For several years, I have been using a hypothetical in my business ethics courses involving the head of a non-profit who brings in a fundraising whiz to help the organization survive. While he is settling in and before he has had time to rescue the organization with his fundraising wizardry, she has asked the staff to accept a freeze on raises and hiring, and has cut other expenses, and even some staff. She asks the new fundraiser to live with his dilapidated office, though she had promised him a redecoration while recruiting him. But he objects:
“He insists that she stick to the terms he had been promised when she was recruiting him; not only that, he states that he had been willing to delay the promised renovation of the small, shabby office of his predecessor for six months, but he will wait no longer. It’s a new paint job and new furniture by the end of the month, or he will leave, and maybe sue.”
The head of the foundation is perplexed:
“She is certain now that the school will not survive without the rescuer’s talent. But she is also convinced that if he doesn’t go along with the reduction in benefits, she’ll have a staff rebellion on her hands. And the thought of him renovating his office while the rest of the staff was enduring riffs and cuts is too horrible to contemplate.”
In discussions with managers, staff, and business school students, I have heard overwhelming support for the position that the non-profit executive needs to block the renovation. Whether, in a narrow sense, the new employee “has a right” to it or not, the message a costly renovation would send is too destructive to the morale of the staff and the integrity of management. This is basic leadership ethics. No class in which I have presented this hypothetical has seemed to think this is even a close call. The debate is usually about whether the fundraiser should be fired now, or later.
So why, then, does President Obama not see that now is an irresponsible time to undertake a costly refurnishing of his office in the White House, which, unlike the office the new fundraiser had to accept, is far from being a pit of despond in its current condition? I don’t want to hear the rationalization that Clinton and Bush fixed up their offices—that’s beside the point. The problem is timing and appearances. This is a man who told us in February, when he unveiled his budget :
“There are times where you can afford to redecorate your house and there are times where you need to focus on rebuilding its foundation.”
Nor do I care that the remodeling is privately funded. Lots of Americans can’t pay their mortgages, and nobody is publicly funding them. There are periods when imperial leadership styles bolster public confidence and trust, and periods when they undermine trust and credibility. President Obama is supposed to be unusually intelligent, and yet it does not take unusual intelligence to conclude that September, 2010, is in the latter category. Clearly, for Obama to remodel his office during a recession is worse for morale and confidence than the fundraiser insisting on a renovation, because the fundraiser, while part of the management team, is only making his leader look insincere and irresponsible. Obama is the leader, he is making himself look insincere and irresponsible, and the United State is just a wee bit more important than a struggling non-profit.
And my students believed that the fundraiser should be fired.
This is an ethical blind spot for the President, and the remodeling isn’t the first evidence of it. It will cost him more than the price of new curtains, and should. It is a breach of integrity and trust, and if Obama can’t see that, he doesn’t comprehend the nature of leadership.
Ethics Alarms 
“There are times where you can afford to redecorate your house and there are times where you need to focus on rebuilding its foundation.” The hidden subtext, of course, was that he was talking to us “little people” and didn’t mean people like him.
I think Ninth Circuit Chief Judge Alex Kozinski hit the nail on the head when he pointed out the disconnect between the governors and the governed. A panel of federal judges decided that it was OK to plant tracking devices on peoples’ cars without warrants as long as they didn’t have garages or live in a gated community.
http://dyn.politico.com/blogs/joshgerstein/index.cfm/tag/FederalJudges
The fund raiser shouldnt be fired the President should be fired for asking her staff to take freezes in pay and some even lose their jobs while at the same time she knew she had a contractual obligation to the fund raiser to make those improvements.
Nah. She has to make the numbers work, somehow. A typical management trade-off—you are unfair to someone, no matter what. Time to take one for the team.
That “Take one for the team logic” is what bad leaders ask subordinates to do to cover for their mistake. A true leader doesn’t do that. By your logic the fundraiser should also take a pay cut along with the rest of the staff. The president made the mistake and should pay not the fund raiser. Hell any 19 year Cpl right out of the NCO Academy would tell you this.
But Bill, the military doesn’t run out of money: non-profits do. When a crisis hits after you’ve made commitments, the commitments have to wait or be adjusted. I once had to oversee 110 lay-offs and 50% salary cuts (including my own).It’s fine to say that the staff “shouldn’t” have to suffer, but they do—there’s no choice. They suffer worse if the organization goes under.
Jack,
All of which would be fine except neither you, I, nor most other people in America work for Obama. It’s not as though the money saved from not refurbishing his office could be of use elsewhere, nor do I seriously think anyone is going to this as an example to follow suit.
-Neil
Not the point. The leader must be part of what he leads. It’s hypocrisy, and lack of seriousness. A leader who preaches sacrifice must be seen to practice it.
Although the office was refurbished with private funds, the President shouldn’t have been soliciting funds to refurbish his office. The country is in a terrible state and he is having donors redecorate his office. How about getting donors to contribute to college scholarships or start up a company to employ people? It just isn’t true that the money couldn’t have been used elsewhere and even if it had been in a dedicated fund set up for this purpose 20 years ago, he (or one of his advisors) should have known better than to use it for that purpose at this time.
True Jack but my point is that it is the president who should be has screwed up and should take one for the team not the fundraiser. The people working there are not just going to resent the office remodel they are going to resent that people got fired and this person got hired more then tjay.
This one is real,and I saw it blow up. People were getting RIFed, and one guy was bringing in rosewood furniture and new carpets. The CEO lost all credibility, even though he and the other managers took benefit cuts. The fundraiser was within his rights; he had a deal. But he needed to recognize the needs of the organization. It’s a classic “star” problem, like the slugger who knows he can skip out on drills, so he does.
First, let me say that this is a fascinating blog and I’m fully in favour of ethics being at the heart of everything we do. I agree, Jack, that in tough times everyone should take a cut, especially those in positions of power and influence. But I would go much, much further and suggest we all limit our wealth and power voluntarily to a generous but serious formula. I’ve launched a website and a Charter to that effect at: http://www.sirisuk.org with sections on banking and business. Comment too on my wordpress blog or find me on twitter. All comments very gratefully received.
best wishes
Nick