18 Jul 2012  Research & Ideas

Penn State Lesson: Today’s Cover-Up was Yesterday’s Opportunity

While leaders may rationalize that a cover-up protects the interests of their organizations, the inevitable damage harms their institutions far more than acknowledging a mistake, says professor Bill George.

 

The most damaging portion of former FBI Director Louis Freeh's comprehensive report on the Pennsylvania State pedophilia scandal is his conclusion that four senior university officials concealed football coach Jerry Sandusky's child abuse from 1998 to 2011, even from its board of trustees, because they wanted "to avoid the consequences of bad publicity."

"No longer can leaders be chosen strictly for their abilities"

In so doing, these officials—including legendary head football coach Joe Paterno and President Graham Spanier—placed their own reputations ahead of the harm that Sandusky did to young boys for the next 14 years.

Ironically, had Penn State turned Sandusky over to legal authorities in 1998, the public would have viewed its actions as protecting the victims, thereby enhancing the University's reputation. Instead, these men caused grave damage to a great university while allowing Sandusky free reign to destroy lives.

Sadly, the Penn State situation is not unique. Consider these other cases:

  1. Had President Richard Nixon acknowledged his role in the Watergate scandals, he could have saved his presidency and his legacy.
  2. Had the hierarchy of the Roman Catholic Church acknowledged its pedophilia scandals, it would have protected victims and its moral authority.
  3. Had President Bill Clinton admitted his relationship with Monica Lewinsky, the scandal would have subsided, enabling him to focus on his pro-growth policies to balance the budget and create jobs; instead, he had to fend off impeachment.
  4. Had Martha Stewart and Rajat Gupta admitted their roles in insider trading, they could have plea bargained, moved past their ethical lapses, and possibly avoided prison time.
  5. Had Best Buy founder Richard Schulze not covered up CEO Brian Dunn's improprieties, he could have retained Best Buy's reputation for sound values (and his own).

Contrast these actions with JPMorgan CEO Jamie Dimon, who took immediate responsibility for his firm's recent trading losses, calling them "stupid and egregious." While Dimon has taken considerable heat during the past month, his reputation as a "truth teller" remains intact. Eventually, JPMorgan will be restored and corrective actions put in place to mitigate future risks.

The deeper question raised by these examples is this: What causes leaders to cover up inappropriate actions instead of acknowledging them immediately?

Penn StateMany leaders strive for such a high degree of perfection that they are unwilling to admit mistakes. They feel tremendous external pressure to be perfect, but in reality they are far more successful when they are authentic. Were they to think rationally and consult with others about what to do, they would see it is better to acknowledge the truth, no matter how painful, because the truth will surface eventually. More importantly, they can prevent further harm to the victims. While leaders may rationalize that a cover-up protects the interests of their organizations, the damage of one typically harms their institutions far more than the direct admission of a mistake.

The Greatest Generation, venerated for placing stewardship and institutional trust ahead of self-interest, contrasts starkly with those in this generation of leaders who believe that putting self-interest first is acceptable. The cardinal responsibility of leaders is to always put their organizations first. As leaders become increasingly successful, their reputations soar and they begin to think they have to be perfect, contributing to their inability to acknowledge mistakes. Or they conflate their interests with the institution, thinking "I am the institution."

In doing so, they head for a fall—often taking their organizations down with them. Meanwhile, the public loses trust in them, and everyone associated with the organization gets hurt. This problem is compounded when many leaders fail, further alienating the public.

Reversing this loss of trust will require a concerted effort to develop a new generation of responsible leaders. No longer can leaders be chosen strictly for their abilities. In the future they must also be selected for their sense of institutional responsibility, based on their performance under stressful conditions. They must be bound by a sound governance system and constraints that require them to acknowledge their responsibilities to their organizations.

Developing this new leadership generation will require programs that focus on their inner sense of responsibility, their integrity and purpose in leading, and accepting themselves as imperfect human beings striving to do their best to help their organizations. An integral part of their development is gaining the self-confidence to acknowledge mistakes and make their actions transparent. Many leaders fear showing their vulnerabilities, but actually gain power and respect in being authentic.

Improving leadership development and selection won't prevent all failures, but it will go a long way toward minimizing them and restoring trust in our leaders.

Comments

    • Charles H. Green
    • CEO, Trusted Advisor Associates

    Absolutely, completely, right on target. Perfectly said. Thank you.

     
     
     
    • Fred J. Pane
    • Sr. Director, The Medicines Company

    Bill, you are right on with your comments. It is unfortunate that one of the qualities/strengths that a leader/people should have, Ethics, is not stressed more during interviews or in Corporate America or even politics. When people get into certain leadership positions, ethics goes out the window and as you mentioned, issues get covered up and then escalated, creating a bigger problem and ramifications against the company, politician, etc. Unless people are made to be accountable, you may not see changes. I have worked in healthcare for over 30 years and we had an Ethics Committee to address end of life issues, but not business issues.

     
     
     
    • Rob Houck
    • Partner, Eaton & Van Winkle

    Certainly in hindsight (even not in hindsight) these were terrible decisions made by PSU officials from many points of view. Why can't these people realize when the problem arises that it will not go away and will only get worse. It WILL come to light some day. Are these cases of "magical thinking"? Put this way, the decision to confront the problem should be easy. But somehow it is not. Or possibly there ARE some problems that can be ignored and the trick is to figure out which ones can and which can't. The Sandusky case was clearly one that could not go away. I address this in a non-ethical manner. I do not mean to imply that there is not a clear ethical position to take. Sadly we cannot expect ethics from many of our "leaders." So I stick to practicalities.

     
     
     
    • Anonymous

    When I first heard of the incident through the media I assumed it was some local rubes who saved the reputation of a famous man. When you read the Freeh report you see that the police ran this out to a point where they even brought in people from Harrisburgh to interview the boy and another boy who had a similar "hug" in the showers. In the original reports the DA mysteriously did not press charges, when in reality it was the belief of many that there was not a legal case that would hold up in court.

    What is missing in all of these reports is the context of who Jerry Sandusky was. I am not a PSU alum; however I did attend PSU's football camp that was run by Sandusky when I was in High School in the 80's. At the time I was a highly recruited player from Upstate NY where I had been recruited by most of the major schools in the East and Atlantic Coast. Of all the coaches I had met, none of them could hold a candle to Sandusky. Here was a guy who was leading the nastiest defense on one of the top teams in America, while running a foundation for disadvantaged kids, while fathering six adopted kids and countless foster children. In short, he embodied all that most of us hope to achieve in way of professional success, personal fulfilment, all while serving the community at large.

    What Mr. George should have written about with respect to this case was when does smoke become fire. We can look now and see the many signs that Joe Paterno missed that his friend was not right. I personally feel that right up until Joe Paterno was subpoenaed by the Grand Jury he never wanted to believe his amazing friend of 40+ years could ever harm a child, much less be the animal he turned out to be.

     
     
     
    • bill george
    • Professor, HBS

    Response to "Anonymous": Thanks for sharing your personal impressions of Sandusky. As for Paterno, denial is a very powerful force, esp. between friends. Corporate solution is to report the incident & investigate it thoroughly, and let the facts lead to the logical conclusions. Just interviewing the perpretrators never works as they always deny their actions. Penn State trustees did the right thing in hiring Louis Freeh to conduct the investigation.

     
     
     
    • Anonymous

    As a youngster I changed schools quite a bit as my father's career was constantly on the move. And I have attended six different colleges and universities over the years. In most of these cases, institutions, I have had interaction with an administrator, Dean, and/or Department Chair. These interactions ranged from procedural such as applying for an advanced class or participating in activities outside the normal coursework; to getting nominated for entry into an honor society or working as a tutor in a tutoring center.

    What I have observed, and this may be true in the corporate world as well, is that there is a certain feeling that the student (replace with appropriate subordinate) is a passing entity; there will always be more new faces to come along. And in a sports franchise this can be particularly true as an injured player simply becomes expendable. I wonder how much of a role this has to play in the thinking of someone in charge of a large organization. There is one student "making trouble" and they will pass on; one employee stirring up trouble and they will eventually go somewhere else so we can't be bothered. But this is usually more a matter that only one person in one hundred has the moral fortitude to make a stand and point out the problem that may exist in an organization. The superior/supervisor makes life difficult for this person to force them to move on; and magically there is no problem once the person has left.

     
     
     
    • Todd Goldberg
    • Exec Director, Amgen

    Prof George, thank you for your perspectives on the organizational failures at PSU. The inability to confront the truth and allow issues to fester into something worse (sadly) continues to undermine society's trust in leadership (even more contemporary to the PSU administration failure is the recent Peregrine Financial fraud). You raise as one of the causes the "me first" mindset of some of today's leaders. Psychologically, failure can be incredibly difficult to accept. The Wall Street Journal last week published an article about work done by a Stanford psychologist (Dweck) that revealed how some children who are told they are smart tend to give up on or avoid challenges that might undermine their own self-image of being smart. Children who demonstrate this self-preserving behavior could become the adults who are risk-averse, hide the truth, or avoid unpleasantness, all at extraordinary cost to themselves, others and orga nizations. Perhaps this is a generational byproduct of how post WWII children were raised? As you point out, organizations need to protect themselves from people with these tendencies. In the Peregrine Financial CEO's confession, he revealingly said, "I guess my ego was too big to admit failure. So I cheated." I wish it were easier for organizations to recognize how to develop and promote leaders who can confront reality, see failure as a learning experience, and have the humility to take accountability even if they are not personally involved in a challenging situation. There is no checklist for this.

     
     
     
    • Rob Houck
    • Partner, Eaton & Van Winkle

    I came back to this site to see what more I could learn. Often the reader postings are as thoughtful as the initial professor's work. No so, so far. I think there must be some groundrules (strictly practical, not necessarily ethical) to determine between problems that can be kicked down the road - as PSU officials wrongly thought Sandusky's behavior could be - and those that have to be dealt with, regardless of how much the executive would like to ignore them and just hope they go away or are never uncovered. In the PSU case, the decision makers must have thought there was a good possibility that the abused children would simply go away. Or there would be only one accuser who could be discredited. They apparently balanced that hope against killing or injuring the goose that was laying golden eggs, year after year. I do not suggest that this adds much to the discussion. I hope others will yet add some thoughful guidelines. We must a ll supply our own ethics. Incidentally, as damages awards go up and the legal system inadvertently adds to the accused list of defenses - the accuser (and his/her lawyer) just want financial gain. So the likelihood of justice being served decreases.

     
     
     
    • tvannest
    • Speaker-Consultant, Next Summit Enterprises

    Great post, Bill. One way to operationalize "values" and the alignment of self- and organization-interests is to teach about how we are shaped by our choices. Here's a link to a related post (more lessons from Paterno/PSU) that gets at key choices: http://www.lastwordonchange.com/blog/bid/77191/Lessons-from-Penn-State-Paterno-for-Organizational-Change

     
     
     
    • Laura M. Foote
    • Lecturer, Boston College

    While these leadership mistakes were in the realm of higher education, we also see examples in the corporate world of denial rather than taking responsibility.

    Sometimes there is a bias towards avoiding impact on the bottom line in the short term, but when reputation is at stake, a choice to avoid confronting the situation always backfires.

    How can we teach future business leaders to make the right choices in how they communicate and act in the face of an unfolding crisis?

    It might be useful to consider different teaching models. What we are doing now in most MBA programs, discussing cases where leaders made poor decisions, does not seem to be building the competency we need in our leaders.

     
     
     
    • Anonymous

    This appears to answer the question asked in the other recent HBS article "Why Is Trust So Hard To Achieve in Management". Simply stated, Trust, in all the examples given, was betrayed, and in my humple opinion, thought to be acceptable.

     
     
     
    • Bill George
    • Harvard Business School

    Reply to Rob Houck: Thanks for your thoughtful two posts . I think your observations are correct. In my experience leaders facing agonizing problems often go into denial, and do believe the problem will go away if they ignore it or cover it up. They also rationalize that this is the only time it has occurred, rather than assuming it is the tip of the iceberg of a much deeper problem. As you point out, this ultimately doesn't work. In fact, the problem spreads like a cancer that is ignored, and then becomes too large to resolve. In part, denial occurs because the individual (Paterno, in this case) is too proud and fearful of damaging his reputation. Ultimately, he pays a much greater price. Tragically, the harm being done to the victims is rarely considered, and is compounded many times over by the denial. In my book "7 Lessons for dealing with crisis," lesson #1 is "Face reality, starting with yourself." I like your Washington Post test. I also use this in the classroom. For all organizations, sunshine or transparency is the best solution. Bill

     
     
     
    • vinod k menon
    • chief marketing, elsteel ltd

    In your strive to achieve perfection you refuse to admit mistakes. Great thought ....wonderful article by Mr.Bill Goerge

     
     
     
    • Chris B

    Actually, Jamie Dimon initially tried denying the problem, calling it a "tempest in a teapot" until the issue was so large it could no longer be hidden. I worry that, at times, HBS aims to glorify it's highest profile alums rather than evaluating their actions in an intellectually honest way.

     
     
     
    • Anonymous

    Very right!

     
     
     
    • Barry

    Ironically, had Penn State turned Sandusky over to legal authorities in 1998

    Really, Really! This statement alone shows you do not have any idea about the situation. The POLICE and the DPW of PA were in charge of the complaint in 1998. PSU had NOTHING to do with it. The POLICE and DA decided not to pursue the matter any further. PA law prohibited PSU administrators other then Gary Shultz to know the details of the complaint.

    Now please update the article with a correction that you really do not know your facts.