America’s Competitive Issues Have a Lot To Do with Failure of Leadership
October 7th, 2008
It was hard, yet almost ironically comical, observing failed Lehman CEO Richard Fuld in front of congress yesterday. Between attempts at fake tears, he corrected them about only earning “closer to $350 million” since 2000, while driving his firm into the ground. At the same time, he says it was “outside forces” that destroyed Lehman, not lack of internal controls or leadership.
I was in corporate life for nearly twenty years, including several executive roles, before founding MadeinUSAForever.com, so I have seen a lot. There is always a struggle inside a company between multiple factions. Through that lens, the ship has to be sailed the right direction. The question always comes up about whether to do the right thing or politically expedient. Though I was effective and liked, I personally got in trouble many times for doing the right thing instead of going along with the crowd. In some cases, what rises to the top is not the most competent person, but the best politician. If that executive politician is also competent, the company is probably OK, but clearly that is not always the case, as when an executive like Mr. Fuld and his clique can destroy an 160 year old company in just a few short years.
Most disturbing is the lack of ownership these “men” take for the issues they create. Any entrepreneur could never get beyond the first stage with this attitude, but these men are not creators. They simply seized control of an existing company (purse strings). They reward themselves as if they are gods, and are yet are unable to take ownership for their own failures. With examples like this it is little wonder we are seeing many people refuse to take responsibility for their own mortgages or other issues, expecting someone else to bail them out.
There is no easy fix, but one thing is clear – we need a serious shakeup of the corporate board of directors system. The board of directors is supposed to be the ones overseeing the company for the shareholders and must be completely independent of the President/CEO of all public companies. It is always tempting for the CEO to stuff the board full of his loyalists, like Michael Eisner did with Disney. Nominees to the board should never come from the senior leadership of the company. Senior executives and board members should also share a real personal liability for fiascos like Mr. Fuld’s Lehman management in order to encourage real oversight. Also, compensation advice from consulting services like Marsh to boards advising on packages like Mr. Fuld’s hundreds of millions of dollars needs criminal investigation. Finally, Boards should always consider Presidents/CEO’s of public companies to fully removable without a golden parachute if they fail.
Todd Lipscomb
Founder of MadeinUSAForever.com (http://madeinusaforever.com/) your source for made in USA products.
Tuesday, October 7th, 2008 at 6:05 pmand is filed under Uncategorized.
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