As Rupert Murdoch's News Corporation empire comes under renewed criticism, Pia Lee outlines why Murdoch has failed not just in terms of corporate governance, but also in terms of guidance, values and vision.
Will media magnate Rupert Murdoch survive his latest test − the report by the House of Commons Culture, Media and Sport Committee?
The committee said the chairman and chief executive of News Corporation was “not a fit person to exercise the stewardship of a major international company”.
It said that Murdoch had “turned a blind eye and exhibited wilful blindness” by not taking steps to become fully informed about phone-hacking at his London newspapers.
The report said this culture permeated from the top and “speaks volumes about the lack of effective corporate governance at News Corporation and News International”.
A public whipping by anyone’s standards.
It’s particularly damning for the leader of an organisation such as News Corporation as it calls into question the culture and values of the media empire and the leadership examples (or lack of it) from Mr Murdoch himself.
He did everything to wipe his hands and, even worse, blamed the leadership of the next level down.
Get rid of the lower rungs of leadership such as Rebekah Brooks through ‘her resignation’ from News of the World and removing his son James, formerly chief executive of News International.
He even tossed away the offending publication News of the World to abrogate himself from blame.
But running any organisation is about accountability. As UK Labour MP Tom Watson rightly said, “It is his company, his culture, his people, his business, his failures, his crimes.”
Financial rewards for shareholders are not the sole focus for a chief.
A leader has a much broader responsibility for corporate governance, guidance, values and vision. The culture is largely created from the example set by the leader or, as the proverb aptly tells us, a fish rots from the head down.
Murdoch has been blinded by the power gained from financial success and with it lost accountability.
The phone-hackings, the sackings, the closure of long-standing publications, the Leveson inquiry and the House of Commons report surely is a stark lesson for Murdoch and, indeed, all leaders: that they face up to their broader responsibilities beyond soley delivering financial returns , or dodge them at their peril.
Culture and values are the set of underlying principles that shape decision-making and actions internally and externally, and guide a corporation’s cultural compass both in respect to business and in the treatment of employees.
They determine organisational behaviour and become a core part of the companies way of doing things or DNA.
The committee found that News Corporation’s executives sought to “cover-up wrong-doing” and that the “failure to follow up very public wrong-doing not just phone hacking and discipline the perpetrators, that should have some resonance as well”.
Interestingly, the media conglomerate has its own code of conduct in its “The Code of Ethics for the Chief Executive Officer and Senior Financial Officers” effective July 2006, according to its website.
This states that “the chief executive officer and each senior financial officer shall, at all times, conduct himself or herself in an honest and ethical manner, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships”.
This covered all CEOs such as News International chief executive Les Hinton, former chief executive of News’s UK arm, Rebekah Brooks and Rupert Murdoch himself as chairman and chief executive officer of News Corporation and Fox News.
Values form the immovable core of an organisation that acts as the ballast to the need for providing agile strategy and direction. All values get tested both on a personal and professional level, and it is in those times that values need to be publically demonstrated, not bent to expedite actions or achieve the interests of a chosen few.
It is the deep-seated nature of values and purpose that align people to an organisation, to a sense of contributing value through their jobs to an outcome bigger than themselves.
Once the values are breached, trust and engagement from both employees and loyal customers are irretrievably damaged.
Values set in calmer times really come into their own in stormy ones. They need to be used by leaders to raise the level of thinking for the greater good.
If News Corporation had been led from the front to “live their values”, this whole circus of phone-hacking, sackings, the Leveson inquiry and House of Commons report wouldn’t have happened.
Instead, a disappointing legacy will be left behind by a blinded Murdoch.
About the author
Pia Lee is CEO of LIW global leadership consultancy