The Bitter Pill of Scandal

In his latest column for Bloomberg Businessweek online, Drucker Institute Executive Director Rick Wartzman comments on a recent piece in Harvard Business Review by Raymond Gilmartin, who was chief executive of the drug maker Merck during the Vioxx scandal.

In his HBR article, Gilmartin called for a series of steps to “renew and restore faith in corporations and capitalism.” Wartzman notes that Peter Drucker would have been in favor of everything Gilmartin advocated, such as maximizing value for society, focusing on long-term results and providing employees with a sense of purpose.

[EXPAND More]“Still,” Wartzman writes, “as simpatico as Drucker would have been with this list of beliefs, I can also see him wishing that Gilmartin had been—as Drucker once said admiringly of another man—”ruthlessly candid, above all with himself.” For had he been, Gilmartin might have seen fit to answer this question: How can someone who advocates all these virtues have presided over the Vioxx mess?”

From there, Wartzman explores how and why the most honorable organizations sometimes slip up.

“In one respect,” Wartzman says, “it’s quite simple: Big companies like Merck, which has about 90,000 employees around the world, are mini-societies, full of actors good and bad.”

So what’s a company to do? Wartzman provides several ideas, including promoting only people of strong character, not confusing the delegation of tasks with an abdication of responsibility and ensuring that stated beliefs and actions are consistent. “Gilmartin’s piece is fine as far as it goes,” Wartzman concludes, “but he should have made this clearer: Without the utmost care, even a company that espouses the most righteous values can find itself swallowing the bitter pill of scandal.”[/EXPAND]