We use cookies to make this site as useful as possible. Read our cookie policy or allow cookies.

Why good people make bad choices

09 November 2017 by Henry Ker

Why good people make bad choices - read more

Boards should be wary of what they are incentivising their employees to do

There is a different feel to this month’s cover interview. I spoke to Walt Pavlo, Jr, who was convicted of embezzling $6 million and spent two years in federal prison. Pavlo’s story is a cautionary tale of disillusioned and isolated employees put under pressure to achieve impossible results.

‘It did not make sense to me that people could be unethical, with low business standards, and be so rewarded. I felt that I had two choices: one, call everyone out for what they were doing, or two, join in. Regrettably, I chose the latter’, he said.

Since his release, Pavlo has offered his insight to business schools, accountancy firms, and even the FBI. ‘There are three components [to white-collar crime]: the pressure, the opportunity … and how a person rationalises it,’ Pavlo says, ‘There is context to the crime’.

PwC’s Max Klugerman echoes this in his article on corporate culture here: ‘Efforts to prevent the next scandal ... [are] spurred by our growing understanding of how individuals’ environments, and their perception of them, plays a large role in decision-making.’

Pavlo’s story resonated with me on the current debate around inequality – and in particular, the exceptionally high levels of executive pay in comparison to the average worker. If the situation continues to escalate there is a danger organisations will breed cynicism among their employees that means they feel justified in taking drastic action to try to, in their eyes, readdress the balance.

As he says: ‘It is important for the authorities, or the businesses, to be able to understand and recognise why an otherwise good person will make such bad choices.’

You can read the full interview with Pavlo here.

Elsewhere, ICSA has released new guidance on the EU General Data Protection Regulation (GDPR). Data protection is an issue which seems to be surrounded by confusion and apprehension. This extends to an organisation’s own assessment of its own preparedness. According to an August KPMG survey, a mere 6% of the FTSE 350 say they are completely prepared for GDPR, while in our own Boardroom Bellwether, 93% considered themselves ready.

Inevitably, the key is once again culture. ICSA’s Liz Bradley explains: ‘[A positive] culture of data protection, transparency and accountability envisaged by the regulation will be more likely to be considered trustworthy by the public.’

Henry Ker is editor of Governance and Compliance

LATEST ARTICLES

Have UK corporate governance standards improved in 2017? - Read more

Have UK corporate governance standards improved in 2017?

11 December 2017

Our community reflects on the previous year in governance, and considers what the future holds. Read more...

Janet Cooper: Agile working is essential - Read more

Janet Cooper: Agile working is essential

08 December 2017 by Henry Ker

The founder of the law firm Tapestry talks about angling for the best talent, ditching ‘cookie cutter’ recruitment, and the merit of employee share schemes. Read more...

Sarah McLaughlin: Company Secretary of the Year 2017 - Read more

Sarah McLaughlin: Company Secretary of the Year 2017

08 December 2017 by Henry Ker

The group company secretary at Allied Irish Banks discusses the challenges of ‘scope-creep’, the importance of inspirational managers, and teamwork. Read more...

Making corporate governance fit for the future - Read more

Making corporate governance fit for the future

08 December 2017

The FRC on how the code review will ensure relevance for modern business. Read more...

25 years of Cadbury - Read more

25 years of Cadbury

08 December 2017

Celebrating the silver anniversary of the original report. Read more...

Reviewing the governance black box - Read more

Reviewing the governance black box

08 December 2017

The many recent governance failures show the code is not enough in isolation. Read more...

Cadbury Report was more than a product of its time - Read more

Cadbury Report was more than a product of its time

08 December 2017

Governance reporting has come a long way since the foundations were laid by the Cadbury Report. Read more...

How to guide employees to a healthier headspace - Read more

How to guide employees to a healthier headspace

08 December 2017

The case for boards to take an interest in mental health is both commercial and moral. Read more...

Business' duty to break the chains of modern slavery - Read more

Business' duty to break the chains of modern slavery

08 December 2017

Modern slavery in supply chains is a serious risk and boards and governance professionals must take action. Read more...

Tony Danker: The management fix for Britain's productivity woes - Read more

Tony Danker: The management fix for Britain's productivity woes

08 December 2017 by Jimmy Nicholls

With productivity growth stagnant, some businesses believe that small steps in management can add up to great strides forward. Read more...

Have your say

comments powered by Disqus

Advertisements


ICSA: The Governance Institute
Saffron House, 6-10 Kirby Street, London EC1N 8TS, United Kingdom