On her weekly podcast entitled, The Guardian, Ryn Melberg reveals the type of culture behind the alleged governance failures at Dow Chemical. In an article published by Reuters on October 13, 2015 and written by Brian Grow and Joshua Schneyer, CEO Andrew Liveris draws criticism for allowing his wife Paula Liveris involvement in the rebuilding of a Dow owned hotel. “While children of company presidents land jobs at the company their parent owns or runs, it is out of the ordinary for the spouse to have responsibility for a multi-million dollar project, especially when they are fulfilling unofficial roles,” Ryn tells her listeners. The Guardian podcast can be heard on iTunes, or from Ryn’s web site, www.rynmelberg.com.
Melberg believes that in a culture that accepts or does not question the alleged misdeeds of the leadership, that any kind of reporting and risk taking are both discouraged. “In this culture, company gossip will spread about the negative consequences of getting in an argument with the CEO’s wife,” Ryn stated. “From a governance point of view, this will shutdown the participation of the employees in governance related issues. The employees recognize that there is no upside to pointing out anything questionable. So keep your mouth shut and keep your job.”
Loss of Creativity
But poor governance is extremely costly in other ways. The pressure to stay quiet shuts down innovation too. Any kind of innovation or invention is always risky, at least to some degree. Employees learn even from informal communications channels that any kind of risk taking is discouraged. Creative or innovative people will not be encouraged to share ideas that are not already part of any accepted, organizational norm. “Reporting or not reporting questionable behavior is more than simply not being a tattle tale. It stifles all kinds of conversations and erodes trust,” Ryn says. “When innovative people shut down, they do not simply stop having good ideas. They simply take them elsewhere. The best people will leave and take their good ideas with them.”
Melberg advises people who are in situations like the one described at Dow to be open to relocating and working someplace else. “I try to always focus on the things I can control,” she says. “No one can control their boss but they can control where they work. So if a situation is morally or ethically compromising, vote with your feet and go somewhere else. There are still plenty of business leaders who are moored to an ethical way of working.”