What business can learn from Rutgers and Mike Rice

Sports are generally held to possess all of the main narratives in the world of business: The courage of conviction, the power of perseverance, the virtue of grace in victory or defeat. These qualities are especially embraced during annual extravaganzas like March Madness, the month-long U.S. basketball tournament famed for pitting powerhouse colleges against valiant underdogs, producing shocking upsets and Cinderella stories by the score.

Inspiring stuff, to be sure, but none are as instructive, or frankly as telling as the story unfolding this week in Newark, New Jersey, involving a basketball program miles from the Final Four.

Rutgers University fired its men’s basketball coach on Wednesday, after a short series of miscues, half-truths, blown calls and just fall-out speechless stupidity. The business world will hopefully learn something from this, as it is safe bet that the NCAA won’t.

By the sheer facts at hand, this should have been a very simple matter. In November, a former assistant coach of the team gave the director of Rutgers’ athletic department, Tim Pernetti, a 30-minute video gathered from a series of practices. The video shows the head coach, Mike Rice, grabbing, kicking and pushing players, throwing basketballs at their heads, and berating them with homophobic slur. You name the insult, Rice hurled it at his players; with the cameras rolling.

On Tuesday, ESPN showed the video in its Outside the Lines series, exposing Rice’s actions, and the university’s mishandling of the case. Within 24 hours, Rice was gone.

The video is completely horrendous, verging on unbelievable, but that’s not the cautionary part. Indeed, Rice’s antics are probably far more prevalent across college sports, especially at the win-or-be-fired U.S. schools. The lesson here is that Rutgers’ administrators chose to largely look the other way. Initially, Rice received a three-game suspension and a $50,000 fine, yet no explanation was offered and no further action taken.

The baffling decision, and the one that will very likely cost the athletic director his job, if not bring down Rutger’s president Robert Barchi in the process, is that Pernetti would have surely known that if the video ever went public that the backlash would be cataclysmic, scandalizing the entire campus. His three-game admonishment wouldn’t be seen as fitting punishment, it would be taken as an act of concealment, if not outright complicity.

First-year philosophy students are invariably asked whether they would stop at a red light in the middle of the night, if they knew no one was watching. The moral response, of course, is yes, because it is the right thing to do. Whether someone else sees or not should have no influence on the ethics involved. (The wisdom of assuming no one is watching, or will ever find out, is another matter entirely and one that Rutgers administrators are only belatedly coming to realize.)

Never mind foresight, if Pernetti had an ounce an integrity, he would have fired Rice as soon as he saw the video, knowing that it was indefensible to subject students and staff to such abuse. He would have looked principled, displaying the kind of leadership that is all too absent in the scandal-plagued NCAA today. Instead he chose not to, taking an enormous gamble that ethics aren’t important if you can get away without them.

That’s the part that every exec needs to take to heart. If you conduct business without integrity because rewards appear to outweigh the risk, or more simply, that you assume you’ll never be caught, the humiliation and horror will be doubly so when you’re exposed.

It’s a lesson that seems so wholly trite and blatantly obvious. Yet, it’s one that is repeatedly ignored, destined to be relived in viral videos, or in courtrooms across North America. From the dockets of Chicago where Conrad Black was sentenced to Bernie Madoff’s Manhattan, the scandals stretch far away – the Libor scandal, phone hacking at News International, Allan Stanford’s Ponzi’s schemes, and on.

Whether the rot starts at the bottom and ends at the top, or vice versa, exposure appears inevitable, and the impacts ruinous.

That’s the education Rutgers is getting this week; one executives should heed.