Dutiful Responsibilities of an Executive Officer - Nonprofit, For Profit, Potato, Potahto, Opioid, O
I recently interacted on social media within the context of Purdue Pharmaceutical's Bankruptcy where a judge was considering a $1.3 million bonus for their CEO. An employee since 1999 and CEO since 2017, Purdue's Chief Executive Officer is also a defendant in lawsuits filed by multiple states, five local governments and more than 100 hospitals. I thought of how pertinent this current case study is to the ethical standings of any executive officer or board member, and how relevant this is to my teachings as an instructor for a bachelor's level human services program where much of our classroom discussions in Nonprofit Management and Program Planning and Evaluation evolve around the roles and responsibilities of non-profit boards, executive officers, and the management and leadership of these organizations.
This had me contemplating the post that linked the Bankruptcy article, quoting a phrase about the CEO's possible bonus. One reader responded in favor of the CEO bonus stating that the CEO "did not make these people take that drug. Most people know when the pain decrease[s] go to Advil. But these drugs make you feel better." As a former executive officer, board member, and a current instructor and coach in this field this fueled my passion: if not the executive officer or board, then who is accountable. As executive officers we are charged with leading ethically, honorably, and transparently. I considered how these opioids were marketed as safe non-addictive pain killers to physicians, and when physicians questioned Purdue after their patients began showing signs of addiction, Purdue labeled these symptoms as “Pseudo Addiction” and they got away with it.
Today, we know that opioids work well at blocking pain messages from reaching the brain well. However, many also know the risks to taking these pain medicines including dependence, addiction, overdose and even death. So I have to question, did Purdue Pharmaceutical's leadership knowingly develop and ethically market a drug that they knew with misuse could and most likely would contribute to America's opioid crisis with the potential of millions fighting addiction.
Substance Use Disorder and Addiction is a disease as clearly as diabetes, leukemia, bi-polar disorder and hundreds more. The DSM-V (Diagnostic and Statistical Manual) recognizes substance-related disorders resulting from the use of 10 separate classes of drugs. Addiction is not a 'feel good choice' as the writer on social media possibly felt. Substance Use Disorder is a gut wrenching, mind altering, and difficult disease. So, where is the pharmaceutical industry's leadership responsible for our national epidemic now; did they know this was probable with their drug?
This past spring, Purdue Pharma reached a settlement claiming their opioids contributed to the deaths of thousands of US folks. However, Purdue Pharma's Sacklers remained a billionaire family and uncharged criminally for contributing to the opioid crisis.
The top ranking position in any corporation, nonprofit and for profit, CEO's have an ethical obligation to oversee, be held accountable, and assure the functions of their businesses. So let's put some of this into perspective. If the US makes up less than five percent of the world population, yet consumes more than 99 percent of the world's Hydrocodone (Watson Laboratories, Inc), 82 percent of its Oxycodone (Purdue Pharma), 59 percent of its Morphine (Merck), 53 percent of its Methadone (Eli Lilly & Company), 52 percent of its Hydromorphone (Fresenius Kabi), and 48 percent of its Fentanyl (Janssen Pharmaceuticals, Inc), have these drugs been distributed wisely and ethically? And, as one can see, we aren't just speaking of Purdue Pharmaceuticals with the list above, when speaking of the manufacturing and distribution of highly effective pain killers, that can and do take on the potential face of highly addictive and even fatal drugs, one life, one addiction, and one overdose at a time.
Opioids are often prescribed by dentists for wisdom teeth extractions for 17 and 18 year old youth, and by physicians for post surgery/procedure pain and more. They've been prescribed to children in elementary school and retirees to manage pain following procedures. A former South Jersey physician has been charged with illegally prescribing nearly 1.4 million opioid doses in three years, resulting in at least one death.
Can we hold accountability and liability within the for profit and nonprofit sectors? Is this industry any different than the previously sued tobacco industry? Purdue will file for bankruptcy and effectively dissolve. However, a new company will evolve and continue to distribute OxyContin and revenue will go to support the lawsuit, and donate drugs for addiction treatment and overdose, meaning there must be some finding of culpability. However, no statement of wrongdoing has been mentioned. With the more than 700,000 US drug overdose deaths, multiple more families, friends, and loved ones lives have been altered forever. Are these CEOs and corporations accountable for these crimes?
According to Washington State's Secretary of State "Washington State has a thriving nonprofit sector comprising more than 52,000 active domestic nonprofit corporations and 16,000 registered charities. These organizations touch every aspect of life in Washington from veterans’ advocacy to environmental stewardship, performing arts to education, elder care to economic development. These organizations leverage hundreds of thousands of volunteer hours and hundreds of millions of dollars in donations to improve the lives of Washingtonians, and drive a significant part of Washington’s thriving economy." When one steps into the nonprofit executive role, and for that matter a for profit corporation seat, they take on certain duties and liabilities. A responsible and knowledgeable executive officer knows that and as CEO, I fully understood my responsibility and liability for the actions, results, and especially wrongdoing of the organization I served. I knew this accountability could include fines, jail and even imprisonment for myself and/or my board of directors if we were unethical in our practices.
Nonprofit executive officers are accountable to their boards and the communities they serve. Corporate boards, as defined by CFI (Corporate Finance Institute), are elected to represent the shareholders of the company and may sit on the board and, in some cases, she or he is the chairperson. In the nonprofit sector we are accountable to stakeholders and we pledge through our leadership an oath to support our customers' well being in a manner that will help improve their standard of living. The corporate shareholder receives an ROI (Return on Investment) through stocks or other monetary forms. The nonprofit stakeholder receives and SROI (Social Return on Investment) in the lives we help to improve. Additionally, as Grantspace explains, although it is legal for executive officers to serve on their governing boards, it is not good practice, and when they do, they commonly are a non-voting member. These ex-officio board or committee members are by virtue of their office, meaning, when such a member ceases to hold the office, his or her membership terminates. Organizational bylaws will outline these roles and the board will assure the positions are carried out.
There is a natural conflict of interest for executives to serve equally on the entity that supervises them. Somewhat indifferent to the for profit industry, there is a fine dance between the nonprofit board and executive officer. Unlike the corporate industry, nonprofit executive officers are not owners, shareholders, nor do they profit financially in a nonprofit organization's successes. Their reward is their SROI. Yet in both industries executive officers are responsible, and overseen by boards who have the ability to hire and fire them. Yet in the nonprofit realm, and to make this an even more tricky dance, the executive officer is usually the individual with the higher level of experience in their sector, to which the board will often lean toward for knowledge and guidance. The nonprofit board's responsibility is strongly as fiduciary and ethical oversight. Therefore, one can see where this dance must be well choreographed for success.
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The Foundation of the Standards for Excellence® program is an Ethics and Accountability Code for the Nonprofit Sector. With six major areas of nonprofit governance and management the Standards include benchmarks and measures that provide a structured approach to building capacity, accountability, and sustainability for the nonprofit sector. As a sector, we play an essential role serving our communities. As workers, executives and board members, we help to enrich the lives of our community members in a variety of ways that may include charitable, religious, scientific, economic, health, cultural, civil rights, environment, substance use and mental health, and education, awareness, knowledge and access to any of the aforementioned and more.
These Standards can hold us accountable, transparent and effective in our industry, while supporting our society's needs. "The code builds upon the legal foundations of nonprofit management, governance, and operations to embrace fundamental values such as honesty, integrity, fairness, respect, trust, compassion, responsibility, and transparency." How then can a bankruptcy court even consider an enormous bonus for what could be highly considered lack of honesty, integrity, fairness, respect, trust, compassion, responsibility, and transparency? Is the for profit sector unique in these standards?
When we step into these senior executive roles, as a board member or an executive officer, we have learned standards along our journey, regardless of working in the for profit corporate world or the nonprofit social sector. We are expected to live by these standards, and just like physicians yet somewhat unspoken, we understand an oath to "do no harm".
Therefore, when we step into an executive officer's role, we fall under legal obligations to ethically oversee the day to day operations of our business. And, according to The Leadership Challenge (Kouzes and Posnerthe), honesty is the most often cited quality, around the world, as the #1 most important characteristic for leadership.
The National Council of Nonprofits explains that: "ethical leadership is of course not limited to the charitable nonprofit sector, but we think nonprofit leaders have a special obligation to demonstrate their commitment to values such as accountability, compassion, honesty, service to others, transparency, and respect...Ethical leadership is an important way for charitable nonprofits to maintain the public’s trust." Do we then let the for profit industry off the hook for these ethical behaviors.
Nonprofit boards and officers are ethically and legally responsible for the actions of their nonprofit and when something goes south, they are held accountable. BoardSource's Code of Ethics explains "under well established principles of nonprofit corporation law, a board member must meet certain standards of conduct and attention in carrying out his or her responsibilities to the organization...These standards are usually described as the duty of care, the duty of loyalty, and the duty of obedience." As an instructor, the knowledge I share with students includes these roles, responsibilities, and ethics, with personal responsibility for any wrong doing and the consequences of such.
If we circle back to the belief that the CEO was not responsible for the outcomes of Purdue Pharmaceuticals, who then is? As executives, we are placed into highly accountable positions that oversee all operations of our corporations, for profit and nonprofit alike. If big pharma knowingly manufactured a highly addictive drug, was this ethical behavior? Today's websites, such as WebMDs warn with these medications that "higher strengths...should be used only if you have been regularly taking moderate to large amounts of an opioid...[which] may cause overdose (even death)."
As a former CEO, executive director and board member within organizations, I always knew my risk in taking on these positions. I knew that my ethical behaviors, if turned unethical could penalize me, up to and including imprisonment. Know your risk before sitting in the most important seat in an organization. Be accountable, knowledgeable, transparent and lead with integrity and ethical behaviors. And most importantly, be willing to be held accountable in both positive and negative outcomes. The buck stops in your chair.
BOARD. The roldlong post.