Hail to the Shareholder-in-Chief
This article was originally published in MarketWatch on January 20, 2017.
President-elect Donald Trump knows one job — business owner and chief shareholder. He does not have experience in either government or governance, leaving him ethically inexperienced and immature. Many say Trump doesn’t know what he is doing as he makes cabinet appointments and plays cat and mouse over his business entanglements.
He can only know what life experience has taught him. Trump studies laws, fines and punishments, and makes decisions accordingly. This is ethical fading — losing sight of when a decision is really about what is right or wrong versus how much it will cost you — and well-studied by today’s behavioral ethicists.
This is a reality of the American way of doing business. Compliance, not ethics, rules the day. Look at the emphasis on reducing fines when infractions are discovered, compared to behaving in a way that doesn’t incur fines in the first place. See how many corporate counsels are schooled in the federal sentencing guidelines, but can’t end unethical practices in their companies.
Ironically, and unfortunately, Trump illustrates why it is so important that leaders represent the correct interests their formal role demands of them. Put simply, leaders need to play their position. When a person is CEO, she is measured against mission and goals. The same person serving in a corporate board seat, for-profit or not, has different obligations and tasks — for starters, decisions are made collectively, not by individuals, and the interests are those of the entity itself, not the management team.
Trump has been a CEO. He is used to being measured against a bottom line, not his ability to play well with others. Trump lacks experience gathered in boardrooms or legislatures — the ability to reach reasoned decisions collectively and identify and support common interests, not personal ones.
Trump acts like a proprietor of his own business. This is what America elected. He is playing the only position he knows. Trump’s early moves remind us that ethics and compliance are different goals. Businesspeople, regulators, and legislators have allowed compliance to substitute for ethics so that many can’t tell the difference between them. Trump’s actions make such differences clearer.
Trump ran on his claim that he gets things done, and argues that he has a mandate to apply such knowledge to running the country. If he does, we are going to learn that the best business decisions are not always the most ethical ones. We will learn the hard way, since too many people we think of as leaders have not been playing position. Congress is a prime example of leadership that struggles to identify and support common interests over personal ones.
Trump is exploiting Congress’s faulty lawmaking at every turn. While campaigning, he noted that he used “the system,” meaning the tax code, to his advantage. Since his election, he is testing whether Congress will use the powers they have to provide checks and balances to the executive branch. Rex Tillerson’s appointment as secretary of state might well be Trump’s canary in the coal mine of congressional response to business conflicts of interest. Will Congress do its job on Tillerson and Trump’s other cabinet nominations?
Anyone who has done a turn in corporate roles north of middle management recognizes that Trump used classic business executive moves assembling his cabinet. C-suite veterans have seen that when a corporate division head complains about another part of the business he may find himself in charge of it — think of Rick Perry running the Energy Department.
In large companies, moving executives into positions where they have little or no applied experience, in order to develop and test their leadership skills, is common practice — like Ben Carson running HUD, or philanthropist Betsy DeVos running the Department of Education.
Except that such risky choices don’t always work. During my time in corporate America, nonprofit management and even corporate governance, I received such assignments. If I improved things on my watch, I say now that I was more lucky than good. Experienced, mature leaders increase the odds of better outcomes.
Trump’s actions help us see that many people in leadership roles either don’t understand their responsibilities, or have not acted on them. They are not playing their positions and as a result, fail to provide ethical leadership where it’s most needed.
Ann Skeet is the director of the Leadership Ethics program at the Markkula Center for Applied Ethics at Santa Clara University. Views are her own.
(AP Photo/Evan Vucci, File)