April 20, 2010

Self-Governance, An Abstract Concept.......

Satellite technology is a wonderful thing. While traveling to Dallas this past Sunday, I was able to watch the Verizon Heritage golf tournament live from my coach seat on Continental Airlines. It was a particularly tight match - by the 10th hole, three players were in close contention for the championship. In professional golf, there are significant spoils to the winner. In this particular event, the winner received $1.03 million and second place received a paltry $616 thousand - with the dollars falling off to where 60th place made just over $11 thousand. This doesn’t even take into consideration the value of the FedEx Cup points, but I digress.

Going into the 18th hole, tournament leader Jim Furyk held a one stroke advantage over his playing partner Brian Davis. On the 18th, Davis hit a combination of great shots and tied the tournament with a birdie - at the end of regulation both players were tied at 13 under par and a sudden death playoff ensued. The Verizon Heritage golf course is one of the most precise courses on the PGA tour. The fairways are narrow, the greens are small, the bunkers and trees are large and the wind is brutal. The course was actually carved from a swamp and the remnants of reeds and undergrowth still abound.

As the players engaged the first hole of the sudden death playoff, Furyk’s second shot landed safely on the green about 30-40 feet from the pin. I’ve learned to never underestimate the prowess of professional golfers, but this clearly set up Furyk for a “Hail Mary” birdie putt to win. Davis’ second shot approached the green but caught the greenside bunker. The commentators expected the playoff to continue to the next hole - anticipating Furyk to 2-putt for par and Davis to successfully get “up and down” from the bunker for a similar par. Then something totally unique to golf occurred.

Immediately after hitting his bunker shot, Davis called a penalty on himself. In real time, no one saw his miniscule mistake, but the world collectively groaned as the TV replay showed his sand wedge ever so slightly tap a reed twig laying in the bunker on his backswing. The rule is clear, moving a twig in a bunker is against the rules, and Davis knew he had broken it. After a very painful five or six minute interval of muffled dialog and continuous TV replay of the infraction, the PGA rules officials confirmed it was a two stroke penalty – Furyk wins. After this righteous display of “self-governance” by Davis, I looked up this term on Wikipedia which classified it as an “abstract concept.”

My golfing partners and I play reasonably well, but not anywhere close to the level of the pros. In my group of 14-16 handicappers we don’t hold ourselves to this level of rule scrutiny, in fact, a foot wedge is one of the most commonly used clubs in our bag. We generally consider being in the rough punishment enough, so if your ball lands in a divot you get to move it out. After all, we aren’t playing for a million dollars.

As I continued my airborne journey, it just so happened I was on a connecting flight with a PGA official so I asked his opinion on the matter. He said something that made me think – “This is what makes golf special.” I couldn’t agree more, so when I got to the hotel I looked up how often this situation has occurred. The most extraordinary example of self-governance in professional golf was the 2008 self-disqualification of golfer J.P. Hayes. Hayes played a non-conforming (illegal) golf ball by mistake for one hole of a PGA Tour qualifying event in Texas.

Hayes subsequently disqualified himself from the tournament which made him ineligible to play fulltime on the PGA Tour in 2009. What an incredible example this sets for those of us who honor the game and struggle to get better. I then began to think. Wouldn’t it be great if the top corporations, the ones that I aspire to model EthicsPoint after, held themselves to this level of scrutiny?

I then recalled the complaints from many of my peers that the Sarbanes-Oxley guidelines and regulations under Section 404 were too onerous for small corporations. The smaller, less established corporations didn’t have the revenue to support these requirements. It was estimated that 404 controls cost $3-8 million to manage regardless if your company generated $1 million or $100 billion. Thankfully this law has been changed.

Just like the rules of golf are more appropriate for the pros, the 404 SOX controls were more appropriate for very large corporations, but tedious and overly burdensome to smaller organizations.

But back to self-governance. Why is it that we see the Enron’s of the world as the poster children for greed and deceit when they should be the shining example for self-governance? I could pontificate for another 1000 words on the why and what I think they should do, but I am more interested in what you think?

Comments

1 Response to "Self-Governance, An Abstract Concept......."

Alex Todd said... May 3, 2010 at 2:38 PM

Yes, there are business lessons to be learned from golf. I am a proponent of corporate self-governance and am introducing the "aspirational corporate governance" framework in a new Wiley textbook (see http://trustenablement.com/index.htm#book) to help governance committees of corporate boards design sustainable corporate governance practices and thereby restore stakeholder trust.

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Ronald Reagan
There are no easy answers, but there are simple answers. We must have the courage to do what we know is morally right.

John Quincy Adams
If your actions inspire others to dream more, learn more, do more and become more, you are a leader.

Aristotle
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Ray Kroc
The quality of a leader is reflected in the standards they set for themselves.

John Maxwell
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