Cynthia Cooper Weighs in on Corporate Culture and Ethical Decision-Making — Transcript

Full transcript

1. 0:13- Hello, I'm Richard Chambers,
2. 0:14the Senior Internal Audit Advisor
3. 0:16for AuditBoard.
4. 0:17And welcome to another
5. 0:18in my continuing series, "Agents of Change"
6. 0:21that I'm doing on behalf of AuditBoard.
7. 0:24I am pleased to welcome back for another session today,
8. 0:27Cynthia Cooper.
9. 0:29Cynthia is an internationally recognized speaker, consultant
10. 0:32and best selling author, and advocate.
11. 0:34She's the CEO of CooperGroup, LLC.
12. 0:38Cynthia consults and speaks to audiences
13. 0:40around the world on ethics and leadership.
14. 0:43In 2020, Cynthia was selected by Time Magazine
15. 0:46to be included in 100 Women of the Year,
16. 0:49Time's list of the most influential women
17. 0:52of the last hundred years.
18. 0:54In 2002, she was named one of Time Magazine's persons
19. 0:57of the year for her role in unraveling
20. 1:00and reporting what would become the largest corporate fraud
21. 1:03in history at WorldCom.
22. 1:05Cynthia, welcome back.
23. 1:06It's so good to have you.
24. 1:07- Thank you for having me back, Richard.
25. 1:09- Cynthia, since WorldCom, you've been a strong
26. 1:12and vocal advocate for ethical decision making,
27. 1:16and the importance of integrity
28. 1:18and courage in the corporate sector.
29. 1:21You most recently have teamed up with Erika Cheung,
30. 1:24the whistleblower from Theranos.
31. 1:26Can you talk a little bit
32. 1:28about the work you're doing together?
33. 1:29- So I have my own consulting firm, CooperGroup,
34. 1:34where I continue to speak and write.
35. 1:37But, Erika and I were introduced
36. 1:39through the Association of Fraud Examiners,
37. 1:41and we've done a number
38. 1:43of presentations together, fireside chats,
39. 1:48and we are now doing some consulting work,
40. 1:51and also doing some whistleblower support work.
41. 1:55So if you're a whistleblower, you're often approached
42. 1:58by other people who have either been a whistleblower
43. 2:01or they're considering becoming a whistleblower.
44. 2:06When I went through my experiences,
45. 2:08I had to try to navigate through that,
46. 2:10there was no book or guidance for me.
47. 2:15And so, Erika and I really want to be able
48. 2:18to share our experiences with other whistleblowers
49. 2:23or potential whistleblowers,
50. 2:24and also provide them with resources that are helpful,
51. 2:29help them to set expectations, and then connect them
52. 2:33with people who might help them walk through the process.
53. 2:37- Yeah.
54. 2:38Well that's, I think, very selfless
55. 2:41and it's a public service that I think you guys are doing
56. 2:44because certainly there have been plenty of cases,
57. 2:48and I see it all the time in the public sector
58. 2:51with internal auditors who somehow
59. 2:55they crossed somebody or said something
60. 2:59about somebody's pet project or whatever,
61. 3:01and then they find themselves being fired
62. 3:04or being retaliated against.
63. 3:06I've always felt the need to go out there
64. 3:09and defend them, and call out the government officials
65. 3:12and others who make it happen.
66. 3:14But I know this,
67. 3:16for every one that I know about,
68. 3:18there's probably a hundred I don't know about.
69. 3:21Where people are done the same way,
70. 3:23so the same thing happens.
71. 3:25For me, what you guys are doing,
72. 3:27it's a great public service
73. 3:28and I, for one, am very grateful that you're doing it.
74. 3:31- Well, Erika, she has shared with me how much it meant
75. 3:36for us to be able to connect,
76. 3:38because I'm 20 years down the road
77. 3:41and she was just out of college when she blew
78. 3:43the whistle at Theranos.
79. 3:45And I felt the same way when I met Sherron Watkins,
80. 3:48and Coleen Rowely, they were a bit ahead of me.
81. 3:50And it was just...
82. 3:52You feel as if you're on this island, right?
83. 3:55But when you meet other people who have gone
84. 3:59through the same experiences,
85. 4:00and you realize there's this kind of
86. 4:03a whistleblower phenomenon, right?
87. 4:06That if you step into that whistleblower box,
88. 4:09you're going to begin to experience a lot
89. 4:11of the same things.
90. 4:12- Right.
91. 4:13- I think I've mentioned to you before,
92. 4:15and you've probably read about
93. 4:17what whistleblowers experience.
94. 4:18- Oh, yeah.
95. 4:19- But, you know, not only retaliation,
96. 4:22but they often have difficulty finding employment.
97. 4:26They often suffer from depression.
98. 4:27Studies show that their marriages frequently end
99. 4:31in divorce, and they end up filing bankruptcy.
100. 4:34Real, real difficulties for people who step over
101. 4:39that invisible line that sometimes
102. 4:41you don't even know exists, and speak truth to power.
103. 4:45And it's very hard to ever be considered part
104. 4:48of the team again.
105. 4:50So most people who become whistleblowers
106. 4:52end up leaving their organizations within a year,
107. 4:56and going in a new or different direction.
108. 5:01- It's sad.
109. 5:02You know, it's true,
110. 5:03as I said, in government a lot of people refer
111. 5:06to the auditors as the watchdogs,
112. 5:09and as I've often said, everybody loves a watchdog
113. 5:12until it barks, because it's at that point
114. 5:15that they somehow say,
115. 5:16"Hmm, this might not be good for me."
116. 5:19And so, I think you guys are out there helping people
117. 5:23find their voice, and more importantly,
118. 5:25find themselves after those things happen.
119. 5:29- Yeah.
120. 5:30I love what you just said about finding your voice.
121. 5:32I think that's important, not only for whistleblowers,
122. 5:36but for all of us, right?
123. 5:38- Right.
124. 5:39- [Cynthia] And particularly people in internal audit.
125. 5:41- Right.
126. 5:42- To find our voice even if...
127. 5:43I believe you wrote, I believe it was you,
128. 5:45"Even if your voice is shaking,"
129. 5:47was there a quote?
130. 5:48- [Richard] Right.
131. 5:49- Find your voice.
132. 5:51- Even if it's shaking inside.
133. 5:52- Even if it's shaking inside, yeah.
134. 5:56- You know, the WorldCom and Theranos scandals,
135. 5:58certainly have gotten a lot of attention,
136. 6:01and for good reason, but on the surface,
137. 6:04those two scandals, they don't have a lot in common.
138. 6:09What would you say are the comparisons?
139. 6:13What makes those two stories have some similarities?
140. 6:18- Yeah, you're right, there are.
141. 6:20I mean, there are some differences, of course,
142. 6:24Theranos was an entrepreneurial startup company,
143. 6:28private company in Silicon Valley.
144. 6:34WorldCom started out as an entrepreneurial company
145. 6:37and grew very rapidly through acquisition,
146. 6:40acquiring other entrepreneurial companies.
147. 6:43And of course grew to $38 billion,
148. 6:45over a hundred thousand employees.
149. 6:46So they were at very different places on the growth curve.
150. 6:50But there were also, I think, some similarities
151. 6:54between the two companies as well.
152. 6:57So if you look at Theranos and WorldCom,
153. 7:01you had situations where there was a gap.
154. 7:06In the case of WorldCom, between reality and expectations.
155. 7:09And in the case of Theranos, there was a gap
156. 7:12between the promises she made and her vision really,
157. 7:16and expectations.
158. 7:18And instead of telling the public the truth,
159. 7:20the executives weren't willing to accept failure
160. 7:24in both of those cases.
161. 7:27- Success at any cost, basically.
162. 7:28- Success at any costs, exactly.
163. 7:30And I think perhaps more than greed,
164. 7:33in some of these cases,
165. 7:35I think pride comes into play.
166. 7:38People just don't want the company to fail on their watch.
167. 7:42Or at least as much as greed,
168. 7:44I think it plays a role.
169. 7:47So there are similarities and certainly,
170. 7:49and I've already alluded to Erika and me,
171. 7:53we had a lot of similarities in what we experienced
172. 7:56as whistleblowers.
173. 7:59We both received pushback from members of the board
174. 8:05of directors and the executive team.
175. 8:07Erika went to George Schultz and received some pushback
176. 8:12at that level, and retaliation in the case of Theranos,
177. 8:16the company hired people to follow her.
178. 8:20So, you know, very similar in terms of what we experienced
179. 8:26as whistleblowers.
180. 8:28- Cynthia, we've talked a lot about companies
181. 8:31and ethics, and decision-making and all,
182. 8:35and a lot of it comes back to culture.
183. 8:37How would you describe corporate culture?
184. 8:40And what advice would you offer CAEs, when it comes
185. 8:44to assessing or auditing the culture in their organizations?
186. 8:48- Well, I've heard culture described
187. 8:51in a number of different ways,
188. 8:52and to a lot of people I think it's a mystery, right?
189. 8:56What is culture and how do you assess or audit culture?
190. 9:00And I think we need to take the mystery out of it.
191. 9:03Culture, one definition I've heard,
192. 9:07is that culture is to an organization,
193. 9:09as personality is to an individual.
194. 9:13I've also heard that it's the glue really
195. 9:16that holds the organization together,
196. 9:18that provides some stability.
197. 9:21But I would really say
198. 9:23that culture is like peeling an onion.
199. 9:26There are so many different elements
200. 9:27and aspects of a culture
201. 9:29from vision, to values, to tone at the top,
202. 9:33even the physical location and what that's like,
203. 9:37just observing what the work environment is like.
204. 9:41So you have to first identify
205. 9:43all of these different elements of a culture.
206. 9:47But I'd love to hear your perspective.
207. 9:50How do you see culture?
208. 9:51How would you define culture within an organization?
209. 9:55- You know, I've been dealing with this issue of culture now
210. 9:59for eight years.
211. 10:02I think 2014 is when I first started talking about it.
212. 10:04And I sort of like a very simple definition,
213. 10:09there are all kinds of academic definitions
214. 10:12and all of culture.
215. 10:14But, for me, I like the simple one:
216. 10:16"It's how we do things around here."
217. 10:19- [Cynthia] Yeah.
218. 10:19- Because, I mean, a great example is Enron.
219. 10:22Enron had the most amazing value posters and all,
220. 10:28but it's what you do and not what you say.
221. 10:32Because when it came down
222. 10:33to what was really being done there,
223. 10:35it was very, very different.
224. 10:37- Yeah. I like that.
225. 10:39I love the definition,
226. 10:41and when you're really not in alignment, right?
227. 10:44- [Richard] Right.
228. 10:45- So when the organization professes certain values,
229. 10:46but they're not living by those values,
230. 10:48they're not in alignment, the same with us as individuals.
231. 10:52- That's right.
232. 10:53That's right.
233. 10:54And so, you know, when it comes to advice for auditors
234. 10:58and CAEs, about how do you audit culture,
235. 11:02first of all, if you've never assessed culture,
236. 11:04you're probably going
237. 11:06to find yourself underwater pretty quickly.
238. 11:08I believe the best way to do it is to start out
239. 11:12by looking at culture in every audit you do,
240. 11:15because at the end of the day,
241. 11:17we're looking for root causes, right?
242. 11:18When we have findings, we're looking for root causes.
243. 11:22And all too often, the root cause lies in culture.
244. 11:26It's not that somebody didn't follow a regulation
245. 11:29or a policy, it's because they were incentivized
246. 11:32not to follow the policy.
247. 11:35They were incentivized with the ends, not the means.
248. 11:39- I also think that doing an overall assessment annually
249. 11:45can provide tremendous benefits.
250. 11:48And you asked me earlier, you said,
251. 11:51"I'm sure you've given a lot of thought to WorldCom,"
252. 11:53and I have, for the past 20 years, not only WorldCom,
253. 11:57but all the, I've studied many, many frauds,
254. 11:59and how they occurred, and given a lot of thought to what
255. 12:04can we do to prevent frauds and detect them more quickly.
256. 12:09So if we were to touch everyone
257. 12:11in the organization annually, through a combination
258. 12:15of one-on-one interviews, roundtable discussions,
259. 12:20culture questionnaires, and we asked the right questions,
260. 12:25I think some of these issues would fall out early.
261. 12:30I think we could detect them much sooner,
262. 12:33because I think there are people who would raise their hand
263. 12:36and say, "Well, I'm in the sales division
264. 12:39and I've been asked to do this,
265. 12:41and I'm not comfortable with it."
266. 12:42So I think-
267. 12:43- Starts to surface up this stuff.
268. 12:45- Yeah, I think so.
269. 12:46I would love to know, what are you seeing out there?
270. 12:50What percent of audit departments are assessing,
271. 12:55either the whole culture or portions of the culture?
272. 12:59- Well, the last surveys I've seen is that very few
273. 13:03do corporate-wide or company-wide audits of culture.
274. 13:07But increasingly, I think culture raises its head
275. 13:12as something that they get into
276. 13:16when they're doing individual audits,
277. 13:18particularly if they find a repetitive sort of condition.
278. 13:23They have to figure out what's really
279. 13:26at the cause here, what's the root cause?
280. 13:29And all too often, and the one common thread I think
281. 13:32I find with cultures, is that the ones
282. 13:36that I would call toxic cultures,
283. 13:38one of the most common characteristics
284. 13:41is that they are cultures
285. 13:43where the ends justify the means.
286. 13:45It's that, "We have to achieve this performance level,"
287. 13:51or, "These are your performance metrics,"
288. 13:53and nobody really looks hard at, "How did you get there?"
289. 13:57And that, to me, it just repeats itself over and over
290. 14:01in some of these cases.
291. 14:02Cynthia, I can't tell you enough how much I appreciate
292. 14:05you sitting down with me,
293. 14:06and having the conversations we've had.
294. 14:09I know that our viewers are going to be,
295. 14:10like I am, really riveted at the kind of insights
296. 14:14that are being offered.
297. 14:15Thank you again so much for doing this
298. 14:18and for joining me, and talking about
299. 14:19these important topics.
300. 14:21- I've loved it.
301. 14:22Thank you for inviting me.
302. 14:23I hope to continue the conversation.