Chapter 8: Before and After an Ethical Fall: The C-Suite Challenge of Building, Managing and Rebuilding Reputation

Despite efforts by government organizations and various stakeholders, many C-suite executives must continue to scramble to minimize the negative impact of ethical scandals in their organizations along with undertaking efforts to rebuild their organization’s reputation in the eyes of various stakeholders. And this often means many of today’s C-suite executives continue to find themselves within a vortex of organizational and leadership mistrust, distrust, misinformation, disinformation, and disclosures, seeking ways to recover or rebuild the organization’s reputation after an ethical scandal.

In the early part of the 21st century, some of the largest corporations in the United States’ many C-suite executives fell victim to the belief that the ethical choices they made would somehow remain invisible. For example, Adelphia, AOL Time Warner, Arthur Andersen, and many more of the most powerful corporations in America in the “pre-Enron scandal era” found themselves on the front pages of newspapers around the world, accused of a wide range of offenses. At Worldcom, senior executives were convicted of fraud, conspiracy, and lying to regulators. Tyco’s CEO was listed by Business Week as one of America’s top 25 managers before he was charged with looting his own company of $600 million. And the name Enron—once considered one of the most innovative and successful energy companies in the world—became synonymous with fraud, greed, and ethical misconduct at the highest levels (Sims, 2008). Hahn (2002) suggested that the array of scandals afflicting corporations and Wall Street over during this time created a triple-tier “Who’s Who” for officials (and organizations) under investigation—those who are jail-bound, those who might be sentenced, and those who had the good luck merely to be greatly embarrassed. However, despite all of the negative ramifications for some individual executives and organizations in the form of media coverage, prison sentences, and increased government oversight or reporting requirements (i.e., Sarbanes-Oxley), some organizations and their respective C-suite leaders still find a way to decrease stakeholder confidence in their ability to “do the right things” (i.e., the recent HSBC, FIFA, General Motors, Volkswagen, New England Patriots, and Walmart scandals), while others proactively attempt to do the right or good things in hopes of getting back in the good graces of their various stakeholders or constituents.