Executive Times |
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Volume 3,
Issue 11 |
November 2001 |
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ă 2001 Hopkins and Company, LLC Note re: links---certain
hyperlinks assume that you are registered as a subscriber to the site. If you
are not a subscriber to certain sites, the links will fail. If you register, the
links should work. Also, certain hyperlinks expire and may not be available
when you try to go to the site. Leadership StylesOur most effective leaders
are the ones whose actions encourage us to follow them. Sometimes, we want a
leader to just tell us what to do, and an autocratic style of leadership
works well in that situation. Often, we want to align with a leader who
listens to our issues and concerns, and then makes decisions that indicate we
were heard. A democratic, participative or consensus style of leadership
works well in that situation. We want leaders who inspire us to draw out our
best skills to produce outstanding results. A motivational style of
leadership works well in that situation. Sometimes, we want leaders to set
some overall direction and give us the space to make our own decisions. Some
experts refer to that as a laissez-faire style of leadership. We want
different leadership styles at different times and in different situations.
Our best leaders adapt their styles to what is most likely to work with a
given person in a particular situation. Our least effective leaders are
usually those whose behavior is viewed as inconsistent with the values they
and the organization espouse. As you read about individual executives and how
they are leading, consider whether your own leadership style remains
consistent, or if it adapts well to changing situations. Think about the
times when your most comfortable approach to leadership, or your predominant
leadership style, works best and when it falls short of the expectations of
others. Decide what changes you will make to improve the versatility of your
leadership skills so you are more effective in more situations. Big Ideas First How do you
assess customer needs and wants in your product development efforts? Do you
expect customers to tell you what products to produce? If you need to make a
major change, what will it take to shake up your organization? One United Company Many executives face
significant challenges in trying to create a single, unified organization,
especially when acquisitions involve management methods and practices that
are difficult to align. Jack Welch, former GE CEO, describes in
his biography (reviewed on page 5 of this issue) that he insisted that all
employees be motivated by a single corporate currency: GE stock. Welch was
willing to lose those employees who wanted to participate in the rise of
stock in Silicon Valley companies financed by GE Capital. The only piece of
the action Welch was willing to offer was his company’s own stock. We read in
The New York Times (10/26/01) (http://www.nytimes.com/2001/10/26/business/26WALL.html)
that Credit Suisse First Boston CEO John Mack has changed the employment
agreements of 100 executives, most of whom came to the company from its
acquisition of Donaldson, Lufkin & Jenrette last year. Instead of
guaranteed pay no matter what profits CSFB earns, the investment bankers have
agreed to pay cuts, reflecting the current realities on Wall Street. Mack’s
predecessor, Allen Wheat, provided $300 million in incentives to
retain another segment of the company, the Silicon Valley based technology
investment group. The Times expects Mack will reel in that group next,
if he can. When you
isolate a group of employees for special compensation treatment, what’s the
impact on the rest of the organization? Will the actions you take in one
environment need to be reversed when times change? How quickly can you
implement a change? When a prior leader behaved one way, how will that limit
or facilitate your ability to go in a different direction? To what extent do
you reward individual success, and to what extent are individual rewards
constrained by overall corporate results? Does your leadership of the reward
system work well? End Run Many
large companies have what are called “related party transactions” between the
company and insiders. Usually, these transactions are carried out without any
special benefits and occur in the normal course of business. What were the
leaders of Enron thinking two years ago when they allowed CFO Andrew
Fastow to set up and run two partnerships that purchased Enron assets for
his personal gain? We read in The Wall Street Journal (10/17/01) (http://interactive.wsj.com/archive/retrieve.cgi?id=SB1003237924744857040.djm)
that while special processes were established with the intention of creating
effective controls, the job of chief financial officer gave Fastow
significant insider knowledge that should not have been used by an entity,
unaffiliated with Enron, that would be engaging in billions of dollars in
transactions with the company. A small part of a recent $1 billion write-down
of bad investments involved a charge of $35 million for the partnerships led
by Fastow. While the company defended Fastow, his credibility became eroded,
and he was replaced as CFO with former Treasurer Jeffrey McMahon.
According to The Journal, McMahon had left Enron last year after
voicing concerns about Fastow’s role in the partnerships. The company stated,
“Enron and its Board established special review and approval processes with
its senior management and external audit and legal counsel to ensure that
each transaction with the LJM partnership was fair, in the best interest of
Enron and its shareholders, and appropriately disclosed.” How do
you decide what actions are inconsistent with your leadership role? When
considering areas of potential conflicts of interest, how do you decide where
conflicts exist and where they don’t? Whom do you rely on for advice about
conflicts of interest? Can controls overcome a loss in confidence that could
arise from potentially conflicting behavior? Would you continue to work for a
boss who ignored conflicts of interest? Up North On November 1, a new CEO
takes over at Nortel Networks, Frank Dunn. We read in Business
Week (10/3/01) (http://www.businessweek.com/bwdaily/dnflash/oct2001/nf2001103_7050.htm)
about all the challenges he’ll face, including a drop in optical market share
from 47% to 17%, huge declines in sales, significant corporate job cuts, and
upset investors who have seen the price of a share of Nortel drop from $70 to
$5 over the last year. Someone compared for us the experience of two
Canadians with $1,000 to invest a year ago. One bought Nortel stock with the
money, and now holds an investment worth about $75. The other bought cans of
Labatt’s and Molson’s, drinking a six-pack every day for the past year, and
recovering $80 from recycling the empty cans. Who’s been happier with their
decision? Let’s watch how Dunn leads a well-known company through its many
challenges. What approach would you take in leading Nortel in this environment?
How would you influence the expectations of multiple constituents? Feet to the FireHave It Your Way
You’ve probably attended a meeting
that involved some type of group exercise that was intended to promote some
corporate skill or another, like teamwork or trust. Sometimes, these
exercises don’t turn out as planned. We read on the Associated Press
wire (10/6/01) that some Burger King marketing employees experienced something not intended as part of
their training. Over a dozen people received first and second degree burns
while walking across white-hot coals in a firewalking ritual meant to improve
bonding. Now they know what it’s like to be grilled.
Do your training
activities really relate to the behavior people will use at work? If not,
change them. If The Walls Could TalkExpress Yourself
You’ve seen those motivational
posters hanging in different workplaces: “Success”; “Teamwork”;
“Determination”; and “Imagination.” The pictures show mountains to climb,
skydivers holding each other, sunsets, trees, etc. An Executive Times reader who shares our gag
reflex when we see these posters told us about alternatives available, including:
“Blame”; “Ineptitude”; “Pessimism”; and “Mistakes.” In this case, the
pictures tell another story. Blame shows one runner passing a flaming baton
to another. Ineptitude shows a skier about to crash. Pessimism shows a
lightening strike and says, “Every Dark
Cloud Has a Silver Lining, but Lightning Kills Hundreds of People Each Year
Who Are Trying to Find It.”
Mistakes shows an iceberg and expresses the sentiment, “It Could Be that the Purpose of Your Life
Is Only to Serve as a Warning to Others.” If you’re looking to express
yourself in a contrary way, visit the Despair, Inc. De-motivators at http://www.thinkgeek.com/stuff/fun-stuff/posters.shtml.
How
comfortable are you with expressing points of view that differ from your
co-workers? How comfortable are you with individuals when their outlook
differs from your own? If you were hanging a poster in your workspace, which
type would it be? Would the image bear a resemblance to the way you usually
express yourself at work? Follow UpHere are selected updates
on stories covered in prior issues of Executive Times: Ř We forecast in the May 2000
issue of Executive Times that
following its acquisition Unilever would retain those things that made
Ben & Jerry’s successful. We read in The Financial Times
(10/16/01) that Unilever has contributed millions of dollars through the Ben
& Jerry’s Foundation to activist organizations, many of which led
anti-globalization protests and are critics of corporations. Guess we were
right. Ř Since we published the October 2001
issue of Executive Times, more
information has come from Cantor Fitzgerald about how it will commit
future profits to the families of employees who died on September 11. Both
the company and CEO Howard Lutnick have come under criticism for some
of its actions since the emotional interview between Lutnick and Larry King.
Bonuses will be paid prior to Thanksgiving based on 2000 performance to the
families of workers whose pay did not include sales commissions. Over the
next five years, 25% of the profits that would have gone to partners will go
to the families of the victims, up to $100,000 per family. The families will
also receive health insurance for 10 years. LegaciesSir Mayor Like all politicians, New York City Mayor Rudy
Giuliani will leave office with friends and foes remembering different
aspects of his leadership. Friends will recall how his tough-on-crime
approach made city streets safer and cleaner, with an improved quality of
life. Critics attribute his autocratic micro-management to creating an environment
for police brutality and violations of civil rights. Over the past year, his
personal life dominated stories about him, from his battle with prostate
cancer that removed him from the race for the United States Senate, to the
lurid details of his divorce and the living arrangements that became bizarre.
Giuliani’s visibility and assertive leadership at ground zero in the events
following the terrorist attack on the World Trade Center will alter the way
he is remembered. Worldwide media featured him exercising leadership during
crisis, and expressing grief while making decisions to get the city back to
normal. Despite our 2000 review (www.hopkinsandcompany.com/books/Rudy
Giuliani.htm) of the book Rudy
Giuliani: Emperor of the City by Andrew Kirtzman, the complete
book on Giuliani continues to be written. Recent images that add to his
legacy include him telling Prince Alwaleed bin Talal bin Abdul Aziz Alsaud
what he could do with his $10 million check, and receiving knighthood from
England’s Queen Elizabeth II (via her son Prince Andrew) for
his “outstanding help and support to the bereaved British families in New
York” after the September 11 attack. New York City voters select a new mayor
this month, and many will miss the current mayor, who will always be
remembered for taking charge at a time of crisis. Reading(Note: readers of the web version of Executive Times
can click on the book covers or titles to order copies directly from
amazon.com. When you order through these links, Hopkins & Company
receives a small payment from amazon.com. Subscribers to the print version of
Executive
Times can receive the web version at no additional cost. Send
e-mail to hopkinsandcompany@att.net
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all books we read make it to the pages of Executive Times. For expanded reviews of Executive Times selections and other books,
visit our book review site at http://www.hopkinsandcompany.com/books/list.htm.) Good Things to Life Doomed Friends Inside Scoop A total of 21 book reviews were added during
October 2001 at http://www.hopkinsandcompany.com/books/list.htm.
Check out the others for books you may enjoy. |
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ă 2001
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