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.

Toyota Exec Short on Specifics -and Anything Else that Might Help Customers

How the company planned to finally solve is massive safety problem was not made clear to Congress.   The culture and mentality that drove the automaker to its current crisis was.

If you ever wanted to see the dark side of global business and the pathetic face of its leadership, you would look no further than the testimony today by James E. Lentz, President of Toyota U.S., before the House Energy and Commerce Committee. He admitted the American operation is really a branch plant; all the key decisions about design and safety take place in Japan.  We made an observation about shortcomings in Toyota’s corporate structure in an earlier posting.

What is most astonishing, at a time when consumer confidence is already in short supply, is that Toyota’s top man in America refused to offer any assurances that the company had gotten to the bottom of the problems involving unintended acceleration and that the right fix was being made. Toyota has had not weeks, not months, but years to solve this problem.  Today was not the day to come before the American public and say the company is still searching for the answer.

Time and again, Mr. Lentz admitted that he did not know the specific answers to the questions posed by lawmakers.  What is most striking about his testimony is that he could not be bothered to check out the findings of Toyota’s highest profile crashes, some of which led to multiple deaths.  “I just don’t have those specifics” was how he responded in question after question.  When Rep. John Dingell (D-MI) asked Mr. Lentz when Toyota “first became aware of incidents of sudden acceleration in its vehicles sold in the U.S.,” his response was a jaw-dropping “I don’t know the answer to that.”  Not an impressive reply to the dean of the House of Representatives, who a competently briefed and prepared witness might have anticipated would have some hard-hitting questions, especially since he’s represented the 15th Congressional District in Michigan since 1955.  It would be difficult to imagine how someone just beginning their career at Toyota U.S. could have given a less inspiring performance than its current head.

Mr. Lentz testified that he was really a marketing and sales kind of guy.  That may be part of the problem.  It’s a little like Don Draper of Mad Men fame going before Congress to give testimony about sexual harassment in the workplace.

If this is the best Toyota can come up with at this time of maximum peril to its brand, the future of the company and the lives of its customers are in serious jeopardy.   Those of us who are long-time owners of Toyota and Lexus products might already have noticed that the company’s dealer network in North America long ago began to show signs of GM-like hubris.  It relegates its customers to a call center approach in dealing with problems, which generally begins with a not-so-subtle reminder that they don’t really matter that much in the scheme of such a successful global corporation.  Many Toyota customers are left to ask where exactly is the service premium you receive for paying a premium price over GM and Ford vehicles.  Some of us who are Lexus customers wonder the same thing, especially when it can take three weeks for a service appointment to be scheduled.  And at Lexus, you can still buy a car and never hear from the salesman again after taking delivery, which these days is a hard trick for even GM to pull off.

Mr. Lentz made an interesting comment in response to the Representative from the 9th Congressional District of Illinois, who also raised questions about Lexus acceleration problems and the treatment of those customers.  He said he was very disappointed to hear about how they had been handled, “especially on the Lexus side of the business.”  Toyota customers might find it a little unsettling that their lives and vehicle investments are somehow valued less than those of Lexus owners.

What the testimony today showed was that Toyota does not have an engineering issue.  The real problem is not in the car.  It’s in the outdated, outmoded and discredited culture and governance of a company headquartered half a world away.  We will have more on that later.

Outrage of the Week: Toyota’s Public Relations Disaster on Wheels

outrage 121.jpgYou would have needed an Olympic-style scorecard to keep track of all the changes made to Toyota’s current and potential recall programs.  What began as an issue involving – or so Toyota said – loose floor mats in some vehicles has morphed into a public relations nightmare caused by faulty gas pedals on Camrys, Avelons and other models, brake problems on Priuses, drive shaft hazards on Tacoma trucks and steering troubles on Corollas.

The company that consistently produced the best selling and most respected brands in the world showed itself to be the gang that couldn’t shoot straight.  Its Tokyo-based bosses have managed to antagonize the U.S. secretary of transportation, confuse millions of Toyota owners, force some drivers to tears on local news programs and become the predictable brunt of late night comedians. The North American operation of Toyota is clearly a branch plant of Japan, which is where key decisions are made and western style corporate governance is uncommon. The fellow the company trotted out in Japan who was wearing a surgical mask as he apologized for the mess was a fitting symbol for just how inept the company has been in handling this crisis.

It took dozens of years and millions of customer transactions to place Toyota in what has been a preeminent position in the global car industry.  But it takes a special kind of genius to allow all that to unravel and have the wheels fall off customer confidence in a matter of a few weeks.

Take a bow, Mr. Toyoda, your company has let millions of loyal customers down and in so doing has become our choice for the Outrage of the Week.