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10 Great Leadership Blunders: 2007

It's time to recognize the ten dumbest leadership moves of the year. In what has become an annual tradition (hey, it's the second year in a row!), I have compiled ten examples of leadership behavior certain to strip the offenders of any credibility while triggering an employee stampede to the door.

1. In March, consumer-electronics retailer Circuit City fired 3,400 salespeople who earned 51 cents more per hour than what management called the "market-based salary range for their role." The company intended to replace the overpaid employees with workers willing to work for less. Then, the company's sales tanked. Stock analysts blamed the slump on management's decision to fire its most experienced employees. So, in a move even more offensive than the firings, Circuit City asked those terminated employees to come back to work and help revive the company's sales. Perhaps the company should consider the sincerity of its slogan, "It's all about helping you."

2. Circuit City is the first company to earn two spots on the 10 Great Leadership Blunders list, and it's an honor the retailer rightfully earned. In December, the same leaders who fired frontline salespeople for earning 51 cents an hour too much, awarded millions in cash incentives to "key executives" who agreed not to quit. Top executives were offered between $600,000 and $1 million each for promising to remain with the company until 2011. The company said it established the incentives "to ensure the stability of the company's leadership team." What stability? Circuit City’s board should think about offering Philip Schoonover a cash incentive NOT to stay.

3. Managers at Catfish Bend Casino in Burlington, Iowa were livid when they discovered a "Dilbert" comic strip hanging on an office bulletin board. In the cartoon, Dilbert begins a conversation with another fictional character by asking, "Why does it seem as if most of the decisions in my workplace are made by drunken lemurs?" The offended managers reviewed surveillance tapes until they found footage showing security supervisor David Steward posting the strip, and they promptly fired him. Defending the termination in court, the company's HR director Steve Morley testified, "Basically, he was accusing the decision-makers of being drunken lemurs." The judge sided with Steward -- who said he was simply trying to cheer up coworkers worried about upcoming layoffs -- and ordered the casino to pay his unemployment benefits. As if describing the leadership mindset that led to Steward's firing, Dilbert's comic-strip friend answers his question by explaining, "Decisions are made by people who have time, not people who have talent."

4. It's impossible to compile a list of leadership blunders without including politicians. Two particularly bone-headed moves stood out in 2007. Senator Larry Craig of Idaho was arrested after making sexual advances toward another man in a Minneapolis airport bathroom. The other man was an undercover police officer. After his arrest, Craig announced he would relinquish his Senate seat; he later changed his mind and plans to serve out the remainder of his term. In Plant City, Florida, vice mayor Robert Brown apologized publicly to his wife for having an extramarital affair. Although it's not uncommon for politicians to openly beg forgiveness for their indiscretions, Brown's apology came during a city commissioners' meeting. "I apologize for my behavior and the hurt I caused," Brown told his wife of twenty-five years, who was sitting in the audience. He presented her with flowers and a kiss and then resumed the meeting.

5. Things have not gone well at British Petroleum over the past two years. In May 2005, an explosion at a Texas refinery killed fifteen people. A pair of Alaskan pipeline leaks in 2006 was attributed to the company's shoddy maintenance practices. And recent problems have delayed completion of an oil production platform in the Gulf of Mexico. Through it all, John Browne somehow managed to hang onto his job as CEO. But at last, BP's board found something to fire Browne for: having a four-year relationship with a male escort and lying about it to the High Court during his lawsuit against a London tabloid. Board chair Peter Sutherland said Browne "should be compelled by his sense of honor to resign in these painful circumstances." Note to Sutherland: there's nothing honorable about deadly explosions and environmental disasters.

6. For eight years, an anonymous contributor to Internet financial forums wrote scathing criticisms about natural-food grocer Wild Oats Markets. In hundreds of posts, the writer known only by the pseudonym "Rahodeb," claimed the retailer's shares were overpriced and questioned why anyone would own the stock. In February, rival Whole Foods Market announced its intention to buy Wild Oats. While considering the antitrust ramifications of the merger, the Federal Trade Commission uncovered Rahodeb's true identity: Whole Foods Market CEO John Mackey. Whole Foods officials deny that Mackey used his secret identity to drive down Wild Oats' stock price before he bought the company, but a skeptical FTC moved to block the merger. Perhaps Rahodeb's most pathetic post was his response to another discussion-board writer who unwittingly poked fun at Mackey's haircut. "I like Mackey's haircut," said Rahodeb. "I think he looks cute!"

7. In its Code of Conduct for event attendees, Madison Square Garden -- owner of the New York Knicks basketball team and the New York Rangers hockey team -- asks guests to "be respectful of others around them" and "refrain from using foul/offensive language." Apparently, the Code does not apply to the Garden's male employees. In October, a Federal District Court in Manhattan ordered the Garden and its parent company Cablevision to pay $11.6 million to a former executive who was fired after she reported obscenity-laced tirades and unwanted sexual advances by Knicks coach Isiah Thomas. Sixteen days later, the company settled another sexual-harassment lawsuit filed by a former Rangers cheerleading-squad captain. The headline of a New York Times article by Selena Roberts appropriately cautions: "The Garden Needs a Warning Label."

8. While his company's hedge funds crumbled and helped fuel a developing global credit crisis, Bear Stearns CEO James Cayne went golfing and played bridge, according to a Wall Street Journal investigation. The newspaper reported that during an especially critical ten-day period in July, Cayne was in Nashville playing in a bridge tournament -- without his cell phone. Even as the crisis worsened throughout the summer, Cayne knocked off work on Thursday afternoons and played golf every Friday, according to the Journal. Two of Bear Stearns Asset Management's hedge funds lost billions through investments in securities backed by subprime mortgages. Cayne, who denied the allegations, announced that he would forgo his 2007 bonus.

9. MIT students and faculty members were shocked to learn that their school had fallen several places in U.S. News & World Report’s annual ranking of colleges. Investigating MIT's drop from fourth to seventh place, the school newspaper discovered that officials had quietly fixed an "honest mistake" that inflated MIT's standings in previous years. Until this year, when calculating the average SAT scores of new students, MIT excluded the scores of foreign students. Non-native English-speaking students tend to score lower in reading on SAT tests than their American-born classmates, so omitting their scores overstated MIT's average and, thus, improved its standing in the magazine's report. It was the second scandal involving the MIT admissions department in 2007. In April, admissions dean Marilee Jones resigned after admitting she lied about her credentials when applying for a job at MIT twenty-eight years ago.

10. Before the New England Patriots went 16-0, they had to go to the woodshed. NFL officials discovered team leaders spying on New York Jets coaches during an early-season game, using a video camera to steal defensive signals from the Jets' sideline. Commissioner Roger Goodell fined Patriots head coach Bill Belichick $500,000. He also fined the team $250,000 and ordered owners to forgo this year's first-round draft choice. Critics say the Patriots' perfect season should be marked with an asterisk.

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I hope your list is in order. The Circuit City debacle was amazing to me. For years I've shopped there rather than Best Buy because Circuit City's employees were head and shoulders above Best Buy's. I could go there to ask questions and be confident I would get a thoughtful answer. No more. So now I have two bad choices in the big box electronics field.

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It never ceases to amaze me how many CEOs are prepared to wreck the ship on the rocks, just to prove they are the captain.

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