There is a saying that love makes the world go round.  While there may be truth in that, it is actually money that drives things.  Organizations recognize that and try to use the “accelerator and brake” method to keep their respective bus on the road while they load it up with lots of money.  Sometimes their efforts don’t succeed.

Organizations try to hire and retain the best people.  They establish levels of authority so that each persons knows what they can do on their own and what matters must have the approval of higher levels.  At the top of each organization is a board of directors whose job is provide overall governance.  Their consent is the last word in organizational authority.

Goldman Sachs is a premiere financial firm.  Its storied past parallels America’s success.  Yet since the financial sector meltdown in 2007/8, we have learned deeply troubling practices that Goldman employed apparently under Board acquiescence.

Goldman actively participated in repackaging mortgage backed securities which they had reason to know were of highly questionable value.  Goldman traded these securities to pension plans, investors, and other banks advertised as high quality securities.  This deception was not enough.  Goldman also used its own money to bet that these securities it had just sold as high value, would fail.  Goldman was ready to collect on both sides of the deal.  Where was the board to counsel against this?

The coach is Joe Paterno.  He was fired as head football coach several days after a grand jury report had indicted two more senior Pennsylvania State University administrators (but not Joe) over a child sex abuse investigation involving a former PSU football defensive coach, Jerry Sandusky.  The firing smacked of knee jerk reaction and lacked any appearance of due process.  This issue is not whether Paterno should have been asked to relinquish his coaching role.  Rather it is the abrupt firing which teaches the students nothing, and in itself appears like a cover up.

Penn State is now paying the price for this reaction.  Alumni are up in arms about the Board’s handling and questioning whether they should continue donating to the school.  That has gotten Penn State officials attention and they are traveling around Pennsylvania holding town hall type meetings with alumni.

Paterno was 84 years old and should have been asked to retire long ago.  While he was a great coach, his continued employment blocked his job from other well qualified candidates and generated an inbred staff.  This was a job for the schools administrators and in their reluctance, it was the job of the board to insist upon certain reasonable age limits for key staff.  In short the board had failed.

The Monsignor is about Monsignor William J Lynn of the Philadelphia Catholic diocese.  He has been accused of trying to cover up cases of child sexual abuse (not doing it himself) under a Pennsylvania statue for child endangerment.  Lynn’s lawyers are attempting to avoid trial by appealing directly to the state supreme court.  What type of governance practice would condone avoiding civil review when the charge is cover up?

The Catholic Church is a case of when you are in a hole and want to get out, stop digging.  It is not a slam dunk that Monsignor Lynn will be found guilty of the law.  While he is assuredly responsible for reassigning priests who were guilty of sexual abuse, that might be just a moral failing.  Instead the practice of circling the wagons continues.

About Jack Lewis

Jack Lewis is a retired, former senior executive of a large chemical company. He has lived twice in Europe, has traveled extensively to Asia, and is the author of 'Vision, Values, and Results', a how-to business book. He began posting to his blog, Regaining the Center, in 2007. Jack firmly believes in progressive values, and finds his way to the center by balancing these values with practical solutions supported by data.

• Web
|
• More Posts (122)