Leadership and Governance from the Inside Out

At last, there’s a business leadership book that really tackles the tough issues of integrity and governance. Taking a unique approach to leadership, this book gathers the path-breaking perspectives of influential shareholder activists; opinion-leading CEOs of major firms; trailblazing, distinguished academics; and courageous regulators. The all-star roster of contributors from the corporate world and academia includes Vanguard's John Bogle, former SEC Chairman Arthur Levitt, and Harvard Business School's Rosabeth Moss Kanter. Sherron Watkins, Enron whistleblower and Time Person of the Year, shares an inside look at Enron, and Barbara Ley Toffler, former head of Arthur Andersen's Ethics Practice, paints a picture of Anderson Consulting before their fall.

Preface xi

Acknowledgments xxi

Part I: Fueling the Crisis: Corporate Scandal and Wrongdoing 1

Chapter 1

“I See Nothing, I Hear Nothing”: Culture, Corruption, and Apathy 3
Robert Gandossy and Jeffrey Sonnenfeld

Chapter 2

Twenty-First-Century Corporate Governance: The Growing Pressure on the Board Toward a Corporate Solution 27
Sherron S. Watkins

Part II: The Role of the Leader 37

Chapter 3

How Leaders Restore Confidence 39
Rosabeth Moss Kanter

Chapter 4

Greed, Vanity, and the Grandiosity of the CEO Character 51
Manfred F. R. Kets de Vries and Katharina Balazs

Chapter 5

The Essence of Leading and Governing Is Deciding 63
Michael Useem

Chapter 6

Vigorous Competition, Cardinal Virtues, and Value Creation 75
Robert W. Lane

Chapter 7

Challenge Up: A Key to Organizational Integrity 83
Marshall Goldsmith

Chapter 8

Enron et al.: The March of Folly 89
Warren Bennis

Part III: The Role of the Board 95

Chapter 9

Seeing Around Corners 97
Norman R. Augustine

Chapter 10

Whither Governance: Process or People? 109
William W. George

Chapter 11

Enron and Effective Corporate Governance 117
Charles M. Elson

Chapter 12:

“Somebody’s Gotta Keep An Eye On These Geniuses”: What We Must Do to Restore Owners’ Capitalism 123
John Clifton Bogle

Part IV: Toward Reform 143

Chapter 13

Shedding the Images and Getting Real About Business Responsibility 145
Barbara Ley Toffler

Chapter 14

Getting What You Pay For: Institutional Investors Take on Executive Pay 151
Nell Minow

Chapter 15

Accounting 101 171
Rick Antle

Chapter 16

Principles and Best Practices of Executive Compensation That Stand the Test of Time 177
Roberta D. Fox and Michael J. Powers

Chapter 17

Evolution of Corporate Criminal Liability: Implications for Managers 191
Jennifer Arlen

Chapter 18

Corporate Governance in Europe 205
Leonardo Sforza and Alan Judes

Chapter 19

Developing Leaders of Character: Lessons from West Point 213
Rakesh Khurana and Scott A. Snook

Chapter 20

Speech by SEC Chairman: Remarks at the 2003 Washington Economic Policy Conference 233
William H. Donaldson

Chapter 21

Corporate Governance and the Culture of Seduction 241
Arthur Levitt

Chapter 22

If I Only Knew Then What I Know Now 271
Susan C. Keating

About the Contributors 277

Index 291

LEADERSHIP AND GOVERNANCE FROM THE INSIDE OUT

“Gandossy and Sonnenfeld have assembled a thoughtful framework for rebuilding trust in business. It is important that business leaders of the future are comfortable around this subject. Reading this book is a start.”
—Jeffrey Immelt, CEO, General Electric

“The subject of corporate governance is daunting, covering a sometimes bewildering array of complex legal, ethical, and financial issues. Gandossy and Sonnenfeld deserve immense credit for bringing together distinguished contributors from the worlds of academia and business to address these critical subjects in a single comprehensive volume.”
—Henry M. Paulson, Jr., Chairman and CEO, Goldman, Sachs & Co.

“Gandossy and Sonnenfeld offer us many viewpoints on corporate governance and shed new light on the dysfunctions of seemingly functional organizations. I don’t agree with all the remedies, but I clearly understand the anger of the betrayed employee and investor. Corporate crooks should face swift justice. Everyone else should read this book.”
—Hank McKinnell, Chairman and CEO, Pfizer Inc.

“A superbly crafted, thought-provoking, and compelling contribution to the dialogue of the day on corporate leadership and governance.”
—Doug Conant, President and CEO, Campbell Soup

“I have dreaded most ‘required readings’ since college. Then along comes this fantastic book filled with great essays about what the somewhat ethereal notion of good corporate governance means, not in the abstract but in practice. I didn’t think that any one text could assemble so many heavyweights on the issue. That’s why this required reading breaks the mold on a topic that most of us wish we didn’t have to focus on but we must because the consequences of ignorance are decidedly non-blissful.”
—James Cramer, founder of The Street.com and co-host, CNBC’s Kudlow & Cramer