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strategy and business
 / Winter 2012 / Issue 69(originally published by Booz & Company)


The Thought Leader Interview: William J. O’Rourke

S+B: What about shareholder actions, like a recent California State Teachers’ Retirement System complaint about Walmart?
I think FCPA sanctions are more likely to address shortcomings in governance. Let’s face it; shareholder actions have little effect, either in the courts or inside corporations. The vast majority of shareholders vote with the board recommendation. In my experience, the reason shortcomings in governance get corrected is that the CEO insists on it, or the board’s audit committee insists on it. Most sustained improvements involve more than mere compliance.

S+B: How do you approach ethical issues as a teacher?
My teaching is almost 100 percent example-based, and largely from actual personal experiences. I have come to the conclusion that the resolution of every ethical problem I’ve seen could have been handled better in some way.

S+B: Who have been your most important ethical role models?
I’ve thought a lot about what makes a person the way they are. For me, I give most of the credit to my father. My dad was a teacher and basketball coach in the small town of Munhall, Penn., where I grew up with a brother and four sisters. He was also a director of the city’s summer recreation programs, so he bought a lot of equipment. One day, the owner of the local sporting goods store came to our house and left a bag of golf clubs in the driveway. He said, “Tell your dad these are for him,” and drove away. When my dad found out, he said, “Come with me.”

We put the golf clubs into the car, drove to the store, and walked up to the counter together. My father said, “I did not pay for these.” He put them down. We walked out and drove home. He never talked about it again.

S+B: How important have the values of executive mentors been in your professional development?
I’ve been very fortunate in my career. Paul O’Neill has the best moral compass I have seen. Rick Kelson was also a role model. He was the CFO; general counsel; and the first VP of environment, health, and safety, a position O’Neill created in 1988. When Kelson was the CFO, I was the auditor. Rick insisted that I decide what was reported to the audit committee. He did not try to influence the reports, and never questioned a reported deficiency. He focused on improvement. When I was vice president of EHS, Alcoa had significant environmental reserves, which are easy to manipulate by putting some back into income. I reviewed all the environmental projects every quarter. If there was an overage, or shortfall, he asked me to reconcile it. But he never suggested manipulating the account; he never asked questions like, “Do you have $10 million for me?” I’m not naive. I was blessed to be working for a guy who never put me in that spot, and who taught me, by example, the right way to lead.

S+B: Public opinion polls these days give business executives low ratings for honesty. Do you think that today’s MBA students are less inclined to work for a large company because of their concerns about ethical business issues?
Most of them want to work for a large company — and not on Wall Street. In the late 1980s and through the 1990s, the “smart” business school students wanted to become billionaires in a week. I believe some of them sold their souls to make a dollar.

The students I am teaching today are not this way. I think the collapse of the economy has been sobering for them, and they are more conscious of the business value of social and environmental responsibility. I would characterize them as enlightened young leaders as opposed to merely ambitious. When I speak on college campuses, I come away encouraged about the ethical caliber of our next generation.

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