Trust Your Values. Act on Your Values
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David Begelman was caught embezzling from the corporation. Alan Hirschfield knew it, but he delayed doing anything about it. The delay cost Hirschfield his job, ultimately, but not in the way you might think.
The Board of Directors sided not with Hrischfield, the CEO of the corporation, but with Begelman, the President of one of the divisions and close friend of many on the Board.
Yes, ultimately, Begelman lost his job, too, but only after the press and the SEC started to weigh in.
The company? Columbia Pictures in 1976.
The story is part of the lore of Hollywood, certainly one that isn't important today, you might think. Actually, it says a lot about a lot of things.
Hirschfield discovered that the Board was truly in charge of Columbia Pictures. The Board room battle became fierce during a year when Columbia was quite successful, with Hirschfield and Begelman playing large roles in that success. Of course, the Board's in charge in any corporation, even a successful one owing a lot of that success to the CEO.
Personalities played a large role, as did long friendships between Board members and senior managers.
Begelman had stolen money by fraudulently creating and endorsing company checks made out to other individuals. The right thing to do was to fire Begelman immediately and move on, or so it seems. Hirschfield delayed firing Begelman allowing internal pressures and alliances to magnify the situation, ultimately effecting morale and profitability.
So, you find something going wrong in your company, but you are not just sure who did what. The first step is to investigate, quickly. Then make a decision, act, and move on. That's obvious. Hirschfield decided to delay the obvious because the Board wanted him to. Then the fights really began. They became worse because it became not just a battle of right versus wrong, but one of alliances and power structures battling each other.
No one really won in the long run.
Pick your Board very carefully, especially in a publicly traded organization. Investigate problems quickly and then act on the findings. Finally, leave personalities and alliances out of the right versus wrong discussion.
As McClintick makes clear, this was easier said than done. It's still good advice. In the parlance of strategy, Hirschfield knew his values. The problem was that he didn't act on his values quickly enough.
Reference
McClintick, David. Indecent Exposure. A True Story of Hollywood and Wall Street. William Morrow and Company, Inc. 1982.