Greedy CEO's and Leadership

Greedy CEO's are in the news. The words greed and CEO are pretty tightly linked. If you watch tv or read newspapers, I am sure that you understand. Type the words "greed" and "CEO" into Google and you get 1,080,000 hits. That 's a lot of hits. Type in the words "Britney" and "nutcase" and you only get 116,000 hits. As a former CEO, I feel both defensive and hurt when I think about it. But I can't really disagree with what is being said. There are a lot of stories in the newspapers that are pretty outrageous.

I think that the outrage is pretty widespread. Corporate America has a lot to answer for. Both sides of the current political campaign keep talking about CEO greed. The financial aid package over our sub-prime mortgage fiasco is hostage to the need to punish CEO's. While the idea of congressmen berating CEO's for greed and immoral behavior is both comic and outrageous, we expect more from our business leaders than we do from our politicians.

Here in Denver we are periodically treated to pictures of former CEO Joe Nacchio walking in and out of courtrooms with what appears to be a smirk on his face. For those of you who may not be familiar with Joe, he was the CEO of our local telecom. In a familiar story, he pocketed hundreds of millions in pay, options and bonuses while his company did a swan dive. Joe was quotable when he was on top and insufferably smug. When his company went on the rocks, he was indicted for insider trading. He was somewhat tenuously convicted. He is now appealing and widely expected to win on appeal.

Joe Nacchio is our evil CEO in Denver, but he is just one of dozens, or even hundreds, around the country. A lot of people were hurt by Joe, and his counterparts at many other companies have done the same and worse. Fat cat CEO's presiding over failing companies have left a legacy of distrust and suspicion that have poisoned us all.

There exists a school of thought that says, "Business is business". We negotiate contracts with each other. We hire each other through formalized procedures that try to completely define our responsibilities to each other. That school of thought would say that if it isn't in the contract or the Law, it doesn't exist. That school of thought would say that if the contract or law doesn't specifically prohibit something, it is OK to do it. I would expect that in reality, everything Joe did was legal or in accord with his employment contract.

But I think that very few of us want to live in a world where "Business is business", with other obligations non-existent. The evident passion of those talking about greedy CEO's shows evidence, strong evidence, for the truth of that. And that is not to say that we want to be socialists or communists or live in communes. Those alternatives have been tried and found wanting. We do want to live in a free market country and are comfortable with business. Our market, and our businesspeople, have given us a standard of living that is the envy of the world. The material prosperity created by our business people have allowed opportunity for the broad mass of us to pursue leisure and personal growth undreamt of anywhere else in time or space.

And yet we are unhappy with them. To judge by the political debate, passionately unhappy. Why?

Because we are human beings. We are not the idealized robots, ruled by logic and seeking to maximize our income, used by economists in their models of the economy. We are the same people who hunted mammoths and built wooden ships to find new lands. We naturally come together in social groups to better our lives or protect our families. Today we call those social groups, companies. Rather than hunt mammoths, they engage in business. Whether we hunt mammoths or engage in business, we need leaders. Without them, we get trampled by the mammoth, or we go bankrupt.

But leadership is a special calling. In all times and places, leadership has its rewards. Even more, leadership brings with it, power. Successful groups delegate power to their leaders. Decisions have to be made, and decisions without the power to enforce them are not decisions; instead we call them the minutes of committee meetings. But when we allow another power over our life, we do so willingly only if we trust them. And we trust them only if we feel they deserve our trust.

When one of the hunters slips and the mammoth rounds on him, we expect the leader of the group to be concerned about saving the one who slipped rather than his own escape. It was expected that the captain of the ship would go down with his ship when disaster struck. We expect our leaders to look into the future and see the opportunities and dangers coming down the road toward us. If they use that knowledge for their own gain rather than for the good of those they lead, we feel betrayed.

We used to call that honorable behavior. We don't use the word "honor" much anymore. Actually, I think that it is officially a politically incorrect word. But honor is what is missing in the behavior of our business leadership, our CEO's. But then, where would they have learned it? We don't talk about honor. I don't recall it being evaluated in performance reviews. People are promoted into the executive suite because they are "accountable" and have good "metrics". Why should we have any reason to expect it?