There is no substitute for a culture of integrity in organizations. Compliance alone with the law is not enough. History shows that those who make a practice of skating close to the edge always wind up going over the line. A higher bar of ethics performance is necessary. That bar needs to be set and monitored in the boardroom.  ~J. Richard Finlay writing in The Globe and Mail.

Sound governance is not some abstract ideal or utopian pipe dream. Nor does it occur by accident or through sudden outbreaks of altruism. It happens when leaders lead with integrity, when directors actually direct and when stakeholders demand the highest level of ethics and accountability.  ~ J. Richard Finlay in testimony before the Standing Committee on Banking, Commerce and the Economy, Senate of Canada.

The Finlay Centre for Corporate & Public Governance is the longest continuously cited voice on modern governance standards. Our work over the course of four decades helped to build the new paradigm of ethics and accountability by which many corporations and public institutions are judged today.

The Finlay Centre was founded by J. Richard Finlay, one of the world’s most prescient voices for sound boardroom practices, sanity in CEO pay and the ethical responsibilities of trusted leaders. He coined the term stakeholder capitalism in the 1980s.

We pioneered the attributes of environmental responsibility, social purposefulness and successful governance decades before the arrival of ESG. Today we are trying to rebuild the trust that many dubious ESG practices have shattered. 


We were the first to predict seismic boardroom flashpoints and downfalls and played key roles in regulatory milestones and reforms.

We’re working to advance the agenda of the new boardroom and public institution of today: diversity at the table; ethics that shine through a culture of integrity; the next chapter in stakeholder capitalism; and leadership that stands as an unrelenting champion for all stakeholders.

Our landmark work in creating what we called a culture of integrity and the ethical practices of trusted organizations has been praised, recognized and replicated around the world.


Our rich institutional memory, combined with a record of innovative thinking for tomorrow’s challenges, provide umatached resources to corporate and public sector players.

Trust is the asset that is unseen until it is shattered.  When crisis hits, we know a thing or two about how to rebuild trust— especially in turbulent times.

We’re still one of the world’s most recognized voices on CEO pay and the role of boards as compensation credibility gatekeepers. Somebody has to be.


Finally, President Obama has decided to change the tone of the West Wing.  Rahm Emanuel, whom we predicted last December would leave before the end of the year, has been sent packing back to Chicago.  His leadership for the White House saw a bewildering loss of political capital, an alienation of the party base and deadlock with the Republicans.

Not all can be laid at the feet of Mr. Emanuel.  But when you have a reform-minded president determined to break new ground in the manner Mr. Obama was, you need a conciliating and stabilizing influence in the West Wing, not a confrontational, profane street fighter. Mr. Emanuel was the wrong man for the job.  It may or may not have been his fault.  It was Mr. Obama’s choice.  He will not get another chance to make it right if it is a second underperforming and uninspired choice that he selects to lead the staff of the White House.  Only the president will be left to blame and it will be too late then to make much of a difference.

Return of the Pharaohs of Misjudgment

Conrad Black is back at his (temporary) winter home in Palm Beach after being freed on bail pending the outcome of his appeal.  His conservative friends in their College of Cardinals-type media conclaves appear to seek his beatification for what he has gone through. If he is found to have been wrongly convicted, as countless numbers are in Canada and the United States every year without a whisper of concern from Mr. Black’s supporters — or the tens of millions at their disposal to make that case, as Mr. Black has — he is entitled to all the redress available for one of the most terrible wrongs the state can perpetrate on a person.  But, as Stephen Bainbridge points out, there is still much of the dark earth about him that stands between Mr. Black and his final elevation to sainthood.

Richard Fuld was back before another committee attesting to the fundamental strength of Lehman Brothers, which went under for every conceivable reason, except, of course, the failure of its leaders.  Follow-up question: does the Financial Crisis Inquiry Commission realize that Lehman had a board of directors who  might shed some light on the calamity?  Fed chief Ben Bernanke was also back before the Commission, after the Fed admitted, once again, that it misread the depth of the economic downturn in recent months.  A change in lyrics was also detected regarding Mr. Bernanke’s explanation as to why Lehman was not saved.  The self-serving music remains the same, however.  BP’s infamous blow out preventer made its way back to the surface; its corporate image is still submerged somewhere in an ocean of missteps and CEO blunders.  HP’s board is back in the news, and not in a good way.  It showed that you can spend tens of millions on a CEO and, for that lofty sum, still get a chief executive with a missing ethics gene.  The directors’ solution?  Spend tens of millions more to get rid of him in the face of the deception which the board claimed was the reason for his ousting.  Go figure. Canada saw a new Governor General appointed to represent the Queen as head of state.  It came on the sole recommendation of a prime minister whose Conservative Party holds a minority position in parliament.  It is a throwback to a time when most Canadians could not read or write and women did not have the vote.  Still, few Canadians seemed bothered by the quaint tradition. On the other hand, few parents teach the idea that any girl or boy can grow up to be GG someday.

President Obama is back to a freshly redecorated Oval Office, where he has hatched yet another stimulus package.  The new soft beige seating areas will provide a calming effect when yet lower approval ratings are published.  As the distancing of the President from the electorate becomes more pronounced, and the loudening canons of Republican victory signal their approach with each day, one can almost hear the mournful reprise of a love no longer to be: “We’ll always have health care.”

However timeless the Pyramids of Giza and the inscrutability of the Great Sphinx remain, they cannot for more than a few weeks distract our attention from the greater monuments of folly and misjudgment that today’s Pharaohs of business and government routinely create.

They will be pleased to know that, along with all of them, we are back, too.

It’s Morning in a Healthier America

The day health care reform and universal coverage moved from a noble dream to the law of the land.

Every few decades, America takes a momentous turn in reaffirming what it stands for and how it treats its citizens.  This happened with the enactment of Social Security in the 1930s and with Medicare and the civil rights legislation of the 1960s.  At 11:57 am EDT today, history will record that another milestone was reached with the signing into law of the Affordable Health Care for America Act by President Barack Obama.

As they rallied to support those landmark moments in the past, each generation of leaders and legislators faced doubts and objections.  But they overcame them because they believed they were engaged in an historic act of faith that would make the world better for their children and grandchildren.  Those who stood in their places over the past months in the White House and in the Democratic aisles of Congress were driven by a similar sense of mission and faith.  This was their contribution to creating a more perfect union, where the first word in that magisterial phrase from the Declaration of Independence, “life, liberty and the pursuit of happiness,” now takes on new hope for millions.   For many legislators, this law will be the hallmark of their careers; everything else will be epilogue.  It is this day they will long remember and frequently recount to their children and grandchildren, as King Harry’s bruised but happy band did on each St. Crispin’s day.

Making health care affordable and accessible for all Americans is likely the most costly enterprise ever embarked upon in the nation’s history — except for the costliness of doing nothing.  It would likely have needed Democratic control of both Houses of Congress, and the White House, for such a plan to have become law, as with previous groundbreaking social legislation under FDR and Lyndon Johnson.  That alignment of political planets does not happen often in America and it may not again for some time, given an increasingly acerbic public mood.  Mr. Obama and his party’s leadership in Congress rightly seized upon a perhaps short-lived window of opportunity, which may in some ways account for an occasionally clumsy process and content in the bill that was not exactly exemplary.  But these imperfections, and those that may arise in the future, should not detract meaningfully from the importance of what has eluded so many presidents and politicians of both parties over a century of efforts.  Nor should it dampen the joy of the moment when health care reform and universal coverage moved from a noble dream to the law of the land.

Lawmakers of this era, including President Obama, may accomplish many things in the years to come.  But few will compare with that symbolized by this day, when, like the giants who preceded them, they ventured upon the bolder path in America’s ever upward moving journey, and gave to the future the promise of a brighter tomorrow.

The Dodge Rahm

The recent flap involving the White House chief of staff is another sign that President Obama needs a Paul Volcker of the bipartisan world – – someone whose stature will command instant respect, who can act as a trusted counselor to the President.   It may be one of his last chances to avoid an even more costly episode of unintended acceleration into political disaster.

There is a universal law of organizations, especially political organizations, which some of us who have counseled them over the years have come to observe.  When the trusted advisor begins to attract the kind of press that puts the boss in a bad light, someone has a problem.  And it’s usually not the boss –unless he lets it.  The latest in a growing list of issues involving White House chief of staff Rahm Emanuel came to light in a column by Washington Post political reporter Dana Milbank,  who made the point that “Obama’s first year fell apart in large part because he didn’t follow his chief of staff’s advice on crucial matters.”

Since it is Mr. Emanuel who was supposed to be giving the advice, not many besides he would know whether it was taken or not.   In any event, this is not something that is going to assist a White House that is more and more looking like a victim of unintended acceleration into disaster, along with a Democratic Party that seems unable to steer away from calamity.  As both the real and symbolic head of the Democratic Party, Mr. Obama needs to think about the picture that is emerging:  The Senate loss in Massachusetts. The Governor’s scandal in Albany.  The demise of Ways and Means chairman Charles Rangel (D-15th NY).  The forced resignation of first-term representative Eric Massa (D-29th NY).   A slow motion train wreck involving health care reform also features prominently on the list.  Cap and trade seems almost buried and gone.  The President’s approval ratings have plunged.  The popularity of his party is foretelling of a November blowout.  Apart from spending trillions in bailout packages to deal with problems that were not of Mr. Obama’s making, there is pitifully little to show on the domestic side for the first year of his term.  On the foreign file, certain presidential trips, like the one to China, seem not to have been worth the cost of the fuel.   Of course, not every problem can be laid at the door of the Oval Office.  But issues, especially the ones that deal with tricky concepts of ethics and competency like those noted above, can quickly morph in the minds of voters, leaving the occupant of the White House often tarred with the blame.  This is especially true during a time of increasing anti-incumbency attitudes and mounting populist sentiment.

As White House chief of staff, a post which many contend is something akin to the role of an unelected prime minister, Mr. Emanuel is not exactly a remote bystander in all of this.  Our own views on the subject of his performance and probable early exit were set out late last year.  One gets the impression that the growing litany of failures and setbacks is prompting some rewriting of history or at least an unbecoming distancing from the decisions themselves.  The fact remains that no chief of staff in any administration worthy of respect would be caught with these kinds of comments connected to him.  He has not denied the thrust of Mr. Milbank’s column.  It’s another red flag that should not be ignored by a president who has already missed some important ones over the past year.

A positive step for Mr. Obama at this point would be to re-think the merits of the Chicago school he brought with him into the White House.  When other presidents have been faced with a loss of momentum, they have called upon respected senior adults to help with turning things around.  David Gergen comes to mind in that role for President Clinton.  Howard Baker was brought in to bring direction to the Reagan White House after the messy arms-for-hostages debacle.  Mr. Obama could use his own version of such a trusted advisor in the West Wing now.

What is needed is a Paul Volcker of the bipartisan political world — someone whose stature will command instant respect inside and outside the White House.  The purpose would not be to replace Mr. Emanuel, but it would be the kind of person who could take over that function if it became necessary.  With a little luck, he or she even might have developed an ability to restrain their predilection for profanities, bone-headed comments and flights of ego, all of which are becoming too closely tied to the staff of the Obama White House.

Coming into office, Mr. Obama wisely made much of his desire not to become tied to pre-scripted viewpoints or inside-the-beltway thinking.  He understood that advice from outside was an important tool for testing the accuracy of the political compass and maintaining a healthy perspective.   More of that thinking, both from Mr. Obama and from those who advise him, is needed now if an even more costly episode of unintended acceleration into political disaster is to be avoided.

The President has plenty of challenges and problems hitting him from outside.  He does not need them coming from the office next door.

Turbo Populism Arrives in Washington — and Anywhere Else it Wants

Wise leaders know that it is never sensible to underestimate either the forces of nature or the power of public outrage. Washington and Wall Street are about to receive an important lesson in history.

The winds of change can blow in both directions.  One year ago, they propelled Barack Obama into the White House on a current of support from every quarter of society. Today, the President finds himself pushing against mounting gales of outrage and discontent, leaving his popularity diminished and his agenda for reform in doubt.  This is his first, but likely not his last, major encounter with what we have dubbed turbo populism.  Fueled by the costs of two far-off wars, record deficits, unprecedented levels of CEO pay and historic rates of unemployment, what lies at the heart of this movement is a revolt over the power and perks of entrenched interests, whether they are found in Washington or on Wall Street.  By the time it ends, more than just Mr. Obama and a very unimpressive candidate who lost her party’s bid to retain the seat held by Massachusetts Democrat Edward M. Kennedy and before that, John F. Kennedy, will have experienced some very Rolaids days.

Abuses on Wall Street and excesses on the part of its key players which led to the worst financial crisis in generations are also featured actors on this stage of seething discontent.  The sight of bankers salivating over bigger bonuses has not gone over well among ordinary Americans, who continue to struggle with jobs losses, spiraling home foreclosures and a crushing national debt.  Mr. Obama’s stalwart support for Ben Bernanke as head of the Fed and Timothy Geithner as Treasury Secretary, both now facing major questions about their roles in the bank bailout and whether they are too close to Wall Street to serve the needs of Main Street, have placed the President in an awkward position for one who campaigned so vigorously on the promise of change.  Health care reform now seems to have been the victim of almost terminal mismanagement by the White House and by the Democratic leaders in Congress, who, in doling out deals to various senators in exchange for their votes, did exactly what Mr. Obama campaigned to change: the way Washington works.

Changing the way politics is done struck a populist chord on the campaign trail, where the forces of unease and the preponderant view that America was on the wrong track, gave momentum to Mr. Obama’s message.  But now, that same misdirected train has turned to face the White House and a political process that so many of its dissatisfied passengers still find intolerable.  What it seems many Americans, especially independent voting Americans, were banking on in Mr. Obama’s policies was that more hope would be focused on Main Street and less audacity would be displayed on Wall Street.

Over the past year, America and its admirers have witnessed the spectacle of business leaders who were paid hundreds of millions of dollars admitting that they did not see the coming storm clouds of their own creation.  But they still kept the hundreds of millions.  Men who were once trumpeted as financial titans and graced the covers of countless genuflecting magazines have been humbled in a way not seen since the 1930s.  Former Citigroup CEO Sandy Weill recently confessed that he always thought the company, whose stock continues to languish in a $3.50 shell of its nearly $50 glory, was “impregnable.”  He was apparently stunned by the extent of Citi’s meltdown.  “I felt that we should be able to weather that storm,” Mr. Weill recently told the New York Times.  No amount of miscalculation, however, prevented Mr. Weill from pulling in more than half a billion dollars in the late 1990s and early 2000s, or being appointed to the board of the New York Federal Reserve in 2001.  Icons like General Motors and Chrysler have become financial wards of the state.  Their descent to that status did not prevent those at the top from pulling in tens of millions in compensation, however.  On the tenth anniversary of what was then billed as the deal of the decade, the merger of AOL and Time Warner is now seen as the marriage from hell, costing tens of billions in shareholder value, lost earnings and vanished jobs.  Only last week,  three CEOs of leading Wall Street firms admitted to a Congressional inquiry that they were as surprised as anyone when the credit crisis struck in 2008.  The trio of Jamie Dimon (JPMorgan Chase), Lloyd Blankfein (Goldman Sachs) and John Mack (Morgan Stanley) were not compensated like anyone, however. Collectively, they were paid more than $300 million over the past five years.

Leaders often fail to heed the growing signs of change and disaffection when they are fond of basking in the reflection of their own egos instead of looking at where reality commonly resides.

The betrayal of elites, or at least the promise of their much-vaunted magic, both in business and in the political arena, the scale of the abuses and excesses of the few and the costs they inflicted on the many, the pervasiveness of leaders who place the claims of special interests over cries for public good – these are among the backdrafts and jet streams that have unleashed the winds of turbo populism.  And like the concept of stakeholder capitalism, a term we coined more than 20 years ago to mark the growing dissatisfaction of institutional investors and pension funds with the self-aggrandizement of management and the somnolent tendencies of boards, this latest wave of populist outrage will be coming soon to a boardroom near you.

Sometimes, change comes in battalions, as it did with the campus upheavals of the 1970s and the swelling protests demanding an end to the war in Vietnam.  Other times, it arrives clothed in the moral authority of a single man, as it did with Mahatma Gandhi and Rev. Martin Luther King Jr.  Occasionally, it will come in the form of a Tea Party or just one too many credit card holders fed up with paying interest rates of 30 percent when the bank is getting money courtesy of the Fed at zero percent.

Wise leaders, as history has shown, do not wait for a call from Western Union before they get the message the people are trying to send.  They know that it is never sensible to underestimate either the forces of nature or the power of public outrage.  Both have the occasional tendency to sweep aside pillars of man-made glory and monuments to entrenched interests as if they were mere castles of sand.

Welcome to the era of turbo populism.

Conrad Black’s Race to the Bottom

By attacking American presidential leadership under Barack Obama and invoking a racial slur in the process, Mr. Black continues to show who and what he is.

Conrad M. Black, famous for vituperative excess, renouncing his Canadian citizenship to become a British Lord, disdain for shareholders whom he viewed as a cheap source of capital and, more recently, his sojourn as Prisoner Number 18330-424 at the Coleman Correctional Facility in Florida, has made some year-end pronouncements on the future of the Untied States that are sure to gain attention.

In his regular column in Canada’s National Post, Mr. Black writes today:

For the first time in the history of the U.S. Presidency, Mr. Obama had to badger a foreign head of government to meet him (China’s premier Wen). Last year, shoes were thrown at the U.S. president. This year we had self-abasement before the Japanese Emperor and (unsuccessful) supplication to the Chinese. If this trend continues, by the end of this new decade, the U.S. president will be invited to international meetings as a shoe-shine boy.

Mr. Black begins the above paragraph with reference to President Obama and ends it by invoking the image of some future American president as a shoe-shine boy. Let’s brand this for what it is: an utterly disgraceful slur with a racial connotation that is being made in connection with the first African-American president in U.S. history.  It evokes images, long discredited, of an ugly past which have no place in the discourse of civilized people.

It is a stark reminder that Mr. Black is not a civilized man, but rather a crook who fleeced his own shareholders and perverted the course of justice.  In a normal world, we would not be reading what crooks have to say about American foreign policy or its justice system, or Canada’s for that matter.  The headlines of their thoughts would not blare across the top of editorial pages.

What happens at the National Post is anything but normal.  Mr. Black is accorded unique access to a significant, though disintegrating, piece of journalistic real estate in Canada, whose editors and publishers drift untroubled by the criminal proclivities of its op-ed columnist and prefer to portray him still wearing a business suit with not a hint disclosed to readers about his current forced confinement as a convicted felon.  The Post has been flirting with bankruptcy for some time.  It is part of the Asper media empire, which, in Canada, has become synonymous with financial folly on the grandest, indeed, almost Conrad Black-like, scale.  Sound judgment is the most underperforming asset in the company.  The Aspers do not just lose money; they hurl it out of their boardroom windows in bales.  Last month, their company experienced another ignominious fate which also parallels Black’s Hollinger:  Canwest  was delisted from the Toronto Stock Exchange (TSX).

The Post continues to hemorrhage to the point where it is unclear how much further it can go.  But by publishing such repugnant views, it is demonstrating that its ethical standards, like those of the felon whose voice it trumpets, have already passed the point of insolvency.