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2004 Hopkins and Company, LLC
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Sweet Talk
One critical skill is capable of tilting
an executive’s performance toward success or toward failure: the ability to
communicate effectively. In recent weeks, we ran across many examples of the
challenges many executives face in communicating effectively, so in this
issue we’re presenting several of those examples for your reflection. As you
read about what other executives have faced in trying to decide the right
messages to deliver to the right audiences at the right time, think about the
effectiveness of your personal communications. How much time do you spend
planning your own messages? Are there certain themes that you want to
reinforce in all your messages? What examples can you use to leverage the
values underlying your own behavior and the behavior you expect others to
exhibit? How can you avoid some of the pitfalls others have experienced?
Fifteen new
books are rated in this issue, beginning on page 5. One book is rated with
one star, one with two stars, and thirteen with three stars. You can also
visit our complete 2004 bookshelf at http://www.hopkinsandcompany.com/2004books.html
and see the rating table explained as well as explore links to all 2004 book
reviews. You can also check this same bookshelf to see what other books we’re
reading or considering. If there’s something missing from the bookshelf that
you think we should be considering, let us know at books@hopkinsandcompany.com.
You there: speak up!
The cover article in
the May 2004 issue of The Atlantic
is by former New York Times
executive editor Howell Raines,
titled “My Times” (http://www.theatlantic.com/issues/2004/05/raines-excerpts.htm).
While most of the article presents Raines’ version of what created the Times culture that led to both the Jayson Blair fabrication scandal and
Raines’ firing as executive editor, there are great insights for executives
on how to lead effectively. You can read about how Raines communicated with
his boss, Arthur Sulzberger, how
Raines spent a summer doing “homework” to prepare to become executive editor,
and how he tried to implement changes. While this is a one-sided story, it’s
rare to gain such a glimpse of organizational life, especially one so
well-written. Here’s a sampling of several lessons learned: “I knew that I was
taking a pounding in the press and on the office grapevine, but I also knew,
from observing my predecessors, that changes of the sort we planned would
inevitably encounter resistance, and therefore had to be made in the morning
of an editorship, rather than in its twilight. I also realized that I had to
go directly to the staff to sell my central strategic rationale: that he
newspaper had to improve itself greatly from front to back in order to ensure
its long-term survival. I was working my way through a series of breakfasts
and lunches at which ten or twenty reporters and copy editors at a time could
get an unfiltered version of my vision for the Times and question me in any
way they liked.
I’ve since heard that some of them were afraid to speak up, and I wish I had
been more sensitive to that. I’ve been involved in the combat of ideas for so
long that it’s hard for me to understand that people can be put off when, as
the British say, one ‘fights one’s corner hard.’ Moreover, even my friends
and family have warned me about ‘the look’ – an
apparently warlike expression that comes over my face when I am thinking
intently about something. One of my closest friends on the paper said that at
such times I look like ‘an angry hawk.’ That’s certainly a failing on my
part, and doesn’t accurately reflect the fact that I love conversation and
contrary ideas, and am drawn to people with a quick sense of humor.
In any event, as we unveiled plans for year two, I knew I had the support of
my publisher and I thought I had the luxury of time. For better or worse, I
didn’t care what times people said so long as they broke stories…”
Who tells you when your
communication approach puts people off? What do you do that inhibits others
from speaking up when they are with you? Are some of your change efforts
heavily dependent on how much time you’ll be around to implement them? What
would happen if you don’t have as much time as you think you do? What would
you do differently now? How likely is it that your methods for receiving
unfiltered information are working? How do you know?
Pointless Dialogue
Some executives have
the good fortune to take on a job and succeed where others failed. Some
executives have the bad fortune to follow someone perceived as successful,
and then have to report to that person. No one had worse fortune in recent
years than Shell executive Walter van de Vijver
who followed Sir Philip Watts as
CEO of the company’s Exploration and Production unit in mid-2001. A report to
the Shell Board released in April (http://www.shell.com/static/investor-en/downloads/gac_report.pdf)
describes how Watts prematurely increased
estimates of proved reserves, leaving van de Vijver
with unrealistic performance targets to achieve. The two men engaged in
dialogue over several years while the company failed to disclose what it
should have about reserves. Some excerpts from the report, representing van
de Vijver’s messages to Watts
and others:
“I must admit that I become sick and tired
about arguing about the hard facts and also cannot perform miracles given
where we are today. The single largest issue facing EP is the shrinking
opportunity portfolio exacerbated by too aggressive reserves bookings in the
past. … I am becoming sick and tired about lying about the extent of our
reserves issues and the downward revisions that need to be done because of
far too aggressive/optimistic bookings. …This is absolute dynamite, not at
all what I expected and needs to be destroyed. … [W]e are
heading towards a watershed reputational disaster.
… Throughout this entire process, my attempts to bring the reserve issues to
management’s attention were met with resistance. … Because the unspoken rule
within the Company is that you are not supposed to go directly to individual
Board members or to the Group Audit Committee, I had to rely on the Chairman
and the CFO to advise the GAC and assumed that happened in early December.” Both executives have resigned from
Shell.
What situation
would lead you to go around your boss to someone else? In Shell’s case, van
de Vijver communicated candidly to Watts, his boss,
but Watts disagreed that there was a
problem. Had you been in van de Vijyer’s position,
what would you have done differently? When you disagree or are in conflict at
work, how do you resolve the conflict? Does a bad situation fester, or does
communication lead to resolution? When your boss is the barrier to your
success, what do you do? At Shell, there was both a performance problem with
unrealistic targets, and a disclosure problem about reserves. Would you have
dealt with both problems? How?
Fear
Another outside
investigative report (http://www.usatoday.com/news/2004-04-22-Report.pdf)
was issued in late April when USA TODAY disclosed the findings of a panel
of journalists asked to uncover why foreign correspondent Jack Kelley got away with fabricated
and plagiarized stories for a dozen years. Here are some observations from
the report:
“…higher performance standards are putting
intense pressure on some members of the staff. They may say they find a
climate of fear because their own performances are marginal. Thus, to the
extent there is fear, it may be an expression that some on the staff feel
upset or threatened and do not want to become casualties. … We found a
newsroom that worried most, not about what they were giving the readers of USA TODAY,
but about giving the editors what they wanted to hear. That was an atmosphere
that was bound to have its effect on an ambitious, cunning, driven reporter
like Jack Kelley who, among his most obvious characteristics, had a deep
desire to please those above him. The effect of this culture, whatever it is
called, combined with an organizational structure that creates walls between
departments and reporting lines that divide management even in the same
department, has been to silence the newsroom. … It is ironic that staff
members of the daily that communicates with more readers than any other
publication in the nation, failed for years to communicate effectively among
themselves about the problems of the reporter who disgraced himself and
humiliated his newspaper. …”
What do you know about the
consequences of the performance expectations that you have communicated? Have
there been unintended consequences? Have you communicated in one form or
another that it’s more important to please you than to satisfy the needs of
your organization’s customers? What are the consequences of that expectation?
How silent is the equivalent of your newsroom? What can you do to ensure that
there’s a willingness to speak up, especially about concerns of quality,
honesty, professionalism? How do you ensure communication among the silos of
your organization? Who breaches the walls that can be built up among
departments? If you’re not leading by example in this area, what are you
afraid of?
None of Your Business
Privacy,
even for executives of public companies, exists and needs to be respected.
Clarity in understanding what not to communicate pays off, especially in
crisis situations. Senior executive illness is one area where there are
multiple role models to consider. Some organizations communicate a lot of
information about executives’ health. Others remain relatively silent and
disclose few, if any, details. The most recent example to think about came
from Kraft Foods in recent weeks.
At the end of March, Chairman Louis Camilleri released the following message inside and
outside the company about the Kraft CEO, “I am writing to inform you that Roger Deromedi
was admitted to a hospital this past weekend with an undiagnosed medical
condition. I am in contact with Roger and Sandy and I have conveyed to them
our strong support and good wishes. I am sure that everyone will respect
Roger's privacy and allow him to devote all his energies to a prompt and
complete recovery. Pending Roger's return, his direct reports will report to
me.” All audiences wanted to know more, but Camilleri
remained silent for two weeks. Then, this message was released: “I am
delighted to inform you that Roger is in the process of making a complete
recovery. After a comprehensive series of medical tests, his condition has
now been diagnosed as a viral infection accompanied by acute dehydration.
Roger is expected back in the office May 10. I would like to thank you for
respecting Roger's privacy and for your understanding and patience during the
last two weeks.” Camilleri endured the internal and
external pressure to talk more about Deromedi’s
medical condition, and followed the path he felt was appropriate, in effect
telling everyone: “It’s none of your business.” Some say that the medical
condition of the CEO of a public company is the business of interested
stakeholders. Whether you agree or disagree, be prepared to know what you
want to say and what you will not say.
Are you clear in your mind
about what constitutes privacy for you and those in your organization? How
well-known is your position on what must not be communicated? Do you have the
courage to say, “None of your business?”
Follow-up
Here are
selected updates on stories covered in prior issues of Executive
Times:
Ø
We
last checked in on DaimlerChrysler
CEO Jürgen E. Schrempp
in the July
2003 issue of Executive Times
when we called attention to a Barrons article
anticipating his dismissal as CEO, an action that has not taken place. We
read in Business Week (4/19) (http://www.businessweek.com/magazine/content/04_16/b3879085_mz054.htm)
that shareholders made multiple calls for Schrempp’s
dismissal during the April 7 shareholders meeting in Berlin. “In prior years, activists and
shareholder gadflies have tossed verbal stinkbombs
at Schrempp and Kopper.
But everyone knew these were mere nuisances. This time the protests -- in a
full-throated roar -- came from the cream of Germany's
asset-management world, including DWS and Deka
Investment, which represents the savings banks and is the second-largest fund
in Germany.
They are asking tough questions. ‘How do you justify $48 million in
remuneration for the [DaimlerChrysler] management board when BMW gives its
management $13 million for a better performance?’ asks Michael Schneider, a Deka fund manager. Because several big funds and the
representatives of minority shareholder groups opposed a move to ratify the
board's actions in 2003, the company got 87% of the vote. That is seen as a
sharp reprimand in a passive shareholder culture where 99% approval of such
measures is routine. If key elements of Germany Inc. start to turn on
Daimler, then this annual meeting could mark the start of the real revolt
against management, not the end of it. What can Schrempp
and his managers do? Performance is the only thing that helps. But most of
all, Schrempp has to realize that his goal in life
is to make shareholders happy.”
Stay tuned to see if Schrempp and DaimlerChrysler
perform.
Ø
Through
great restraint, we’ve remained silent about former Enron CEO Jeffrey Skilling since the January 2002
and February
2002 issues of Executive Times
but when we read multiple stories about his recent intoxicated antics in New York City, we felt
compelled to call your attention to the most complete description of his
escapade. Read The Washington Post
(4/21) (http://www.washingtonpost.com/wp-dyn/articles/A32548-2004Apr21.html)
to learn some of the worst executive behavior you could ever exhibit.
Legacy
Second Act
Two of the candidates the McDonald’s Board of Directors considered
for the CEO job in 1998 were Jack M.
Greenberg and James R. Cantalupo. They chose Greenberg, and Cantalupo retired a year later to serve on other boards.
At the end of 2002, the Board was ready to oust Greenberg for poor
performance, and they asked Cantalupo to come back.
He did, and immediately refocused the company on customers, a not-so-typical
action by a financial guy. Within a year, his refocusing was working,
especially shown by increases in same store sales. Another immediate action Cantalupo took in early 2003 was to bring in Charlie Bell as COO and to prepare Bell to ultimately
succeed Cantalupo as CEO. When Cantalupo
died of a heart attack in late April, the Board acted within hours to appoint
Bell as CEO. Cantalupo provided a model for executives to follow:
clarity of focus, attention to customers, and preparation for transition.
Presiding Director Andrew McKenna said
of Cantalupo, “Jim was a brilliant man who brought
tremendous leadership, energy and passion to his job. He made an indelible
mark on McDonald’s system.” He’ll be missed, and will be remembered for
making a critical impact in leading a great company through difficult times
and reminding all its employees of what constitutes corporate success.
Latest Books
Read and Reviewed:
(Note: readers of the web version of Executive Times
can click on the book covers to order copies directly from amazon.com. When you order through these links, Hopkins
& Company receives a small payment from amazon.com. Click on the title to read the review or
visit our 2004 bookshelf at http://www.hopkinsandcompany.com/2004books.html).
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Title (Link to
Review)
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Author
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Rating
|
Review Summary
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Purchase
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The
Scarlet Letters
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Auchincloss, Louis
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•••
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Puritan. Hawthorne’s
tale updated to 1950s Manhattan.
Well-written with complex characters, depth and thoughtfulness about loyalty,
power, mores and temptation at work and in relationships.
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Flyboys: A True
Story of Courage
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Bradley,
James
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•••
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Disturbing. A fine
Memorial Day book that will leave readers perplexed about wartime
atrocities by all sides during World War II in the Pacific. Heroism and
barbarism described along with courage and the effects of propaganda.
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The
Pecking Order: Which Siblings Succeed and Why
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Conley,
Dalton
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•••
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Size Matters. Lots of factors,
but not birth order, predict sibling success, based on this analysis of
lots of data. Read and recognize that you and your siblings were not raised
equally.
|
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We
Are Lincoln Men: Abraham Lincoln and His Friends
|
Donald,
David Herbert
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•••
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Lonely. Outstanding
historian and Lincoln scholar selects six individuals who could be considered
close friends of Lincoln and explores the
nature of those friendships and the impact of those men on Lincoln’s often lonely life.
|
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Paranoia
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Finder,
Joseph
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•••
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Malfeasance. As if there
weren’t enough real stories of corporate malfeasance in the media, here’s a
novel that takes on that theme and presents executives in the worst
possible way. An entertaining thriller.
|
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Voyage
to the End of the Room
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Fischer,
Tibor
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••
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Home Sweet Home. Clever
Brit novel, often funny, always highly creative. London recluse finds the world by
bringing it to her flat, and then leaves her flat to find herself. Not your
grandfather’s Robinson Crusoe.
|
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How
Congress Works and Why You Should Care
|
Hamilton,
Lee H.
|
•••
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Representative.
Plain-spoken former Indiana
congressman and vice chair of the 9/11 commission tells the simple and
complex story of how things get done in Congress and why we should all pay
attention to the work of Congress.
|
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The
Real Thing: Truth and Power at the Coca-Cola Company
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Hays,
Constance
|
•••
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Arrogance. 400 pages about
arrogant executive behavior from the beginning of the company until almost
the present. Recent executive turmoil at the company calls for a sequel.
|
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The
Dumbest Moments in Business History
|
Horowitz,
Adam
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•
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Dim. Some chuckles, but
not nearly as amusing as the 101 Dumbest Moments in Business listed in Business 2.0 that led to this book.
Silent on the whole S&L debacle: how dumb is that?
|
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A
Spectacle of Corruption
|
Liss, David
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•••
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Politics as Usual. Foray
into 18th century British politics provides entertaining respite
from current U.S.
presidential election cycle. Well-written historical fiction with
meticulous description of London
scenes and period dialogue.
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Five
Days in London: May 1940
|
Lucaks, John
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•••
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On the Brink. Defeatists
and appeasers in the British government were ready to give up the fight
against Hitler, but Churchill convinced them otherwise. Lucaks
claims these five days saved Western Civilization from the revolution of
National Socialism, its greatest threat.
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My
Father’s Footprints: A Memoir
|
McEnroe,
Colin
|
•••
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Da Paradox. Second only to the power of
mother-daughter relationships would be father-son relationships.
Well-written memoir delves into mortality, grieving, and losing a parent
while being a parent.
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Bad
Business
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Parker,
Robert B.
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•••
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Human Nature. 31st
Spenser novel presents Enron-like company (Kinergy)
and the consequences of its culture of marital cheating and corporate
malfeasance.
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Old School
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Wolff,
Tobias
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•••
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Prodigal. Fine, tightly
written novel set in 1960s at prep school. A study in how character is
formed by expectations, failures, and redemption.
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Walking
to Vermont
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Wren,
Christopher S.
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•••
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Take a Hike. Well-written
personal tale by retired NY Times
writer and editor of his journey into retirement by walking from Times
Square to his home in Vermont
in five weeks. Even readers under age 65 will enjoy this chronicle.
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