Individual Donors Enrich Fellows’ Experience

As a beneficiary of the HBS Leadership Fellows program, I was excited to see the June cover story about the program and the profiles of several colleagues associated with it. Â As the article suggests, the program provides a unique platform for graduating MBAs to engage in and influence the key strategic priorities of leading social sector organizations. Although the article cited the generous financial support that HBS and its donor base provides to fellows, it’s also worth noting that individual donors are an instrumental component of the program’s “network” effect. In addition to being able to connect with fellows within and beyond their fellowship cohort, fellows benefit enormously from access to the program’s individual donors. This combination enhances the fellowship experience and exposes fellows to a variety of pathways for professional and personal involvement as they embark on their post-MBA careers.

Aaron Rudenstine (MBA ’09)
New York, NY

Curbing Corruption

I highly commend the editor for publishing “Show Me the Money” and “M.I.A. Boards” in the June Bulletin, as well as the authors of those articles. I have never seen an article in a business journal that gives as strong, comprehensive, and accurate a depiction of corrupt business practices as “Show Me the Money.” My own career was mostly in the Foreign Service when I had occasion to see and lament most of these despicable practices on the part not only of the host country but of American and foreign businesses as well.

My only recommendation to remedy the abuses mentioned is to lift the level of morality of all perpetrators, government and private sector alike. But as citizens, we have no power to implement the recommendation. Even stressing morals in teaching business administration cannot change the world. The recourse I see is to establish a level of supervision above the corporate world, either private sector or government. Of the two, only government is susceptible to opinion of mere citizens. The SEC could require that one of its employees be an observer at all corporation board meetings. However, in order to be effective, the guidance provided by law should be more detailed than it is at present. In addition, the SEC ought to give guidance on remuneration of executives.

Monroe Burk (MBA ’40)
Columbia, MD

The Six-Gun and the Fountain Pen

Thank you for “Show Me the Money” in the June issue, enriched as it was by the considerable input from Raymond Baker (MBA ’60) of Global Financial Integrity. You are right: Everybody is against corruption. But Mr. Baker seems intent on doing something about it.Â

Having spent much of my career in international banking, I am familiar with “the old shell game” of tax evasion via the transfer pricing mechanism. Differentiating between tax avoidance and tax evasion in this area is often very difficult indeed. But very big money is involved, as your article indicates.

In this regard, HBS professor Lou Wells states, “I would hesitate to have those kinds of financial dealings thought of as equivalent to the problems of drug money, or terrorist financing, or secreted money from blatant bribes.” Maybe so. But the ethics of tax cheats are not enhanced by their wearing a coat and tie and by being armed with a sharp pencil. I would urge all of us involved in international trade and tax accounting to do what we can to make the old shell game a game not worth the candle, just as GlaxoSmithKline learned in 2006 to the tune of a $3.4 billion payment to the IRS.

I am reminded of a verse from Woody Guthrie’s “The Ballad of Pretty Boy Floyd”:

Yes, as through this world
I’ve wandered
I’ve seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.


Sam Heffner (MBA ’70)
Ponte Vedra Beach, FL

Squeaky Clean vs. Human Incentives

Re your article “Show Me the Money,” I worked for a number of years in Southeast Asia and have a rather less restrictive view of corruption than most Westerners. In Thailand, my company would not leave envelopes of cash on plates but did allow some other practices.

Corruption should be controlled, but you are never going to eliminate it any more than you will eliminate disease. The whole range of human incentives is involved, not just money. In the UK, people like to say “We are not corrupt,” but we’re not all as squeaky clean as we like to suggest.

Hugh Quick (MBA ’56)
Ilminster, Somerset, England

No Conflict

I was heartened to see in the June Bulletin the article “M.I.A. Boards” by John Gillespie and David Zweig (both MBA ’83).

During the last 13 years of my 49-year business career, I served on seven major corporate boards involving a variety of industries. All the board members I served with were well-qualified and intent on knowing where the CEO and his executives were taking the corporation. We all understood our fiduciary duties and our responsibilities to the shareholders as well as to the long-term health and viability of the enterprise.

The exception I took to the article was the authors’ belief that being CEO and chairman was a conflict of interest. I was both chairman and CEO of one company and chairman of another who had a CEO. If you are a qualified board member to begin with, then your only qualification to become chairman is to know Robert’s Rules of Order and run the board meeting. The CEO and the outside directors’ committees do everything else.

The best way to ensure that directors carry out their responsibilities is to indict outside directors for malfeasance when they fail to do so. Enron was a perfect example of malfeasance run amok. All a director had to do was read the statement of principles and objectives as outlined in Enron’s annual report and diligently ask the questions necessary to determine if, in fact, those principles and objectives were being followed by management. They clearly were not.

R.E. Mercer (AMP 49, 1966)
Palm Coast, FL

A Constitution for Corporations

The article “M.I.A. Boards” was of interest to me and my son, Stephen, a professor who holds a management chair named for Paul W. Chellgren (MBA ’66) at the University of Kentucky. The two of us have looked for ways to help boards, before restrictions are placed on them that would surely damage the competitiveness of America’s corporations.

The lesson from our financial crises may be that it is not rules that are wanting but principles. Getting people to do things right has more to do with helping them understand a set of principles than with externally imposed rules, which also may carry unintended costs and consequences. Boards and managers cannot simply be regulated into managing their companies in a responsible manner.

Here’s an idea we might try. The United States has gotten a lot of mileage out of having a constitution, a set of fundamental principles from which more specific laws and customs can flow. It provides a framework for solving problems. Why not have corporate constitutions?

A corporate constitution would be a document developed by a company’s board of directors to set the firm’s guiding principles and conduct in specific situations. Rather than being a mission/vision/culture statement, it would be an aid to decision-making. Thus, when several courses of action are possible, the board could ask, “If we did this, would it be constitutional, that is to say, consistent with our fundamental principles?”

A board of directors that has ownership of the corporate constitution is likely to be responsibly activist in its oversight of management. We propose that the cornerstone of a changed role for the board of directors be the adoption of a constitution.

Joseph J. Borgatti (MBA ’51)
New York, NY

Don’t Mess with HBS

In the June Bulletin, I was rather startled to read the editor’s remarks in “The MBA at a Crossroads,” as well as the comments regarding the book Rethinking the MBA. My use of and admiration for the MBA I received decades ago remains, and I would not change it one bit. I see business being staffed with baby boomers who have been in a hurry all their lives, with a “what’s in it for me attitude” and little patience. I have found that there is really no shortcut to success, and learning business takes time. Companies are different, industries are different, and the case method recognizes this. The elements that concern Professors Datar and Garvin — roles and responsibilities, limits of markets and models, risk and restraint, pros and cons of regulation — all appeared in some form in the cases I studied.

The best way to learn leadership in business is to give the new MBA graduate a project; he or she will either learn leadership quickly or unfortunately fail. The Harvard Business School MBA is outstanding and is an excellent foundation for further training by executive mentors in the business world. Let other business schools change their curricula, but let’s leave HBS alone. It is in a class by itself.

Rear Adm. Rowland G. Freeman III, USN, Ret. (MBA ’53)
Williamsburg, VA

Featured Alumni

Featured Alumni

Class of MBA 2009, Section F
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Monroe Burk
Class of MBA 1940
Class of MBA 1970, Section F
Class of MBA 1956, Section E
Class of AMP 49
Class of MBA 1951, Section D
Doc Freeman
Class of MBA 1953, Section C

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