Sunday, December 24, 2006

BusinessWeek Blunders

On the last page of the December 25/January 1 issue of BusinessWeek, Jack and Suzy Welch wrote a disappointing answer to a valid question. In their column entitled “The Boardroom Bunker”, they begin with a question from an anonymous reader who asked, “Do you think boards today are running better or worse than before?”. A valid and important question, but the Welches made no serious effort to answer it. Instead, they changed the question and launched yet another indirect attack on Sarbanes-Oxley, saying that too many boards “are running scared”. Even that might have opened the door to an interesting examination of governance options, but the Welches had other intentions, specifically to whine and complain. Instead of a cross-section of executives and managers who have to deal with the Sox reality, the Welches focused on CEOs, and it was not long at all before the Welches were unloading cheap shots on Accountants in general. The money quote? “The same accountants who failed to flag the scandals are now the biggest beneficiaries”. That is the same sort of logic which blames the police for criminals, hospitals for disease, or our defense forces for our enemies. And yet the Welches blame other people for paranoia.

The Welches made no attempt to support their accusation, not that they could find much evidence for their claims. No, they delivered a sort of whiny homily, basically blaming the problems of boards on everyone else. I found it strangely reminiscent of Mr. Skilling’s defense strategy. But after consideration, I realized that the Welches had done at least one service. They have demonstrated that five years after the passage of Sarbanes-Oxley, far too few people in the high end of business are willing to seriously examine their responsibility and accountability, even when they pull a check from BusinessWeek magazine.

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