(Published in Business Mirror under the Mirror Image Column, June 20, 2011)
It’s all over the press. News Corporation Chairman Rupert Murdoch has obviously metamorphosed from a venerable media mogul to a subject of assault from all sides.
Murdoch shut down the 168-year-old News of the World last week after it was accused of hacking and eavesdropping on the phones of politicians, murder victims and other famous personalities. There were also reports and revelations of cover-ups and potential bribery of the police, the resignation of top Murdoch executives and the death of a whistle-blower.
A scandal of this proportion is rife with invaluable business, management, and leadership lessons that we can learn from.
Clearly, ethical conduct is one of them. It’s obvious that eavesdropping on other people to get information and publish it is absolutely unethical, not to mention the reported police bribery to cover up. But what is glaring is the gap between what Murdoch is publicly preaching and what is actually happening.
A look at News Corp.’s web site leading to the Standards of Business Conduct reveal a letter from Murdoch saying, “hundreds of millions of people around the world trust us for the best quality and choice in news, sports and entertainment. This public trust is our Company’s most valuable asset: one earned every day through our scrupulous adherence to the principles of integrity and fair dealing.”
Moreover, the site provides links leading to extensive public commitments outlining “Trust in the Workplace,” “Trust in Our Employees,” “Trust in the Free Market,” and “Integrity of the Law.” It goes on with the conclusion that “the Company expects that every employee, at every level, will strive to conduct himself or herself with integrity.”
Trust and integrity are values that all of the stakeholders of News Corp. expect from it. The company may have focused too much on the bottom line, that hacking into cell phones was a way to scoop the competition.
The big lesson here is that profit alone will not make companies maintain its success. Companies that embrace ethical values such as trust and integrity get employee commitment, customer loyalty and shareholder confidence, leading to further growth.
The scandal also presents lessons in leadership. The gap between what Murdoch was stating as the chairman, and what has blown up as a corporate crisis, clearly shows a leadership gap as well. Leaders, in times of public crisis need to take full responsibility. James Murdoch, in his public apology, was quoted by The New York Times as saying that the company and the newspaper had “wrongly maintained that these issues were confined to one reporter”—an apparent attempt to put the blame on others and take partial responsibility.
Murdoch might learn from the example of James Burke, the CEO of Johnson & Johnson who had the unfortunate task of dealing with the disastrous aftermath of the cyanide-laced Tylenol capsules. He promptly acknowledged the problem, accepted full responsibility, and put his money where his mouth was: Not only did he offer to exchange all Tylenol capsules already purchased for Tylenol tablets. He changed the packaging to a more secure one to ensure that the problem would never happen again. Both the company and the brand emerged from the crisis with their reputations enhanced.
Indeed, Murdoch decided to close down the News of the World in an attempt to correct the wrongdoings and penalize those who are responsible. But critics see this as a long-planned business move intended to create an opportunity for other publications in his media conglomerate to publish on Sundays.
The scandal has already resulted in huge losses to Murdoch’s family, amounting to almost $1 billion from the drop in News Corp. (NWSA) stock since the phone-hacking scandal broke out.
Whether Murdoch will need to make additional moves and take more responsibility to salvage his company and its reputation remains to be seen.
****
Reynaldo C. Lugtu Jr. teaches strategy, management and marketing courses in the MBA Program of De La Salle University, Graduate School of Business. He may be e-mailed at rlugtu2002@yahoo.comThis e-mail address is being protected from spambots. You need JavaScript enabled to view it , or visit his blog at http://rlugtu.blogspot.com.
It’s all over the press. News Corporation Chairman Rupert Murdoch has obviously metamorphosed from a venerable media mogul to a subject of assault from all sides.
Murdoch shut down the 168-year-old News of the World last week after it was accused of hacking and eavesdropping on the phones of politicians, murder victims and other famous personalities. There were also reports and revelations of cover-ups and potential bribery of the police, the resignation of top Murdoch executives and the death of a whistle-blower.
A scandal of this proportion is rife with invaluable business, management, and leadership lessons that we can learn from.
Clearly, ethical conduct is one of them. It’s obvious that eavesdropping on other people to get information and publish it is absolutely unethical, not to mention the reported police bribery to cover up. But what is glaring is the gap between what Murdoch is publicly preaching and what is actually happening.
A look at News Corp.’s web site leading to the Standards of Business Conduct reveal a letter from Murdoch saying, “hundreds of millions of people around the world trust us for the best quality and choice in news, sports and entertainment. This public trust is our Company’s most valuable asset: one earned every day through our scrupulous adherence to the principles of integrity and fair dealing.”
Moreover, the site provides links leading to extensive public commitments outlining “Trust in the Workplace,” “Trust in Our Employees,” “Trust in the Free Market,” and “Integrity of the Law.” It goes on with the conclusion that “the Company expects that every employee, at every level, will strive to conduct himself or herself with integrity.”
Trust and integrity are values that all of the stakeholders of News Corp. expect from it. The company may have focused too much on the bottom line, that hacking into cell phones was a way to scoop the competition.
The big lesson here is that profit alone will not make companies maintain its success. Companies that embrace ethical values such as trust and integrity get employee commitment, customer loyalty and shareholder confidence, leading to further growth.
The scandal also presents lessons in leadership. The gap between what Murdoch was stating as the chairman, and what has blown up as a corporate crisis, clearly shows a leadership gap as well. Leaders, in times of public crisis need to take full responsibility. James Murdoch, in his public apology, was quoted by The New York Times as saying that the company and the newspaper had “wrongly maintained that these issues were confined to one reporter”—an apparent attempt to put the blame on others and take partial responsibility.
Murdoch might learn from the example of James Burke, the CEO of Johnson & Johnson who had the unfortunate task of dealing with the disastrous aftermath of the cyanide-laced Tylenol capsules. He promptly acknowledged the problem, accepted full responsibility, and put his money where his mouth was: Not only did he offer to exchange all Tylenol capsules already purchased for Tylenol tablets. He changed the packaging to a more secure one to ensure that the problem would never happen again. Both the company and the brand emerged from the crisis with their reputations enhanced.
Indeed, Murdoch decided to close down the News of the World in an attempt to correct the wrongdoings and penalize those who are responsible. But critics see this as a long-planned business move intended to create an opportunity for other publications in his media conglomerate to publish on Sundays.
The scandal has already resulted in huge losses to Murdoch’s family, amounting to almost $1 billion from the drop in News Corp. (NWSA) stock since the phone-hacking scandal broke out.
Whether Murdoch will need to make additional moves and take more responsibility to salvage his company and its reputation remains to be seen.
****
Reynaldo C. Lugtu Jr. teaches strategy, management and marketing courses in the MBA Program of De La Salle University, Graduate School of Business. He may be e-mailed at rlugtu2002@yahoo.comThis e-mail address is being protected from spambots. You need JavaScript enabled to view it , or visit his blog at http://rlugtu.blogspot.com.
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