A Discussion on Ethics Vis-à-Vis Yahoo’s Scott Thompson

Judging by the media coverage, seems to me at this point we may have a Dead CEO walking…

Thompson is in way-hot water over the revelation by a minority stakeholder that the CEO — only five months into his reign — does not in fact have a degree in computer science, as stated on his resume.

The Yahoo! board called the claim an “inadvertent error,” which as you can imagine did not exactly put out the fire. Now everybody’s talking about it — it’s even on the front page of the business section of Yahoo! News.

Today on KQED Public Radio’s Forum program, host Michael Krasny discussed l’affaire Thomspon with Kirk Hanson, Executive Director of The Markkula Center for Applied Ethics at Santa Clara University. Edited transcript after the audio…

Edited transcript

HOST MICHAEL KRASNY: In 2010, a survey was conducted by HireRight, and it was revealed that nearly 70 percent of 1,818 men and women queried in the survey lied on their resumes. The most common lie was educational attainment. This Forum hour we want to discuss the case of Yahoo!’s Scott Thompson and resume padding.

Joining us from the Santa Clara campus at Santa Clara University is Kirk Hanson. He is executive director of Markkula Center for Applied Ethics, and he’s researching a new book with the working title Unavoidable Ethical Dilemmas in a Business Career, which he says number one is presenting yourself accurately on your resume.

Well, the key question here, and listeners will doubtless want to weigh in on this in droves, is what’s the right thing for the board to do in light of this ethical lapse?

HANSON: Well I think the board’s in a hard place. Clearly, there would be great pain in having to replace the CEO again. Unfortunately, when something like this happens, and someone’s deception is revealed like this, they have a very hard time continuing to function effectively as CEO.

There are really two reasons. One: There will always be lingering questions about their truthfulness. Can the board rely on them always to tell the board everything they should know and never to embellish? Can employees count on that? Can customers who are told capabilities of software, or whatever, count on the CEO’s word?

And then the second thing is: Can the CEO be a moral leader in the organization? Organizations, we know, have a pattern — behavior runs downhill, and if the CEO exaggerates a little, you probably will expect a lot of exaggeration down in the organization.

KRASNY: What about the argument that Thompson was hired for talents and abilities that he’s displayed since college, not whether he was in a computer lab time in his teens. That what matters is, well, the bottom line.

HANSON: Well, I think that’s what ironic about this. If there’s someone who doesn’t appear to have needed this kind of boost to their resume, it’s probably Scott Thompson, who’s developed a good record in Silicon Valley. And clearly there’s no question about his technical capability to run Yahoo! The problem is that a CEO is not just a technical leader, they’re an organizational leader and a moral leader.

KRASNY: We have Richard Blumenthal, who was elected to the Senate in Connecticut and who said he was in combat in Vietnam. He was elected in spite of the revelation that he lied about being in combat in Vietnam. And there are other precedents.

And the CEO of Bausch & Lomb said he had an MBA. He didn’t. The board said it would not accept his resignation, and he lost a bonus and a year, but he stayed on as CEO.

HANSON: And I’ve not seen an evaluation of how that worked out for Bausch & Lomb in the long term, but I think the difficulty is that things continue to change, and the potential for this being a negative for a company actually has ratcheted up as the years have gone on during the last 10 years — if for no other reason than you’ve got dissident shareholders like Third Point out there who are going to try to make trouble over it.

Clearly, the world of opposition research, which we’ve come to know in politics, has entered into the corporate arena. Clearly, what Third Point did was go through the resumes with a fine-toothed comb and try to uncover things to embarrass the company.

KRASNY: Well, they’re not only calling for his head — Daniel Loeb — but also the Executive Search Leader Patti Hart, who they also say has a degree that is suspect. [Note: She stepped down from the board today.] A lot of this may be political. And Daniel Loeb was wanting to get on the board of Yahoo! and didn’t — was sort of spurned by the board, which may be why there’s this scorched earth attitude. But I’m reading a quote of his. He says, “CEOs have been terminated for less in other companies.” He’s absolutely right.

HANSON: Well, he’s right. They’ve been terminated for less. You point out, the Bausch & Lomb case, and there are several others where the individuals have been kept on. In part, it depends upon the full disclosure. If the Yahoo! board, at this point, could make a brand new decision, they might choose to keep him on, but at the same time I think I would argue that the potential downside for the company, and the continuing questions about trustworthiness just don’t make it worthwhile.

KRASNY:Let’s talk about some of the precedents on that side. Radio Shack CEO David Edmondson resigned less than nine months after it turned out he didn’t have a degree, as he said he did, in theology and psychology. There was another case, a football coach — George O’Leary resigned five days on the job because he didn’t have a masters in education from NYU, and didn’t play football like he said he did.

HANSON: I think what that demonstrates is these things that you add to your resume early in a career often stay there. It’s hard to back out of a lie after a period of time when you might want to. And eventually this time bomb blows up on you at the most inopportune moment. Clearly, when George O’Leary stepped into the big time — the kind of public attention a Notre Dame football coach gets — people started to look back at his resume in much greater detail than they had before.

So why would someone do this? I think it’s pretty clear — and that’s what the research we’ve done has indicated about early in people’s careers — they want to present themselves in the very best light. They’ve been told, hey, it’s your brand — “You Inc.” What you’ve got to do is establish your credential and your marketing of yourself.

And people go overboard, just like some companies puff their products. Individuals, at least a substantial percentage of them some of these surveys indicate, succumb to the temptation to exaggerate and expand upon their accomplishments. And then, once they get the job, arguably they’ve shown their capabilities and they don’t need that kind of fake boost to their resume, but it’s very hard to back out of it.

KRASNY: Well he’s almost assured of another job, because of his track record, but it does say some things that are troubling about his character, and that’s where a lot of the criticism has rested. Also, four months on the job, he’s laid off 2,000 employees worldwide. It may save the company about $376 million, but a lot of the employees he just recently apologized to are quite angry about that.

HANSON: I think there’s no question that anything he’s done during the last five months, once his character has been questioned, will come to be points of criticism. To some extent, that’s piling on, and this is a sad case all around. It’s sad for Scott Thompson, it’s sad for the shareholders of Yahoo!, but there are times when you simply have to cut your losses and move forward.

And it seems to me for the board, that’s what’s called for at this point in time, and in some ways for Scott Thompson, that this is a life lesson which will obviously always stay with him and be on his resume and the search results about him, but nonetheless perhaps it’s time for everyone to move on.

KRASNY: Well, I may be mistaken about this, but doesn’t Yahoo! have a policy that if someone lies on their resume, they’re out?

HANSON: I don’t’ know whether the company ethics code says that. But that is very common among companies. I’ve seen companies that review resumes from students who’ve graduated from some of our programs, find an error, something they think is substantially exaggerated, and that person is simply dropped from all consideration immediately.

Similarly if something of significance like a degree is found not to be entirely true, those individuals in most companies would be fired immediately, no matter how many months beyond the hiring event.

KRASNY: The real lesson here is don’t pad you resume. But according to statistics it appears that most people do pad their resumes….

HANSON: There’s become a culture of stacking your college-going resume, your applications for college with fake clubs, fake volunteer activities. And the repercussions from that are generally less, and therefore some people get in the pattern.

KRASNY: One has to ask, just how good are screening processes or vetting processes?

HANSON: In this case of Yahoo!, the question is, “Who’s at fault for this?” Obviously, Scott Thompson is for having put it on the resume. But it’s also the fault of the search committee. In this case, apparently they did not use a search consultant. The search committee did it itself.

In this day and age you cannot afford not to do very detailed checking of the credentials and the claims that are on a resume, particularly if it’s going to be a CEO that’s going to be a part of your submissions to the Securities and Exchange Commission and so on. And apparently the search committee did not do their job here.

KRASNY: Do you think would Thompson have been where he was or gone to where he went without a computer science degree?

HANSON: It’s possible that he wouldn’t have gotten the first step on the first rung of the ladder, and that’s the motivation that people have to add something to their resume.

It isn’t relevant probably to his getting the job at Yahoo!, or maybe even at PayPal. Earlier in his career it may have been the key to getting on the ladder.

There’s a huge risk individuals take who make this kind of moral choice to embellish their resume, and that is that eventually this is going to come back to haunt you — probably at the least opportune time.

We’re in a very different world in terms of our ability to check these facts. And we used to say we could check the degrees, but it was very hard to check the claims about what kind of projects you worked on or whatever else. But that’s becoming increasingly easy as people use websites like LinkedIn and others. Lots of individuals, including those you worked with before, look over your resume and have the opportunity to weigh in either privately or publicly about whether your role really was as great as that.

There’s a LinkedIn claim that the resumes on their site are more honest than the typical resumes, and I think its probably because of the public nature of LinkedIn and other sites like it where individuals put their whole job history up, and the whole world can look at it and inevitably somebody who’s worked with you in the past can detect the exaggerations and errors and call you on it.

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Jon Brooks

Jon Brooks writes mostly on film for KQED Arts. He is also an online editor and writer for KQED's daily news blog, News Fix. Jon is a playwright whose work has been produced in San Francisco, New York, Italy, and around the U.S.

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