Showing posts with label upper echelon management. Show all posts
Showing posts with label upper echelon management. Show all posts

Wednesday, June 14, 2023

Starbucks: A Racist Company Against Racism

In June, 2023, Starbucks had to face a unanimous jury decision in favor of a regional manager whom Starbucks' upper management had fired because she had resisted the company's racist policy of punishing innocent Caucasian managers for good public relations, which the CEO felt was needed and appropriate after a store manager had legitimately called the police on two Black people in a Starbucks restaurant who presumed the right not only to sit in a restaurant without ordering anything (before Starbucks allowed this),  but also to ignore the authority of the store's manager. Starbucks cowered to the unjust negative publicity, and thus showed a lack of leadership, and went on to act unethically in wanting to show the world that the company can go after Caucasian employees. This racism is ironic, for several years earlier, Starbucks' CEO had ordered employees at the store level to discuss racism with customers. Interestingly, the anti-racist ideology being preached was partial, and thus contained a blind spot wherein racism such as the company's upper management would exhibit is acceptable. 

The full essay is at "Starbucks"

Sunday, June 7, 2020

Strategic Leadership

Strategic planning is oriented to enhancing the bottom-line.  Leadership affects organizational performance as well.[1] Therefore, strategic leadership, which can be defined as the formulation and articulation of a vision depicting a social reality and incorporating strategic aims, can enhance a firm’s sustainable competitive advantage.[2] Strategic leadership is an intangible core competency that can give rise to a core capability differential involving reputation.[3] That strategic leadership is difficult to understand and therefore to imitate contributes to its value in no small measure. But a straightforward application of strategic leadership may be thwarted if a tension develops in its exercise.  In particular, the principles behind an enduring leadership vision can be at odds with pressing strategic interests, especially as these profit-interests change while the abstract vision still holds.

The full essay is at "Strategic Leadership."


[1]. J. A. Petrick and J. F. Quinn, “The Challenge of Leadership Accountability for Integrity Capacity as a Strategic Asset,” Journal of Business Ethics 24 (2001): 331; S. Finkelstein and D. Hambrick, Strategic Leadership: Top Executives and Their Effects on Organizations (St. Paul, MN: West Publishing, 1996); J. Ciulla, “Leadership Ethics: Mapping the Territory,” Business Ethics Quarterly, 5, no. 1(1995): 5-28; K. B. Lowe, K.G. Kroeck, and N. Sivasubramaniam: “Effectiveness Coorelates of Transformational and Transactional Leadership: A Meta-analytic Review of the MLQ Literature,” Leadership Quarterly 7, no. 3 (1996), 385-425.
[2]. R. D. Ireland and M.A. Hitt, “Achieving and Maintaining Strategic Competitiveness in the 21st Century: The Role of Strategic Leadership,” Academy of Management Executive 13, no. 1 (1999): 43.
[3]. Petrick and Quinn, “The Challenge of Leadership”; J. A. Petrick et al, “Global Leadership Skills and Reputational Capital: Intangible Resources For Sustainable Competitive Advantage,”  Academy of Management Executive 13, no. 1(1999): 58, f.n. 2.

Wednesday, February 13, 2019

Johnson’s “Reinvention” of JC Penney: Too Much and Too Little

In April 2013, JC Penney’s board wished the CEO, Ron Johnson, “the best in his future endeavors.” His effort to “reinvent” the company had been “very close to a disaster,” according to the largest shareholder, William Ackman. During Johnson’s time at the company as its CEO, shares fell more than fifty percent. In February 2013, Johnson admitted to having made “big mistakes” in the turnaround. For one thing, he did not test-market the changes in product-line and pricing-points. The latter in particular drove away enough customers for the company’s sales to decline by 25 percent. Why did Johnson fail so miserably?

The full essay is at "JC Penny Reinvented?"
Ron Johnson's short tenure as CEO of JC Penney was disastrous, according to Altman.   Source: Reuters


Monday, January 14, 2019

Protecting Minority Stockholder Rights: On a Conflict of Interest at Revlon

The principle of majority rule is a staple of democratic theory. Typically the victor of a close election is quick to proclaim that “the people” have spoken. That “the people” corresponds to 51% of those who voted is beside the point. What about the 49% who voted against the victor? What about the minority’s rights? In the U.S. Senate, the fact that it takes 60 out of 100 votes to end a filibuster means that a large minority can halt a majority’s bill. In the European Council, the qualified majority rule means that for a bill to pass, the states in the majority must be at least 55% of the total number of states and must have at least 55% of the E.U.’s population between them.  A large minority can therefore stop a small majority. In both of these “intergovernmental” bodies, the implication is that 51% of a vote is not as significant as the principle of majority rule suggests. What about the rights of a minority of shares of stock in corporate governance? When a majority stockholder has control of management, the interests of the minority stockholders can be shirked. This is particularly true when a majority stockholder proposes a going-private transaction with the aid of management.

The full essay is at "Protecting Minority Stockholders."

1. Peter Lattman, “To Perelman’s Failed Revlon Deal, Add Rebuke From S.E.C.,” The New York Times, June 14, 2013.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.
6. Ibid.

Saturday, December 22, 2018

Managing and Presiding: Leading as CEO and President

A manager does not preside. To manage is to be actively engaged in the operations of an organization; it is not to “sit before,” as in representing the organization itself externally and intervening in it only as needed in serving as guardian of its “constitutional” order. For example, if a company’s corporate governance system is about to implode, the President is there to preside as the board (and major stockholders) come to terms. In other words, the President would be oriented to maintaining the meeting foremost—intervening in the discussion only if a key juncture is likely to result in an implosion of the governance system.

Material from this essay has been incorporated into The Essence of Leadership: A Cross-Cultural Foundation, which is available in print and as an ebook at Amazon. 


Monday, November 19, 2018

Leadership vs. Management: Change vs. Constancy?

In the "leadership vs. management" dichotomy, "management focuses on getting work done on time, on budget, and on target--in other words, steady execution and control--while leadership focuses on change and innovation." However, this contrast of implementation and innovation is a different dichotomy. Abstractly speaking, a category mistake may be involved in this false dichotomy. Change would be occurring in the execution of an innovative vision. In the realm of change alone, formulating and selling it can be distinguished from making the change. Therefore, the “leadership vs. management” distinction does not reduce to “change vs. status quo."

Material from this essay has been incorporated into The Essence of Leadership: A Cross-Cultural Foundation, which is available at Amazon. 

Wednesday, November 14, 2018

Target’s Senior Managers in Damage Control Mode: A Forensic Appraisal

The number of transactions at Target, a major American retailer, during the weekend before Christmas in 2013 came in at between 3 to 4 percent lower than for the same weekend in 2012.[1] That the number of shopping days between Thanksgiving and Christmas in 2013 are five less than in the previous year and number of transactions at other retailers during the weekend in 2013 is slightly higher than for the previous year suggests that Target did indeed take a financial hit due to the massive breach in electronic security. The debit and credit-card numbers of up to 40 million customers (between November 27th and December 15th) could have been compromised by hackers who immediately began selling the “secured” information from abroad.[2] Lest this lesson in the downsides of electronic commerce and globalization be enough bitter medicine to swallow, Target’s damage control gives us a rare opportunity to glimpse the mentality of the company’s corporate-level managers by inference.



The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available at Amazon.

Saturday, October 27, 2018

Is Corporate Governance Anti-Democratic?

Assuming all the votes cast in an election are accurately tallied, the pronouncement of the winner would seem to be straight-forward. What it means to have won, however, is considerably more complex. Specifically, is winning getting over 50% of the vote, or should a mere plurality of, say, 38% suffice? It could be argued that a super-majority of 60% or two-thirds is necessary for there to be a discernible will of the people behind the winner. To claim that 51% represents the will of the people seems a bit of a stretch, since almost half of the voters cannot be considered to be of that will. Typically, much is read (or projected) into the 1% over the 50% in terms of a mandate. All of a sudden, 51% of the voters become “the people.”  Certainly a winning plurality of 38% cannot be said to stand for or represent the will of the people, for 38% is a minority in the total votes cast. Yet in Delaware’s corporate law, which is binding for most American corporations, a mere plurality is sufficient for a candidate to be elected to a board of directors. While this arrangement is not ideal, it is a legitimate basis even if some stockholder activists beg to differ.

Monday, October 23, 2017

On the Unfairness of the Bonus System on Wall Street

Craig A. Dubow, Gannett’s former chief executive, had a short six-year tenure that was, by most accounts according to The New York Times, “a disaster.” David Carr reports: “Gannett’s stock price declined to about $10 a share from a high of $75 the day after [Dubow] took over; the number of employees at Gannett plummeted to 32,000 from about 52,000, resulting in a remarkable diminution in journalistic boots on the ground at the 82 newspapers the company owns. . . .  the company strip-mined its newspapers in search of earnings, leaving many communities with far less original, serious reporting. . . . Not only did Mr. Dubow retire under his own power because of health reasons, he got a mash note from Marjorie Magner, a member of Gannett’s board, who said without irony that ‘Craig championed our consumers and their ever-changing needs for news and information.’ But the board gave him far more than undeserved plaudits. Mr. Dubow walked out the door with just under $37.1 million in retirement, health and disability benefits. That comes on top of a combined $16 million in salary and bonuses in the last two years.”

Besides the inherent unfairness in an incompetent manager getting millions of dollars in compensation (for championing incompetence?), it is morally problematic when, as Carr puts it, “the consequences of bad decisions land on everyone except those who made them.” 

The full essay is at "Unfair Bonuses on Wall St."


Source:

 David Carr, “Why Not Occupy Newsrooms?” The New York Times, October 24, 2011. http://www.nytimes.com/2011/10/24/business/media/why-not-occupy-newsrooms.html

Thursday, August 3, 2017

Bureaucratizing Leadership into Management

Fuqua/COLE surveyed 205 executives of public- and private-sector companies. Based on the results, I provide a critique that renders transparent some of the questionable assumptions that leadership-advisors and even business leaders themselves may have without realizing it. 

The full essay is at "Bureaucratizing Leadership."


Monday, May 20, 2013

President Obama as Chief Executive? Too Busy Leading and Legislating to Catch the IRS

Has the presidency become too big for one person? This question was salient in the 1970s, as Americans endured Nixon’s Watergate plight, Ford’s frustrations with stagflation, and Carter’s failure to free the American hostages being held in Iran. Meanwhile, none of those presidents were able to take on OPEC (an Arab Oil Cartel). Reagan’s answer was that big government, not an overwhelming office, was the problem. Leaving aside the ideological question of whether the U.S. Government had indeed grown too big (especially relative to the state governments), I contend that occupants of the White House have serially misunderstood the nature of the office. In short, the presidents have allowed their efforts in partisan leadership to crowd out being the chief executive of the executive branch. I suspect that the explanation involves a mix of self-centeredness and simply wanting to shirk the boring stuff for more exciting activities.
 
To preside literally means to stand before. In the Constitutional Convention in 1787, Ben Franklin referred to the proposed office as sitting “in peaceful Council … merely to preside over our civil concerns, and [to] see that our laws are duly executed” (Madison, Notes, p. 55). Referring to the first role, which I take to be that of presiding, Governeur Morris stated on July 19 in convention that the President should be “a firm guardian of the people and of the public interest” (Madison, Notes, p. 324). In this respect, the office of the American presidency is thus geared to looking over the viability of the whole, leaving the partisanship and legislating to the legislative branch. When these two are not left to the Congress (the veto being originally intended to protect the whole rather than for ideological purposes), the credibility of presiding is compromised. Further, the administrative tasks in seeing that “our laws are duly executed” are unduly delegated or simply ignored.
 
In presiding, the president stands for the Union, which includes protecting its system of governance at the macro level and the Union itself, whether from internal dissolution (e.g., Lincoln) or foreign invasion (e.g., FDR). The Presidential leadership that is most credible is at this “high altitude” level. Because the office is not primarily oriented to partisanship on every single issue before the Congress, partisan leadership, such as on a garden-variety issue, is ultimately bad for a president both in terms of credibility and opportunity cost (i.e., the value of tasks closer to the office  that are crowded out).
 
George Washington can be cited to support the thesis that the office is oriented to flying above all but the highest storm clouds. The first president had both Thomas Jefferson and James Hamilton in his cabinet.  Listening to the two men debate, the presider could discern where the national interest lay rather than risk ideological group-think oriented to using the office to push an agenda. President Jackson was oriented to the good of the whole rather than a partisan ideology when he opposed Congress funding roads entirely within a given state (Missouri) and yet sent troops to South Carolina after it passed the Nullification Acts that purported nullified federal laws that hurt the state’s interests. It is not clear if the president was a federalist or an anti-federalist, as his focus was on keeping federalism in balance because that would support the viability of the Union.
 
The results of a 2010 focus group reported by the New York Times indicated that Americans wanted a president who resists the temptation to engage in partisan fighting. They wanted a leader who would stand for things on which most Americans agree, such as that American society should be more civil. Such leadership is oriented to a vision of the whole that transcends partisanship. For example, Barak Obama could have run in 2008 explicitly as a multiracial (rather than black) candidate capable of personifying what America was rapidly becoming: a true melting-pot wherein multiracial persons are seen as the leading wave of the future. Taking a partisan stand on virtually every issue that come out of Congress so as to have as much as possible his way undercuts the credibility of “personification leadership” because people on the other side of a given issue will resist accepting the president as personifying anything involving themselves. In other words, Obama’s political opponents will not buy into any America that he personifies—period.
 
As a general principle, partisanship undercuts presiding. Paradoxically, a president wanting to maximize his influence on every issue winds up undercutting his influence that is most in line with the design and nature of his office and thus effective. In wanting so much to go his way, a president’s ego obstructs his performance on tasks that only he is in a position to accomplish. Lost in the backwash of partisan spit is not only presiding, but also executing the law as the chief executive. It is counterintuitive to conclude that a sort of presidential leadership (i.e., the partisan or ideological variety) is bad because it crowds out the more fitting administrative role. Properly understood, (presiding) leadership applies to the presidency without crowding out the administrative tasks in holding agencies accountable. Sadly, presidents typically try to get involved in as many issues as possible—hence the office appears to have grown too cumbersome for one person.
 
Joe Hagin, George W. Bush’s deputy chief of staff, observed while still in office that there “was much less time [under the second Bush] to catch your breath during the day.” A constant juggling of issues—from wars down to cleaning up after hurricane Katrina often taking place all at the same time—had exhausted the White House staff. “There’s only so much bandwidth in the organization,” Hagin admitted.  “Can any single person fully meet the demands of the 21st century presidency?”  Doris Goodwin has argued that the growth in the number of things expected of the president has expanded exponentially since WWII. “The President’s inner circle can become stretched by the constant number of things labeled ‘crises’ that land on his desk.” Just because the media labels some issue as a crisis in order to increase viewership does not mean that the issue measures on the “presiding” scale. Surely the Presidency, being intentionally designed as one person rather than a presidential council, was not initially intended to micromanage every issue in public discourse. The proliferation of news sources has increased the pressure on the President to weigh in on more things. Meanwhile, his administrative tasks are neglected even more.
 
President Obama delivered 57 speeches in October, 2010 alone; he had seven speechwriters at the time. It would be interesting were someone to analyze those speeches to see how many pass muster in terms of presiding rather than being partisan on topical issues. The opportunity costs of getting into every issue in hopes that each one will go the way he wants include not only foregone presiding opportunities but also administrative lapses in executive branch agencies that the chief executive and his immediate staff could have caught and rectified at an early stage.
 
In May 2013, President Obama claimed that he had learned that the IRS had been targeting conservative groups for audits “only with the rest of you.” This statement “drew criticism,” according to the Wall Street Journal, by “focusing attention on his management style and whether he has kept himself sufficiently informed about the agencies under his authority.” I suspect that the president enjoys giving partisan speeches more than overseeing many agencies. In other words, he allowed the time-expansive sort of (partisan) presidential leadership to eclipse his administrative duties. Even the American people tend to view the presidency as a leadership rather than administrative position—so the president gets away with trying to get as much as possible to come out his way, politically.
 
The problem can be viewed as one of self-discipline. While in the U.S. Senate, Sen. Obama did not enjoy the committee hearings, but attending them was part of his job. Whereas in the Senate his leader, Harry Reid, could hold him to task on the monotonous parts of the job, no such authority in the White House exists over a president. To do more administratively as chief executive of the executive branch agencies, Obama would have had to rely on his own self-discipline, which appears to be in short supply. In regard to the partisanship in the IRS, it could be asked why neither the president nor his White House staff had caught the problem in their administrative capacity as the conservative groups were being targeted. Perhaps the president had been too busy giving campaign speeches or negotiating with Republican legislators on legislative proposals.


Sources:

Daniel Stone, “Hail to the Chiefs,” Newsweek, November 22, 2010, pp. 30-33.

Matt Bai, “Voter Disgust Isn’t Only About Issues,” The New York Times, October 6, 2010.

Peter Nicholas, “Obama’s Counsel Was Told of IRS Audit Findings Weeks Ago,” The Wall Street Journal, May 19, 2013.

James Madison, Notes in the Federal Convention of 1787. New York: Norton, 1987.

 

 

 

Monday, April 15, 2013

On the Roles of Mentors and Sponsors in Leadership Development

In the corporate world, distinguishing between a mentor, sponsor, and leader can be difficult. As people can get carried away in describing their roles, it is necessary to clearly demarcate the three. According to Sylvia Hewlett , mentors “act as  a sounding board or a shoulder to cry on, offering advice as needed and support and guidance as requested.” A sponsor is “a powerfully positioned champion” who offers “guidance and critical feedback.” Although appropriating “champion” from sports does not fit, the distinction between critical feedback and “support and guidance” is worth exploring.
Material from this essay has been incorporated into The Essence of Leadership: A Cross-Cultural Foundation, which is available in print and as an ebook at Amazon. 

Source:

Sylvia A. Hewlett, “Mentors Are Good. Sponsors Are Better,” The New York Times, April 13, 2013.

Sunday, March 10, 2013

The Fed Whitewashes Citibank: Systemic Risk Understated

As reported by Reuters in March 2013, “The newest stress tests for U.S. banks produced scores that are at odds with other measures of lenders' safety, in another sign that some institutions may be too big for regulators to understand and executives to manage. For example, Citigroup Inc, which has been bailed out multiple times by the U.S. government, showed up on the score sheets posted by the Federal Reserve . . . as being clearly safer than JPMorgan Chase & Co. That conclusion is at odds with the views of investors, bond analysts and credit-rating agencies, as well as when measured by a yardstick regulators themselves want to use in the future.” Kathleen Shanley, a bond analyst at GimmeCredit, a research service for institutional investors, said "I wouldn't say that Citi is safer than JPMorgan, for a variety of reasons, including its track record.” Citigroup has lower credit ratings than JPMorgan, and prices for credit default swaps suggest that the market views JPMorgan as safer.
The full essay is at "Fed Whitewashes Citibank."

Friday, January 18, 2013

Leadership at Goldman Sachs: Mice or Men?

Inevitably, with any focus comes the opportunity cost of the benefits that could have come from alternative agendas. Put another way, a sustained focus on particular trees means losing the benefits that go with looking at the forest as a whole. One might ask whether Wall Street bankers, even those in lofty positions, are too focused on marginal differences even as the bankers stay away from operational oversight. Goldman Sachs, being led by a former trader, may have been a case in point as 2012 succumbed to 2013.

The full essay is in Cases of Unethical Business, which is available at Amazon.

Friday, September 23, 2011

Meg Whitman at HP: A Leader or Manager?

Referring to the appointment of Meg Whitman as CEO of HP, Ray Lane, chairman of the board, said, “We are at a critical moment and we need renewed leadership to successfully implement our strategy and take advantage of the market opportunities ahead.”[1] On both scores, Lane was actually referring to management rather than leadership. Even the setting of strategy is within the purview of management, as in strategic management; implementing a strategy is the epitome of management. Similarly, recognizing market opportunities is strategic in nature, and thus a function of managing a company as a whole.


Material from this essay has been incorporated into The Essence of Leadership: A Cross-Cultural Foundation, which is available in print and as an ebook at Amazon. 


1. HP Names Meg Whitman as New CEO,” Reuters, September 22, 2011; “HP’s Whitman: I’ll Focus on Leadership,” The Bottom Line, msnbc.com., September 23, 2011.

Wednesday, March 2, 2011

BP's CEO Tony Hayward: A Golden Parachute Despite Having Failed on Safety

In terms of corporate governance setting executive compensation to align the employee's incentives to the financial interests of the company even beyond his or her term of employment, it is apparently quite easy to go overboard. This can include severance packages for top managers--packages that may not reflect the performance of the executive. At the very least, it would appear that corporate lawyers are not writing very good contracts. Worst yet, insider board-management friendships may mean that the gap between achievement and severance pay may be intentionally wide. Sadly, the innocent non-management investors whose interests are not adequately represented in the board room pay the price, even if they don't perceive it on an individual level.  Even so, the lack of fairness alone calls for an end to the insider luxuriating.  The case of BP, whose rig exploded in the Gulf of Mexico in 2010, provides a good case study.

The full essay is in Cases of Unethical Business, which is available at Amazon.