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

It is time for boards to shape corporate culture - Read more

It is time for boards to shape corporate culture

18 April 2018

Updates to the UK Corporate Governance Code will spur directors to keep tabs on behaviour. Read more...

Vicky Browning: Charity governance after Oxfam - Read more

Vicky Browning: Charity governance after Oxfam

18 April 2018 by Henry Ker

The chief executive of ACEVO discusses the Oxfam scandal, ensuring reputation does not outweigh cause, and the positive reaction from the voluntary sector. Read more...

Voting guidance for the 2018 AGM season - Read more

Voting guidance for the 2018 AGM season

18 April 2018

The latest PLSA and ISS voting guidelines on directors’ and auditors’ resolutions. Read more...

Directors must now navigate the 3D boardroom - Read more

Directors must now navigate the 3D boardroom

18 April 2018

Managing disruption, digitisation and diversity is core to good leadership. Read more...

Spurning ousted executives is a waste of valuable experience - read more

Spurning ousted executives is a waste of valuable experience

18 April 2018

UK businesses’ refusal to forgive veterans of corporate failure is a mistake. Read more...

UK redraws the boundaries of employment - Read more

UK redraws the boundaries of employment

17 April 2018

The government responds to fears the law has fallen behind modern work, while the courts clarify collective bargaining, garden leave and public interest whistleblowing. Read more...

Resist the itch to punish companies with a pay gap - Read more

Resist the itch to punish companies with a pay gap

17 April 2018

The gender pay gap is far more complex than some believe. Read more...

Trump's tax cuts will play havoc with reported earnings - Read more

Trump's tax cuts will play havoc with reported earnings

17 April 2018

US deferred tax reforms could lower firms’ reported profits in the short term, but will raise them over time. Read more...

Court of Appeal ruling shows how courts might handle global cartels - Read more

Court of Appeal ruling shows how courts might handle global cartels

17 April 2018

The recent judgment considered the effects of complex international supply chains. Read more...

GDPR will force us to properly govern data - Read more

GDPR will force us to properly govern data

17 April 2018

With the arrival of the regulation, organisations must embrace greater privacy rights in order to handle data. Read more...

Have your say

comments powered by Disqus

Advertisements