Thursday, June 16, 2005

Scrushy 2: Murder in the Cathedral

There's another way to take the Scrushy HealthSouth fraud, although it wasn't a version presented in the courtroom. And since the jury of peers in any corporate fraud case is unlikely to contain anyone who has ever been remotely close to the executive suite, it's not a version that will occur to them during deliberations.

If you have spent any time in contact with the upper reaches of corporate decision making, it will be extremely familiar. I call it the Murder in the Cathedral Syndrome.

Murder in the Cathedral Syndrome takes its name from T.S. Eliot's play dramatizing the power struggle between King Henry II of England and Thomas Beckett.

King Henry had a personnel problem. He had appointed his close friend and chancellor, Thomas Beckett, as Archbishop of Canterbury. Henry had hoped that Beckett would bring the ecclesiastical courts under the crown. Instead, Beckett became a staunch defender of the Church and repeatedly foiled Henry’s attempts to consolidate power.

Finally, Henry cried out, “Will no one rid me of this troublesome priest?” Four knights who overheard the king decided to oblige, and ultimately, a resisting Beckett died a martyr.

Were Henry's words simply an expression of frustration that led to a terrible misinterpretation? Or a calculated indirect order that insulated the king from any consequences of black deeds gone wrong — exercising what became known as the doctrine of "plausible deniability". Later, Henry made a great show of regret, with regular pilgrimmages to Beckett's tomb. But it didn't work for Henry any more than it worked for Nixon and the Watergate conspirators. All became objects of international contempt.

The same behavior happens in modern corporations. The boss makes an ambiguous or offhand comment, and underlings scurry to carry out what they perceive to be the king’s wishes. If they are successful, everyone benefits. If there's a disaster, the king can say, in court if necessary, "That's not what I meant at all."

Sometimes the failure to question authority's ambiguity can be fatal for all. Years ago, a Wall Street Journal article on corporate jet accidents told of a crew who may have overridden their own judgment of flying conditions because they were leery of displeasing their powerful passengers. As a result, they all died.

From my reading of the Scrushy case, the detail man only selectively didn't want to know the details. He wanted someone to rid him of troublesome earnings shortfalls, so he could continue making his pronouncements to the street.

It works like this: "I know what I'm saying is not true, but if I don't actually have concrete evidence, if I don't know how they fixed the numbers, then I can rely on them for my statements in good conscience. I told them to fix the problem, and not trouble me with the details. So how do I know they didn't fix it for real?"

Meanwhile, the staff is quavering: "Did he really mean for us to cook the books? Because that's the only way to fix this. But if we ask him, he'll go ballistic, because it'll mean we are questioning his integrity. Or that we're stupid. Or incompetent."

And so the problem gets fixed, and the boss has his plausible deniability.

In its most frequent manifestations, Murder in the Cathedral Syndrome kills ideas, squelches constructive questioning and causes a tremendous amount of waste as staff members try to read between the boss’s lines.

Some staffers learn to identify the difference between an order and a passing thought. President Nixon’s staff, to their credit, apparently ignored some of their boss’s more egregious musings. Oliver North, on the other hand, would’ve fit in well with Henry’s knights.

But when the stakes are higher — should we invade? will we meet analyst expectations? — leaders become willfully blind and yeomen fall silent. Ambiguous statements gain murderous momentum.

Leaders may have legitimate reasons for creating ambiguous situations. The circumstances themselves may be ambiguous. A lack of clarity tests the ingenuity of subordinates. It gives them flexibility to determine the correct course of action, and that can be very motivating. It also leaves wiggle room for the leader when actions cross the legal line.

You do not build a multi-billion-dollar business without understanding the uses of power and ambiguity.

1 Comments:

Anonymous Anonymous said...

Well said. Wow. Something to ponder.

12:28 PM  

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