Perhaps the most ubiquitous phrase in compliance is “tone at the top.” From the Justice Department to the U.K. Ministry of Justice to the OECD, every commentary on an anti-corruption compliance program says that it all starts with the senior leadership of an organization and most specifically a CEO. This has led many organization to consider not only what a CEO says but how he or she comports themselves to be indicative of how they might run an organization. This type of analysis speaks to a leader’s character. There is, however, a second and equally important trait for every CEO—and that is judgment. Unfortunately, judgment does not always get as much due diligence and research as character.
This judgment issue was brought to the forefront of the corporate world when the CEO of Barclays, Jes Staley asked the company’s corporate security department to unmask the identity of an anonymous internal whistleblower. When the department demurred, he requested they use U.S. law enforcement to obtain the identity. Now a second instance has arisen that has brought Staley’s judgment into question. James Stewart reported that Staley intervened “in a dispute over a Brazilian private-equity deal that pitted his brother-in-law against the influential private-equity firm KKR, a major Barclays client.” Staley claimed he was not acting in a capacity as Barclays’ CEO but in a private capacity in this assistance to his brother-in-law.
Unfortunately there are not many, if any, objective tests for judgment at the CEO level. The Man From FCPA once heard James Baker say, that the only way to know if a person had the right stuff to be president was to elect him president and find out. Similarly for an executive vice president or corporate division president who is promoted to the CEO chair, you may not be able to adequately determine if that person has the judgment to run a multinational, worldwide organization, unless and until they are promoted to CEO.
Both character and judgment matter. If you are considering a new CEO from the compliance angle, how, if at all has your organization considered the judgment issue? Promoting issues involving your relatives over the interests of clients and customers can certainly be seen as a conflict of interest at the very least. It may also lead to further complications done the road.