. It has also been the rallying point to strengthen the black family to improve the poverty conditions experienced by many. This means the acceptance of responsibility by the black man as the precursor for community improvement. This, however, does not recognize other condition variables impacting outcome nor that adjusting for such other factors, outcomes can be explained across many communities in the U.S.

In the book Before the Mayflower, Lerone Bennett, Jr. states that during slavery in the South, the plantation owners would not allow “poor whites” to be seen by the slaves. They were relocated out of the site of the plantation allowing the psychological indoctrination of the dominance and supremacy of the class of plantation owners. Given this beginning, it is not inconceivable that this structure of separation and exclusion is reinforced through the use of the evolved social organizations. These types of organizational structures also make communication very efficient and secretive. With today’s GPS satellite and telecommunication technologies, messages can be sent to the entire group and supporters with lightning speed identifying those not keeping with the group norms. There is historical evidence of how far some in power will go to reinforce or confirm a belief (The Tuskegee Experiment).

I have no intention to belittle the social and racial progress that has been made in this country. In fact, I intend to promote its continuation in the face of  to contradict those who will use this historical achievement as political fodder to end policies beneficial to the excluded and underrepresented. Some may use the historical event as confirmation of the separate group structure and as a basis for career success. However, until we can see the photo and think of it as history and it reflects images of representative government, corporate structure, and a global society, we are not there yet.

Conservatism, Innovation, and Diversity: Management Lexicon Oxymoron

I have throughout my career been exposed to many companies that have defined the organization as a conservative company. This designation at times has perplexed me for those are some of the same companies that depend upon new ideas to stay ahead of the competition. Merriam-Webster defines conservative and conservatism as follows:

con•ser•va•tive - \kən-ˈsər-və-tiv\ adj.
1: PRESERVATIVE 2 a: of or relating to a philosophy of conservatism
3 a: tending or disposed to maintain existing views, conditions, or institutions: TRADITIONAL b: marked by moderation or caution (a conservative estimate) c: marked by or relating to traditional norms of taste, elegance, style, or manners.

con•ser•va•tism - \kən-ˈsər-və-ˌti-zəm\ noun
2 a: disposition in politics to preserve what is established b: a political philosophy based on tradition and social stability, stressing established institutions, and preferring gradual development to abrupt change ; specifically : such a philosophy calling for lower taxes, limited government regulation of business and investing, a strong national defense, and individual financial responsibility for personal needs (as retirement income or health-care coverage)3: the tendency to prefer an existing or traditional situation to change.

Literally based upon the definition, these companies are stating that they are committed to the historical authority structure and do not welcome challenges to the established corporate culture and business model. It is not necessary for a company to define itself as conservative based upon its decision-making because the fundamental role of business is to manage risk while ensuring its existence as a going concern. The conservative identification is more about the political affiliation and nature of the leadership than anything else.

For companies in an industry that has not had to change since its initial discovery, I can understand this conservative posture. For example, companies in industries producing commodities and natural resources have had very little incentive to change other than to improve yield and efficiency. The principal methods to remove resources from the earth have not changed. Other industries such as computer technology and consumer goods thrive on new discovery and innovation limited only by the human imagination. Value to these organizations is truly its employee base of creativity and innovation. This is completely opposite of an organization maintaining its existing views or conditions (conservative definition 3a.).

So, at this point my question would be - Does a conservative company value diversity? My idea of diversity goes beyond identity politics of gender and ethnicity although these factors are important and included. I would also add experiences, class, education, and orientation. Many of these companies are directed and managed by men due to the historical early laws of the land excluding others from participating and prospering within this economic structure. In an effort to participate, the excluded groups attempted assimilation by adopting the conservative philosophy to the extent possible for a limited overall prosperity. This conformance is counter to the individual added value of experience and culture to maintain the existing status quo. Ideas, innovation, and value get lost in the conformance.

The premise of Diversity is that all of humanity has value and should be included throughout all levels of society and organizations for enhanced prospective and performance. The oxymoron is a company committed to its conservative traditions touting diversity to prevent being a political outlier. When employees do not feel valued, they can quickly become competitors to those intransigent organizations unwilling to recognize the contributions within its human resources and unable to modify or expand a business model to accommodate a game changing idea.

The Great Debate

During the early days of freedom for Black Americans and the end of slavery after the Civil War, there was an intellectual discussion regarding the path to prosperity. On the one side of the debate was Booker T. Washington arguing greater training in a trade or skill for the newly found free people. This position was supported by the work of George Washington Carver and his multiple scientific discoveries of peanut uses. The other side of the debate was delivered by W.E. B. Du Bois with, in part, the argument of the Talented Tenth to lead the way. The Talented Tenth was defined as the liberally educated, intellectual elite to lead the way to societal change for the benefit of the masses.

Understand that this debate was based upon the segregation and oppression of Black Americans during those early years. As a country we have thankfully passed through this terribly painful history; however, I would like to look at a simplified version of this debate extrapolated and applied to the current, greater U.S. society.

We are experiencing according to some experts the greatest financial and economic collapse in history. So how do we proceed? The current U.S. government planned policies include educating the population to a proportion greater than experienced after WWII to each man/woman according to his/her skill. The plan is to make education available and affordable at all levels (from technical trade to the Ivies). Generally, I wholeheartedly support this initiative. In a speech I gave in New Orleans many years ago I had reached a similar conclusion stating that wherever your position in the linear intellectual spectrum of the debate, contribute! For the progress of us all – Contribute!

The current economic situation in America has enlightened a blind spot in this conversation for the path going forward. The failures can largely be attributed to the collaboration and collusion of the Talented Tenth (Ivy League educated traders, financiers, managers, and think tank rule-makers). When leaders of the country, her assets, and the rules are all working to implement an ideology that has no empathy for those toiling “in the trenches” creating economic value without sharing the benefits, there is a problem. The lesson is that those in power are not always right nor do the right thing.

In a Democratic society empathy must always be taken into consideration in rulemaking. So, how does the public decipher these qualities from candidates asking for support to represent them? Forgoing the “system of riches” and becoming a community organizer is a good place to start along with the personal freedom allowing a person to determine their path no matter the method.