“In most cases, it is not a company-wide problem that causes an ethical issue, it is the activity of a few individuals,” explains Bart Schwartz, chairman and CEO of SolutionPoint International, LLC, and recent speaker at the ILLINOIS Leighton Lecture on Ethics and Leadership.
Five years ago HP endured a public spying scandal set around the actions of its board of directors that garnered the attention of the California Attorney General and federal government.
HP hired Schwartz as an independent monitor to review its business practices and fix any related problems. The California Attorney General agreed to forgo immediate prosecution in favor of Schwartz’s monitoring.
The problem, which led to the scandal, was due to the illegal activities of an independent security firm employed by HP and not its leadership.
Schwartz is one of a small number of people in the world who can sometimes help companies fix internal problems and avoid costly and public litigation when governments and companies agree that an independent monitor is the answer.
As a frequent court appointed monitor for high profile cases including BP, Deutsche Bank AG, Hewlett-Packard, Merkin-Madoff, and others, Schwartz brought the 8th annual Leighton Lecture an amazing repertoire of experiences he used to weight his many insightful points.
When a company accepts monitoring, they agree to allow someone like Schwartz and his team to delve into its most sensitive business processes, learning everything about financials, human resources, and internal and external relationships; anything deemed relevant by the monitor. The information is used to help the company correct operations in lieu of court action.
For most companies, monitoring represents a less costly and less publicly damaging alternative that serves to realign problem areas with government expectations.
The federal government benefits from monitoring that addresses the root of a problem and can motivate an entire industry to change its practices.
In sharing his insights, Schwartz explained to the audience that his role is not a means of punishment but of corrective action that meets a need effectively and efficiently; “The [monitoring] process works best when everyone buys into the process.”
Schwartz acknowledged the great responsibility that comes with someone in his position but says it is very engaging and rewarding work.
Assignments typically last from 1 to 3 years, an aspect that companies appreciate and one that keeps him sharp. Schwartz is trained as an attorney but his knowledge of business, finance, human behavior and overall company leadership as well as current events and more impact his work.
Schwartz ended his presentation on a note about the importance of the people who he works with and his own effectiveness. Schwartz shared that one of the most important parts of being an effective monitor was gaining and holding people’s confidence; “If employees have confidence in the monitoring process, then they respect the outcomes more.” Gaining and holding the respect of the diversity of people Schwartz engages requires exercising a strong ethical compass and regularly communicating with them.
Many students who attended the lecture saw connections to their own classroom experiences in Schwartz’s comments. Concepts of professional responsibility have been introduced to all University of Illinois freshmen in the College of Business students through BUS 101 each year since 2009.
Chelsea Aulis ’13 took note when Schwartz mentioned that some companies specifically market their compliance programs to potential employees, showing their commitment to ethical behavior; Aulis saw the connection to her studies that asked the question, “Why would you want to work for a company that hesitates or poorly responds to a question regarding compliance offices and values in place at his/her company?”
Aulis also appreciated Schwartz’s directive for new employees to ask questions about how a company works when attempting to make ethical decisions. “This is exactly what we stress during the Two-Minute Challenges!