Carl Pascarella, Executive Advisor, TPG Capital
Carl Pascarella is Executive Advisor at TPG Capital. “Mr. Pascarella recently retired as President & Chief Executive Officer of Visa U.S.A. Inc., after twelve years of service. Before assuming that position, he was President & CEO of Visa Asia Pacific Limited Region and Director of the Asia Pacific Regional Board. Before joining Visa, Mr. Pascarella was Vice President, International Division at Crocker National Bank and Vice President, Metropolitan Banking at Bankers Trust Company. His experience also included commercial banking, corporate banking, credit review and policy, and DeNovo banking. Mr. Pascarella was also head of the California International Banking and Trade Finance organization for Crocker National Bank. Carl Pascarella received a Master of Science in Management from Stanford Sloan Program at the Graduate School of Business at Stanford University. He received his undergraduate degree from the University of Buffalo.” [Quoted from TPG Growth web site (http://www.tpggrowth.com/
- What is the most important ethical lesson you have learned (either personally or professionally)?
The most important thing over time is that in order to run an organization successfully ethics must be part of the fabric of the organization. If you don’t set standards and communicate them as part of the platform and underpinning of the organization, you really don’t have a stable organization. If you allow behavior to cross a line, this creates not just transactional failure but personal and corporate failure. (Internal politics is the norm in these kinds of organizations because if there is no respect for ethics of the organization or the organization lacks a good ethics platform, you don’t have people respecting each other or the sectors or divisions within the organization or walking down the same road together.) It’s important to draw the line early in places where ethics standards may be different. We had this experience in Asia, for example. So many companies failed because there is a code of ethics but not the compliance that checks against these ethics: the real question is how you test it. Sometimes these companies don’t necessarily pinpoint a precise reason (for example, catching an act of bribery) but simply do not flourish. The lesson: you need not only the standards of ethics, but also to test, reiterate, update, ethical standards within the relevant business environment. Incidentally, I remember the early days at Stanford Business School being almost a guinea pig in the first ethics class around 1980.
- What is the most shocking corporate ethics matter you have seen in the news recently? Non-profit sector? Why?
Without pinpointing any one example, the most shocking issue is the lack of controls in financial institutions an environment where we have just gone through a phenomenal economic downturn – people operating outside the norms in which they should be operating. To me ethics start with taking responsibility when something goes wrong as soon as you are aware of it: take responsibility and be accountable for the action, step up, and make sure the CEO and executive team do so and not just the tangential staff or risk officer. Then take remedial action. There are many examples where huge scandal might have been avoided had responsibility been taken at the first awareness of the issue: had Madoff stepped up before he started unethical behavior to cover his losses, Lance Armstrong… Leaders often mistakenly believe that the greater the visibility and the more power, the more they are invisible and believe they are above the fray as if no one sees what they do or how they do it. But as the scale goes up, the scrutiny goes up. Leaders must be “above reproach.”
- What do you see as the opportunities for the corporate sector and non-profit sector to collaborate in raising the bar in ethical matters?
I am on the board of a number of non-profits. I hold them to the same standards as a for-profit and in some cases higher standards. I always insist that non-profits create a code of conduct and tracking and compliance processes. If a corporate shareholder or investor invests money, a non-profit is worse as patrons offer their disposable income. This revenue should be handled as a scarce resource, and conduct should be operating within highly ethical standards. Also, a lot of people on the governance side of non-profits are there for self-aggrandizement rather than good governance. This is the responsibility of the organization. At the firm we have a number of initiatives to encourage both giving and, more importantly, giving of oneself, such as our “random acts of kindness” and matching gift programs or the efforts of our New York office to assist after Hurricane Sandy.
- What are the most effective strategies for mitigating risk of unethical behaviour in your organization?
As discussed earlier, a code of ethics and compliance, together with taking responsibility as soon as you become aware of an issue, are very very important. I have learned through my experience that ethical standards not only include compliance internally but being ahead of the curve regarding deals in places like Russia, China, or Indonesia where compliance may be different. It is essential to be strong enough to impose our ethical standards or walk away – even in situations where transactions are legal.
- What are your strategies for ensuring ethical policies and standards flow down through all levels of the organizing and to all stakeholders?
Communication is essential and ensuring that you enforce, check, and update. If ethics is something you compose and put on the shelf, people in their everyday work won’t adhere. You must have regular compliance meetings to ensure that people continuously understand our code, for example with the extreme care required for management of confidential information. A key message: treat people the way you want to be treated whether an investment bank, companies, portfolio companies, peers, or in an investment review. Be open and honest. If you’re not transparent, you’re not ethical.
- Are there areas you think regulation should be more extensive in regulating corporate ethics? Non-profit sector ethics?
I am a proponent of self-regulation. Whenever we have seen excessive regulation, everything becomes exponentially more expensive and opaque. It is necessary to have certain standards and compliance (for example, the SEC, the FDA, the Comptroller of Currency…). However too often regulators lack corporate experience and regulate behind closed doors without asking experts in the business world how things really work.
- Should culture be an important contextual element in ethics analysis? What is unique about the ethical culture and environment in your country that should be taken into consideration?
Whether at profit-oriented organizations or non-profits, you either go to the lowest common denominator or to the highest standard because your organization is your organization and your brand is your brand everywhere. You can’t stand for something different in different places just because some places don’t care about or don’t enforce certain ethical issues. And it’s not the US that is always highest…you must take the highest standard and integrate that into your corporate ethics profile whichever country/standard that is. Then you must show people right and wrong from the start and do remedial work as necessary. It is essential to aim to have ethics transportable and communicable across lines, as well as to test, check, reiterate, and show people how to operate and be successful but within clear boundaries. It is critical to show everyone how to work together in the relevant environment.
- Do you think globally applicable ethics principles and practices are possible? Desirable?
Yes. The old adage applies everywhere: never do anything you wouldn’t want to see on the front cover of the Wall Street Journal.
- What is the biggest mistake people make in making decisions around ethical issues?
It goes back to taking accountability for, and acting on, any issues no matter how painful or how key the person is in the organization. With ethics it’s usually just the tip of the iceberg: if you find someone acting unethically or in a manner potentially injurious to the organization, when you dig down you are usually going to find flawed judgment. Strike fast and strike hard when you have all the facts. You must act or you are culpable.
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