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The fall of Arthur Andersen is one of the great tragedies of modern business. Andersen had long set the industry standard for professionalism in external accounting. In its own eyes, the fi rm stood for public service and independent integrity, protecting shareholders’ interests

and the fi nancial system. Andersen employees often spent their entire

careers at the fi rm, whose corporate culture was strong and consistent,

supported by a rigorous system of education and acculturation into the

fi rm’s values.

But cultures need to be tended to; otherwise they slowly wither

away. Andersen is a classic example of how, through external pressure

and internal neglect, norms cease to be binding and values lose their force. A company’s reputation needs to be guarded by more than just

strategies, processes, and policies—it needs to be protected by its people

in their daily decisions.

Reputation management strategies need to be implemented by people. Culture plays a major role in implementing effective reputation management processes. Cultures can be fragile. They need to be constantly reinforced. Otherwise they atrophy.

The company must depend upon the judgment, experience, and integrity

of the partners to guide their decisions. In other words, the company’s

reputation depends on its people. During its long and distinguished history,

Andersen understood this as well as any other company. In an environment

in which a decision by any partner can bring down the company, nothing

is more important than selecting the right people and ensuring that

they uphold the core values and embrace the collective consciousness of an

unambiguous corporate culture. Corporate cultures are delicate equilibria,

and some companies go to extremes to maintain them.