Tag Archives: CEO

CEOs Should do the Job, Nothing but the Job and the Whole Job They are Hired to Do?

Being a “respected business leader” does a lot for the ego—but not the bottom line

How would your boss react if you waltzed into the office and blithely announced that you needed about a week off every quarter to meet with some other company to help them with their business? How encouraging would the boss be if you also mentioned that this other company would be paying you for your time, but that you would expect him to continue to pay you; even while you were away trying to help this other company? And, you mention in passing that you also might need a few days each quarter to keep up to date on the activities of the other company or attend side-meetings? Oh, and while you have his full attention, you also reveal that you are going to need some days off to attend meetings of other “business groups,” even though these groups may have nothing to do with your company. And, of course, you are expecting the company to pay your salary while at these meetings, too—along with all the costs of attending these “business” meetings.

Of course, you would never have such a conversation with your boss, because you know it might be a bit short – both in terms of time and temperament. Your future with the company would have the life expectancy of a condemned man who had just received a lethal injection. Even if you don’t become a dead man walking, you would certainly get the lecture about the necessity for you to be fully committed to the job you had been hired to do. And, who could honestly blame the boss? If you have been hired to do a job and are being paid to do it, then isn’t it reasonable to expect you to give it your full attention and time?

It’s Reasonable but Not Necessary for CEOs

It is a good rule that employees should be fully obligated and dedicated to do the job they have been hired to do, but it is amazing how many CEOs seem to believe that the rule does not apply to them. It is mind-boggling – actually disgusting – how many CEOs believe it is perfectly acceptable – even desirable – for them to spend large chunks of their time (company time, really) serving on the board of directors of other companies or to spend even more time (at the expense of their own company) being involved with “industry and business” associations. A recent survey identified that over 50 percent of the CEOs of the S&P 500 companies serve on the board of at least one other company.

This attitude and activity is nothing short of arrogance and ego gratification on the part of these CEOs. It sends a clear message to employees of the company (and should also to the shareholders) that they – unlike the employees – are so gifted and talented that a full-time effort is not needed. It also signals that the company is not their primary priority.

There may be some feeble justification to the argument that there is value to the company in having the CEO involved in industry associations. However, the reality is that most of these meetings are no more than an excuse for big egos to hobknob together, play golf and partake in similar, thinly-disguised gayeties and to do so at the expense of the company.

There is an interesting dichotomy of attitudes among CEOs regarding the allocation of their talent, time and effort. Very rarely will you see CEOs who  have a material ownership interest in the company become involved in outside “business” activity. On the other hand, you will often find the bureaucratic, hired-hand CEO who has little real ownership interest in the company becoming involved as a director for other companies or heavily immersed in the activities of various business groups. This seems to be especially true of CEOs who have been hired to run subsidiary companies of a larger entity.

These hired-hand CEOs will argue that such outside activity is “good for the company” because it allegedly allows them to keep abreast of important business news and events. But in reality it is nothing more than an ego trip designed to pad the CEO’s resume and demonstrate to everyone how important, respected and involved they are in the business world. These CEOs will also argue that such activity is a “responsibility” they have to put their company in a “good light” and help the business community; but that logic is as phony as they are. For them the company is only a launching pad for their own ego gratification. They love to brag about all their outside activity, but it is nothing more than an effort on the part of these CEO’s to convince themselves that they are “players.” It certainly does nothing to help the company they have been hired to run; if anything it may be detrimental. (Excluded from this criticism is membership on local, not-for-profit boards.)

This outside activity on the part of the CEO can send the wrong signal to those working for the company who are expected to give their “full faith and effort” to the development and success of the company. The CEO who becomes involved in significant outside activities is communicating either that they are so talented that a full-time effort on their part is not necessary or that the success of the company is not all that important. Either way, it is not a good message to send to those in the company who are expected to give all to the company.

You will never see a CEO who has a material ownership interest in a company involved in any activity that takes time and energy away from efforts to build their company. These CEOs are there all the time, slogging it out with everyone else, dedicating all their talent and effort for the benefit of the company.  For a hired-hand CEO to do any less is an abdication of their duty as an employee and a clear lack ethics.

And the Moral of the Story …

The CEO – more than anyone else in the company – should set the tone and be the role model for dedication and commitment to the development and success of the company. No one should work harder or be more visible in their efforts to help the company be successful. If the CEO signals that outside activity is more important than activity that helps the company directly, what type of message does that send to the employees?

Whenever you see a CEO who is more dedicated to achieving ego-stroking identification as a “recognized business leader,” than as a “recognized company leader,” you have identified someone who does not believe the rule of doing the job, nothing but the job and the whole job they have been hired to do, applies to them.

If that is the case, it may be a telltale foreboding of the ultimate failure of that company; for if the CEO signals that they don’t believe the company deserves their undivided attention and effort, then why should the employees behave any differently?

 

 

WANTED: Top-notch CEO with a firm grasp of financial services, particularly insurance. Must possess proven record of aggressive turnaround skills to position old-line insurance icon for recovery and growth. Charming Connecticut setting, three-to-five -year commitment preferred. Salary to be determined by government committee.

Who wouldn’t covet such a job? Even the outgoing CEO gushed as he announced his resignation, “Now that the company’s on a sure footing, it’s time for me to move forward with my plans…It’s time to give somebody else a chance and a crack at this fabulous enterprise.”

OK, if being CEO of The Hartford is such a fabulous job, then how come there isn’t a line around the block at One Hartford Plaza?

I think I can answer that question. There’s a lot going on behind those venerable doors that even the management of Hartford can’t understand or control. And since the potential candidates who are actually qualified to do the job know that, they welcome the opportunity to say, “No thanks.” As a result, Hartford will most likely end up with a tail-end custodian CEO who is there to keep the Hartford ship afloat as long as possible, while other alternatives are explored.

According to John Carney who writes for The Business Insider.com, Hartford reportedly approached Christopher “Kip” Condron and Bob Kelly and both declined the top job. Christopher M. “Kip” Condron is president the CEO of AXA Financial, Inc. and a member of the AXA Group Management Board. Robert (Bob) Kelly is chairman and CEO of The Bank of New York Mellon Corporation.

And who can blame them? If I were to grade the challenge facing Hartford’s new CEO, I would use the same “degree of difficulty” scale as an Olympic diving competition. In this case, accepting leadership of the Hartford would be akin to a forward 4-1/2 somersault with, say, 3 or more twists from a 1-meter springboard. (What makes it even worse is that the water is rapidly draining out of the pool.) Which is to say, the job is so impossibly challenging that few savvy execs, it seems, are willing to dive in.

Small wonder, then, that Carney’s article goes on to state that Hartford has spoken to Morgan Stanley co-president James Gorman and former Merrill Lynch executive Bob McCann. Both, according to Carney, have reportedly declined.

So what’s wrong with the Hartford job? Nothing. That is, nothing I haven’t written about before. But for starters:

  • The company is mired in a bureaucratic culture that has concentrated on cost-cutting, restructuring and organizing.
  • At the same time Hartford has failed to expand into lucrative markets in Japan and Europe.
  • To help stabilize its sinking fortunes, Hartford accepted a $2.5 billion investment from Allianz SE.
  • Still trapped for cash and unable to peddle company subsidiaries and divisions, it has accepted $3.4 billion in TARP funds, and the draconian government straightjacket that goes with this “investment.”
  • The company has completely failed in its bedrock job of prudently pricing its life products and assessing its risk.
  • Six top executives have left the company since 2007, with heavier turnovers at lower management levels.
  • Finally, here’s a company whose stock was selling for $100 a share little more than a year ago. Now you can buy a share of Hartford for the same price as a couple of Big Macs© (but the Cokes and fries will cost you extra).

All of this is not to mention the fact that big, bad Allianz SE has its nose in the door and just might be the catalyst for the eventual sale or break up of Hartford. And what really qualified candidate will want to walk into that nightmare?

Did I say “degree of difficulty” rating? Perhaps the Richter Scale is a more apt matrix to rate this job. And in this case, the corner office of The Hartford is likely situated on a little-known Connecticut fault line with a magnitude 6.5 trembler varifiably predicted for this year and next. The only thing the new CEO can bank on is that when it hits, Connecticut (and Hartford) are unlikely to fall into the Atlantic Ocean. But if things continue as they are, Hartford may crumble anyway.

Obama Pops a Cap

PODCAST EPISODE #103: To be honest, the executive talent we need to rescue these companies won’t even get out of bed for $500,000.