10 Great Leadership Blunders: 2008
Happy New Year! It's time for the Vital Integrities Blog's annual ranking of the ten dumbest leadership moves of the past twelve months. Here then, in no particular order, are ten examples of pathetic leadership behavior that had us shaking -- and scratching -- our heads in 2008.
1. Federal agents arrested Illinois governor Rod Blagojevich in December, charging him with conspiring to commit fraud and soliciting a bribe. Authorities accuse Blagojevich and his former chief of staff John Harris of attempting to sell the U.S. Senate seat vacated by Barack Obama. As Governor, Blagojevich has the authority to appoint a replacement to finish Obama's Senate term, and he allegedly decided to offer it to the highest bidder. The governor ignored calls for his resignation from top federal and state politicians, while Illinois lawmakers began impeachment procedures against him. Then, in an astonishing act of defiance, Blagojevich proceeded by naming former Illinois Attorney General Roland Burris to fill the vacant Senate seat. Leaders in the Illinois General Assembly and U.S. Congress vowed to block the "tainted" appointment.
2. In late 2007, Merrill Lynch & Co. hired John Thain as CEO to rescue the troubled brokerage house. Known in financial circles as "Mr. Fix-It," Thain received a $15 million signing bonus and a bounty of incentives. As recently as August 2008, Thain assured investors that Merrill was significantly capitalized and well positioned for the future. But one month later, Thain sold the company to Bank of America. It turns out that Merrill had actually been teetering on the edge of extinction. Here's the best part: after Merrill lost $12 billion for the year and announced it needed to fire 20 percent of its workforce, Thain had the nerve to ask his board for a $10 million performance bonus. A scornful letter from New York attorney general Andrew Cuomo convinced Merrill's board to forgo bonuses to top executives, including Thain.
3. In September, the U.S. government saved insurance giant American International Group from certain financial collapse with an $85 billion taxpayer-funded loan. A few days later, AIG executives enjoyed a weeklong, company-paid escape to the lavish St. Regis Resort in California. The getaway's $440,000 price tag included spa treatments, extravagant banquets, and golf outings intended to reward AIG's top insurance agents. White House Press Secretary Dana Perino called the incident "despicable." Equally despicable was AIG CEO Edward Liddy's announcement in late December that the company would award bonuses of up to $4 million each to dozens of senior executives to convince them not to leave.
4. Speaking of spas, the Canyon Ranch Spa in Lenox, Massachusetts, told its pampered patrons that an 18 percent gratuity was conveniently included in their bills. Therefore, tipping waiters, massage therapists, yoga instructors, or other service personnel was unnecessary -- and discouraged. But rather than giving the employees the gratuities it collected, the resort kept the funds as revenue. The employees sued, forcing Canyon Ranch to pay $14.75 million to the hundreds of employees it cheated since 2004.
5. The chief executives of automakers General Motors, Ford, and Chrysler traveled to Washington, D.C. in a united appeal for a federal bailout. Without the government's immediate help, they argued, their companies would face bankruptcy and 3 million industry workers might lose their jobs. But after pledging to streamline operations and reduce expenses, the CEOs -- GM's Rick Wagoner, Ford's Alan Mulally, and Chrysler's Robert Nardelli -- admitted to traveling to Washington separately in private planes. "There's a message there," pointed out Rep. Gary Ackerman. When Congress asked Wagoner, Mulally, and Nardelli if they would consider working for $1 a year as a good-faith gesture for securing government assistance for their companies, Mulally, who earned nearly $22 million in 2007, arrogantly responded, "I think I'm okay where I am."
6. In December, as proof that it is making cars that consumers want, Ford executives unveiled two new Lincoln models that can parallel park themselves. Seriously. Ford leadership apparently presumes that American drivers will give up needless luxuries like dependability and fuel efficiency as long as their cars can relieve them of the infrequent and ancient task of parallel parking. Rather than a car that parks itself, perhaps Ford's engineers should begin designing a car company that leads itself.
7. New York governor Eliot Spitzer, who earned the moniker "Sheriff of Wall Street" while prosecuting corrupt corporate titans as the state's attorney general, resigned amid allegations of his involvement with a high-priced prostitute. After the New York Times linked Spitzer to a pricey escort service with $1,000-an-hour call girls, Spitzer had a new nickname: "Client 9." Unlike his Illinois counterpart, Spitzer immediately fell on his sword. "I cannot allow my private failings to disrupt the people's work," he said when announcing his resignation.
8. In August, the LPGA tour announced that it would require all its players to speak English. Beginning in 2009, tour members would need to pass an oral evaluation of English skills or face suspension. Last year, the LPGA had 121 international players from twenty-six countries, including forty-five players from South Korea. Tour commissioner Carolyn Bivins said the policy would actually help the players by ensuring they "have the skills necessary to maximize their individual earnings potential by being able to communicate with prospective sponsors." LPGA officials quickly abandoned the new policy when current sponsors expressed outrage over the rule.
9. The Detroit Lions fired head coach Rod Marinelli and several assistant coaches after a history-making 0-16 season. "You can't go 0-16 and expect to keep your job," rationalized Marinelli, adding "They don't fire players, they fire coaches." The question is, what took the Lions' top brass so long? Marinelli's record in Detroit was a dismal 10-38, with only one win in the Lions' last twenty-four games.
10. Struggling in a tough economy, New York-based media agency Carat was facing employee layoffs. In an unfortunate email mishap, the agency's HR officer prematurely blasted the news to all of the company's employees. The email, which was intended for senior managers only, included PowerPoint and Word attachments containing talking points for breaking the bad news to doomed employees and spinning the actions to clients, vendors, and the press.
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1. Federal agents arrested Illinois governor Rod Blagojevich in December, charging him with conspiring to commit fraud and soliciting a bribe. Authorities accuse Blagojevich and his former chief of staff John Harris of attempting to sell the U.S. Senate seat vacated by Barack Obama. As Governor, Blagojevich has the authority to appoint a replacement to finish Obama's Senate term, and he allegedly decided to offer it to the highest bidder. The governor ignored calls for his resignation from top federal and state politicians, while Illinois lawmakers began impeachment procedures against him. Then, in an astonishing act of defiance, Blagojevich proceeded by naming former Illinois Attorney General Roland Burris to fill the vacant Senate seat. Leaders in the Illinois General Assembly and U.S. Congress vowed to block the "tainted" appointment.
2. In late 2007, Merrill Lynch & Co. hired John Thain as CEO to rescue the troubled brokerage house. Known in financial circles as "Mr. Fix-It," Thain received a $15 million signing bonus and a bounty of incentives. As recently as August 2008, Thain assured investors that Merrill was significantly capitalized and well positioned for the future. But one month later, Thain sold the company to Bank of America. It turns out that Merrill had actually been teetering on the edge of extinction. Here's the best part: after Merrill lost $12 billion for the year and announced it needed to fire 20 percent of its workforce, Thain had the nerve to ask his board for a $10 million performance bonus. A scornful letter from New York attorney general Andrew Cuomo convinced Merrill's board to forgo bonuses to top executives, including Thain.
3. In September, the U.S. government saved insurance giant American International Group from certain financial collapse with an $85 billion taxpayer-funded loan. A few days later, AIG executives enjoyed a weeklong, company-paid escape to the lavish St. Regis Resort in California. The getaway's $440,000 price tag included spa treatments, extravagant banquets, and golf outings intended to reward AIG's top insurance agents. White House Press Secretary Dana Perino called the incident "despicable." Equally despicable was AIG CEO Edward Liddy's announcement in late December that the company would award bonuses of up to $4 million each to dozens of senior executives to convince them not to leave.
4. Speaking of spas, the Canyon Ranch Spa in Lenox, Massachusetts, told its pampered patrons that an 18 percent gratuity was conveniently included in their bills. Therefore, tipping waiters, massage therapists, yoga instructors, or other service personnel was unnecessary -- and discouraged. But rather than giving the employees the gratuities it collected, the resort kept the funds as revenue. The employees sued, forcing Canyon Ranch to pay $14.75 million to the hundreds of employees it cheated since 2004.
5. The chief executives of automakers General Motors, Ford, and Chrysler traveled to Washington, D.C. in a united appeal for a federal bailout. Without the government's immediate help, they argued, their companies would face bankruptcy and 3 million industry workers might lose their jobs. But after pledging to streamline operations and reduce expenses, the CEOs -- GM's Rick Wagoner, Ford's Alan Mulally, and Chrysler's Robert Nardelli -- admitted to traveling to Washington separately in private planes. "There's a message there," pointed out Rep. Gary Ackerman. When Congress asked Wagoner, Mulally, and Nardelli if they would consider working for $1 a year as a good-faith gesture for securing government assistance for their companies, Mulally, who earned nearly $22 million in 2007, arrogantly responded, "I think I'm okay where I am."
6. In December, as proof that it is making cars that consumers want, Ford executives unveiled two new Lincoln models that can parallel park themselves. Seriously. Ford leadership apparently presumes that American drivers will give up needless luxuries like dependability and fuel efficiency as long as their cars can relieve them of the infrequent and ancient task of parallel parking. Rather than a car that parks itself, perhaps Ford's engineers should begin designing a car company that leads itself.
7. New York governor Eliot Spitzer, who earned the moniker "Sheriff of Wall Street" while prosecuting corrupt corporate titans as the state's attorney general, resigned amid allegations of his involvement with a high-priced prostitute. After the New York Times linked Spitzer to a pricey escort service with $1,000-an-hour call girls, Spitzer had a new nickname: "Client 9." Unlike his Illinois counterpart, Spitzer immediately fell on his sword. "I cannot allow my private failings to disrupt the people's work," he said when announcing his resignation.
8. In August, the LPGA tour announced that it would require all its players to speak English. Beginning in 2009, tour members would need to pass an oral evaluation of English skills or face suspension. Last year, the LPGA had 121 international players from twenty-six countries, including forty-five players from South Korea. Tour commissioner Carolyn Bivins said the policy would actually help the players by ensuring they "have the skills necessary to maximize their individual earnings potential by being able to communicate with prospective sponsors." LPGA officials quickly abandoned the new policy when current sponsors expressed outrage over the rule.
9. The Detroit Lions fired head coach Rod Marinelli and several assistant coaches after a history-making 0-16 season. "You can't go 0-16 and expect to keep your job," rationalized Marinelli, adding "They don't fire players, they fire coaches." The question is, what took the Lions' top brass so long? Marinelli's record in Detroit was a dismal 10-38, with only one win in the Lions' last twenty-four games.
10. Struggling in a tough economy, New York-based media agency Carat was facing employee layoffs. In an unfortunate email mishap, the agency's HR officer prematurely blasted the news to all of the company's employees. The email, which was intended for senior managers only, included PowerPoint and Word attachments containing talking points for breaking the bad news to doomed employees and spinning the actions to clients, vendors, and the press.
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Author George Brymer's comments about the leaders who get it, and those who never will.
