Who's to Blame for CEO Scandals?
CEOs do not have the best public image. From the classics Enron and Worldcom, to more recent scandals over executive pay -- Bob Nardelli at Home Depot and Blackstone's Steven Schwarzman come to mind -- to the anonymously posted trash talk about an acquisition target from Whole Foods' John Mackey, CEOs have recently come off as vain, greedy, morally bankrupt egoists, interested only in enriching themselves and their companies in the short-term.
In a recently posted article on Business Week's Outside Shot, Henry S. Givray diagnoses the problem.
The problem's roots lie in the fact that the terms "CEO" and "leader" have mistakenly become synonymous. Nothing could be further from the truth. CEOs are measured by quantitative results. Leaders are shaped and defined by character. CEOs are expected to boost sales, improve profit margins, and make money for shareholders. Leaders inspire and enable others to do excellent work and realize their potential. As a result, they build successful, enduring organizations.It's time, Givray feels, that CEOs become leaders again. And how should this be accomplished in the face of the pressures of Wall Street to meet short term financial goals? Givray suggests,
Corporate board members and others who recruit CEOs must adopt disciplined approaches to investigate a candidate's character. For example, divide the interview process into two distinct components to vet candidates on both traditionally examined management talents, as well as on their lived--not just spoken--values.That sounds like a pretty idea, but it seems unlikely if all the incentives are towards ruthlessness. Writing on the Huffington Post yesterday, Stephen H. Baum has different ideas about where reform will come from. He reminds those who have a stake in the public perception of the business community that the ball is firmly in their court:
You are not entitled to your low expectations [of CEOs] if you have not been an activist investor, participated in an annual meeting, written a letter to the board of directors, written to your local newspaper, started your own "soandsosucks.com" -- done something active.Rather than dreaming that corporate boards will somehow magically decide to consider the long term health of the business community when hiring CEOs, perhaps its time for people who believe in business and believe it can function ethically for the public good, to start making some more noise.