This week, the Inspector General determined that Hillary Clinton violated policy and didn’t have approvals for her private email server, despite her claims to the contrary. This reminds me of a lot of those really annoying and often catastrophic CEO behaviors in which the top person in a company exists as a special class and thinks that rules don’t apply to him or her. This is a behavior that often results in premature departure when that envelope is pushed too far.
Here are some examples: Carly Fiorina and her near abandonment of the job in order to support the Bush re-election campaign; Mark Hurd and his desire to have HP pay for his mistress; and CEOs of financial firms, all of whom were eventually disgraced and fired, who thought it appropriate to spend millions of company money on office remodels and luxury homes.
Every time a CEO is fired for cause, it is disruptive and reflects badly on the company. And it all seems to result from CEOs feeling they are immune from the rules.
Let’s talk about why this happens and why you may want to avoid working for or using a firm that has this problem.
The Royal CEO
The idea of CEOs acting out isn’t really new. But over the last decade, much more of this activity has become public and firms like HP seem to have endemic problems. I think this is largely because CEO salaries and compensation have massively outstripped those of employees and that perks like limousines and private jets have become part of this escalated compensation.
The perks handed to CEOs give them the sense that rules don’t apply, creating a massive feeling of entitlement. Adding to this is the fact that no one is willing to call the CEO on the carpet for a rules violation.
This kind of behavior creates massive resentment within the firm, particularly if the employees are seeing salary cuts and layoffs while the CEO is getting huge perks.
Recall that Steve Jobs not only got fired for overstepping while initially at Apple, he almost got fired again when he came back -- for mucking with his stock options. This suggests that even the best can lose track of what is right and wrong. And when the top person loses sight of what is right and wrong, every employee, customer and investor is at risk.
Wrapping Up: Avoiding the Behavior
I’ve been lucky in that most of the companies I’ve worked for didn’t have this problem. But I’ve also watched companies that do have the problem and have noticed they have more layoffs, make more disruptive decisions, and see catastrophic CEO departures as a result. As you are advancing your career, choosing a company to invest in or buy from, look out for firms that have “Royal CEOs” or practice massive disparity between the CEO and the rank-and-file. Chances are, a lot of things are going on behind the scenes, creating massive risks that have nothing to do with business. You should avoid those firms.
What people don’t seem to realize is that the Clinton email scandal put every man, woman and child in the country at risk for no good reason. CEOs who think that the rules don’t apply to them will treat their employees, customers and investors poorly, making them and their firms a bad investment.
Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+.