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LEVICK Weekly - Sept 7 2012

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Why Harvard Mishandled Its …

Why Harvard Mishandled Its
Cheating Scandal
The World Is Catching Up on
Anticorruption Enforcement
Corporate Social Responsibility
for Profit
Thalidomide: A Specter Still
Haunts the World

www.levick.com/insights

Published in: Business

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  • 1. EDITION 7Weekly September 7, 2012 Why Harvard Mishandled Its Cheating Scandal The World Is Catching Up on Anticorruption Enforcement Corporate Social Responsibility for Profit Thalidomide: A Specter Still Haunts the World
  • 2. WhyHarvardMishandled ItsCheating ScandalRichard S. Levick, Esq.Originally Published on Forbes.comIt’s an unpleasant trait of the human per- or basically ignore the underlying issue in thissonality that we instinctively want to think particular case. Happily, a few recent pieces dothe worst of those who have more money, eloquently define that underlying issue, argu-more power, more opportunity than we do. ing that, in fact, a grave injustice is being done.When, for example, an institution like Har- Yet responsibility for this injustice ultimatelyvard University announces that it is investi- rests neither with the media nor the public’sgating possible cheating by its students, it’s collective schadenfreude. We design institu-not long before high-authority publications tional codes to assure the fairest possible pro-are posting articles with titles like “Yes, they cess when problems arise, and we have bestcheat at Harvard, too.” communications practices to protect institu-One week after Harvard’s announcement, tions and individuals from calumny.many of the stories still highly ranked on Harvard failed its students on both scores.Google news either discuss cheating itself as anational problem that needs to be addressed, The inquiry focuses on a take-home final exam and the possibility—based on purported simi-
  • 3. Weeklylarities in how exam answers were phrased— It’s a very fair guess that, after a year of dutifulthat students may have copied answers. Around silence, Harvard was contacted by the media125 students are involved; they were enrolled in and decided to go proactive. Get ahead of thea course called Introduction to Congress taught story. Don’t wait for reporters to tell it for you.by Matthew Platt. Show how transparent you are. To be sure, corporations and institutions are well-advisedThe students under suspicion will be sum- to consider just such practices in the shadow ofmoned to an Administrative Board hearing and an impending crisis.face sanctions ranging from one-year suspen-sions to formal reprimands. As the events in But absent sound judgment regarding thequestion happened last spring, students who particulars of each situation, these bromideswere supposed to graduate in 2011 remain in are just that—bromides, ill-advised and ratherlimbo. They’re not the only ones whose lives dangerous. Lawyers don’t typically commentare on hold. Some who did graduate are cur- on pending litigation, and for good reason.rently unemployable. Others are loath to apply Boards don’t reveal the details of their inves-for jobs under the assumption that they may tigations when CEOs are under fire, and forbe disciplined and their standing with their good reason.employers fatally compromised as a result. In compliance with Harvard’s own policy, aNeedless to say, the students at risk are not brief statement, with only minimal confir-likely performing at full capacity under mation (if any) that an investigation is beingthese conditions. speedily conducted, would have sufficed.Now, I should not be telling you any of this The need for a tight-lipped response was allbecause no one should have told me. Univer- the greater because of that aforementionedsity policy demands total confidentiality. While “underlying issue,” which could well exculpateHarvard naturally declined to reveal names, the majority of students involved. The Studentwe should certainly not be reading that “Har- Handbook provided by the Administrativevard officials called it the biggest such probe Board prohibits students from discussing examin living memory.” We should not know how questions or in any way collaborating on howmany students are involved, nor how a teach- to interpret and answer those questions. Buting assistant was disturbed by what he read there is a crucial exception.in the suspicious exams, nor what steps theuniversity will take to spread the gospel of According to the Handbook, “The amount ofacademic integrity—which assumes the as-yet collaboration with others that is permittedunproven point that those steps are at all nec- in the completion of assignments can vary,essary in light of this inquiry. depending upon the policy set by the head of the course. Students must assume that col-
  • 4. “ The Elizabeth Warren plagiarism controversy may have played a hand in light of the savage depictions of Harvard’s response by the conservative media. Equally savage, there are the inevitable academic politics, including support from some faculty for a formal honor code. (Like most American universities, Harvard has never had one.) The “scandal” plays right into that agenda.”laboration in the completion of assignments is The shroud over these students is all the more Anyone who’s ever experienced on-campus about where collaboration ends and cheatingprohibited unless explicitly permitted by the lamentable since there is a fundamental peda- politics anywhere can well imagine these 125 begins, the solution lies with open, university-instructor…” gogical issue here—the role of “collaboration” students caught in such a power struggle even wide dialogue to define and stabilize the versus enforced individual effort—hat merits as the institution itself indulges a dubious stab middle ground.Instructors are thus allowed to waive the open and lively discussion. Instead, we get it at reputation management. One shudders atrestriction, which many students may reason- It’s a much more practicable and equitable buried under a disciplinary probe. the possibility of FOIA requests down the line,ably have believed to be the case. After all, his solution than preaching academic integrity of careers damaged in ways we’ll never knowoffice and those of the class’ Teaching Fellows One can fairly assume a few extraneous forces to students and instructors. You might just be about. In all matters involving communications,—some of whom innocently provided specific influencing Harvard in this matter. The Eliza- preaching to the choir. L proactive or not, the Hippocratic imperative,answers—were open at all times. Discussion of beth Warren plagiarism controversy may have “First, do no harm,” is a guiding principle. Richard S. Levick, Esq., President and CEO of LEVICK,the test questions was encouraged, so much so played a hand in light of the savage depictions represents countries and companies in the highest-stakesthat it may be fair to surmise that, if the exam of Harvard’s response by the conservative Fortunately, I am quite sure that Harvard has global communications matters—from the Wall Streetanswers seemed familiar from student to stu- media. Equally savage, there are the inevitable the institutional integrity to seize on any honor- crisis and the Gulf oil spill to Guantanamo Bay and the Catholic Church.dent, it’s because those students picked up the academic politics, including support from able way out of this situation. There is one.phraseology from Platt and the Teaching Fel- some faculty for a formal honor code. (Like Since the whole issue of “collaboration” haslows themselves. Students were also permitted most American universities, Harvard has come to the fore (albeit as a result of disclosuresto share lecture notes, which would likewise never had one.) The “scandal” plays right into that should not have been made), Harvard canencourage similar-sounding answers. There that agenda. now focus on it as a positive take-away. Ifwere no restrictions put on how the direct help the problem can be defined as lack of clarityprovided by the instructors could be shared.
  • 5. The World Is Catching Up on “ When it comes to external communications, companies are sometimes reticent to publically discuss compliance issues for fear of creating an issue where none exists.anticorruption Canada—a figure that ranks the country with When companies encourage employees to Australia and Austria as Transparency Interna- speak up, they keep potential whistleblowers tional’s most-improved enforcers. Even China is within the fold while also providing them- getting in on the act, as it has promised to stiffen selves the opportunity to self-report (a strategyEnforcement anticorruption controls after a series of embar- that often diminishes the penalties at play). rassing episodes—including the 2011 ouster of When it comes to external communications, Railway Minister Liu Zhijun from the Commu- companies are sometimes reticent to publi- nist Party for allegedly accepting bribes. cally discuss compliance issues for fear of With intensified enforcement and new anti- creating an issue where none exists. But when corruption regimes springing up all over the they do so, they not only provide themselvesJohn Lovallo world—and even in the most unexpected of an advantage in markets that are emphasizingOriginally Published on LEVICK Daily regions—boards of directors need to carefully ethics like never before, even as they condi- examine what their companies are doing tion the marketplace, investors, and regulatorsFor the last several years, corporate direc- That’s a good thing—because the U.S. in no to articulate compliance both internally to give them the benefit of the doubt shouldtors in the U.S. have been wrestling with cor- longer among only a handful of countries that and externally. trouble arise.ruption issues with greater frequency than are intensifying their anticorruption efforts. Within the company, the board needs to ensure The U.S. is no longer the only sheriff in town.ever before. Aggressive enforcement of For- Today, the world is catching up and introduc- that all employees know the rules of the road And with more watchdogs come more oppor-eign Corrupt Practices Act (FCPA) strictures ing a new universe of liability for companies that govern their dealings overseas and the tunities to attract their attention. That meansand new game-changing whistleblower laws that do cross-border business. consequences for operating outside acceptable boards must not only ensure that compliancehave introduced a number of new liabilities Consider the six new cases that have been boundaries. That means the C-Suite needs to set is a priority; they also need to ensure that thethat include record-setting fines, jail time filed under the UK Bribery Act 2010, which has a strong “tone at the top” with messages that company’s dedication to ethics is articulatedfor executives, high-profile securities litiga- been called the toughest enforcement stan- emphasize a culture of compliance. It means far and wide. Ltion, and the reputational challenges that dard in the world and, for the first time, made routine training for foreign agents and evenaccompany each. As a result, compliance is John Lovallo is a Senior Vice President, Chair Corporate failure to prevent bribery a criminal offense contractors and other business partners. Reputation Practice at LEVICK. He is also a contributingtaking on added significance in many board- (even the FCPA doesn’t go that far). Consider At the same time, every employee also has to author to LEVICK Daily.rooms as directors seek to ensure that a the 34 bribery cases under investigation in be well aware of the internal mechanisms bycommitment to ethical behavior permeates which they can report perceived violations.their companies from top to bottom.
  • 6. Corporate Social ResponsibilityFOR PROFITRichard S. Levick, Esq.Originally Published on Forbes.comThere’s an ongoing transformation in the veryway companies define their Corporate SocialResponsibility (CSR) programs. The messages aredifferent, the goals are different, and, to be sure,the strategies are different.
  • 7. WeeklyConsider two recent studies. the direct beneficiaries of our CSR largesse— In turn, that message rivets consumer attention companies by buying their products. 53% would even at the cost of a few big shareholders. on the products themselves and encourages the even pay a 10% premium for those products.One report by the Havas Media Lab under- compelling supposition that responsibly manu-scores this transformation with a list based Many of the highly ranked CSR programs on But the benefits don’t stop at the check-out factured products are simply better products.on a survey of 50,000 consumers worldwide the Havas list predictably feature green initia- line. They extend to stock value as well, aswho identified the companies they feel have tives, often, as with Leroy Merlin, highlighting In the new CSR lexicon, “impact” is invoked suggested by Harvard Business School datathe most “meaningful” CSR. The 10 top names how the company’s own employees person- as the crucial factor—the impact of a phone confirming that this new species of sociallyincluded Unilever and Bimbo, Ikea and Leroy ally volunteer in repair and recycling efforts or a computer on the daily lives of their users. responsible company gets more favorable rat-Merlin, as well as consumer technology compa- around the world. Here too, with this volun- The key is to build a better mousetrap, not just ings from securities analysts.nies like Samsung and Sony. As the Lab’s direc- teerism, we’re a long way from the passive provide lavish demonstrations of goodwill. The Harvard report specifically underscorestor Umair Haque quips, they’re not “necessar- check-writing that defined the old CSR. Such an approach to CSR comes quite naturally the difference between yesterday’s CSR, whichily the do-gooding corporate entities you to consumer electronics leaders like Steve Jobs The message to consumers is, again, personal. was largely based on gratuity, versus today’smight expect.” whose ingenuity, more than their philanthropy, Since these Leroy Merlin people commit model based on impact. The study notes that won the hearts and minds of consumers in theIn lieu of such “do-gooding,” Haque talks about themselves, their own time and sweat, to these the former were often perceived by the mar- first place.CSR as a way to connect to the personal well- responsibility programs, it’s no reach to infer kets as “value-destructing” while the latter isbeing of customers. Nike+ is a prime example. that they do the same when they manufacture To be sure, the green movement has played a now seen to be “value-creating.” Today’s ana-“Instead of putting up another campaign of the home improvement products that have a key role for many industries in the transforma- lysts know that high-impact products generatebillboards with celebrities saying, ‘Buy our direct impact on our lives. tion of CSR because it’s all about being systemic revenue simply because they work better evenshoes’…Nike+ actually helps makes you a bet- in approach. You’re expected to not pollute as they provide the tools with which society In another report, Pike Research found thatter runner,” he says. the river—Haque would call that the “table can improve itself. L “the closer the company’s business is related to stakes”—but, beyond that, what “impact” onIn other instances, companies underscore consumer electronics, the higher its CSR score.” It doesn’t matter what you sell. People are the environment do all your business opera-their commitment by taking substantive risks. Companies like IBM, HP, and Texas Instru- looking hard at how you do business and the tions have, including how much water theEarly last year, for example, Unilever CEO Paul ments topped the charts for transparency and companies that do it best win the CSR race, plumbing in your corporate office saves on aPolman really spoke the language of CSR as reported results. For starters, their sustainabil- ahead of those for whom “corporate giving” is yearly basis?value—not just donations—when he made an ity initiatives have impressed consumers, the the only index of corporate responsibility.ambitious sustainability and anti-hunger plan report suggests. Mr. Haque’s new book, Betterness: Economics Richard S. Levick, Esq., President and CEO of LEVICK,an investment prerequisite. “If you don’t buy for Humans, provides a useful context in which represents countries and companies in the highest-stakes These sector-leading companies have pushedinto this [program], I respect you as a human these varied issues can be understood as part global communications matters—from the Wall Street hard to highlight their greater focus on en-being, but don’t put your money in our com- of the transformation from impersonal cor- crisis and the Gulf oil spill to Guantanamo Bay and the hanced sustainable design, manufacturing, Catholic Church.pany, he said. porate giving to the “impact” of products and distribution, use, and end-of-use management. services on consumers’ lives—and, of course,It’s easy for consumers to read this resolve as a The message is, our products are socially re- the profits generated in the process.personal message to them: that we as a com- sponsible across a broad spectrum of consum-pany are guided by the same determination to er needs, beginning with the benign impact There is ample data to confirm this profit-gen-produce beneficial impacts for you—not just they have on the world in which they’re used. erating potential. More than half the consumers surveyed by Havas want to reward responsible
  • 8. Thalidomide:A Specter Still Haunts the World Richard S. Levick, Esq. Originally Published on Forbes.com William Faulkner said it. “The past is never Grünenthal settled a lawsuit in Germany in dead. It’s not even past.” Those are caution- 1972 and expressed regrets. But the company ary words in an age when digital coverage has not admitted liability, claiming all required of today’s global disaster seems to imme- clinical trials were dutifully conducted. diately erase the memory of yesterday’s News reports about the apology were haunting global disaster. on at least four levels. So there it was over the Labor Day weekend, Personally, it was a reminder to me of the topping the Google News charts for most of forces and events that have shaped my own one day. The Grünenthal Group, German sensibilities, political and otherwise. In fact, I’d manufacturer of the drug thalidomide, issued group thalidomide with the Vietnam War and its first apology to the victims a full 50 years the civil rights movement as formative impacts after agreeing to recall the infamous drug. in my life. I’m particularly haunted by the me- Thalidomide, which was given to pregnant dium through which those impacts were made. women to relieve morning sickness, was Dead soldiers and civilian babies, hoses turned recalled in 1961 in the aftermath of a wave of savagely on peaceful protesters, limbless chil- birth defects in Europe, Australia, Canada, and dren held fast by agonized parents…Then as Japan. The drug was also found to cause pro- now, visual images mold our perceptions and found damage to the eyes, ears, heart, genitals, transform our lives. and internal organs of developing babies. It was never approved in the United States.
  • 9. Morally, it was a reminder that no one can es- Professionally, it was a reminder that, for all According to Stock, the need for a public apol- believe that you’re taking steps to ensure thatcape the shadow of the past; that, somehow in that companies may be learning in terms of ogy was impressed on the company during similar tragedies won’t happen in the future.some way, we eventually confront the demons crisis communications, there are still situa- recent talks with victims. Yet it’s hard to imag- Instead, Stock maintained that “the sufferingof our own actions, individual or corporate. tions that sorely test those evolving skills. In ine that Grünenthal could have expected many that occurred…50 years ago happened in aThey call it karma, from which there’s no that context, the Grünenthal Group’s current of those victims or their families to respond world that is completely different from today.”escape by simply writing a settlement check to ordeal merits a closer look. warmly to its pronouncements. Predictably, vic- In many countries, victims are still waiting forremit ancient sins or recent misdeeds. tims like Freddie Astbury—born armless and Grünenthal’s chief executive Harald Stock not compensation from Grünenthal. So we have legless 52 years ago and now a thalidomide vic-Historically, it was a reminder of how the tha- only apologized for the suffering of thalido- only a stunningly belated apology that offers tim’s advocate—were instead contemptuouslylidomide nightmare helped shape the current mide victims, he apologized for not apologiz- no solution for anyone to anything. Instead, dismissive. “It’s a disgrace that it’s taken themenvironment in specific practical ways. Class ing. “We ask that you regard our long silence the company has only underscored the tardi- 50 years to apologize,” said Astbury. “For yearsactions and plaintiffs’ lawyers cast as moral as a sign of the shock that your fate caused in ness of the apology (it was in “shock” for 50 [the company] insisted they never did anythingavengers; aggressive regulation on all business us,” said Stock, speaking in the city of Stolberg, years) and encouraged perceptions that its cur- wrong and refused to talk to us.”fronts (nowhere more so than with food and where Grünenthal is based. The occasion was rent tears are but crocodile tears.drugs); lobbyists enlisted to ease the burden the unveiling of a bronze statue of a child born In the art of the Public Apology, there is a The apology is additionally puzzling in light ofon manufacturers and NGOs deployed in the without limbs—again, a reminder that power- central precept: in order to be credible, there ongoing class action litigation that Grünenthalopposing cause—the thalidomide litigation and ful visual images drive events. must be some sort of remediation, a penitential has refused to settle. (Grünenthal’s British dis-public furor were indeed eloquent precursors act that will serve those who’ve been injured tributor did settle in July.) From a strictlyto our current mélange. and provide the public with sufficient reason to
  • 10. Weeklybusiness standpoint, Stock’s apology won’t like- past liability or infuriating victims with isly serve the company’s interests in that lawsuit; apology, Grünenthal might have used the oc-it may only remind the fact-finders of what the casion to propose any number of initiativesplaintiff’s lawyer in the case calls “a calculated underscoring the company’s good citizenship.corporate strategy to avoid the moral, legal Grünenthal did take a step in that direction inand financial consequences of its reckless and 2009 when it pledged 50 million euros to helpnegligent actions…” victims, although bitter complaints still abound as victims say Grünenthal’s settlements andWhat then could have possibly driven Grü- benefactions are woefully inadequate to sup-nenthal to ensnare itself in this cul-de-sac? port their day-to-day needs.One explanation is that, when the idea for thememorial was proposed, the city government A more practicable strategy may lie with thestipulated that Grünenthal be involved. Pre- drug itself. After all, thalidomide is still usedsumably, the company felt it had no choice. as a treatment for multiple myeloma (a plasmaHow could it refuse? But once it said yes, what cell cancer) and leprosy. Research is also beingwas Stock supposed to say? conducted to determine if thalidomide is useful in the treatment of AIDS and arthritis as wellIt was a no-win situation. If Grünenthal had as other cancers.simply declined to participate, it would haveseemed heartless and indifferent. On the other It would seem that here, if anywhere, is anhand, in a hard-ball approach, the company opportunity for the company to make what-could have cited ongoing litigation as reason to ever atonements it feels in its soul should bebow out. The adverse reaction might have been made. Direct support for that research, as wellless stinging than the response to its messy as a public information campaign to spotlightapology for not apologizing, while the city of its potential, might be apology enough for 50Stolberg might have shared the blame for set- years of guarded silence. It’s never too late toting an impossible condition to the memorial save somebody’s life. Lgoing forward. Richard S. Levick, Esq., President and CEO of LEVICK, represents countries and companies in the highest-stakesOnce Grünenthal decided to participate, the global communications matters—from the Wall Streeterror in judgment was in saying too much. crisis and the Gulf oil spill to Guantanamo Bay and theSome few careful, compassionate words would Catholic Church.have sufficed and, for the rest of the occasion, adignified non-committal silence. THE URGENCY OF NOW.Yet there was an alternative solution to whichwe have already hinted. Without admitting