In a recent Wall Street Journal essay called “A Crisis of Ethic Proportions”, John C. Bogle (founder and former chief executive of the Vanguard Group of mutual funds) talks about increasing the expectation of behavior for business people.  In the course of the article he touches on two things that I think are quite important when looking at your organizations and, more generally, understanding the “mess” we are in economically.

 

Mr. Bogle’s main point is that we need to “establish a ‘fiduciary society’” to increase accountability at all levels of leadership, from managers/agents to the owners of the corporations they serve. By doing so, we can increase the level of trust people have in individuals and organizations to act with the same level of care towards our interests as they do when protecting their own interests.

 

As readers of my book know, I place a large emphasis on “trust” as a building block for ethical and high performing organizations, so I would see Mr. Bogle and raise him: every member of your organization – from the CEO to the clerk – has some level of fiduciary duty to act for the benefit of your stakeholders. The more organizations can instill a sense of fiduciary responsibility throughout their ranks, the better off the organization will be and the greater the benefits that will inure to the stakeholders – owners, employees and the rest. Maybe we will see the notion of fiduciary come through in corporate values in the near future.

Further, many organizations have established higher standards of behavior, similar to honor codes at universities, in order to create a competitive advantage and instill a deeper sense of accountability to stakeholders in their cultures. Closely tied with the vision/mission/values, these ideals are an aspirational, but effective, way to increase awareness around behaviors that will promote an ethical, high performing organization. It also allows employees throughout the organization to focus on building long-term relationships and value; increasing organizational and market loyalty; and ostracizing the “get rich quick” mindset that seems to be at the heart of much of the financial crisis.