Conflict and Corporate Fraud By Lynne Eisaguirre

Congress is busy passing new laws in response to the latest news about

corporate misdeeds. Is this really the best solution to the problem of corporate

fraud?

I would suggest the answer is no. There will never be enough laws or

enforcement money to prevent all of these kinds of corporate malfeasance. Instead,

we should encourage — indeed insist — that corporations incubate and encourage

everyone in the organization to speak up when they witness corporate fraud. The

reality is that with every one of our recent corporate scandals, someone inside

knew what the company was doing was wrong, and yet their opinions were

squelched.

The idea of encouraging whistle blowers is enough to make most corporate

executives shake in his or her boots, but anyone who did would take a giant step

forward in encouraging the public’s confidence in the stock market and corporate

America — trust that’s essential for our economy to recover and thrive. Any

organization that does welcome diverse opinions would reap other benefits as well.

It may be helpful to you and others in your organization as you do the hard

work of learning to welcome a different opinion if you understand just how critical

this essential skill is for the future of your organization. Sally Helgesen, author of

found in her study that the ability to create open communication where people felt

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comfortable giving and receiving feedback at all levels of the organization was one

of the key predictors of organizational success.

One of my clients, Jane started her own successful telecommunications

company based on this very premise. A long distance service “reseller,” Jane’s

company was one of a score of such companies that made their business on the

idea of buying long distance services from the larger telecommunications

companies, bundling them in unique ways, and reselling them to individuals. Both

Jane and her staff cam from various members of the old Bell system.

Accustomed to large, hierarchical organizations, Jane and her staff wanted a

change. “We wanted to look like the telecommunications network we were selling.

We devised a complex web — like a matrix, really — of interlocking people and

departments. We wanted everyone to have access to anyone they needed in the

organization. We wanted everyone’s thoughts and ideas so we wound up with the

best solutions to our problems.

One of Jane’s first problems was how to design the offices. Breaking with

years of Bell tradition, she put her own office out in the open with the other

staffers. She toiled at a desk, no walls or even a cube to separate her from her

employees. Anyone could talk to her at any time about any concerns. Jane had no

secretary and no set schedule. Although this sometimes resulted in a line

surrounding her desk, she welcomed the open atmosphere the design created.

“Spontaneous meetings erupted around my desk,” Jane told me. “We finally

put a couch next to it so people could participate without fainting from fatigue.”

The informal system had another benefit: Rumors were nipped in the bug because

anyone who wanted to participate in the initial discussion could. There were no

secret meetings behind closed doors. Jane’s power as a leader came from the

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extraordinary openness she was able to demonstrate. Creative solutions flowed out

of the chaos surrounding Jane’s desk.

Jane also instituted an electronic bulletin board where anyone could post

questions about what the company was doing and why. No queries were off-limits.

Postings ranged from, “Why don’t we have a better brand of coffee?” to “Why is

our stock down this morning?” Jane or one of her assistants answered these queries

within 48 hours or let the questioner know when the information would be

available.

Perhaps most important, Jane shaped her successful company by listening

and asking the right questions. When anyone would come to her with an issue, her

response was always, “What do you think we should do?” or “What are your

team’s ideas for solving that problem?” No one doubted that Jane was anxious to

seek out their opinion or to be confronted about any issue.

In part, because of the depth of inclusion and confrontability Jane was able

to create; her company survived the recent telecommunications shakedown that

plunged many other companies into bankruptcy. When the market tightened, Jane

simply solicited the best ideas of all of her employees. Instead of the layoffs other

companies had to stomach, Jane asked her people what they should do. When

someone suggested offering voluntary three-month sabbaticals to those who

wanted them, Jane agreed. Around 15 percent of her employees took advantage of

her offer over the next two years — enough to get the company over their financial

hump.

Similarly, Southwest Airlines has always created an inclusive culture where

everyone from a vice president to a baggage handler knew they could offer

suggestions and feedback. Everyone refers to Herb Kelleher as “Herb,” and he

seems to know all the employees by their first names. Once, after I gave a speech

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to their executives, I attempted to walk across the crowded hall with Herb to the

buffet table. He stopped so often to ask how someone’s divorce was going or to

inquire about a new baby that I gave up in starvation and fetched lunch by myself.

The new head of Southwest, Coleen Barrett, is well known for her encyclopedic

knowledge of employee birthdays, anniversaries, and work preferences.

When new employees start at Southwest, they are given a list of 100

questions to answer about the company. Everyone’s door — right up to Herb’s — is

open to these questioners. From an employee’s first moment at Southwest, they

know they can approach anyone with questions or concerns.

What is the benefit of such extraordinary access? When other airlines were

forced to lay off employees after the September 11 attacks on the World Trade

Center and the Pentagon, Southwest instead assured employees that they would

stand firm and asked employees to suggest any cost-saving ideas they may have.

The strategy worked and Southwest flew through the storm.

Another one of my clients, a manufacturing company, has always avoided

unions in an industry that’s largely unionized. How do they manage this feat, I

once asked the vice president of employee relations? “If you don’t want a union,”

he responded, “act as if you already have one.”

Indeed, the company recently fought off an attempted organizing effort by

stepping up its normally frantic schedule of town meetings, management/labor

baseball games, and CEO informal lunches with employees — all emphasizing

access, access, access. The would-be union lost again, gaining only 10 percent of

the worker’s votes. In addition, profits were up for the third year in a row, running

against the industry norm.

Likewise, a large school district in our state was fraught with dissension

from teacher unrest, parent unhappiness, and student agitation. When the new

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superintendent took over, she announced that she was delegating most of her dayto-

day duties to one of her deputies. Instead, she would spend her first year

“listening and learning.” She got an earful.

Teachers want more pay and more support. Students wanted open campuses

and smoking lounges. Parents wanted higher education standards. Voters wanted

better administration accountability. The superintendent realized that there was

only one way to achieve everyone’s objectives — a new bond issue to raise money.

The only problem? The past three bonds issued had failed miserably.

Continuing to listen to the suggestions from the various stakeholders, she

told the voters that she had adopted one citizen’s groups’ gusty idea: The district

would receive new money from voters only if they managed to achieve specific

educational objectives. No gains, no money. The bond issue passed.

Creating a confrontable organization doesn’t happen overnight, and the

process can challenge some of our most cherished assumptions about the way

things should be. Yet as these examples illustrate, welcoming a different opinion

can lead to good fights as well as increased success.

Copyright © 2002 REV 2008. No part of this material may be reproduced without written permission from Lynne

Eisaguirre, Workplaces That Work, 303-216-1020, Lynne@workplacesthatwork.com,

www.workplacesthatwork.com