The High Cost Of Bad Leadership

Regardless of the legal outcome of the Skilling and Lay trial beginning next week, the high cost of their bad leadership is well established. In exchange for the unsustainable run up in shareholder value — the single answer to all challenges in the Enron regime of Skilling and Lay — energy markets were turned into casinos, employees at both Enron and other organizations lost jobs, consumers went without power and other necessities, marriages were ruined, and people were endangered. Evidently, Skilling’s defense will combine claims that he was unaware of the bad deeds going on and, to the extent he approved anything, all such approvals were legal according to the accountants and lawyers advising him.

I was reminded of all this when I received a notice in the mail about a product defect. Over the past several decades, we’ve all become quite familiar with the strong shared concept and idea named ‘product recall’. For example, The Salt Lake Tribune runs a service for readers to be sure they are up to date on all such recalls. In our new world of markets, networks, organizations, friends and families, bad products can find there way into anyone’s life anywhere. The human beings selling you a bad car, a bad toy or an exploding mortgage don’t live down the block or around the corner. You don’t see them at church or your kids’ school. You don’t know them in any meaningful way. You know their companies– and their brands.

If single answer fundamentalism drives their company and brand to choose value over values — to put your health, safety, security and well-being in jeopardy because of the dedication of the executives and other decision makers to the single, all determining goal of building shareholder value — you cannot count on ‘locality’ to bail you out. Corporate cultures driven by shareholder fundamentalism are prone to reach into your life and shake it up — with dangerous products…… and with bad leadership.

A century ago, the adverse effects of bad organizational leaders likely stayed within the ambit of the places those leaders lived with others. Plenty of harm could and did result. But, today, in our new world of markets, networks, organizations, friends and families, the high cost of bad leadership takes on entirely new and breathtaking scope. So far, though, we’ve not adjusted to this new reality.

It’s great that we have product recalls. Now, however, we need to figure out as many and as effective means as possible to have ‘leader recalls’. And waiting for a drawn out legal process triggered after most of the damage has been done is better suited to a mid-20th century world of places than our new 21st century world of markets, networks, and organizations. Meanwhile, for shareholder activism and democracy to work demands, among other things, rooting out and eliminating unsustainable shareholder value fundamentalism in favor of a blended values approach that honors and builds shareholder value and values in concert with employee value and values, customer value and values and societal value and values. We must find a way to save shareholder value from itself — and from the bad leaders whose extreme self-interest now imperils the world to be inherited by our children.

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