Board Governance Plays Out on ESPN

After noting what an oddity that was last night, let me begin this Blog by saying that as a father and a grandfather, my heart aches for those who were (at least to this point, allegedly) victimized by a former Penn State assistant football coach.  The ignorance of and/or lack of knowledge re: how to monitor/eradicate pedophilia in our country is totally unacceptable.  Maybe Penn State’s situation will bring the additional impetus to make needed progress against that atrocity.

Allow me also to say that as someone who was born in Altoona, PA, and who lived in that area until graduation from high school, I have been a lifelong Penn State fan, although I did not go to college there.  The issues that have surfaced are troubling to many, like me, who follow Penn State – our following fueled by a belief that this was a school that could excel and follow the rules.

So what, if anything, have we learned from how this situation has played out up to now?

First, the Board acted quickly, decisively and publicly yesterday on the debilitating issues that are currently facing the university.  While we may or may not agree with some or all of their decisions, the Board became accountable and did what it felt it had to do with the information it had at this point in time.  And quick action was required as Penn State had already lost the PR battle.

Second, there are basically three types of corporate governance – proactive/engaged (very good), reactive/not as engaged (average at best) and no governance (unacceptable).  Last night was an example of a combination of proactive and reactive governance, proactive in the sense the Board was committed, from a business perspective, to stabilizing the Penn State brand and, from a societal perspective, to improving the University’s ethics policies going forward. Unfortunately, it was also reactive in that the controls (monitoring systems) and risk management processes that should have been put in place years ago were either not activated or utilized.

Third, this situation is NOT about Penn State’s football program, per se (although some have zeroed in on that as the root cause of the situation).  Rather it’s about a fundamental lack of leadership of the type I have written about in past Blogs.

In my opinion (based on decades of both senior management experience and public/private/NFP Board service), what happened at Penn State has happened and will happen to any corporation or university where one individual, on an incremental basis, is allowed to become bigger than the organization he or she works for.  It’s simply a recipe for disaster, as that individual, a mortal human, has been turned into a being that is ultimately unable to live up to the lofty status they have been accorded.  For example, when someone asks you what is the first thing you think of when a university’s name is mentioned, it’s probably a negative indicator if you respond with the name of the football or basketball coach.  Coaches are not products of a university.  Successful academic programs and successful (and ethical) athletic programs are the university’s products.

A more astute, more proactive/engaged Board of Trustees would have years ago seen the potential for something like this to happen, and would have put safeguards in place with the University’s President in an attempt to minimize the effects of wrongdoing or, in a best case scenario, make sure the bad things don’t happen.  Present day comfort is an insidious disease as it allows little things to become very big problems that others have to deal with in the future.

So while there was a failure of operational leadership at Penn State, there was also a governance failure.  Let’s hope that all organizations that have Boards will now require their Boards to take a hard look at what I call the “gradual sainthood” syndrome and begin to deal with it before their Black Swan event brings the organization to its knees, as it has at Penn State.