The CFO Duality: Mixing Business with Integrity

Author of a new book, former GE general counsel Ben Heineman dishes out plenty of advice for finance chiefs about doing the right thing without sacrificing their companies' business goals.

Ben Heineman got an eyeful of the C-suite during his 18 years as general counsel for General Electric Co. until his retirement in 2005. A book by Heineman published in June, High Performance with High Integrity, argues that a chief financial officer can and should act as guardian and protector of the company’s integrity without abandoning his role as business partner to the CEO. In an interview with CFO.com, Heineman, 64 and a one-time Assistant Secretary of Health, Education, and Welfare under Jimmy Carter, took some swipes at impatient CEOs, sycophant CFOs, anti-whistleblower cultures, and the SEC.

What motivated you to write the book?

First, I thought the corporate governance debate had spent way too much time on directors and not enough on where performance with integrity takes place, which is inside the company. Obviously that has to be led by the CEO, but with strong support from the finance, legal, and H.R. functions. One of the problems in most companies is that they try to outboard it to those departments, but it has to be led by the CEO and other business leaders.

Second, I really believe that high performance with high integrity are the foundational goals of the contemporary company and, indeed, capitalism. You must have a fusion of both to have a successful, durable company.

Why have there been so many corporate scandals?

The make-the-numbers mentality can clearly lead to corruption. How many times do we have to see this? How many cycles do we have to go through for this truism to be understood? It is so basic. In this decade alone you have the accounting scandals, the option-backdating scandals, even the credit meltdown — that’s partly a failure of business discipline, but my guess is that there are a lot of ethical and legal issues buried in there.

In your book you write that the ideal role for the CFO is to be simultaneously a partner to the CEO and the guardian and protector of the company’s integrity, and yet that often presents a conflict.

The danger is that CFOs become partners first, and then yea-sayers when the tough issues come out, because they’re so used to working with the CEO to get things done.

So being the guardian of integrity means not being a yea-sayer?

You have to be able to stand up and say, “No, you can’t do this — it’s too gray, too close to the line.”

If something is just flat-out illegal and the CEO goes ahead with it, you have to quit. But a lot of these issues are gray, where there’s no right answer. It’s not like anyone is saying, “Let’s do something that’s completely wrong.” It’s, “How far can we push it toward the red line?” And the CFO and the general counsel, in both reputational and ethical issues, have to be able to say, “Look, before you do this, while it may not be absolutely wrong, you really ought to think about the implications for the company in the longer term.”

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