THE ART OF BUSINESS: IN THE FOOTSTEPS OF GIANTS

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We’ve profiled some truly outstanding leaders on our website and in The Art of Business. Now it’s time to profile some less than wonderful ones. We compiled a list of the 12 least respectable leaders who are in the public spotlight. We call these the Dirty Dozen. We hope these shining examples of dirty leadership will shed some light on how not to be a leader. For a comparison, see also the Seven Essential Qualities of Leadership at the end of this piece. Enjoy!

Donald Trump

The size of Trump Towers is exceeded only by the size of Donald Trump’s ego. Trump once presented New York's archbishop with a shirt emblazoned with the words, “Jesus Loves Donald Trump” and he calls Trump Tower his best friend. His show, The Apprentice, teaches young leaders to rule by fear and backstabbing politics. He is quoted in episode 11 as saying, “You should never lose your cool unless it’s an act, if you’re acting that you’re angry because you want to scare your employees.” He also wants to patent the phrase, “You’re fired!” His book is supposed to teach readers How to Get Rich, while his hotel chain is in pending bankruptcy.

Kenneth Lay (former chairman, Enron)

Lay told his workers that “the balance sheet is strong” entitling him and other executives to bonuses when he knew the balance sheet was in fact carrying at least $7 billion in losses. Lay used Enron as his personal bank, enabling his daughter and wife to use the company's jets for personal trips at a moment's notice (at $5000/hr), costing the company millions of dollars. One flight to pick up his daughter in Europe cost the company $125,000. Those lies and extravagances wiped out 5,000 jobs and erased $800 million in employees’ pension investments.

Joe Berardino (former CEO, Andersen Consulting)

While this former CEO wasn’t personally indicted, under his leadership his company was barred from conducting audits of public companies after a Houston jury found it guilty of obstruction of justice in the Enron case (translation: overtime shredding of Enron documents that Andersen principals call “routine housekeeping.”) As a result, the company had to layoff 27,000 employees, and lost a minimum of $1.4 billion in billings and the love of its parent company Andersen Worldwide (which had to cough up $60 million to Enron investors and creditors).

Dennis Kozlowski (former CEO, Tyco)

This former CEO gave an ironic commencement speech at New Hampshire’s St. Anselm College to the class of 2002, in which he warned them: “You will be confronted with questions every day that test your morals. Think carefully, and for your sake, do the right thing, not the easy thing.” Later that year, he and two others were charged with looting their own company out of $600 million. He currently has a reprieve due to a mistrial.

Bernard Ebbers (former CEO, Worldcom)

Ebbers often liked to begin corporate meetings with a prayer. He also, along with former Tyco CFO, engineered a $7.68 billion accounting fraud that made the company look profitable when it was not. The fraud cost state pension funds $64 million. Ebbers then claimed that these were “generally accepted accounting procedures.” A report by a special committee for Tyco’s Board stated, "Ebbers created the pressure that led to the fraud. He demanded the results he had promised, and he appeared to scorn the procedures (and people) that should have been a check on misreporting."

Martha Stewart (domestic diva)

Martha Stewart has made a very public show of humbleness, first volunteering to enter prison when she didn’t have to, then offering to help underprivileged women start their own businesses. This has helped boost her stock more than 70% since she went behind bars. But is this real humble pie or just good PR? She actually wanted to go behind bars early so she could “be back to work before the spring planting season” (USA Today, September 15, 2004). She also offered to help underprivileged women so “she could shorten her time in jail by offering to serve part or all of her sentence,” as reported in the July 19 issue of USA Today.

Walter A. Forbes (former chairman, Cendant)

Although not officially found guilty due to a mistrial, Forbes and partner in crime E. Kirk Shelton, former vice chairman of Cendant, were both accused of inflating corporate revenue by $500 million, causing share prices to drop $14 million in a single day. Forbes may or may not evade conviction in the courtrooms, but he does know how to structure a company in all the wrong ways: Cendant’s currently picking up Forbes’ legal tab, which is running as high as $1 million per month. Under corporate bylaws, Cendant can sue to recover fees only if Forbes is convicted.

John and Timothy Rigas (father and son leaders, Adelphia Communications)

Both Rigas’ were convicted of all 15 securities fraud charges against them and other counts, for hiding $2.3 billion in debt at the cable company, deceiving investors and stealing company cash to line their own pockets. In closing arguments, one Rigas lawyer attempted to sway the jury by indicating that the Rigas’ were not as morally bankrupt as the Enron folks, calling Enron executives “the real villains.” Lawyers also defended the elder Rigas’ $26 million corporate purchase of 3,600 acres of timberland to preserve the view outside his home as a way “to keep the small town attractive to its employees.”

Jack Welch (former chairman, GE)

In his book Jack: Straight From the Gut Welch teaches his readers this leadership lesson: It takes a life time to build a reputation and only 5 minutes to wreck it. Maybe he should have read his book more closely, since he spent from 1981 onwards building a stellar reputation, only to wreck it in 2000 with the public unveiling of his excessive post-retirement perks (originally $2.5 million per year for life before he renounced many of them), a messy public divorce, and a botched Honeywell acquisition. His reputation continues its downward spiral as none of his protégés have performed well. Finally, Jack is known to rule by fear, having spent 75% of his time at GE evaluating employees, and regularly firing 10% a year.

Franklin Raines (former CEO, Fannie Mae)

Think ousted Fannie Mae CEO is singing the blues? Hardly. Raines knows a golden parachute when he sees one. He was asked to resign by the Fannie Mae board in December 2004 after the SEC said the company must make accounting corrections that could erase $9 billion of past profit dating to 2001. Regulators believe the company misstated profit and lacks the money to cover potential losses. Raines’ balance sheet looks good, though, since he is scheduled to receive a monthly pension of more than $114,000 for life. Raines also has deferred compensation of $8.7 million to be paid out through 2020 and owns more than $5.5 million in Fannie Mae’s stock. Plus, his late retirement date of June 22 gives him an additional $600,000 in salary.

Chuck Conaway (former Chairman and CEO, Kmart)

Former Kmart president Hall once praised Conaway for his “financial acumen, operational and leadership abilities,” adding that these abilities would “serve Kmart's shareholders, customers and employees well.” Wonder what Hall is thinking now? After less than 2 years of service, a civil suit accuses Conaway and other Kmart executives of using that financial acumen to accelerate the chain’s decline. During Conaway’s tenure, investors lost more than $4.6 billion, and the company eventually had to lay off about 67,000 employees. Conaway walked away with $9 million in compensation and billed Kmart for luxury perks like $106,191 for home improvements. Kmart also forgave Conaway a $5 million loan when he left the company.

Don Carty (former CEO, American Airlines)

Don Carty, who should have learned his lesson from his stint at American Airlines, is back. Carty was forced to resign after negotiations with labor unions unraveled. At issue was Carty’s decision to keep executive perks like bankruptcy-proof pensions while negotiating a $1.8 billion cost-cutting package with labor unions. He has now re-emerged in the airline industry as a possible player at Hawaiian Airlines, taking a seat on their board after purchasing $2 million of stock in the airline’s parent company in July 2004. Carty has been described by a former pilot this way: “He spent money like he had a printing press and mortgaged the future of AMR.. . . . Then he tried to load his pockets in the middle of the night while the employees took pay cuts. Shame on such executives that inherit vibrant healthy companies and drive them to bankruptcy. Tar and feathers are way too good for their ilk.”

Every excellent organization bears the stamp of its original leaders. This small group of leaders mentored a larger group of leaders that, in turn, creates a whole organization of leaders. Great leaders translate an inspiring original vision into synchronized daily executions that make a marked difference in the world. The essential qualities of leadership are:

• Values:
  All great leaders are defined by their character in terms of how well they uphold their values, such as integrity. No organization led by people who fail to talk and act according to ethical values can survive. The disastrous results of leaders failing to walk the talk have been abundantly demonstrated by corporate fiascos such as Enron, Arthur Andersen and WorldCom.
• Dream:
  Great leaders create dreams that galvanize people into action. Real leaders subjugate their personal desires to a compelling vision or higher purpose with the aim of making a difference. That urge to improve, enhance, revolutionize, and better the world is what separates the great leaders from the average. A higher purpose establishes a collective identity so that people’s passions are unleashed, and the organization achieves many multiples of performance when compared to the average organization.
• Commitment:
  Leaders commit totally to their causes. Total commitment means they must persevere despite the sometimes overwhelming odds against them. Three necessary ingredients for preservation are forbearance, self-discipline, and courage. Leaders are highly competitive. Self-discipline, therefore, is a necessary foundation for their eventual success. Self-discipline provides consistency in a leader’s behavior.
• Excellence:
  Great leaders strive for excellence in their quest for mastery. As they let go of the perception of fear, they achieve confidence. John Wooden is a shining example of unwavering confidence. His confidence is based on the concentration and effort he puts into preparation, not the outcome. Such leaders have a bias for action.
• Vulnerability:
  Leaders have a sense of vulnerability, knowing they need other people to help in achieving their dream. Great people, however, do not always start out great. They need to be nurtured and guided. To cultivate covenant relationships, leaders must communicate. Communication means listening as well as talking, to resolve issues and inform people.
• Humility:
  When leaders truly let go, reflection becomes a natural habit, as they tend to look at the whole picture rather than just themselves. Reflection helps one to look at the whole picture and assess: What’s happening? What’s not happening? What can I do to influence the outcome? This kind of reflection provides insight into the big picture necessary clarity to juggle long-term priorities and short-term emergencies. More importantly, such clarity allows leaders to maintain poise under pressure.
• Peace of Mind:
  Leaders have a deep sense of satisfaction about what they have done to make a difference in the world. They have gained the peace of mind that comes from knowing that when their best was called upon, they delivered. They flow into their destiny with certainty and have the patience not to force their will on their environment. They have a heightened awareness of their own being.