Bob MacDonald on Business

Sage Advice on Insurance and Financial Services from the Perennial Maverick

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The Differing Perspectives of Rangel and Schorr

July 26th, 2010 · Business Ethics, Business Management

During the past week there was extensive news coverage of two powerful insiders in Washington – Congressman Charles Rangel (Dem-NY) and Daniel Schorr, longtime broadcast journalist. These two gentlemen were connected together in the news because of their approach to power and principle. One of the men – Charles Rangel – was accused of the lack of principle in the use of the power of his position for personal gain. The other man – Daniel Schorr – was lauded for his high principle in the use of the power of his position to expose abuse of power.

Charles Rangel was indicted by the House Committee on Standards of Official Conduct (seems like an oxymoron if I’ve ever heard one) on a wide variety of ethics charges and will face trial by his peers in Congress. No matter what the outcome of the ethics trial, Rangel will exit a long Congressional career of power and prominence in disgrace. Daniel Schorr passed away at 93, recognized as a person who kept his principle intact in the face of overwhelming political power and the mandates of his employers.

Which one of these men do you think is most comfortable with the life they have lived?

Many readers may be too young to know of Daniel Schorr or to have seen much of his work on television, but his career is a wonderful example and model for those who will face the conflict of personal principles and the power of authority in their careers. It often comes down to a simple paradox. Will our success be defined by our adherence to principle or will our principles be sacrificed on the altar of success?

Charles Rangel represents the many (most) who are willing to trade principle for power. Daniel Schorr represents the few who are willing to forgo power and success in order to maintain personal principle. The irony (and good news) is that as these two men exit the stage, one is disgraced and one is lauded. It is Schorr who is recognized as the most powerful and successful.

A brief review of Schorr’s career will provide good lessons for anyone who will ever be faced with the pressures to conform and avoid rocking the corporate boat at the expense of personal principles.

As Patricia Sullivan reported in the Washington Post (July 24, 2010) “Schorr was as fearless in exposing government misdeeds as he was in taking on his employers.”

Schorr’s national career began in 1953 when he was hired by Edward R. Morrow of CBS, to be an international correspondent for the network. But Schorr made his mark by exposing the abuses of the most powerful. So much so that Richard Nixon had him added to his notorious “enemies list.” The New York Times (July 24, 2010) reported, “Nixon was so angered by Mr. Schorr’s reporting that he was said to have ordered the FBI to investigate him.” When, in 1976, Schorr became aware of and began to expose the abuses of the CIA and FBI he was confronted with death threats and investigations by the FBI and Congress. Not willing to reveal his sources, Schorr was threatened with and almost convicted of “contempt of Congress.” (That’s Schorr on the right testifying in 1976 before a meeting of the House Ethics Committee in Washington.)

And it was not just the powerful in government that Schorr challenged. He held his employers to the same high level of principles that he lived by. Fearful of a negative reaction from its affiliates and regulators CBS decided not to publish the information on the abuses of the FBI and CIA unless Schorr would expose his source. Instead, he gave the information to The Village Voice. For this CBS relieved him of his reporting duties and his 23- year career with the network was over. His defense was, “To betray a source would be to betray myself, my career and my life. I cannot do it.”

According to The Times, when Schorr was later hired by Ted Turner to be the first reporter for CNN, he demanded a clause in his contract making clear “no demand will be made upon him that would compromise his professional ethics and responsibilities.” When Schorr refused to take an assignment that he felt violated the agreement, CNN took him off the air and allowed his contract to expire.

And yet as time went by, Daniel Schorr came to be sought out, recognized and respected for his unwavering adherence to principle. Despite his success and power in Congress, it is doubtful anyone will ever say the same about Charles Rangel.

And the Moral of the Story …

The ultimate question for all of us is this: If we are ever confronted with a conflict between our principles – what we feel is the right thing to do – and what those with power over us want us to do, how will we react?

Daniel Schorr had a clear answer. Advising a group of young journalists he once said, “At least once in your lifetime take a risk for a principle you believe in, even if it brings you up against your bosses.”

If you follow the path of Daniel Schorr and do the right thing at the right time, you will not only feel better about yourself, but others will think better of you as well and you will achieve a success that is real and lasting.

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The Dark Side of the Steinbrenner Legacy

July 19th, 2010 · Business Ethics, Business Management

There Ought to Be a Word for His Management Style—and There Is

As I observed all the folderol surrounding the passing of George Steinbrenner, what struck me the most was that many of those asked to comment about him obviously did not like the man and were courteously struggling to find something, anything, nice to say.

There is no doubt that George Steinbrenner was a talented man who achieved much success during his life. (Although a closer examination of his success would show that it was not as great as his PR machine would have us believe and had as much to do with circumstance as talent.) Nevertheless I do not really question his success, but I do challenge his methods.

Steinbrenner was the personification of the idea that, “the end justifies the means.” It says a lot about Steinbrenner that he took pride in (and self-promoted) the nickname of “The Boss,” even though for most it was a form of derision, not an affectionate compliment. In reality, his nickname should have been “The Bully.”

Steinbrenner’s management style was based upon fear, intimidation, greed and the bribery of “buying” (as opposed to earning) loyalty. These are management techniques that I find to be the antithesis of ethical leadership. The objective of this approach is to make “the boss” look good at the expense of the feelings of others in the organization and its future.

Whenever someone’s management theme makes it clear to all that they are “the boss” and the center of all attention, we are viewing someone who is either weak, insecure or an egotistical psychopath. Steinbrenner was probably a bit of all three.

Cartoonist Bill Gallo of the New York Daily News best characterized Steinbrenner’s style by depicting him in a Prussian military uniform, complete with spiked helmet, gold epaulettes and medals, calling him “General von Steingrabber.” (A Teutonic style of management with which I am all too familiar.) Sport Illustrated viewed Steinbrenner as a Napoleonic despot. George Will, the modern historian of baseball, once described Steinbrenner as a “baseball dumb-o-meter.”

Steinbrenner’s leadership strategy was to buy people by paying them more than they could receive from others and then browbeat and intimidate them like they were little more than indentured servants.

A tell-tale example of Steinbrenner’s management style and the-ends- justifies-the-means philosophy was his interaction with one of his top employees (players) Dave Winfield. After signing Winfield to the then largest contract in baseball, Steinbrenner constantly and publicly derided Winfield’s performance. Eventually Winfield was forced to sue Steinbrenner for failing to pay Winfield’s foundation the $300,000 that was guaranteed in his contract. Steinbrenner’s reaction was to pay a shady gambler $40,000 to “dig up dirt” on Winfield. (For this arrogant act, Steinbrenner received a “lifetime” ban from baseball. This followed an earlier “suspension” from baseball when Steinbrenner pleaded guilty to illegal contributions to Richard Nixon and felony obstruction of justice.)

The examples of Steinbrenner’s abusive, intimidating and micro-management style are almost too numerous to mention. Many note that during the first 23 years of his Yankee ownership Steinbrenner made 20 managerial changes. How can someone perform to their potential when they know that with one mistake (even if only perceived) they will lose their job? Steinbrenner was such a micro-manager that he even dictated the type of hair cut his players could have. This polluted work environment caused a number of top players such as Ken Griffey Jr. to list the Yankees as the one team they would never play for; no matter how much money was offered. Others were bribed by Steinbrenner with such large contracts they ignored the situation. And, they paid the price.

In fairness, Steinbrenner is lauded for his financial contributions to charity and community, but this also has its dark side. Heavy publicity was given to his actions and most of the contributions came with the requirement that the facilities bear Steinbrenner’s name. These contributions seem to be the actions of a man with a guilty conscious. It is as if the sinner builds a beautiful church, then God will forgive him.

Steinbrenner was not the only manager to believe that fear, intimidation and the entrapment of high pay is the most effective form of management leadership. He was simply the public face for thousands of corporate managers who believe such an approach is the path to success.

For some, the success of the Yankees is validation that this type of leadership is the best way, but they are wrong. There is no question that under Steinbrenner the Yankees have become the dominant franchise in baseball, but a closer look at history will reveal that in the past the Yankees were even more dominant. The Yankees have been successful because the revenues that could be generated in New York allowed Steinbrenner to buy the most talented players available. This unique situation allowed success to be achieved despite his management style—not because of it. One must wonder if his style would have worked in Cleveland. (A team he attempted to buy before the Yankees.)

As I watched the memorial service for Steinbrenner at Yankee Stadium, I could not help wondering if what we saw were crocodile tears, and the true feelings were of relief, not sadness.

And the Moral of the Story . . .

The truth is that a manager who uses fear, intimidation and bribery to dominate and control others does so out of weakness and insecurity, not from strength of his leadership. In business intimidation makes cowards of the brave and the result of this management failure is wasted time, talent and opportunity.

There should be a new term in management that would immortalize Steinbrenner and his leadership style. When a manager makes it all about “the boss,” seeks greatness for himself at the expense of others, always recruits outside talent rather than developing from within, and all the while seeks to intimidate all around him, then such behavior should be called a “Steinbrenner.” And for my money, the meaning of “Steinbrenner Management” is as clear as a Charles “Ponzi Scheme” or a “Queen of Mean” hotel manager Leona Helmsley.

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The Hypocrisy Exhibited in the LeBron James Circus

July 12th, 2010 · Business Ethics, Business Management

The hyper-heat (pun intended) of publicity, acrimony, accusations and recriminations surrounding the free-agency actions of LeBron James is nothing more than an example of the typical attitude of corporations toward their employees. The only difference in the LeBron situation is that the attitudes and actions of management are blatant, open and in hi-def.

LeBron James is being made out to be the villain in all this, but the real scoundrel here is the “system” of management control that LeBron James and many of us are forced to work under.

The system is designed for management to remain in control the employee and nothing upsets or intimidates management more than when an employee uses the system for their own benefit. The real reason that management is so angry with LeBron – as expressed in a vitriolic public relations campaign – is because he used the system that was designed to control him to beat the system. Cleveland Cavalier owner Dan Gilbert has acted like a pre-Civil War Southern slave owner who has had one of his chattels leave the plantation. If LeBron James is “selfish” for exercising his rights under the system, then Gilbert is nothing more than a selfish, ignorant buffoon for acting as he has. Do you think he is concerned for the future of LeBron James or the money he will lose without him?

The Playing Field has Never been Level

From the very start of the game, the system in both business and sports has been designed to allow management to control the actions and future of employees and the athlete. The system is more obvious in sports and may be more subtle in the corporate world, but it is there just the same. The system has been used to take advantage of and exploit both the corporate employee and the athlete.

For example, for over a century, baseball (and every major sport) employed what was called a “reserve clause” in every player contract. The reserve clause had the effect of making the athlete the “property” of the team for which he signed his initial contract. (No wonder Gilbert acts like a jilted slave owner!) The athlete was prohibited from signing and playing with another team – even after the contract expired – unless he was traded or released. As a result, with lack of flexibility and freedom, the players were exploited by the management of the teams. There was no way for the player to protect his future in the event of injury (since management would still control the player at the end of the contract only one-year contracts were offered) and with no competition for the services of the player, management could pay whatever they deemed fit—not what the player might deserve had there been a free-market. (Amazingly, in 1922 the Supreme Court validated the ownership of the players by the team on the basis that sport was an “amusement” and not a business, so teams were exempt from anti-trust or constitutional issues.)

Fortunately, this system was broken 35 years ago, but only by the courageous actions of a few baseball players who were willing to stand up and sacrifice their careers for the benefit of all future players. And, ironically for the benefit of all sports, which flourished after the rules changed.

Let’s look at the system under which LeBron James was forced to work and how he worked the system. At the start of his career James (like all athletes) had no free choice as to where to ply his talents. He was “drafted” by the Cleveland Cavaliers. (One might question the credibility of a “lottery” under which the lowly Cavaliers were able to “win” the rights to draft the already local sports hero LeBron James.)

James signed the (non-negotiated) rookie contract and later even signed an extension so that he spent a total of seven seasons with the Cavaliers. During that time he rose to become the dominant “King” of basketball and Cleveland. (Of course being King of Cleveland is a little like being King of Moldova – there is not much competition). Twice named the league’s Most Valuable Player, James lifted what had been a downtrodden team to title contention every year. Who could ever forget how he personally dismantled the Detroit Pistons in an NBA East Finals. He led a team that, without him, would probably not have even reached the playoffs.

In short, LeBron James did everything and more that would be expected of any employee working for a company. Of course, for his efforts he was well paid. But clearly James also had his own interests and future in mind as he worked under the system.

Like Tiger Woods, Michael Jordan, Alex Rodriguez, Kevin Garnett, and other elite athletes who seek to define their legacy by the number of “majors” they win, LeBron James wanted – more than anything – to win NBA titles. (It is not only the players, but the media and sports fans who define the legacy of an athlete by the number of championships they win, i.e. despite his immense talents and record as a winner, Peyton Manning was never really considered a “great” quarterback until he had won a Super Bowl. Kevin Garnett led the Minnesota Timberwolves to eight-consecutive playoff appearances, but he wanted to play for a winning team. It’s not about money. It’s about personal achievement, something we all seek and treasure. Minnesotans were disappointed when he left, but in his very first year with the Boston Celtics, he finally earned that elusive crown while leading the Celts to their first NBA championship since 1986 and the Celtics’ seventeenth title.

In reality, this is no different than it is in business, where individuals seek to define their legacy by becoming CEO of a large company or by building their own successful company; even if it means leaving their initial or current employer to do so.

In any event, right or wrong, James made the personal decision that the potential for him to win “majors” at Cleveland was not all that high. (Not many top athletes want to move to Cleveland, even if it is to be a teammate of LeBron James. And, can you blame them? Living in Cleveland is like a real-life “Locked Up Abroad” scenario.) James played by the system and when the system allowed him to become a free agent, he used the system to do so. And for that he is vilified as selfish, self-centered, disloyal and a money grabber. (Of course, few noted that he took about $30 million less than he could have earned in Cleveland.)

You have to ask yourself what more does James owe to the owners of the Cavaliers and the sports fans of Cleveland that he has not already given them? Why should James be disparaged as a villain for not being willing to sublimate his personal goals and desires to those of the owner of the Cavaliers and the fans in Cleveland. (How much money has Gilbert made off the efforts of James during the past seven years?) Come on, we are talking basketball here, not a cure for cancer or world peace!

And the Moral of the Story …

Many business executives and corporations operate on the basis that the employee is no more than a “human resource” who should play the rules of the system, dedicate themselves to the success of the company, be loyal, accept what management decides for them and sublimate their personal happiness and future to what management thinks they should be. There are all types of threats – real and implied – used by management to keep the employee in the system. Often there are even efforts to “lock up” an employee within the system.

My advice to those (and I have been there) trapped in such a system is to honestly meet your obligations and requirements, but to ultimately be concerned with your own vision of happiness and success. To do less is to cheat yourself and reduce yourself to nothing more than an employee working under the ultimate “reserve clause.” It takes a certain amount of courage to use the system to beat the system, but the reward for doing so far outweighs the slings and arrows sent your way by those who lack the courage to act and those who simply want to control your future for their benefit.

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