Bigger mistake to get the U.S. embassy involved, leading to WikiLeaks moment and public scrutiny.
Biggest mistake: to completely fumble your response to items #1 and #2.
Any company could find itself dealing with an employee whose goof falls somewhere on the spectrum between mischievous high spirits and inciting an international incident. Therefore, every company should have a plan to manage the situation. Especially a company whose business is security and whose brand is quiet, steady, reliability.
Yes, board of directors of DynCorp International. Yes, CEO Steven Gaffney. This means you. Unless you can do a better job of damage control (and even go deeper), you are a bigger risk to the company than the employees who put on the party.
A Lindsay Lohan moment
The usually-sober Compliance Week sounded like "In Touch" scoring a Lindsay Lohan scoop, with its snarky tweet about the Virginia-based government contractor: "You know when the headline includes your company and 'Dancing Boys Scandal,' no good is coming your way."
Others on Twitter have been more accusatory: "#US tax dollars pay for the rape of Afghani boys."
DynCorp brands itself as the essence of sober stability -- it trains the local police forces in countries such as Afghanistan. Now it looks like it can't protect a teenager from exploitation at one of its own parties--and that's the kind version. DynCorp seems to know the value of an image -- it had tried to bulletproof its motto -- "We serve today for a safer tomorrow" -- with a trademark. But the fallout from one bad decision has blown a hole through that upright and patriotic slogan. The reputational hit for a news story like this goes to the foundation of the company's brand and demonstrates the vulnerability of its greatest asset -- its credibility.
Defense contractors told, no "deviant hazing"
The involvement of the State Department in this mess underscores the major role corporate operations overseas play--and the hazards they can pose to US diplomacy. US government contractors in Afghanistan were already on notice that "Lord of the Flies" abuses would not be tolerated, following a 2009 report from the Project on Government Oversight documenting "blatant, longstanding violations" including "deviant hazing and humiliation" that posed "a significant threat to the security of the Embassy and its personnel -- and thereby to the diplomatic mission in Afghanistan."
Still, when DynCorp employees threw a retirement party for staff, they decided to perk it up with 17-year-old boy hired to dance, dressed as a girl. This is an accepted -- though sometimes abused -- local custom because men and women do not socialize together. But hiring this teenager for an American party is, as the company admitted, so "culturally insensitive" that it was stopped by a company official halfway through the dance. Although a State Department investigation found that no inappropriate touching occurred, the incident was so embarrassing that the Afghan government called on the US to help keep the incident out of the newspapers and take over the operation of the police training facilities DynCorp was operating. website brags "As a professional services company, integrity necessarily comes down to our people - our fellow employees..." (ellipsis in the original).
Smart companies--including those that live up to such aspirations -- know how to respond promptly and credibly when things go wrong. Instead, DynCorp is now doing damage control one reporter at a time, and without any thoughtful response to the most obvious of follow-up questions.
Who's in charge here?
They need to do much better. Step 1: Convene a committee of the board to investigate and report on what happened and how such episodes of rotten judgment will be headed off in the future. 2. Add a director to the board who has expertise in international human resource issues. 3. Put CEO Steven Gaffney out there, with an immediate public statement posted on the company's home page, explaining what happened, what action DynCorp is taking, and how they can do more than trademark "safe tomorrow" -- they can deliver it.
DynCorp lists its directors, starting with Gaffney, who is also chairman.
DynCorp parent Cerberus Capital Management puts its commitment to good governance front and center: "We hold ourselves and all of our portfolio companies and management teams to the highest ethical standards and business practices. Cerberus believes that strong corporate governance is the cornerstone of our business.''
However, the company does not list its board members.
Nell Minow, dubbed "queen of good corporate governance" by BusinessWeek, is a member of the board of GovernanceMetrics International (formerly The Corporate Library, which she co-founded).
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