By Lucy P. Marcus
CEO of Marcus Venture Consulting.
The World Cup has concluded with its usual flourish, and much of the world, as usual, couldn't help but get caught up in the excitement of it all - which is exactly the outcome that Sepp Blatter wants. Blatter, the president of FIFA, the Cup's organizing body, wants the afterglow of an exciting month of play to blot out the corruption and backroom deals - and, most recently, a ticket scandal - that have roiled his tenure.
Times were very different in 1998, when Blatter took up his role. Social media did not exist, and the Internet had not yet become a means of spreading the views of the voiceless and disenfranchised. Nor was the culture of shareholder activism and corporate social responsibility as strong as it is today. As BP, GM, and Royal Bank of Scotland have discovered, the world is watching, talking, and no longer willing to accept the old way of conducting business.
FIFA has two problems. One is a straightforward lack of compliance with accepted business practices. Allegations of wrongdoing range from match-fixing and bribery among members of FIFA's Executive Committee to questions about how Qatar was chosen to host the World Cup in 2022.
The second problem is arguably more serious, for it is epiphenomenal: the damage that unethical behavior has done to the ideal of fair play. When people see an institution that relates to something that they feel passionate about failing so publicly to abide by simple rules, they lose faith not only in that institution, but also in the idea that good governance is achievable at all. The message sent, and understood, is that some institutions - of all kinds - are immune from scrutiny and can play by their own rules.
The code of conduct on the field - where we expect players to give their all under clear rules that are swiftly enforced by independent referees - is fundamentally the same as what we expect from governing bodies off the field. In this sense, FIFA is not a special case: All non-profit and for-profit organizations around the world are expected to abide by this code of conduct.
And that is why FIFA's problems are unlikely to fade from view. They must be addressed head-on, with a clean sweep of its leadership and a complete overhaul of its governance structures. FIFA is as complex as any large multinational private or public organization; how it is governed must reflect that.
For starters, FIFA must introduce truly independent board members to the governance process - people who will ask hard questions and challenge the organization's executives. Governance solely by association members has not worked - and, by encouraging a lack of transparency, may have made FIFA more vulnerable to the problems it now faces. No organization that holds so much public influence and importance should be able to operate as a black box.
Likewise, FIFA must introduce and adhere to clearer term limits for its president and board members, starting with Blatter - and with immediate effect. More effective checks and balances will not come easily; but they will not come at all without champions. Before the World Cup began, some representatives of FIFA member associations spoke up in opposition to the status quo. It will now be seen whether their actions reflect their words.
There are other glimmers of hope. In the world of for-profit companies, investors are increasingly demanding better corporate-governance standards and more diverse boards that include independent members. They are taking a much more active and public role in speaking out against bribery, corruption, and excessive pay packages, and in favor of corporate social responsibility and fair labor practices. If their calls go unheeded, they vote at the annual general meeting - or with their feet.
FIFA's sponsors must hold FIFA similarly to account, and there are signs that some are finally beginning - albeit tentatively - to speak out. If they don't, sponsors will leave themselves exposed to a consumer backlash as FIFA's poor reputation rubs off on their brands. Customers are savvier than ever before, and they, too, can vote with their feet.
Ultimately, however, change starts at the top. Consider what a change in leadership has done for the Roman Catholic Church: Pope Francis is transforming an institution that was thought to be so byzantine, opaque, and intractable that change was all but impossible. If the Catholic Church can change, so can the church of football.
There is another lesson here: good leadership also consists in knowing when to step down. If Blatter genuinely cares about FIFA, he knows that remaining there would mean dragging the organization further into disrepute, damaging whatever positive contributions he has made, and quite possibly being forced to leave under a cloud.
The caption to a picture of Blatter on page six of FIFA's 2013 financial report reads: "We have reached very high levels of accountability, transparency, and financial control." The problem is that no one believes it. FIFA desperately needs to restore its public credibility. That can happen only after the necessary changes at the top and throughout the organization have been achieved.
Copyright: Project Syndicate