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Nick Leeson was known in financial circles as the original rogue trader for his misbehaviour on the trading floor in the early 1990s, and his story still stands out — not just because he was played by Ewan McGregor in the 1999 movie “Rogue Trader.” Leeson singlehandedly toppled a major financial institution. Indeed, today’s push for effective risk management of global trading practices can be traced back to his actions as a 25-year-old trader in 1995, when Britain’s oldest merchant bank at the time suffered a US$1.3 billion loss thanks to Leeson’s unauthorized speculative bets. The actions in question were not driven by greed. Rather, Leeson bankrupted the Queen’s personal bank, destroyed his career and reputation, and was sentenced to six and a half years in a Singaporean jail because he did not have what it took to admit failure. In this IBJ interview, Leeson talks to Ivey Business School Professor Gerard Seijts about lessons learned, the unique challenges managing trading risk today, and why he supports initiatives by Ivey’s Ian O. Ihnatowycz Institute for Leadership to help the world proactively develop business professionals with superior judgement driven by a proper balance of leadership character traits. As Leeson says, “People who freely admit that they are not sure about operational matters are not what we’re traditionally drawn to when we look for a leader, but it’s what we need.”

Bad leadership is clearly expensive. Fraud resulting from mismanagement at Wells Fargo, for example, has cost the bank about US$300 million in fines and pre-settlement investigative costs while wiping out around US$6 billion in shareholder value. Ex-employees, meanwhile, are seeking at least US$2.6 billion in a class action lawsuit related to the Well Fargo corporate culture that rewarded employees who created multiple accounts for customers without permission. And let’s not forget the extra millions lost from the hit to Wells Fargo’s brand value. <br><br> It has been less than a decade since banking-sector leadership and governance failures almost toppled the global financial system, but the lessons embedded in the 2008 financial crisis already appear forgotten as cases of appalling corporate behaviour continue to undermine capitalism. It is no secret that good leadership requires commitment to doing the hard work it takes to look out for all of an organization’s stakeholders, along with the intellect and competencies required to compete in today’s disruptive times. But as research into the financial crisis has made clear, good leadership also requires a balance of identifiable character dimensions. When recruiting leaders and directors, organizations have long invested time and money to ensure they are managed and governed by people with adequate experience and competencies. But all that time and money can be wasted when leadership character isn’t also given the attention it deserves. This is because costly failures in decision making are often rooted in character-based issues such as close-mindedness and impatience, as well as a lack of accountability, empathy, humility, and courage.

Although much had been accomplished since the members of the Commercial Building Energy Initiative Leadership Council first met in September 2009, the co-chairs were concerned about the local landlords' reluctance to engage in a public race to reduce energy consumption in their respective buildings. As one of three environmental initiatives launched out of CivicAction's Greening Greater Toronto initiative, reducing the energy consumption in commercial office buildings in the Greater Toronto Area was a project that would certainly require the landlords' support and commitment. Use with supplements CivicAction (B): The Target and CivicAction (C): The Awards.

Too many people fall into the trap of accepting that it is appropriate to use technicalities and loopholes to break the principles behind rules when they think they can get away with it. According to Andrew Fastow, this is a problem approaching endemic proportions as seen in business deals, political fundraising, and tax avoidance. And as the former chief financial officer of Enron, he knows what he’s talking about. In 1999, Fastow’s unique financing techniques were being called ground-breaking. He felt like a creative corporate hero, not a criminal. That changed in 2002, when he was indicted on multiple counts of fraud, money laundering and conspiracy. Fastow, of course, went to jail for bending accounting rules. As he recently told Ivey Business Journal, “The fact that I did not see what I was doing as fraud, and the fact that I was not thinking that what I was doing could hurt people, doesn’t mitigate what I did…. When I was in business school, there was only one word — shareholder. And I thought what I was doing was good for shareholders and employees, so I thought I was doing my fiduciary duty.” Fastow had a good upbringing and education, and still inadvertently ended up a participant in one of the largest corporate frauds in U.S. history. Although business education has come a long way since Fastow got his MBA, students may eventually be tempted to cross the line and make ethically challenged decisions under intense pressure to perform from bosses, peers and stakeholders/shareholders. It is imperative that they develop an awareness of the need to internalize a core set of principles by which to live and lead.

AltaGas Ltd. (AltaGas), an energy company based in Calgary, Alberta, successfully collaborated with the Canadian federal government, British Columbia's provincial government, and a First Nations group to reach an agreement for constructing a large, green energy, hydroelectric project in a remote location in northern British Columbia. Although most observers considered the agreement to be a resounding success, the founder and chief executive officer of AltaGas worried that the hardest work was yet to come. Believing that success could be measured only in terms of social value, he wondered how the project could sustain positive community impact for the entire 60-year duration of the commercial agreement.

It is possible to follow rules and commit fraud, a lesson that former Enron CFO Andrew Fastow learned the hard way. In this Ivey Business Journal Q&A, the world’s most infamous finance executive explains how a good kid from a good home, who received a good education from good schools, ended up a willing participant in one of the largest corporate frauds in U.S. history. Today, he accepts full accountability for the damage caused by flaws in his character that enabled him to justify questionable interpretations of accounting laws. He says that the media portrayed Enron as “a bunch of sinister guys sitting in a dimly lit room trying to think of ways to rip people off. It wasn’t that way. When we did these creative deals, they weren’t hidden. We had parties to celebrate them. We got awards for them…. I like to think that I wouldn’t have done what I did if it had dawned on me that my actions were potentially criminal. It just never did.” Fastow believes that many unethical business behaviours happen in a grey area, where we rationalize fraudulent behaviour because we’ve technically followed the rules. Although he still sees questionable behaviour in politics, tax avoidance, and business, he’s optimistic that improvement is possible — less through legislation than cultural change. After all, business schools did not even offer comprehensive courses on ethics when Fastow did his MBA.

In this Ivey Business Journal Q&A, Monica Lewinsky — former White House intern and “patient zero” of online harassment — talks with Ivey Professor Gerard Seijts about what it takes to survive shame and bullying on a global scale. She offers two important considerations for victims of public humiliation. First, many people — those bullied and otherwise — suffer from shame or some form of public humiliation, and there is no reason to suffer in silence. Second, victims should know that they can survive the shaming. Resilience, she says, is like a muscle that can be built up. It may be safer to remain silent in the short term, but allowing others to define you exacts too high a price — both psychologically and socially. In her time of need, Lewinsky had a network of support, including family, close friends and professionals. Such a core group of people in one’s real life is the best defense against being humiliated online. Finally, she says, we need a cultural revolution when it comes to empathy and compassion in our society. More people need to click with compassion. When content providers earn advertising dollars from clickbait, they are encouraged to offer more articles rooted in shame and public exposure. Every time people click on gossip, or an article celebrating a public shaming, they are “feeding the beast.”

PowerPoint presentation for instructors.

In early 2014, Ferio Pugliese looked back on his turbulent first year as president of WestJet Airlines Ltd.’s new regional air service Encore. Encore represented the company’s most significant organizational change in its 18 years of dramatic growth. Expanding the airline’s fleet to include smaller, short-haul aircraft that could service smaller destinations throughout Western Canada had not been without growing pains. For example, a number of employees reportedly felt they were losing their sense of belonging in the company that prided itself on employee satisfaction. Pugliese wondered how he should proceed in putting Encore on a successful path.

Although the Toronto Blue Jays didn’t make it to the 2015 World Series, they clearly didn’t lack character — and this wasn’t a fluke. As departing General Manager Alex Anthopoulos explained, team management had made a concerted effort during the off-season to focus less on “talent and tools and production” and put more emphasis on player “character, make-up, quality of the human being, what kind of teammate they are.” This article uses research on 11 character dimensions that drive performance to examine how the team members came together to contribute to one of the team’s best performances in decades. The focus on character that Anthopoulos put in place did much more than make the Blue Jays popular with fans — it was what turned the team into an outstanding baseball club. And that’s something that the next GM should take note of, along with managers and directors responsible for hiring and promoting individuals in the public, private and not-for-profit sectors. After all, as Ivey research shows, giving character the attention it deserves leads to “home runs” in performance outside the baseball stadium as well.

When Volkswagen’s emissions-hiding scandal surfaced, then-CEO Martin Winterkorn initially tried to ride out his leadership crisis, claiming he had been unaware of the company’s use of pollution-hiding software. Authorities are investigating, but currently no public evidence directly links senior management to the rigging of diesel engines marketed as green technology. Winterkorn eventually agreed to resign to give the company a chance to recover, which might have been worthy of some praise, but then Winterkorn insisted he was “not aware of any wrongdoing on my part.” This article examines why he bears responsibility for the crisis as a leader and examines the related lessons that should be learned. The auto sector is under huge pressure to cut both costs and emissions while also improving vehicle quality and safety. As a result, and as every CEO knows, the temptation to cheat is enormous. But as a leader, it never pays to focus on rewarding results while ignoring how they are achieved, especially when conducting business in environments that are highly competitive. In other words, trust is only a good thing when you have a culture that supports the right behaviour. The essence of good risk management is asking appropriate questions and getting truthful answers. Leaders need to listen to the “whispers” in the organization. The Volkswagen saga is yet another example that all three Cs of leadership — competencies, character and commitment — are essential for good leadership.

On June 6, 2014, the deputy general manager of the human resources department of Xiamen Airlines, based in Xiamen, Fujian Province, China, discussed his company’s best practices at China's first national forum on aviation security. Since 2009, a significant reform in the company’s pilot compensation system had aimed to promote a stronger linkage between their pay and performance. Initial outcomes had been positive, with improved productivity and job satisfaction. Yet, there were ongoing challenges in recruiting and retaining pilots due to increasing shortages of qualified personnel in the domestic and global aviation labour market and greater competition from both state-owned and new private airline companies in China. How could Xiamen Airlines become an employer of choice? Was the high compensation sustainable if the industry became less profitable? What else could the company offer to retain talented pilots?

On June 6, 2014, the deputy general manager of the human resources department of Xiamen Airlines, based in Xiamen, Fujian Province, China, discussed his company's "best practices" at China's first national forum on aviation security. Since 2009, a significant reform in the company's pilot compensation system had aimed to promote a stronger linkage between their pay and performance. Initial outcomes had been positive, with improved productivity and job satisfaction. Yet, there were ongoing challenges in recruiting and retaining pilots due to increasing shortages of qualified personnel in the domestic and global aviation labour market and greater competition from both state-owned and new private airline companies in China. How could Xiamen Airlines become an employer of choice? Was the high compensation sustainable if the industry became less profitable? What else could the company offer to retain talented pilots?

In early 2014, Ferio Pugliese looked back on his turbulent first year as president of WestJet Airlines Ltd.'s new regional air service Encore. Encore represented the company's most significant organizational change in its 18 years of dramatic growth. Expanding the airline's fleet to include smaller, short-haul aircraft that could service smaller destinations throughout Western Canada had not been without growing pains. For example, a number of employees reportedly felt they were losing their sense of belonging in the company that prided itself on employee satisfaction. Pugliese wondered how he should proceed in putting Encore on a successful path.

Character has often been described as the difference-maker in sports, business and life. The importance of character in the workplace, especially leader character, has proved all too easy to forget in recent years. Events in 2014 involving Toronto Mayor Rob Ford, radio broadcaster Jian Ghomeshi and NFL running back Ray Rice helped demonstrate the important role that character plays in the success and failure of organizations. As this article states, effective performance requires competencies and commitment. But without the support of good character, the strengths that come from having competencies and commitment can be seriously undermined, as shown by the 2008 financial crisis. While anyone can cross the line of acceptable behaviour, leaders cannot expect forgiveness. Ensuring good character in leaders and top performers is not about reputational risk, as ignoring bad behaviour is always bad business in the long run, especially when the business in question involves role models. The long-term benefits of a healthy work environment with happy, productive employees are far greater than anything a star talent with questionable judgement can provide.

Nine meetings involving 786 directors and would-be directors were held at the Institute of Corporate Directors with the objective of facilitating a discussion on leader character with people experienced in the practice of corporate governance as well as with individuals interested in becoming directors. Following the sessions, a survey of attendees was conducted. This article presents what the authors learned and offers six recommendations for improving the director search, evaluation, performance review and renewal processes: 1. Be explicit about search criteria and include the character dimensions along with competencies. 2. Ensure that whoever does interviewing is, in fact, a good interviewer. 3. When multiple interviews are done sequentially, ensure that each interviewer has a set of questions so that the sessions are comprehensive but not repetitive. Furthermore, schedule a session of all involved in the process to share their observations. 4. Task the search consultant, if one is used, with developing a comprehensive list of referees who actually know the potential nominee. 5. When asking a referee whether they “know” someone, care must be taken to understand the context of this knowledge. 6. If a candidate resists or resents discussion about character, then you should resist the candidate.

On July 16, 2014, the finance manager of the Powertrain Department in the Whitby, Ontario branch of Astra Automotive, a global automotive parts manufacturer, was summoned to a meeting. He had been with the company for 11 years, steadily rising through the ranks because of his analytical capabilities, grasp of business complexities and intense work ethic. He was ambitious and driven to succeed; as a result, he was sometimes perceived as unnecessarily harsh and somewhat disrespectful toward colleagues and those under him when mistakes were made. He had been in his present role for just over a year, and though the company was pleased with his results, they were insistent that he enrol in training to help him better lead his department and staff. Overcome with preparing for a major presentation, he neglected to do so. As a result, he was suspended with pay for one week for allegedly not treating a colleague with respect. Now, his director, the Canadian president of operations and the human resources manager were waiting to give him the bad news: he was being fired.

On July 16, 2014, the finance manager of the Powertrain Department in the Whitby, Ontario branch of Astra Automotive, a global automotive parts manufacturer, was summoned to a meeting. He had been with the company for 11 years, steadily rising through the ranks because of his analytical capabilities, grasp of business complexities and intense work ethic. He was ambitious and driven to succeed; as a result, he was sometimes perceived as unnecessarily harsh and somewhat disrespectful toward colleagues and those under him when mistakes were made. He had been in his present role for just over a year, and though the company was pleased with his results, they were insistent that he enrol in training to help him better lead his department and staff. Overcome with preparing for a major presentation, he neglected to do so. As a result, he was suspended with pay for one week for allegedly not treating a colleague with respect. Now, his director, the Canadian president of operations and the human resources manager were waiting to give him the bad news: he was being fired.

Business schools have done an admirable job of teaching competencies, and many business organizations have defined the framework of competencies that are required to be successful in the institution. However, much less attention has been spent on leadership character and the importance of commitment to the leadership role. There is no consistent understanding among executives about what character means, despite a concurrence that it is important. The movie Invictus portrays Nelson Mandela in his first year as the first black president of the newly desegregated South Africa as he persuades not only both black and white populations to support the national rugby team in its effort to win the World Cup but also the players themselves. It provides a truly brilliant illustration of not only the competencies required to lead but also the leadership character and commitment that are needed to lead during trying times.

Business schools have done an admirable job of teaching competencies, and many business organizations have defined the framework of competencies that are required to be successful in the institution. However, much less attention has been spent on leadership character and the importance of commitment to the leadership role. There is no consistent understanding among executives about what character means, despite a concurrence that it is important. The movie Invictus portrays Nelson Mandela in his first year as the first black president of the newly desegregated South Africa as he persuades not only both black and white populations to support the national rugby team in its effort to win the World Cup but also the players themselves. It provides a truly brilliant illustration of not only the competencies required to lead but also the leadership character and commitment that are needed to lead during trying times.