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Stick to Your Core Values: A Lesson


John Stewart

Sometimes core values may not seem so lofty, but sticking with the rules you set—despite temptations—can save you a lot of pain. Morton Mandel, cofounder of Premier Industrial Corporation and now CEO of Parkwood Corporation, a private trust company, tells the story of how his “Golden Rulebook” saved him from investing with Bernard Madoff. Ever since his service in the armed forces during World War II, Mandel appreciated the value of discipline and clear rules. After the war when he returned to business, Mandel created a Golden Rulebook, which contained Premier Industrial’s most important policies and principles. Decades later, when he set up Parkwood, the Golden Rulebook stayed with him and was modified to suit what was now largely an investment business. Among other policies, it precluded putting money with managers whose investment process lacked transparency and who did not use a first-rate auditing firm. Friends had been pushing Mandel to meet with Madoff and invest with him for years. The meeting finally took place and Mandel was charmed, but he asked for more transparency and if Madoff would consider changing auditors. Madoff declined. Mandel recalls that, “The policy book told me we had to pass.”

The truth is, I was sorely—but not sufficiently—tempted to make an exception. After I presented the opportunity to our investment committee a few weeks later, some members urged me to invest with Madoff anyway. One adviser said that there comes a time when you should make an exception to the rules. I decided, however, that leaders have to lead and that abandoning principle would set a poor example. My decision was that we would not invest with Madoff. I’m glad we didn’t.[i]

A year later Madoff was in jail.

[i] Morton Mandel, It’s All About Who You Hire, How They Lead … and Other Essential Advice from a Self-Made Leader (New York: Wiley, November 11, 2012), Kindle loc. 1626–1630.


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