What becomes a CEO most?

There is so much about corporate leadership that is, and is not, in David Brooks‘ New York Times column this week, “In Praise of Dullness” (and in the research he cites), that it may take me a few posts to react.

Here is the thesis:

[W]arm, flexible, team-oriented and empathetic people are less likely to thrive as C.E.O.’s. Organized, dogged, anal-retentive and slightly boring people are more likely to thrive.

Brooks cites a study by Steven Kaplan, Mark Klebanov and Morten Sorensen called “Which C.E.O. Characteristics and Abilities Matter?” Brooks says they relied on detailed personality assessments of 316 C.E.O.’s and measured their companies’ performances. According to Brooks, they found that strong people skills, enthusiasm, and strong communications do not correlate with being a good C.E.O. Rather, “The traits that correlated most powerfully with success were attention to detail, persistence, efficiency, analytic thoroughness and the ability to work long hours.”

Agreed, and maybe, obvious. But dissing enthusiasm and communications would seem to run counter with one of my basic premises, that solid and repeated communications from leadership about mission, vision, values and culture can help a business do better in both the ethical and the economic sense.

Well, let me deal with Brooks’ view first, in this post, and later turn to the research itself. I think Brooks – with whom I frequently agree, much to my surprise — gets a little lost in the midst of trying to relate to this research.

Says Brooks:

The market seems to want C.E.O.’s to offer a clear direction for their companies. There’s a tension between being resolute and being flexible. The research suggests it’s more important to be resolute, even at the cost of some flexibility.

OK, number 1, how does the market, much less your employees, know your clear direction if you cannot articulate what that direction is and why it’s worth following. And like any other important message you have to market, you have to sell it like soap — believability and memory go up with repetition. And then believability and memory go up with repetition. Score one for communication skills.

Number 2, did Brooks miss every other business writer since, I dunno, 1980, talk about the need for business leadership to remain nimble in the face of accelerating change. Or what we call, “flexibility.”

So the good business leadership formula here is being resolute and flexible: resolute on your goals, resolute on the vision, AND resolute about getting there ethically — and then be flexible about strategy and tactics.

Says Brooks:

The second thing the market seems to want from leaders is a relentless and somewhat mind-numbing commitment to incremental efficiency gains…. The methodical executives at successful companies just make the same old four-door sedan, but they make it better and better.

Sometimes. But that “incremental improvement” strategy worked out great for GM and Chrysler.  And at the moment, it is also going great guns for the newspaper business. Not.

Says Brooks:

The C.E.O.’s that are most likely to succeed are humble, diffident, relentless and a bit unidimensional. They are often not the most exciting people to be around.

So explain Warren Buffet, Jack Welch, Lee Iacocca (who saved Chrysler’s bacon last bailout), and a lot of dynamic men and women I have known who have led fast growth companies. And BTW, Iacocca’s list of 9 valued leadership traits — which I admit is hindered by his requirement that they all being with the letter “c” — includes “communications” and “charisma.”  (C is also for cookie, and that’s good enough for me.)

In summary, this column points us to some very interesting research, but it’s not one of Brooks’ best efforts.

More to the point, I think we need to conclude that dynamic, communicating, exciting leadership can’t be all bad. Granted, you need to walk the walk as well as talk the talk. And maybe if you have to choose one, choose the walk.

But myself, I think if you want your teams to walk in the same direction as you, you’d better show them the way and invite them along. More than once. Audibly.

Another CEO for Golden Rule Management

Another vote for really, truly treating employees like teammates — for managing by the Golden and Silver Rules and thereby building a successful business — from Richard Teerlink, the retired chairman of Harley-Davidson. I recommend his recent comments, as reported by my friend Anne Ciesla Bancroft in her very substantive blog on managing workforce reductions.  Anne is an employment lawyer with Fox Rothschild.  She reports that:

During his 18 years with Harley-Davidson, Teerlink led the successful cultural transformation of the company based on the premise that “people are an organization’s only sustainable competitive advantage.”

Here here! And unlike some former leaders of major American manufacturers, I don’t think Teerlink has come to this conclusion recently.

Is Employment a Corporate Social Responsibility?

I heard some interesting reactions to and interpretations of the comments on April 29 by Dr Margaret Chan, the Director-General of the World Health Organization. She said:

“I have reached out to companies manufacturing antiviral drugs to assess capacity and all options for ramping up production.

“I have also reached out to influenza vaccine manufacturers that can contribute to the production of a pandemic vaccine.

….

“Above all, this is an opportunity for global solidarity as we look for responses and solutions that benefit all countries, all of humanity. After all, it really is all of humanity that is under threat during a pandemic.”

In on-air chat the next morning, these comments led the CNN anchors into a discussion of corporate social responsibility in the broad sense, of pharma companies as rich citizens of the world, etc. Their explicit point: hey, drug companies — you’re making billions off of us, so don’t be greedy when the world needs your Tamiflu.

If that is a fair point, then how come we never heard it applied to the economy? According to the CDC there are, as of now, 226 cases of 2009 H1N1* in the US. By contrast, the Labor Department says some 1.9 Million Americans have lost their jobs since December 2007. A more widespread pandemic, don’t you think?

But we never heard a public outcry, or a governmental shout-out, to this effect.  What if someone with a bully pulpit said this:

“The Economic Meltdown of 2008-2009 is a pandemic, fueled by the contagion of uncertainty. People are afraid they are going to lose their livelihoods, so they stop spending, that causes losses in the companies that produce our goods and services, and those companies go on to lay more people off.

“To stop the spread of this pandemic, we need to contain the layoffs and the fear of layoffs. So we are calling on the companies that have profited from the American consumer to now do their part, to live up to their social responsibility, by striving to the greatest extent commercially possible NOT to put more people out of work.”

And saying that wouldn’t have cost the taxpayers a dime.

I have run companies. When my company’s survival or fundamental profitability was at stake, I laid people off. I really had no choice. And for many companies this year, that sad reality is behind their RIFs.

But seriously, and I would like to hear from my fellow corporate ethicists out there, do you think is it patriotic, is it ethical in this kind of economy for a profitable company to lay people off just to increase its profit margin?

I’m just asking.

But even Jack Welch might say that kind of layoff is unethical AND bad for business. At least, I think he’s saying that these days, now that he has repudiated the idea of “shareholder value” as a prime objective of business. As Jack told the Financial Times:

“Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products.”

* I like bacon way, way too much to call it “swine flu.”

Words from The Boss

Bruce Springsteen and the E Street Band, Wachovia Spectrum, April 29, 2009. IPhone photo by me.

Went to see the boss Wednesday night, April 29. As in, The Boss. Springsteen. Last concert ever, by anyone, in Philadelphia’s Spectrum, and one of the best concerts, ever, that I have seen.

And, even when it comes to business ethics, Bruce said it all.

I’ve done my best to live the right way
I get up every morning and go to work each day….

Mister I ain’t a boy, no I’m a man
And I believe in a promised land

PS. Props to Nils Lofgren for his guitar solo on “Youngstown.” No one bettter.

Behavioral Econ Part II: Managing like you like it (and like them)

More thoughts on my April 25 post on behavioral economics and behavior change. This gets to the nub of what I want this blog to be (mostly) about.

Randy Cohen‘s anecdote made me think of another that appears in my no-question favorite management book: “It’s Your Ship,” by D. Michael Abrashoff. The story is about the owner of an industrial repair shop who kept his tools in a tool-issue room to avoid theft and losses. He paid the custodian of the tool-issue room $35,000 a year (this was c. 1990), and his workers spent part of their day standing in line to check tools in and out. So the owner did away with the tool issue room. No more lines. And over the next year, he spent only $2,000 to replace tools.

As Abrashoff puts it, a “lack of trust was costing him money.”

Bingo. Beware of the processes that get in the way of compliance. Beware of bureaucracy that takes the name of compliance but really has nothing to do with your company staying on the right side of law and ethics, because that busy-work only makes your team resent your legitimate compliance efforts. And beware of processes that may be contrary to your tone at the top.

There are things you’ve got to button down in tight processes, like, say FCPA compliance. Then there are areas where clearly and repeatedly communicating a vision and mission — and not contradicting them with your actions – goes a long way.  (Balance. An obvious point, right?)

And let me take this moment to give a fan’s rave to Abrashoff’s book. It’s the story of his time as captain of a US Navy destroyer, and how he used simple, commonsense trust and communication — treating his sailors as he would expect to be treated– to lead it to excellence. I’ve lead companies or business teams for more than 20 years of my career, and I’ve read a lot of management books — this is the one that, as I read it, I kept nodding my head. “Yes, that’s right!”, I kept saying. (I got real annoying to my family about it.) And there’s no diluting his approach by saying that a commercial executive can’t enforce the order and discipline that a military leader can; as Abrashoff notes, he was the ultimate middle-manager — with ranks of superiors above him and an immense bureaucracy surrounding him.

This book also carries an interesting history, to me, anyway. It was published in 2002, but demand made it disappear from book store shelves overnight in the fall of 2007, when it was mentioned on Monday Night Football as the inspirational leadership guidance for Bengals QB and Captain Carson Palmer.

Behavioral Economics and behavior change in the company

I have long advocated that behavior change is the New Frontier of company ethics programs. I’ve described it to my clients as the heart of “Compliance 3.0” (if the heart of v1.0 was the employee handbook and v2.0 was the code of conduct). It’s a hard nut to crack, but not rock hard. Just needs some attention to detail.

Whether an C-suite exec embraces this idea, that her company’s programs can actually affect the behavior of team members, is not a bad indicator of whether her company’s dedication to ethics and compliance is cynical or sincere.

In this light, some nice thinking about behavior change — and that it is for real — from perennial compliance thought-leader Jeffrey M. Kaplan. He gives it in an interview with compliance professional and recruiter Maurice Gilbert, in Gilbert’s meaty new website, Corporate Compliance Insights. Kaplan’s point is that the ideas of behavioral economics, a fundamental tenet of the Obama Administration, can and should be applied to leading one’s company toward ethical behavior:

“[T] need for strong C&E [compliance and ethics] programs has often been questioned based on the assumption that ethical decisions are driven almost entirely by character, and this view hurts C&E program efforts because character is largely beyond the reach of such programs. What [behavioral economics] shows is that this view is incorrect, and that by impacting in a positive way the situations in which ethical decisions are made – which is what truly effective C&E programs do – ethical “results” can indeed be significantly improved.”

Something for Execs to keep in mind if they need rebuttal evidence against the cynics.

Kaplan refers to an experiment that took place on the campus of my old client, the Princeton Theological Seminary. It found that people were much more likely to act like true Good Samaritans to a person in distress… if they were not running late.

It reminded me of an example used by Randy Cohen, author of “The Ethicist” column for The New York Times. Cohen basically says he has faith that ethics can be fostered by processes thanks to a small change at Penn Station in New York City. Used to be that it was a free-for-all to catch a cab on 7th or 8th Avenue next to Penn Station and Madison Square Garden. People would push and cut in and make cab-catching hopeless for anyone standing down the arterial flow. Then they put in a cab line on the sidewalk along each Avenue, with a painted line (or now, sometimes, a wimpy barricade) to mark where to stand in line and — presto! — people willingly and orderly got in the line and waited their turn. The non-compliant received social ostracization from their peers. No line attendant necessary.

Says Cohen in one interview:

“Now people stand in line-because you gave them a structure that made it possible for everyone to behave equitably and civilly to one another. People still cheat, but most don’t. It’s extraordinarily inspiring. There’s no fear of getting caught by the police. People do the right thing because they want to do the right thing and because they see those around them behaving ethically.”

Ethics in ethics training

Interesting appellate decision spotted by lawyer Howard J. Susser of Boston’s Burns & Levinson LLP: The copyright case is a cautionary tale to compliance trainers who build their course materials by cutting, pasting, borrowing, and lightly paraphrasing from somebody else’s course, like maybe from a PowerPoint made available at a conference or from a course provided by a vendor that their company’s not using anymore. (I’m shocked, shocked….)

Well, that’s copyright infringement. In Situation Management Systems, Inc., v. ASP Consulting, LLC (1st Cir. March 19, 2009), the First Circuit Court of Appeals nails one training company for using another’s course materials as a template for its own. (The opinion is available at the Court’s website.) The Court says those courses are “original expression,” even if they are “vapid” and “filled with generalizations, platitudes, and observations of the obvious.”

In his article posted by the firm, Mr. Susser concludes: “What this decision means is that companies and individuals risk exposure when copying for commercial purposes any training materials or other commercial business materials from competitors or other sources.”

We ought to know better, given our concern with compliance. It’s kinda like a movie exec downloading bootleg films. Hurts to be hoisted on one’s own ethical petard.

Golden rule management ala Berkun

Really nice exposition of management by the Golden and Silver Rules, by consultant and author Scott Berkun.

In fact, the old Rule gets an explicit mention in #7 of Berkun’s “Top Ten Reasons Managers Become Great.

“Practice of the golden rule.  It’s funny how well known this little gem is, and rare in life people follow it. But I think anyone in power who believes in it, and treats all of their employees the same way they truly would want to be treated, or even better, treats employees as they actually want to be treated, will always be a decent, above average manager. A deeply moral person can’t help but do better than most people, as treating people with respect, honesty and trust are the 3 things I suspect most people wish they could get from their bosses.”

Other reasons he lists: great managers “Enjoy Helping People Grow” and (speaking of ethics) and “Instrinctively correct[] bad behavior within their own team.”

And thanks to my son Rob for referring Scott’s post to me.

“Shareholder Value” and short-term thinking

Can short-term thinking in a business leader be ethical… at least when the survival of the business is not at stake?  Isn’t there something intrinsically wrong about sacrificing the future for the sake of the present?

Valuing the long-term over the short-term is at the heart of a lot of messages that company management gives to employees about ethics.  When we say, “Don’t approve a shipment of peanut paste that you know is tainted,” we are really saying, “We don’t want you to sacrifice the company’s future reputation and sales for the sake of filling this one, immediate order.”

So not being hypocritical about that message in the top-level business decisions we make adds a bit of a challenge in maintaining our “tone at the top,” eh?

And so it seemed ethically obvious when Jack Welch told the Financial Times on March 12, that the “obsession with short-term profits and share price gains that has dominated the corporate world for over 20 years was ‘a dumb idea.’ Welch says now that the concept of “shareholder value” that he championed was never supposed to be a be-all-and-end-all.

According to the Financial Times:

Mr Welch said last week he never meant to suggest that setting, and meeting, profit expectations quarter after quarter in an effort to boost a company’s share price should be the main goal of corporate executives.

On the face of it, shareholder value is the dumbest idea in the world,” he said. “Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products.”

At least, that’s what he says now.