Acknowledgments | xi | ||||
Foreword | xiii | ||||
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Introduction | xv | ||||
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1 | (64) | |||
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3 | (19) | |||
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22 | (24) | |||
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46 | (19) | |||
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65 | (56) | |||
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67 | (12) | |||
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79 | (20) | |||
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99 | (22) | |||
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121 | (54) | |||
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123 | (13) | |||
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136 | (16) | |||
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152 | (10) | |||
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162 | (13) | |||
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175 | (18) | |||
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177 | (16) | |||
Appendix A Herb's Hints: A Road to a Better Business Life | 193 | (6) | |||
Appendix B Presentations and Communication | 199 | (22) | |||
Index | 221 |
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The air in the conference room was somber. As a member of theboard, I had been asked to cast my vote for the forced resignationof the reigning CEO.
The board meeting was held at the Broadmoor Hotel in ColoradoSprings, a resort nestled in the shadows of the RockyMountains. Earlier in the day I met the CEO for a casual lunch inthe hotel restaurant, along with the company's senior vice presidentof human resources. It was a great day. Or so I thought.
We had a casual lunch at an outdoor table, and the conversationwas upbeat. The Dial Corporation's CEO, Malcolm Jozoff,acknowledged that earnings were slipping, but he was certainthat things would soon turn around. None of us at the tablesensed what lay ahead, and even Malcolm was completely unawareof the perilous events about to unfold in his career.
Jozoff was a vigorous man with stark white hair. He was anavid runner, and sometimes could be seen running in the neighborhoodaround Dial headquarters in Scottsdale, Arizona, atlunchtime. A graduate of Columbia University, he had arrivedat Dial after two years as the chairman and chief executive officerof Lenox, Inc., a division of Brown-Forman that sold china andcrystal.
Mal had had a long career with Procter & Gamble that gavehim a good background for managing a company like Dial. Asa CEO he was confident (perhaps arrogant at times) and, as itturned out, not totally communicative with the board about the businesses' problems. As a member of that very board, I began to feelthat Dial -- the company he had led for five years -- was headed fortrouble. Dial had missed earnings estimates for three consecutivequarters. The employees described the atmosphere along executiverow as oppressive, employee turnover was high, and Jozoff seemed tohave no solid succession plan in place, a necessity for any good leader.At prior board meetings I had listened carefully while Jozoff and hisexecutive team outlined strategies for growing the business, and onthe day we lunched together at the Broadmoor, I had no indicationthat it would be his last meeting as CEO, an unceremonious end to along and stellar business career.
When the members of the board convened in the hotel meeting roomwe took our seats, approved the minutes, and immediately elected anew director! It was Jim Osterreicher, the retired chairman and CEOof the J.C. Penney Company, Inc. Then, as we got into the meeting,one board member spoke up and asked that we break into executivesession -- a meeting that would exclude everyone on the corporatemanagement team, including the CEO. For seconds there was silence.Malcolm seemed surprised, but then again so were the rest of us.Someone cleared his throat. The room was quiet, and Malcolm stoodand quickly left.
The board member who called the session was the retired CEO of amajor telecommunications company. He explained that some seniorDial executives had come to him with legitimate concerns about thehealth of the business and the tactics being used to build sales. We listenedto what he had to say, digested the information, and thoughtabout solutions.
There were nine people on the Dial board, among them the CEO ofa major telecommunications provider, the CEO of a paper corporation,and two very talented women, one who at the time was the presidentand chief operating officer of an Abbott Labs subsidiary. I had been ona lot of boards, but this one was by far the most governance-orientedand aggressive panel of executives I'd worked with, and they representeda variety of industries.
The board discussed the employee allegations. We had to take into account that these were just allegations, not documented facts, but weall knew that earnings had declined significantly, sales had slowed, andthat the stock price was in a free fall.
After we evaluated the information presented, we all came to thesame conclusion: it was time for a change. We decided that the CEOhadn't been completely open and honest but instead had painted a rosypicture even when things weren't so good. He hadn't been completelyforthright about the company's problems, and we felt we had no choicebut to vote for his resignation.
No one enjoys casting a vote to end someone's career or turn it in adifferent direction. That's the tough part of being a board member.But the Dial board acted quickly and responsibly by opting for a nononsenseapproach designed to purge the company's problems andbreathe life into it again. There wasn't any scandal to speak of, butthings sure weren't getting any better, and in the absence of total disclosurewe wondered what other skeletons might be lurking in themanagement team's closet.
The Opaque Company
A lot of business leaders found themselves in the same position in recentyears. In the time period between 1995 and 2001 alone, CEOturnover at major corporations had increased 53 percent. Fifty-threepercent!
It seems a day hasn't gone by without a major headline concerninga scandal involving a company CEO, which is a sad sign of the timeswhen you consider that at some point in their careers they had beenconsidered highly qualified. After all, they had to be to get the job inthe first place! They had a lot of the traits found in other leaders, likeintelligence, charisma, creativity, and vision. So if they had all thatgoing for them, why did they fail?
The answer isn't simple. A lot of the executives who made headlineswere just plain white-collar thieves who deserved to do time. Andthere were others who were basically good people who made compro-mises when they shouldn't have. They stretched the truth because theythought they had to, and they made some business decisions that wereshort on integrity ...
The Transparent Leader
Excerpted from The Transparent Leader: How to Build a Great Company Through Straight Talk, Openness, and Accountability by Herb Baum, Tammy Kling
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.