What can Sepp Blatter’s lengthy term of office as the Fifa president teach us about a leader’s role in good corporate governance?
Given the events of the past few weeks, and the many suspicions of the past few years, it is tempting to think it teaches us very little that is positive. In a story that looks likely to run farther than Lionel Messi, it is dangerous to assume we are at the limits of the Fifa scandal.
Even so, it is fair at this point to say that the latest round of arrests and allegations has not portrayed the organisation as a beacon of good corporate governance.
It would take a column much longer than this to unpick the inner workings of Fifa’s corporate structure, together with the complex arrangement of ethics committees and independent audits that were intended to maintain its integrity. It is also difficult to discern how far Mr Blatter himself set the tone as Fifa’s leader. At the time of writing, no charge has been levelled at him, although many commentators have expressed the view that at the very least he has been an impressively inattentive leader to remain oblivious of corruption at the scale being alleged.
From a leadership perspective, it raises the question of how far the person at the top can be held accountable when those beneath run riot. It also brings into focus the question of how an extended period in charge might affect a person’s perception of governance. As the years pass, more and more of the systems and people around a leader rely on their continued presence, and can therefore entrench poor business practices.
He is not alone in facing these questions, and Fifa is certainly not the only organisation to talk a good game on governance and be caught short in practice. The global financial crisis was punctuated by such incidents of corporate governance practices that went completely awry. As scandals engulfed multinationals and financial powerhouses, it became screamingly clear that talk of “sustainable organisations” and “clean business” was well off the mark.
Corporations such as Fifa had the appearance of being able to operate with minimal transparency despite an active press, activist shareholders and the occasional whistle-blower. Internal mechanisms such as risk management arrangements, non-executive directors and external audits also appeared to have failed in their checks and balances role.
At the same time, academics and industry writers looked again at the role leaders play in setting the governance agenda. A large part of this focused on the basic character traits a leader needs and how these can influence the direction of their business. It will not surprise you to note that personality traits such as integrity and fair-mindedness were ranked highly by many. There was also a consensus that a leader’s belief in their own accountability for an organisation’s actions is a critical component of good corporate governance.
These attributes are important when you consider the genuine influence a leader wields over critical duties such as recruiting the directors and senior managers who determine a company’s performance. A leader possessing these character traits is likely to recruit people in a similar mould, reinforcing their positive impact throughout the chain of command.
In this vein, most people could probably accept that a great leader can instil their drive to succeed across an organisation – evidenced, for example, by the way a company pursues innovation. It can certainly work in the same way with a leader’s focus on corporate governance. It simply needs the same level of commitment and drive to achieve.
This question of commitment perhaps returns us to Mr Blatter. The way a leader can move towards effective corporate governance is to view it as the fundamental, foundational concept that drives the corporate strategy and the nuts-and-bolts effort to maximise profits. You begin with a framework that seeks to look after the interests of stakeholders and ensures compliance, then work out how to bring in the cash. It is just possible that Fifa has seen this relationship as being rather the reverse.
Ahmad Badr is the chief executive of Abu Dhabi University Knowledge Group
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