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Be sure to get my good side

by on February 4, 2010

New York’s attorney general announced today its office would be pressing civil charges against former Bank of America (BAC) CEO Ken Lewis (retired) and former CFO Joe Price (now head of the institution’s consumer banking division).  The charges are due to alleged misconduct related to the Merrill Lynch acquisition that took place one hurried weekend in September 2008.  At the time, some of the actions taken by the executive team also led BAC’s Treasurer, Jeffrey Brown, to ask privately (again, allegedly) if they wouldn’t all end up in prison for their conduct.

When is the last time you had that exchange at work?

Coworker: “Here, let’s do X.”

You: “No thanks, I don’t want to go to jail.”

Now imagine you are the CEO of Bank of America.  The image of YOUR face is linked with every major media story, as well as all of the company’s own annual reports and press releases.  You are also bound by Sarbanes-Oxley (and hopefully your own conscience) to act ethically in all of your business dealings and financial reporting.

But in September 2008, the government approached you and your executive team and gave you less than one weekend to take on an ailing giant (Merrill).  Chase would eventually be asked to do the same for Washington Mutual, a creaky house of cards that Gramm-Leach-Bliley built.

To be clear, I don’t know if the misconduct took place.  But I know that, as BAC has endured in the headlines for its dealings (Merrill, the apparent mishandling of the Countrywide acquisition, the Capitol Hill tongue lashings for its execs, the credit default swap fallout), the photos and videos of former CEO Ken Lewis used in the news stories have gotten progressively less flattering.  At this point, he’s no longer a person; he’s a symbol.  On some level, a CEO’s identity gets all mixed up with that of the company, and every move he or she makes is parsed by the market.  In addition, a significant portion of market capital is tied to his or her actions and remarks.

Is it any wonder CEOs have a hard time apologizing?  What is it like to look in the mirror and see a stock symbol?

I am not being an apologist for any billionaires or other disgraced executives here.  However, I do not subscribe to the notion that rising to the top of the corporate ladder makes a person less ethical than any human randomly selected off the street.  But I do think being in such a position, as Ken Lewis was, could have a profound effect on one’s sense of identity and accountability.

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4 Comments
  1. Jordan,

    An excellent point. A CEO not only becomes a public figure, and thus subject to the too-close scrutiny of the media, but also a public symbol for his or her own enterprise. This changes your life — and the bigger your company, the bigger the change, and the lighter you must tread.

    Consider the peculiar case of John Mackey, CEO of Whole Foods Markets — the nation’s number one natural food stores (in terms of sales). Mackey’s personal politics stand in extraordinary opposition to what are generally regarded as the politics of his customer base. Consider his stance on health care, or his peculiar views on climate change. Mackey insists that he’s only speaking of his personal views — but those views have been inseparable from his company, inciting many to boycott his organization outright.

    I share your stances: CEOs aren’t automatically amoral or immune to mistakes, but their positions are exceptionally tangled with the often immense lives of their organizations.

    • Ajay Pillay permalink

      I agree with Ross, CEOs are not automatically amoral or immune to mistakes. In fact they are brilliant people, whose negatives are always over-emphasized to an extent that they are no longer regarded as people with any soul in them.
      For example Jeffrey R. Immelt, the then chief of GE, is one of the greatest management gurus of the decade. He made the modern concept of reverse innovation, which brought in a new breakthrough in managerial practices.
      But now all we here is Jeffrey Immelt was a CEO who had led GE with a -12% annualized total return during his tenure, but took along a six-year average annual compensation of $14.4 million.
      How long before these stains go off?

      • Jeroen permalink

        As it is with any public role or role of power – there will be people who don’t like you. Leading by consensus is hard and making decisions where people disagree is *very* hard. It also ties into the idea of how CEO are somehow idealized as super-human. Kevin did point this out in class, how managers and CEO’s can not count the amount of times they have made mistakes but name from memory they have done well.

        We ourselves seem therefore to be the same as the rest, focused on what went wrong. Because we know all our mistakes they are in front of us. As a CEO I believe you need the skill to lay those things aside, especially when the criticism comes from external sources.

  2. All great points. I also think mistakes are unavoidable since we’re all human beings. But the difference is that CEOs are making high-level decisions which flow down within organizations, so potential mistakes or indiscretions could be easily magnified.

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