Wednesday, August 26, 2009
"It was never about him"
Safe to say you won't find a more moving tribute to a friend than what Vice President Joe Biden conveyed earlier today on the passing of Sen. Edward Kennedy. Say what you will about our political process. Just don't confuse the messenger with the message when it comes to tributes. What Vice President Biden conveyed today on the passing of Sen. Edward Kennedy should be instructional for leaders of every shape, size or persuasion. For more on this moving moment, go to http://www.huffingtonpost.com/2009/08/26/bidens-emotional-kennedy_n_269331.html.
Tuesday, August 04, 2009
Insidious trend
So let's say you're a former CEO who moves into private equity. Before doing so, you help run a major company into the ground by leveraging up via acquisition when that same company needed to be paring down costs and changing its processes. Granted you did cut costs when losses started to mount. But that was only after the fact when you had no real choice.
Fast forward a few years later. You're still hanging out in private equity, tapping the rolodex for deals. Another major company from your homeland comes calling with a board seat. A few years later, you're made Chairman to calm things down after that same company goes through a major proxy fight.
Jacques Nasser, a.k.a. Jac the Knife, must be feeling pretty good right now. BHP Billiton, the Australian mining conglomerate, has just turned to the former Ford CEO to help sort out its future path. Here's the announcement: http://www.nytimes.com/2009/08/05/business/global/05mine.html?ref=business
Some might call this failing upward. Others might yawn and say "business as usual." A few might even have the courage to say, "eminently qualified for the job. Great leader," which is what Cerebrus basically said about Bob Nardelli in a recent statement after naming Nardelli to a key post following the Chyrsler bankruptcy.
This type of revolving door is an insidious trend that really needs have a door stop put in place. No failed CEO of a major company should go on to serve as Chairman of another major company. Period. End of story.
Note: BHP told the New York Times that they consulted with Heidrick & Struggles on the selection of Nasser and KMPG on a secret ballot distributed among board members.
Next thing you know boards will be playing duck, duck goose to ratify these types of decisions.
Fast forward a few years later. You're still hanging out in private equity, tapping the rolodex for deals. Another major company from your homeland comes calling with a board seat. A few years later, you're made Chairman to calm things down after that same company goes through a major proxy fight.
Jacques Nasser, a.k.a. Jac the Knife, must be feeling pretty good right now. BHP Billiton, the Australian mining conglomerate, has just turned to the former Ford CEO to help sort out its future path. Here's the announcement: http://www.nytimes.com/2009/08/05/business/global/05mine.html?ref=business
Some might call this failing upward. Others might yawn and say "business as usual." A few might even have the courage to say, "eminently qualified for the job. Great leader," which is what Cerebrus basically said about Bob Nardelli in a recent statement after naming Nardelli to a key post following the Chyrsler bankruptcy.
This type of revolving door is an insidious trend that really needs have a door stop put in place. No failed CEO of a major company should go on to serve as Chairman of another major company. Period. End of story.
Note: BHP told the New York Times that they consulted with Heidrick & Struggles on the selection of Nasser and KMPG on a secret ballot distributed among board members.
Next thing you know boards will be playing duck, duck goose to ratify these types of decisions.
# # #
Monday, August 03, 2009
Red rover, red rover, send Sallie over
(Editor's note: This column only represents the author's views, which are blogging by nature. Tinges of sarcasm are subject to safe harbor statement protection and do not intend to offend or misinform.)
In a largely unexpected move underscoring significant change, Bank of America (BofA) today appointed former Citi CFO and practice head Sallie Krawcheck as the bank's new leader in charge of global wealth and investment management.
Observers and compensation experts alike were seen quietly listening along the New York to Charlotte corridor for the original red rover request, which could be heard sometime this morning between BofA CEO Ken Lewis and Citi CEO Vikram Pandit.
This move certifies the power of failing up in an industry that's been flailing since well before last year's market collapse.
Krawcheck will join a senior team that now includes at least three bona fide candidates to replace CEO Ken Lewis when he's ready to go -- or when the board decides it's time for him to go.
There is no reported timetable for either option, although Lewis has hinted in previous interviews that it's not exactly a great job at the moment. Neither Lewis nor BofA board Chairman Walter Massey were available for comment, according to their personal bartenders.
Chairman Massey continues to move swiftly and deftly with mixing up the board's composition at the behest of the Obama administration. How he's able to do so without the official help of any of the major executive search firms defies human reason.
The only real question left behind this high-level talent mix-up is what role did the government play in approving the selection of Krawcheck? What exactly was required to get this plum assignment -- performance in previous positions? Extensive industry experience? Long lost uncle related to Obama or Geithner?
Most importantly...What will Krawcheck earn in her new position compared with what she received at Citi? Bonus watchers at both leading financial institutions will be waiting patiently for the answer.
The appointment of Krawcheck to head what's left of Merrill Lynch also unofficially signifies an internal horse race for top job at BofA. While it remains unclear who will ultimately get the CEO position, one thing is abundantly clear: The race will not produce anything dramatically different than what's been seen thus far.
Meanwhile, in other news, AIG has appointed a former MetLife CEO to replace the insurer's outgoing CEO, Edward Liddy, who used to run AllState. And Apple has decided that it's time for Eric Schmidt, CEO of Google, to step off the Cupertino, Calif.-based company's board. Liddy is rumored to be Schmidt's replacement, but the TGR could not confirm this to be true as of press time. Something about iPods not working in the board room.
Ah yes, the more things change, the more they stay the same. Captain Weill, more yacht steam -- it's time to return to port.
In a largely unexpected move underscoring significant change, Bank of America (BofA) today appointed former Citi CFO and practice head Sallie Krawcheck as the bank's new leader in charge of global wealth and investment management.
Observers and compensation experts alike were seen quietly listening along the New York to Charlotte corridor for the original red rover request, which could be heard sometime this morning between BofA CEO Ken Lewis and Citi CEO Vikram Pandit.
This move certifies the power of failing up in an industry that's been flailing since well before last year's market collapse.
Krawcheck will join a senior team that now includes at least three bona fide candidates to replace CEO Ken Lewis when he's ready to go -- or when the board decides it's time for him to go.
There is no reported timetable for either option, although Lewis has hinted in previous interviews that it's not exactly a great job at the moment. Neither Lewis nor BofA board Chairman Walter Massey were available for comment, according to their personal bartenders.
Chairman Massey continues to move swiftly and deftly with mixing up the board's composition at the behest of the Obama administration. How he's able to do so without the official help of any of the major executive search firms defies human reason.
The only real question left behind this high-level talent mix-up is what role did the government play in approving the selection of Krawcheck? What exactly was required to get this plum assignment -- performance in previous positions? Extensive industry experience? Long lost uncle related to Obama or Geithner?
Most importantly...What will Krawcheck earn in her new position compared with what she received at Citi? Bonus watchers at both leading financial institutions will be waiting patiently for the answer.
The appointment of Krawcheck to head what's left of Merrill Lynch also unofficially signifies an internal horse race for top job at BofA. While it remains unclear who will ultimately get the CEO position, one thing is abundantly clear: The race will not produce anything dramatically different than what's been seen thus far.
Meanwhile, in other news, AIG has appointed a former MetLife CEO to replace the insurer's outgoing CEO, Edward Liddy, who used to run AllState. And Apple has decided that it's time for Eric Schmidt, CEO of Google, to step off the Cupertino, Calif.-based company's board. Liddy is rumored to be Schmidt's replacement, but the TGR could not confirm this to be true as of press time. Something about iPods not working in the board room.
Ah yes, the more things change, the more they stay the same. Captain Weill, more yacht steam -- it's time to return to port.
# # #
Thursday, July 30, 2009
Obama's missed mandate
Government meddling with business ranks as the worst idea of the Great Recession (GR), according to a unscientific poll taken this month by the TGR. More specifically -- what the Obama administration has done and has proposed to do. And yes, that includes health care reform despite widespread agreement that something has to be done.
At the top of the worst list was the government's takeover of GM and Chrysler. A close second was anything to do with executive pay, ranging from restrictions to the appointment of a compensation czar.
On the side of best ideas, respondents seem to think the recession was having a positive impact on families and friends re-discovering what's important in their lives. That's a highly personal barometer, however, and not an easy one to quantify.
Here's where the TGR comes down on the best and worst of the GR. While we tend to side with advocates who believe government can't fix everything, what's more disheartening is watching a new administration flub its leadership mandate.
Obama was elected to reverse course on the Bush era and to change government so it can work more effectively without bankrupting the country. He was not elected to lay regulation upon more regulation or to hand-off major challenges to a Congress filled with mostly selfish special interest morons who think reading their own legislative bills is unnecessary. See the following exhibit if you haven't already: http://www.youtube.com/watch?v=ACbwND52rrw
Anyone who says Obama was forced to do things this way or this is what he intended to do all along doesn't grasp leadership. Let's go back and trace a couple key inflection points that help explain the current situation.
When the Obama administration started filling its ranks late last year with the "best and brightest" who have already served in government, that's when the mandate began to be missed. Not now when the going has gotten tough.
Way back before the current debate on health care was TARP, which now represents a Bush holdover. Then came the stimulus package, which no one who lives outside the bubble can defend as short-term financial stimulus. Much needed aid for the unemployed, yes. But help to small business, no. Fact: Only 10 percent of the approved funding will be spent this year.
By nearly every measure it was politics as usual during a time when something different was desperately needed. It's impossible now to ask for shared sacrifice, especially when major corporate CEOs perceive they can get what they want without having to pay a dime. Don't even bother on Cap and Trade, another legislative special interest boondoggle that appeared on the worst side of the GR ledger more than once.
Why didn't Obama and his capable insider hand, Treasury Sec. Tim Geithner, move more aggressively to end special favors emanating from TARP? Why are we continuing to handout public money to AIG? Why haven't the major banks been forced to disclose how much toxic asset remains on their balance sheets?
These are the tough questions that one seems to be asking -- much less answering from within the complex. Which isn't all that surprising seeing that it's occupied with revolving door members of previous administrations. Here's our view from last November when the crisis was in full force: http://povblogger.blogspot.com/2008/11/sailing-against-headwinds.html.
This is not a partisan message, nor is it an anti-Obama crusade. We want the guy to succeed in every way possible. Until more elected leaders share an interest in reforming government and its system and processes, then we're going to keep getting the same thing.
To those whom elected Barack Obama in droves, what do you think about how he's doing? Do you find that the same guy who ran for office is now serving as President? Trace those lines and feel free to comment when you get a chance.
The parallel in the corporate world is how CEOs jockey all their professional lives for the top job only to find that what they aspired to is far different than what they understood coming into the job.
Good news is there's still plenty of time to get the mandate right. Great leaders learn and adjust. We'll be watching Pennsylvania Ave. for signs that the nation's chief is making changes. And for those who say, "give the guy a break, it's only been six months," we say...You're right, but time is relative. When the mandate is misunderstood or missed, then everything else tends to follow suit.
# # #
At the top of the worst list was the government's takeover of GM and Chrysler. A close second was anything to do with executive pay, ranging from restrictions to the appointment of a compensation czar.
On the side of best ideas, respondents seem to think the recession was having a positive impact on families and friends re-discovering what's important in their lives. That's a highly personal barometer, however, and not an easy one to quantify.
Here's where the TGR comes down on the best and worst of the GR. While we tend to side with advocates who believe government can't fix everything, what's more disheartening is watching a new administration flub its leadership mandate.
Obama was elected to reverse course on the Bush era and to change government so it can work more effectively without bankrupting the country. He was not elected to lay regulation upon more regulation or to hand-off major challenges to a Congress filled with mostly selfish special interest morons who think reading their own legislative bills is unnecessary. See the following exhibit if you haven't already: http://www.youtube.com/watch?v=ACbwND52rrw
Anyone who says Obama was forced to do things this way or this is what he intended to do all along doesn't grasp leadership. Let's go back and trace a couple key inflection points that help explain the current situation.
When the Obama administration started filling its ranks late last year with the "best and brightest" who have already served in government, that's when the mandate began to be missed. Not now when the going has gotten tough.
Way back before the current debate on health care was TARP, which now represents a Bush holdover. Then came the stimulus package, which no one who lives outside the bubble can defend as short-term financial stimulus. Much needed aid for the unemployed, yes. But help to small business, no. Fact: Only 10 percent of the approved funding will be spent this year.
By nearly every measure it was politics as usual during a time when something different was desperately needed. It's impossible now to ask for shared sacrifice, especially when major corporate CEOs perceive they can get what they want without having to pay a dime. Don't even bother on Cap and Trade, another legislative special interest boondoggle that appeared on the worst side of the GR ledger more than once.
Why didn't Obama and his capable insider hand, Treasury Sec. Tim Geithner, move more aggressively to end special favors emanating from TARP? Why are we continuing to handout public money to AIG? Why haven't the major banks been forced to disclose how much toxic asset remains on their balance sheets?
These are the tough questions that one seems to be asking -- much less answering from within the complex. Which isn't all that surprising seeing that it's occupied with revolving door members of previous administrations. Here's our view from last November when the crisis was in full force: http://povblogger.blogspot.com/2008/11/sailing-against-headwinds.html.
This is not a partisan message, nor is it an anti-Obama crusade. We want the guy to succeed in every way possible. Until more elected leaders share an interest in reforming government and its system and processes, then we're going to keep getting the same thing.
To those whom elected Barack Obama in droves, what do you think about how he's doing? Do you find that the same guy who ran for office is now serving as President? Trace those lines and feel free to comment when you get a chance.
The parallel in the corporate world is how CEOs jockey all their professional lives for the top job only to find that what they aspired to is far different than what they understood coming into the job.
Good news is there's still plenty of time to get the mandate right. Great leaders learn and adjust. We'll be watching Pennsylvania Ave. for signs that the nation's chief is making changes. And for those who say, "give the guy a break, it's only been six months," we say...You're right, but time is relative. When the mandate is misunderstood or missed, then everything else tends to follow suit.
# # #
Tuesday, July 21, 2009
Weather Channel picks non-TVer as CEO
So one of Atlanta's hottest brands, okay, formerly hot media properties, The Weather Channel, has settled on a TV industry outsider as their new CEO.
According to the New York Times, http://www.nytimes.com/2009/07/21/business/media/21weather.html?_r=1&ref=business, former venture capital advisor and publisher Michael J. Kelly will now serve in the company's top leadership role.
Interesting choice for several reasons:
1.) Kelly has no real network or cable TV experience, which strongly suggests that The Weather Channel will now fully embrace status as an on-line brand vs. TV channel. How that impacts their advertiser-based business model will be worth watching. It's a lot harder to make money on-line than it is charging ad rates the old fashioned way.
2.) The split in partnership between two private equity firms and NBC Universal means everything from this decision to how the channel operates likely will be done via watered down consensus. This is a far cry from independent status when the brand became an icon for "weather weenies" far and wide.
3.) Speaking of watered down, the perception of Kelly as a back-up selection to their primary choice means the new CEO will have to move quickly with a new stamp on what's already under way. The company has had several rounds of official and unofficial layoffs, the first in their history. How new leadership manages to inject life into this brand will make or break its future. Oh, and an economic turnaround to boost ad sales might help, too.
According to the New York Times, http://www.nytimes.com/2009/07/21/business/media/21weather.html?_r=1&ref=business, former venture capital advisor and publisher Michael J. Kelly will now serve in the company's top leadership role.
Interesting choice for several reasons:
1.) Kelly has no real network or cable TV experience, which strongly suggests that The Weather Channel will now fully embrace status as an on-line brand vs. TV channel. How that impacts their advertiser-based business model will be worth watching. It's a lot harder to make money on-line than it is charging ad rates the old fashioned way.
2.) The split in partnership between two private equity firms and NBC Universal means everything from this decision to how the channel operates likely will be done via watered down consensus. This is a far cry from independent status when the brand became an icon for "weather weenies" far and wide.
3.) Speaking of watered down, the perception of Kelly as a back-up selection to their primary choice means the new CEO will have to move quickly with a new stamp on what's already under way. The company has had several rounds of official and unofficial layoffs, the first in their history. How new leadership manages to inject life into this brand will make or break its future. Oh, and an economic turnaround to boost ad sales might help, too.
# # #
Wednesday, July 15, 2009
Ketchup kings and CEO comp.
You have to hand it to Goldman Sachs. They made "money the old fashioned way" and the new way. Good for them.
Standard corporations, however, continue to offer a different shade to the much maligned public issue otherwise known as CEO pay. Latest example that has a personal twist (shareholder since 2005): Heinz Chairman, President and CEO W.R. Johnson.
By all standard measures, Heinz has become a well oiled consumer products machine, thanks in part to accountability from outside investors. Mainly the hedge fund trader, Nelson Peltz, who currently serves on the company's board of directors and led a charge to shake things up a couple years ago. Revenues have been steady and net income has shown small incremental increases over the past several years. Both marks are commendable during a worldwide consumer recession.
The picture gets a little murkier when CEO pay enters the frame. Granted it takes digging a little to see the hues. According to the company's annual proxy statement, the board of directors raised total CEO compensation by $10 million between 2007 and 2008. Salary and bonus amounts increased only slightly. The bump was more in the deferred and long-term performance awards category (latter is a new column as of 2008.) Total value of CEO compensation was nearly $15 million in 2007. By 2009, the total comp. number had grown to approximately $24,398,056.
Money is money these days, and the large increase begs a few questions. Mainly is Johnson worth more than the next highest ranking executive by a 5:1 ratio? The CFO receives a little more than $4 million a year. For a company that lists "make talent an advantage" as a core corporate goal in 2009, such imbalance in compensation in the executive suite does not bode well for attracting other top performers.
Defenders of large pay packages love to wax about "peer-to-peer performance," but all that does is put CEOs in a higher class than other company officers, most of whom are more actively involved in the day-to-day operations of the company.
The more obvious Great Recessionary question: If you're a CEO of a major company and oversee an operation that stays out of the red, does that mean you should get a significant bump in total comp. simply for survival? Is not losing money the new success incentive measure?
Next thing you know boards and CEOs will be arguing for Darwinian clauses. In Heinz' case, if you can't sell more ketchup in the current dollar menu business environment, then when will you be able to?
It seems like a new set of pay incentive rules are being drawn every day. Here's hoping the set won't include more imbalances such as what the Heinz exhibit shows.
Standard corporations, however, continue to offer a different shade to the much maligned public issue otherwise known as CEO pay. Latest example that has a personal twist (shareholder since 2005): Heinz Chairman, President and CEO W.R. Johnson.
By all standard measures, Heinz has become a well oiled consumer products machine, thanks in part to accountability from outside investors. Mainly the hedge fund trader, Nelson Peltz, who currently serves on the company's board of directors and led a charge to shake things up a couple years ago. Revenues have been steady and net income has shown small incremental increases over the past several years. Both marks are commendable during a worldwide consumer recession.
The picture gets a little murkier when CEO pay enters the frame. Granted it takes digging a little to see the hues. According to the company's annual proxy statement, the board of directors raised total CEO compensation by $10 million between 2007 and 2008. Salary and bonus amounts increased only slightly. The bump was more in the deferred and long-term performance awards category (latter is a new column as of 2008.) Total value of CEO compensation was nearly $15 million in 2007. By 2009, the total comp. number had grown to approximately $24,398,056.
Money is money these days, and the large increase begs a few questions. Mainly is Johnson worth more than the next highest ranking executive by a 5:1 ratio? The CFO receives a little more than $4 million a year. For a company that lists "make talent an advantage" as a core corporate goal in 2009, such imbalance in compensation in the executive suite does not bode well for attracting other top performers.
Defenders of large pay packages love to wax about "peer-to-peer performance," but all that does is put CEOs in a higher class than other company officers, most of whom are more actively involved in the day-to-day operations of the company.
The more obvious Great Recessionary question: If you're a CEO of a major company and oversee an operation that stays out of the red, does that mean you should get a significant bump in total comp. simply for survival? Is not losing money the new success incentive measure?
Next thing you know boards and CEOs will be arguing for Darwinian clauses. In Heinz' case, if you can't sell more ketchup in the current dollar menu business environment, then when will you be able to?
It seems like a new set of pay incentive rules are being drawn every day. Here's hoping the set won't include more imbalances such as what the Heinz exhibit shows.
# # #
Thursday, June 25, 2009
How much does Henry Kravis get?
Talk about a complex story reported completely different ways. What's a poor blogger to do?
The Wall Street Journal (WSJ) has buried their original Money and Investing cover piece, "KKR Stock is Coming, via Europe" on http://www.wsj.com/ -- to the point where it appears they're intentionally trying to de-emphasize the original story even if that's not true. Here's their version (requires subscription to access: Check that. The story link is GONE, as in off the list.) Strange days in new vs. old media land. It must be a really busy business news day.
The New York Times, meanwhile, has a more "so what" take -- http://www.nytimes.com/2009/06/25/business/25kkr.html?ref=business.
Getting to the point...The Times reports that KKR execs. will get "40 percent of carried interest" after a merger between a European-based subsidiary that they already own an interest in along with investors. Then, according to the WSJ, they're going to seek another listing on the New York Stock Exchange (NYSE) after abandoning a previous attempt to list on the NYSE last year. Bottom line: They're doing a Euro end around to access much needed public capital. For exactly what remains a bit unclear.
The only detail that really matters here is what KKR's Founding Partner, Henry Kravis, expects to take home and why? While the latter may be obvious these days, the road to this complex deal is anything but simple.
It continues to amaze how little details such as how much individuals receive don't factor into the equation. Sometimes it's obviously not clear until a public filing, which in this case might help shed light. But in the larger picture, it's almost as if they're all so larger than life, when in reality, they're less mortal now than ever before. Even Henry Kravis, the self appointed king of private equity.
The Wall Street Journal (WSJ) has buried their original Money and Investing cover piece, "KKR Stock is Coming, via Europe" on http://www.wsj.com/ -- to the point where it appears they're intentionally trying to de-emphasize the original story even if that's not true. Here's their version (requires subscription to access: Check that. The story link is GONE, as in off the list.) Strange days in new vs. old media land. It must be a really busy business news day.
The New York Times, meanwhile, has a more "so what" take -- http://www.nytimes.com/2009/06/25/business/25kkr.html?ref=business.
Getting to the point...The Times reports that KKR execs. will get "40 percent of carried interest" after a merger between a European-based subsidiary that they already own an interest in along with investors. Then, according to the WSJ, they're going to seek another listing on the New York Stock Exchange (NYSE) after abandoning a previous attempt to list on the NYSE last year. Bottom line: They're doing a Euro end around to access much needed public capital. For exactly what remains a bit unclear.
The only detail that really matters here is what KKR's Founding Partner, Henry Kravis, expects to take home and why? While the latter may be obvious these days, the road to this complex deal is anything but simple.
It continues to amaze how little details such as how much individuals receive don't factor into the equation. Sometimes it's obviously not clear until a public filing, which in this case might help shed light. But in the larger picture, it's almost as if they're all so larger than life, when in reality, they're less mortal now than ever before. Even Henry Kravis, the self appointed king of private equity.
# # #
Thursday, June 18, 2009
In the nick of time
It's about time someone at a local leadership level woke up and did something in the public's interest.
DeKalb County CEO Burrell Ellis has asked the county's development authority to delay a decision that would have rewarded $52 million in tax abatement to an out-of-town developer trying to finish the next great mixed used park in northeast Atlanta. See the AJC's coverage by Ty Tagami at http://www.ajc.com/metro/content/metro/dekalb/stories/2009/06/18/sembler_0619_web1.html
While the final outcome remains up in the air, Ellis' leadership is a refreshing attempt even though it came late in the game. The system remains highly out of step. It's also a classic case study in how metro Atlanta's politico-business complex has been slow adapting to change in the new economic environment. Here's a run-down:
1.) Effective governance remains locked in a time machine with no sign of reform whatsoever. Members of DeKalb's development authority are appointed by the governor. In this situation, that means the authority could have voted to reward millions of dollars in tax abatement without a single locally elected official being held to a vote. What's the significance? The system gets gamed with personal preference, and without responsible watchdogs, it's impossible to hold anyone accountable.
2.) DeKalb's Development Authority (DDA) comprises a board of political appointees, not a robust slate of directors pushing for change. See for yourself at http://www.decidedekalb.com/site/authority/authorityLanding.html. The board chairman and vice chair have zero development experience in their background -- what makes them qualified to serve on a development authority?
3.) Old economic impact projection models no longer apply, or at least not in the current climate. When the economy is in tank, new expansive projects simply sap money from existing businesses. Standard projections about jobs and what the businesses will generate in economic impact don't take into account what is sucked away from other local companies feeding the tax base. Granted in some cases, properly managed projects can revitalize and strengthen local communities, assuming an open market. But what's unfolded doesn't qualify.
Don't misinterpret the message. We all want robust businesses willing to relocate and hire local workers -- especially when the state's unemployment rate is at a record high. But that doesn't mean those businesses should get handouts or 100 percent tax relief for doing so. Particularly not now when so much public money is being allocated that it's difficult to tell where it's going and what it's actually paying for.
Here's an idea to help reach compromise on the Sembler project. Why not ask for a revenue matching program? For every dollar generated by the project's development, $.25 or $.50 would go to specific teaching materials or after school programs for K-12 children in the DeKalb County schools.
The politicians will explain that away as impossible or not workable in the current system, to which someone needs to say, why not? If there ever was a time to demonstrate public leadership with money, then the time is now.
DeKalb County CEO Burrell Ellis has asked the county's development authority to delay a decision that would have rewarded $52 million in tax abatement to an out-of-town developer trying to finish the next great mixed used park in northeast Atlanta. See the AJC's coverage by Ty Tagami at http://www.ajc.com/metro/content/metro/dekalb/stories/2009/06/18/sembler_0619_web1.html
While the final outcome remains up in the air, Ellis' leadership is a refreshing attempt even though it came late in the game. The system remains highly out of step. It's also a classic case study in how metro Atlanta's politico-business complex has been slow adapting to change in the new economic environment. Here's a run-down:
1.) Effective governance remains locked in a time machine with no sign of reform whatsoever. Members of DeKalb's development authority are appointed by the governor. In this situation, that means the authority could have voted to reward millions of dollars in tax abatement without a single locally elected official being held to a vote. What's the significance? The system gets gamed with personal preference, and without responsible watchdogs, it's impossible to hold anyone accountable.
2.) DeKalb's Development Authority (DDA) comprises a board of political appointees, not a robust slate of directors pushing for change. See for yourself at http://www.decidedekalb.com/site/authority/authorityLanding.html. The board chairman and vice chair have zero development experience in their background -- what makes them qualified to serve on a development authority?
3.) Old economic impact projection models no longer apply, or at least not in the current climate. When the economy is in tank, new expansive projects simply sap money from existing businesses. Standard projections about jobs and what the businesses will generate in economic impact don't take into account what is sucked away from other local companies feeding the tax base. Granted in some cases, properly managed projects can revitalize and strengthen local communities, assuming an open market. But what's unfolded doesn't qualify.
Don't misinterpret the message. We all want robust businesses willing to relocate and hire local workers -- especially when the state's unemployment rate is at a record high. But that doesn't mean those businesses should get handouts or 100 percent tax relief for doing so. Particularly not now when so much public money is being allocated that it's difficult to tell where it's going and what it's actually paying for.
Here's an idea to help reach compromise on the Sembler project. Why not ask for a revenue matching program? For every dollar generated by the project's development, $.25 or $.50 would go to specific teaching materials or after school programs for K-12 children in the DeKalb County schools.
The politicians will explain that away as impossible or not workable in the current system, to which someone needs to say, why not? If there ever was a time to demonstrate public leadership with money, then the time is now.
# # #
Thursday, June 11, 2009
Au contraire, Mr. Rattner
Tuesday's selection of Edward E. Whitacre, Jr. to be Chairman of the "new GM" is starting to make a little more sense after reading today's story http://www.nytimes.com/2009/06/11/business/11auto.html?_r=1&hp=&adxnnl=1&adxnnlx=1244728921-+2dCjpiPUSmxex6n6dmDWQ by Michelle Maynard at The New York Times.
Auto Czar Steve Rattner was behind the decision to appoint Whitacre, according to the Times. Which still begs the question: Why do you need a search firm to find him? But that's beside the point.
In reference to changing GM's insular culture, Mr. Rattner says, “It’s not uncomplicated...We hope and believe that it can take place.”
If 'not uncomplicated' means lacking complexity, then this guy is all wrong. Changing GM's culture will require changing behavior, which can be complex and extremely difficult to do. Especially when the old guard remains in place calling the shots with a Chairman of the Board who has no real turnaround or expertise dealing with contemporary change.
This situation is shaping up to be a real albatross from every conceivable point of view. Sooner everyone wakes up and snaps to, the better.
Oh, and while that hopefully happens, someone please put a temporary halt to those slick ads, which should not run until re-emergence from bankruptcy. The last part of the TV spot even references "going back to Chapter One." What a bad choice of words. Guys, you're in Chapter 11 right now in case no one noticed. It's now impossible now to go back to first base.
Auto Czar Steve Rattner was behind the decision to appoint Whitacre, according to the Times. Which still begs the question: Why do you need a search firm to find him? But that's beside the point.
In reference to changing GM's insular culture, Mr. Rattner says, “It’s not uncomplicated...We hope and believe that it can take place.”
If 'not uncomplicated' means lacking complexity, then this guy is all wrong. Changing GM's culture will require changing behavior, which can be complex and extremely difficult to do. Especially when the old guard remains in place calling the shots with a Chairman of the Board who has no real turnaround or expertise dealing with contemporary change.
This situation is shaping up to be a real albatross from every conceivable point of view. Sooner everyone wakes up and snaps to, the better.
Oh, and while that hopefully happens, someone please put a temporary halt to those slick ads, which should not run until re-emergence from bankruptcy. The last part of the TV spot even references "going back to Chapter One." What a bad choice of words. Guys, you're in Chapter 11 right now in case no one noticed. It's now impossible now to go back to first base.
# # #
Wednesday, June 10, 2009
Incredibly good take -- wish it were ours
http://www.businessweek.com/print/managing/content/jun2009/ca2009065_772331.htm
I don't normally fully endorse other POVs, but this fellow consultant is really on to something here. Those holding senior-level management and leadership positions would be well versed to read AND apply these points.
I don't normally fully endorse other POVs, but this fellow consultant is really on to something here. Those holding senior-level management and leadership positions would be well versed to read AND apply these points.
Big search firms live on -- for now
Love 'em or hate 'em, the large retained executive recruiting firms remain standing. Two in particular, Spencer Stuart and Heidrick & Struggles, are active at the highest levels, making daily headlines with General Motors (GM), AIG and Freddie Mac.
Spencer Stuart is remaking the GM board after the company named Edward J. Whitacre, Jr. chairman. See yesterday's post for our POV on this latest installment. http://povblogger.blogspot.com/2009/06/stuck-in-time-machine.html Summary: The more things change, the more they stay the same. Not to mention: Why do they need a search firm to find Ed Whitacre? Guess the answer is because the government told them to.
The latest flurry of high profile activity doesn't mean search firms are immune from change -- or that everything will remain in current form. Far from it. Every major search firm active in North America, with the exception of Egon Zehnder, has been forced to cut staff to the bone. Even the top privately held firms, which love to talk about the advantages of not being public, have whacked away forcibly within their ranks. Russell Reynolds reportedly has experienced four cutbacks during the past 18 months, while Spencer Stuart has cut staff for the second time since 2001.
What's leading the contraction? Well, for starters, the loss of good paying jobs at every level. Unlike the previous two recessions, this one has spared few levels except for CEOs, which (shock!) are the buyers who along with their boards generally hire search firms. Regrettably losses have not ratcheted down all the blah-blah about "talent war" and "shortage of qualified workers."
What the downward spiral has brought to the surface are a couple realities, which will either be dealt with or held in contempt at the firms' peril. First, the most sacred cow: How big firms are paid by clients. Pricing is getting whacked like a pinata. Anecdotal evidence suggests the traditional payment structure -- retained fees/expenses or one third of placement's first year salary -- will be revised as a result of the current recession. Some industries, such as private equity, have already forced their own variation. Other client buyers are asking that the final payment be paid upon delivery of a hired hand. At least one middle market search firm, CTPartners, is doing executive-level work for a flat fee and then asking for more business when the market turns.
The second reality is search as a traditional practice has grown dated by not innovating quickly enough to keep up with what's going on in the marketplace. Companies can't afford to get the leadership vs. management question wrong so they're turning more inward to more controllable practices, such as succession planning and development. Effective succession, such as what unfolded at P&G this week, doesn't require putting out a search. Then there's the simple reality that many inside companies don't have enough to do so they're handling recruiting themselves. Or the chosen few, such as GM, that require political cover.
The large publicly held search firms are currently caught in these crosswinds and have invested in two models, search and advisory. They'll tell you the businesses are complementary. But that's like saying you're a dentist and doctor, too. Talk to some big firm consultants and they'll tell you they don't even know what advisory services are offered by their own firm. Until the marketplace embraces one more than the other, then the muddle will remain.
Final thought: Only about 10 percent of the wider business public knows what executive search is. Even fewer fully understand "advisory," present company included. That leaves at least 90 percent left to offer up conjecture on something that they don't know anything about. What others do get are high profile brand names working in tumultuous situations. It's difficult to see that dynamic changing as long as Fortune 100 companies and their executives remain in existence. Unfortunately, or fortunately depending on market position, equally difficult to tell is what the major search firms will look like when the recession is over.
Spencer Stuart is remaking the GM board after the company named Edward J. Whitacre, Jr. chairman. See yesterday's post for our POV on this latest installment. http://povblogger.blogspot.com/2009/06/stuck-in-time-machine.html Summary: The more things change, the more they stay the same. Not to mention: Why do they need a search firm to find Ed Whitacre? Guess the answer is because the government told them to.
The latest flurry of high profile activity doesn't mean search firms are immune from change -- or that everything will remain in current form. Far from it. Every major search firm active in North America, with the exception of Egon Zehnder, has been forced to cut staff to the bone. Even the top privately held firms, which love to talk about the advantages of not being public, have whacked away forcibly within their ranks. Russell Reynolds reportedly has experienced four cutbacks during the past 18 months, while Spencer Stuart has cut staff for the second time since 2001.
What's leading the contraction? Well, for starters, the loss of good paying jobs at every level. Unlike the previous two recessions, this one has spared few levels except for CEOs, which (shock!) are the buyers who along with their boards generally hire search firms. Regrettably losses have not ratcheted down all the blah-blah about "talent war" and "shortage of qualified workers."
What the downward spiral has brought to the surface are a couple realities, which will either be dealt with or held in contempt at the firms' peril. First, the most sacred cow: How big firms are paid by clients. Pricing is getting whacked like a pinata. Anecdotal evidence suggests the traditional payment structure -- retained fees/expenses or one third of placement's first year salary -- will be revised as a result of the current recession. Some industries, such as private equity, have already forced their own variation. Other client buyers are asking that the final payment be paid upon delivery of a hired hand. At least one middle market search firm, CTPartners, is doing executive-level work for a flat fee and then asking for more business when the market turns.
The second reality is search as a traditional practice has grown dated by not innovating quickly enough to keep up with what's going on in the marketplace. Companies can't afford to get the leadership vs. management question wrong so they're turning more inward to more controllable practices, such as succession planning and development. Effective succession, such as what unfolded at P&G this week, doesn't require putting out a search. Then there's the simple reality that many inside companies don't have enough to do so they're handling recruiting themselves. Or the chosen few, such as GM, that require political cover.
The large publicly held search firms are currently caught in these crosswinds and have invested in two models, search and advisory. They'll tell you the businesses are complementary. But that's like saying you're a dentist and doctor, too. Talk to some big firm consultants and they'll tell you they don't even know what advisory services are offered by their own firm. Until the marketplace embraces one more than the other, then the muddle will remain.
Final thought: Only about 10 percent of the wider business public knows what executive search is. Even fewer fully understand "advisory," present company included. That leaves at least 90 percent left to offer up conjecture on something that they don't know anything about. What others do get are high profile brand names working in tumultuous situations. It's difficult to see that dynamic changing as long as Fortune 100 companies and their executives remain in existence. Unfortunately, or fortunately depending on market position, equally difficult to tell is what the major search firms will look like when the recession is over.
# # #
Addendum: If you haven't seen the following gem on dealings between Whitney Group LLC and Hunt Scanlon, then you may want to: http://www.recruitingentrepreneur.com/2009-FEB.pdf. Not sure about the source, but at the very least, issue begs for an industry re-examination.
Tuesday, June 09, 2009
Stuck in a time machine
Is is it just us, or do Fortune 50 board-level matters feel stuck in a time machine?
Pick your exhibit: The so called Chairman of change at the new General Motors (GM), Bank of America (BofA) recently hired slate of directors or the proverbial AIG mix and match. Each has their own set of challenges. Yet all are united in one common governmental vision. It's time to cover our eyes and ears 'cause the governance horror flick is starting to make "Friday the 13th" look like a G-rated movie.
GM takes the cake with the hiring of former AT&T/SBC/Southwestern Bell CEO Edward E. Whitacre, Jr., a 67-year-old telecom cowboy of the tallest order. A person familiar with Whitacre used to regale us with first-hand stories dealing with 'ole Ed. Fear, intimidation and control were his management tools of choice -- no need to go there on evaluating his leadership style. This is the same man who didn't use email or a computer until his final years at the helm of the nation's largest telecom company. Whitacre evidently called called weekly executive meetings near his ranch in San Antonio every Monday morning. Executives had to show in person instead of calling in like they do in every other 21st century company. "Better to get everyone together, all in one place so I can tell them what to do," was the mantra; doing things his way or finding the highway was the other. To say Whitacre represents a different way to lead in a newly reorganized environment would be like saying former Vice President Dick Cheney personifies peace and love in a post-Islamic state.
But that's all water under the bridge. Now Chairman Cowboy can take on the New GM vision and everything else that comes with that bankrupt house of cards. Amazing. Just when you thought the page could be turned, it gets torn out of the book under the auspices of gray hair, experience and stability. Which, by the way, is what did in GM. But that's another story. Whitacre gets high marks in at least one required area: Dealing with government regulators, which he did so deftly there were often questions of who was regulating whom.
Here's a new suggested slogan for the Obama administration, which obviously signed off on this latest cutting edge decision. "Change We Can Believe In" should be renamed, "Change: It never happens in North America." At least not in the board rooms.
Where's Jon Stewart and Stephen Colbert to provide parody when we need them?
Pick your exhibit: The so called Chairman of change at the new General Motors (GM), Bank of America (BofA) recently hired slate of directors or the proverbial AIG mix and match. Each has their own set of challenges. Yet all are united in one common governmental vision. It's time to cover our eyes and ears 'cause the governance horror flick is starting to make "Friday the 13th" look like a G-rated movie.
GM takes the cake with the hiring of former AT&T/SBC/Southwestern Bell CEO Edward E. Whitacre, Jr., a 67-year-old telecom cowboy of the tallest order. A person familiar with Whitacre used to regale us with first-hand stories dealing with 'ole Ed. Fear, intimidation and control were his management tools of choice -- no need to go there on evaluating his leadership style. This is the same man who didn't use email or a computer until his final years at the helm of the nation's largest telecom company. Whitacre evidently called called weekly executive meetings near his ranch in San Antonio every Monday morning. Executives had to show in person instead of calling in like they do in every other 21st century company. "Better to get everyone together, all in one place so I can tell them what to do," was the mantra; doing things his way or finding the highway was the other. To say Whitacre represents a different way to lead in a newly reorganized environment would be like saying former Vice President Dick Cheney personifies peace and love in a post-Islamic state.
But that's all water under the bridge. Now Chairman Cowboy can take on the New GM vision and everything else that comes with that bankrupt house of cards. Amazing. Just when you thought the page could be turned, it gets torn out of the book under the auspices of gray hair, experience and stability. Which, by the way, is what did in GM. But that's another story. Whitacre gets high marks in at least one required area: Dealing with government regulators, which he did so deftly there were often questions of who was regulating whom.
Here's a new suggested slogan for the Obama administration, which obviously signed off on this latest cutting edge decision. "Change We Can Believe In" should be renamed, "Change: It never happens in North America." At least not in the board rooms.
Where's Jon Stewart and Stephen Colbert to provide parody when we need them?
# # #
Friday, May 29, 2009
Time to stir on BofA
So the nation's largest bank, Bank of America Corp. has finally made board-level change after being forced to by governmental gunpoint. Miracles never cease. Lead director Temple Sloan is out after 16 years of service. On a slow news Friday during a holiday week no less. For a guy with no real bearings in headquarters, Chairman Walter Massey is moving fast now. Look for a new director slate to emerge along AIG lines, or former industry chieftains representing lots of gray hair. Whether that will lead to actual change beyond the surface remains to be seen. Government is doing the bank's bidding. It's difficult to find anyone still in business who thinks that's a good idea or is willing to admit so publicly. But that's where we are -- for now.
# # #
Wednesday, May 06, 2009
Take this jet and shove it
So we're based in Atlanta but have to receive something called the PE Week Wire to keep up with what's going on locally at The Weather Channel. Amazing. Here's the latest installment on CEO largess: http://www.nypost.com/seven/05062009/business/wrong_forecast_167802.htm?dlbk
Someone at NBC, preferably in a leadership not pencil headed management role, needs to step up and straighten out this broken process. Since buying the Weather Channel with a private equity consortium, the National Broadcasting Corporation has left their newest portfolio gem high and dry without effective leadership. First a long-timer named Deborah Wilson moved out while handing the job to interim help. Now they can't decide who should be CEO. The gap is beginning to show. From things as simple as lacking live storm coverage and programming to things as complex as leading through the toughest business climate in history, TWC has demonstrated all the signs of a rudderless ship.
Now some greedy former network hand wants to cover private flying privileges as a pre-requisite for the top job. Can we say completely out of touch? Where's the board, or better yet, is there a board to hold management accountable? Worse yet, why wasn't this story reported locally by the daily newspaper otherwise known as the Atlanta Journal & Constitution? Oh, that's right. They've re-designed and folded business coverage into another section -- not to mentioned launched a sexy new ad campaign. Wish we could say that's going to lead to more vigilance on shenanigans like what's been laid out here.
Someone at NBC, preferably in a leadership not pencil headed management role, needs to step up and straighten out this broken process. Since buying the Weather Channel with a private equity consortium, the National Broadcasting Corporation has left their newest portfolio gem high and dry without effective leadership. First a long-timer named Deborah Wilson moved out while handing the job to interim help. Now they can't decide who should be CEO. The gap is beginning to show. From things as simple as lacking live storm coverage and programming to things as complex as leading through the toughest business climate in history, TWC has demonstrated all the signs of a rudderless ship.
Now some greedy former network hand wants to cover private flying privileges as a pre-requisite for the top job. Can we say completely out of touch? Where's the board, or better yet, is there a board to hold management accountable? Worse yet, why wasn't this story reported locally by the daily newspaper otherwise known as the Atlanta Journal & Constitution? Oh, that's right. They've re-designed and folded business coverage into another section -- not to mentioned launched a sexy new ad campaign. Wish we could say that's going to lead to more vigilance on shenanigans like what's been laid out here.
# # #
Thursday, April 30, 2009
Back to sleep
So Bank of America has stripped the Chairman title from CEO Ken Lewis. What an important news cycle story that means...very little. If they really wanted change, then they would have named Lewis chairman and appointed someone new as CEO. There's real default going on here, and as the TGR posted on Monday, it's getting stranger by the day. Newly appointed Chairman and long-time board member Walter Massey isn't a change agent by any measure. They've retained lead director Temple Sloan -- at least for now. Until investor Hugh McColl pipes up with something different then this one remains officially on snooze. Keep hitting the button, folks. It's not worth keeping our eyes open.
Lewis, meanwhile, continues to take actions and speak publicly as if he's the bank's most valuable employee. Here's the latest gem (Wall Street Journal, April 30th): Referring to the deal with Merrill, Mr. Lewis said, "My decision and the board's to go ahead with the merger was not about a selfish desire to keep our jobs," adding, "Every member of this board, including me, would be all right if we had to leave the company."
Someone needs to shake a few screws loose and remind him that he represents the bank's owners and customers. There's a big difference between punching the clock all your life inside an institution and acting in its best interests. But the difference seems lost on CEO ears right now.
Lewis, meanwhile, continues to take actions and speak publicly as if he's the bank's most valuable employee. Here's the latest gem (Wall Street Journal, April 30th): Referring to the deal with Merrill, Mr. Lewis said, "My decision and the board's to go ahead with the merger was not about a selfish desire to keep our jobs," adding, "Every member of this board, including me, would be all right if we had to leave the company."
Someone needs to shake a few screws loose and remind him that he represents the bank's owners and customers. There's a big difference between punching the clock all your life inside an institution and acting in its best interests. But the difference seems lost on CEO ears right now.
# # #
Monday, April 27, 2009
The Public's Bank of America?
Complete insanity is nearing on the subject of the nation's largest bank, Bank of America Corp., and its merger with Merrill Lynch. While Rome continues to burn, we're treated to endless coverage about whether Chairman and CEO Ken Lewis should be canned when the real question should be: Will the combination of Merrill Lynch with BofA produce any combined business value minus the recent earnings Merrill generated on its own? We know it's produced losses in the billions, but realistically, is there any reason why this dysfunctional marriage should last through the honeymoon period?
Answers seem either too obvious to report or foregone to matter. Here are a few reasons why the marriage shouldn't last. Sooner investors and owners (yes, that means you, too, Mr. TreasuryFed) agree on a separation, the better.
1.) Permanently disparate cultures whose rift has only widened to ravine-like status. For crying out loud, when two companies lie to themselves, much less each other, isn't that a good sign they're not supposed to be combined? We won't even go there on bonuses or compensation structure and the lack of required change to address this issue from the outset. The government needs to step up here and finish its own dirty work. If Merrill can't stand on its own then let it fail. Life goes on. Here's a memo to Ken Lewis highlighting the cultural point, which was published late last year: http://povblogger.blogspot.com/2008/09/memo-to-ken-lewis_16.html.
2.) Zero leadership. According to first-hand accounts, Lewis took one for the country by agreeing to the Merrill Lynch deal. Why he didn't fess up to investors sooner will have to be vetted through regulatory and legal channels, which rarely if ever produce a clear, honest answer. The fact that the agency that regulates the SEC said you can't discuss anything publicly must have weighed heavily in the decision. Yet even taking this into account while holding the opposite view -- Lewis didn't want to do the deal but was forced to by the government -- doesn't hold up to his fiduciary responsibility as Chairman and CEO to the board. Particularly not after gobbling up Countrywide. Lewis' primary responsibility is to the owners and customers of Bank of America, not the country's financial system. We won't even attempt to counter-balance this latest string with the forced hand on TARP money. It simply can't all wash one way in the end. And if it does then it's time to rename the company, "The Public's Bank of America."
Answers seem either too obvious to report or foregone to matter. Here are a few reasons why the marriage shouldn't last. Sooner investors and owners (yes, that means you, too, Mr. TreasuryFed) agree on a separation, the better.
1.) Permanently disparate cultures whose rift has only widened to ravine-like status. For crying out loud, when two companies lie to themselves, much less each other, isn't that a good sign they're not supposed to be combined? We won't even go there on bonuses or compensation structure and the lack of required change to address this issue from the outset. The government needs to step up here and finish its own dirty work. If Merrill can't stand on its own then let it fail. Life goes on. Here's a memo to Ken Lewis highlighting the cultural point, which was published late last year: http://povblogger.blogspot.com/2008/09/memo-to-ken-lewis_16.html.
2.) Zero leadership. According to first-hand accounts, Lewis took one for the country by agreeing to the Merrill Lynch deal. Why he didn't fess up to investors sooner will have to be vetted through regulatory and legal channels, which rarely if ever produce a clear, honest answer. The fact that the agency that regulates the SEC said you can't discuss anything publicly must have weighed heavily in the decision. Yet even taking this into account while holding the opposite view -- Lewis didn't want to do the deal but was forced to by the government -- doesn't hold up to his fiduciary responsibility as Chairman and CEO to the board. Particularly not after gobbling up Countrywide. Lewis' primary responsibility is to the owners and customers of Bank of America, not the country's financial system. We won't even attempt to counter-balance this latest string with the forced hand on TARP money. It simply can't all wash one way in the end. And if it does then it's time to rename the company, "The Public's Bank of America."
3.) Anyone seen the BofA board? Investors want Temple Sloan's head when they should be more concerned with abolishing the lead director structure and retaining the Chairman's role with someone who can actually help lead the ship. Lead directors are another monikor for empty suits, especially in situations such as this one when the CEO and Chairman holds such discriminate power. When the structure is wrong, the whole thing is wrong -- no white knight of world leading talent can provide a fix. Not even (Ret.) Army General Tommy Franks (pictured to the left, courtesy of http://www.tommyfranks.com/) who sits on the board with other mere mortals: http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-govboard.
Finally, who would have thought that a merger between Wells Fargo and Wachovia would turn out better than a combination of BofA and Merrill Lynch? Strange days, indeed. Stay tuned. It's about to get a lot stranger.
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Monday, March 30, 2009
Make that Four Boards to watch in full
In early January, we listed five boards to watch in full. See post: http://povblogger.blogspot.com/2009/01/5-boards-to-watch-in-full.html
Now that one of them, GM, has been involuntarily forced to replace their CEO, we're down to four.
When and where will the next shoe drop? Stay tuned. While currently flat, high profile turnover will increase in the months ahead. If it doesn't, well then we're looking at newer heights to the status quo. Or lows, depending on your point of view.
Now that one of them, GM, has been involuntarily forced to replace their CEO, we're down to four.
When and where will the next shoe drop? Stay tuned. While currently flat, high profile turnover will increase in the months ahead. If it doesn't, well then we're looking at newer heights to the status quo. Or lows, depending on your point of view.
# # #
Wednesday, March 25, 2009
Undeniable truth
Following is reprinted from our client newsletter, "The Pointe." Based on the high direct response rate, we're posting a copy to share more widely. Thanks for continuing to read, JG.
======================================
Lost within the AIG bonus and big banking mess lies an undeniable truth. You can't dictate proper behavior.
Rules don't create an incentive to do things. Penalties provide a deterrent but only when enforced, which hasn't been the case for a while now. Rules or laws create boundaries, which lead to limits, which have been extended now more than ever by a system that many believe to be gamed to benefit the rich and powerful. When those limits cross the highly discretionary line of good vs. bad, well, you get outrage -- followed by dust-ups -- followed by settling -- followed by more of the same with the cycle repeating over and over.
More often than not, rules create a set of unintended consequences that fall so far outside the lines that we're left scratching our heads as to why. Enter the highly charged pinata issue called executive pay. Whether it's a deified CEO or his/her underlings, outrage over excessive compensation has no limit. Yet every time the government offers up a new rule or reform, you can almost see bands of brothers heading underground to devise new ways around the rules.
Compounding this situation are so called leaders who feel the need to impose their will on others vs. doing the hard work that they should be doing: Aligning beliefs and values of diverse constituencies to create better modes of behavior. We could throw the whole lot of politicians and their appointees in this pool and try to drown them, but that seems a little over the top. They think more laws and regulations are the fix when history shows that approach rarely works. Dov Seidman, author of "How", sums it up this way: "Laws tell you what you can do. Values inspire in you what you should do."
Back to Earth, or Main Street. It's a leadership responsibility to model proper behavior within our companies and organizations. Simple enough, right? Well, not exactly. But it's generally where the buck starts and stops -- not whether another policy can be jammed down people's throats.
======================================
Lost within the AIG bonus and big banking mess lies an undeniable truth. You can't dictate proper behavior.
Rules don't create an incentive to do things. Penalties provide a deterrent but only when enforced, which hasn't been the case for a while now. Rules or laws create boundaries, which lead to limits, which have been extended now more than ever by a system that many believe to be gamed to benefit the rich and powerful. When those limits cross the highly discretionary line of good vs. bad, well, you get outrage -- followed by dust-ups -- followed by settling -- followed by more of the same with the cycle repeating over and over.
More often than not, rules create a set of unintended consequences that fall so far outside the lines that we're left scratching our heads as to why. Enter the highly charged pinata issue called executive pay. Whether it's a deified CEO or his/her underlings, outrage over excessive compensation has no limit. Yet every time the government offers up a new rule or reform, you can almost see bands of brothers heading underground to devise new ways around the rules.
Compounding this situation are so called leaders who feel the need to impose their will on others vs. doing the hard work that they should be doing: Aligning beliefs and values of diverse constituencies to create better modes of behavior. We could throw the whole lot of politicians and their appointees in this pool and try to drown them, but that seems a little over the top. They think more laws and regulations are the fix when history shows that approach rarely works. Dov Seidman, author of "How", sums it up this way: "Laws tell you what you can do. Values inspire in you what you should do."
Back to Earth, or Main Street. It's a leadership responsibility to model proper behavior within our companies and organizations. Simple enough, right? Well, not exactly. But it's generally where the buck starts and stops -- not whether another policy can be jammed down people's throats.
# # #
Tuesday, March 03, 2009
Revamp to Nowhere
So Citigroup is revamping its board under the direction of change agent, Chairman Richard Parsons. Yawn. Stretch. Rub those eyes.
Here's our slate of nominees, which we thoroughly researched and arrived at after careful contemplation. Or as much as Spencer Stuart will likely do over the next six months while they collect a handsome fee talking to the same old recycled hands. In fairness to Spencer Stuart, any of the other old line firms would be handling the search in the same way.
We don't the buy the idea that no one will want to serve on this board despite the potential pitfalls. Mainly due to what a Search master always says, "we never have trouble finding candidates for major CEO and board positions."
Paula Rosput Reynolds -- Fresh off her AIG and Delta stints, there is no one more primed and ready for for more board responsibility when it comes to potential turnarounds, sales and/or bankruptcies.
Bob Nardelli -- Proven bag carrier for private equity, strong operations experience and can ask for the loan/sale, a competency which Citi's board will need. And while he's a sitting CEO, Nardelli isn't exactly leading explosive growth right now so he should have plenty of time to lend expertise to a national cause.
Jeffrey Immelt -- Why not? After overseeing GE Capital's debacle, he ought to know how to avoid future mine fields. For those who say he has hands full right now, well, not for long if that stock continues its decline into value meal territory.
Pete Correll -- Last great company CEO to take a large operation private without losing their shirt (Georgia-Pacific Corp. sold to Koch Industries in 2006)
Ken Chenault -- Primed and ready after steering the ship quietly away from ice bergs at American Express, a proven financial services company. They're always Open, right?
Paul O'Neil -- former Treasury Secretary under George W. Bush and retired CEO of Alcoa. Government will need someone who knows all the pitfalls -- besides, it's time to throw the Republicans a bone in the spirit of partisanship.
Alternates: Assuming some members of the above slate aren't available, we also would like to suggest John Snow based on the svelte handling of the Cerebrus/Chrysler bailout and Dick Grasso for his expertise on lucrative pay packages awarded right under the nose of compensation committees.
Throw in a few of the previously publicly named suspects from the banking industry, and voila, you have a whole new slate ready to steer Citi back to...who knows. Either they're going away, will live to another day or be run as a quasi-private enterprise by the government. Here's what we do know: No one really knows. Or if they do, nobody is telling the public.
Here's our slate of nominees, which we thoroughly researched and arrived at after careful contemplation. Or as much as Spencer Stuart will likely do over the next six months while they collect a handsome fee talking to the same old recycled hands. In fairness to Spencer Stuart, any of the other old line firms would be handling the search in the same way.
We don't the buy the idea that no one will want to serve on this board despite the potential pitfalls. Mainly due to what a Search master always says, "we never have trouble finding candidates for major CEO and board positions."
Paula Rosput Reynolds -- Fresh off her AIG and Delta stints, there is no one more primed and ready for for more board responsibility when it comes to potential turnarounds, sales and/or bankruptcies.
Bob Nardelli -- Proven bag carrier for private equity, strong operations experience and can ask for the loan/sale, a competency which Citi's board will need. And while he's a sitting CEO, Nardelli isn't exactly leading explosive growth right now so he should have plenty of time to lend expertise to a national cause.
Jeffrey Immelt -- Why not? After overseeing GE Capital's debacle, he ought to know how to avoid future mine fields. For those who say he has hands full right now, well, not for long if that stock continues its decline into value meal territory.
Pete Correll -- Last great company CEO to take a large operation private without losing their shirt (Georgia-Pacific Corp. sold to Koch Industries in 2006)
Ken Chenault -- Primed and ready after steering the ship quietly away from ice bergs at American Express, a proven financial services company. They're always Open, right?
Paul O'Neil -- former Treasury Secretary under George W. Bush and retired CEO of Alcoa. Government will need someone who knows all the pitfalls -- besides, it's time to throw the Republicans a bone in the spirit of partisanship.
Alternates: Assuming some members of the above slate aren't available, we also would like to suggest John Snow based on the svelte handling of the Cerebrus/Chrysler bailout and Dick Grasso for his expertise on lucrative pay packages awarded right under the nose of compensation committees.
Throw in a few of the previously publicly named suspects from the banking industry, and voila, you have a whole new slate ready to steer Citi back to...who knows. Either they're going away, will live to another day or be run as a quasi-private enterprise by the government. Here's what we do know: No one really knows. Or if they do, nobody is telling the public.
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Tuesday, February 24, 2009
Stop! Read before you resume.
There's a lot of conventional wisdom swirling around in the career management category. Which means it's time to insert a dose of reality -- no matter how awful the market may be. We'll be the first to admit: We've probably unintentionally contributed to the situation. But that doesn't mean buying into the same old drumbeats. Here's more:
1.) Dump the career aspiration blah-blah and focus on The Job. What do you do really well that others may need right now -- sales, marketing, operations? If demand is low for what you do or have done, then consider retraining or more education. Careers and "work with passion" are great when the economy is growing but hold little sway when things are contracting. The only exception is when you've decided to become an entrepreneur. Then it's a whole different ball game. And it's not one to play just because nothing else in your job search is working.
2.) Suspend the how to tools, on-line resume builders and social media. On-line should only take about an hour or two each day max. Find the potential buyers (hint: they're human with voices and generally live closer than you think) then craft the proposition with their needs first, your competencies second. Find a way to create ongoing conversation. And no, the resume and cover letter don't always come first even though a majority cling to these tools like a security blanket.
3.) Differentiation doesn't always mean being different. It's more about bringing an advantage to bear that someone else has been unable to. Example: "Highly experienced attorney with 35 years experience" means very little when stacked against "Proven litigator specializing in Fortune 1000 employment law."
4.) Chances are you are not a brand and won't become one anytime soon even despite what the personal branding whizzes and certified strategists have to say. At the core, branding is about cutting through the clutter to identify why what you offer is valuable and then making sure whatever that is resonates with potential buyers. It doesn't depend on clippings and other self serving nonsense. The process is not the product either. We've seen our share of empty stares on this topic. Bottom line: We're not all bars of soap or laundry detergent. So get a move on. Risk being yourself.
5.) If You Inc. isn't your cup of tea, then become a teacher, government worker or hospital employee. No one in a business-driven environment should be incapable of standing on their own. Through a series of intended and unintended actions, we have created a system where lack of accountability rules the day. Layoffs rippling through the economy have claimed their share of performers. But the cuts also have claimed a few pretenders. And while it's painful in the short run, the adjustment makes us stronger in the long run. So the economists say. We'll stay tuned and report back on how this lullaby plays out.
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1.) Dump the career aspiration blah-blah and focus on The Job. What do you do really well that others may need right now -- sales, marketing, operations? If demand is low for what you do or have done, then consider retraining or more education. Careers and "work with passion" are great when the economy is growing but hold little sway when things are contracting. The only exception is when you've decided to become an entrepreneur. Then it's a whole different ball game. And it's not one to play just because nothing else in your job search is working.
2.) Suspend the how to tools, on-line resume builders and social media. On-line should only take about an hour or two each day max. Find the potential buyers (hint: they're human with voices and generally live closer than you think) then craft the proposition with their needs first, your competencies second. Find a way to create ongoing conversation. And no, the resume and cover letter don't always come first even though a majority cling to these tools like a security blanket.
3.) Differentiation doesn't always mean being different. It's more about bringing an advantage to bear that someone else has been unable to. Example: "Highly experienced attorney with 35 years experience" means very little when stacked against "Proven litigator specializing in Fortune 1000 employment law."
4.) Chances are you are not a brand and won't become one anytime soon even despite what the personal branding whizzes and certified strategists have to say. At the core, branding is about cutting through the clutter to identify why what you offer is valuable and then making sure whatever that is resonates with potential buyers. It doesn't depend on clippings and other self serving nonsense. The process is not the product either. We've seen our share of empty stares on this topic. Bottom line: We're not all bars of soap or laundry detergent. So get a move on. Risk being yourself.
5.) If You Inc. isn't your cup of tea, then become a teacher, government worker or hospital employee. No one in a business-driven environment should be incapable of standing on their own. Through a series of intended and unintended actions, we have created a system where lack of accountability rules the day. Layoffs rippling through the economy have claimed their share of performers. But the cuts also have claimed a few pretenders. And while it's painful in the short run, the adjustment makes us stronger in the long run. So the economists say. We'll stay tuned and report back on how this lullaby plays out.
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