How do employees feel when their leaders let them down?

Organizations are blessed by having hard-working employees who take pride in their work. I recognize not everyone fits this bill, but hopefully an organization has more of those that do than not. Yet, what becomes problematic for these earnest employees is when their leaders let them down.

I am thinking of the hard-working Wells Fargo employees who day in, day out help their customers, who saw leadership create a culture of cross-selling that led to some illegal behaviors. And, when honest employees shared their concern, they were admonished or let go.

i am thinking of the hard-working employees of energy company Enron whose leaders pursued aggressive and fraudulent accounting approaches with various code names to hide profits and dress up earnings. They also told their employees not to sell Enron stock when they knew the price was artificially propped up.

I am thinking of the hard-working folks of Arthur Andersen, who watched client leaders for their Enron accounting team help Enron’s leaders mask inappropriate activities and not catch others. These leaders brought down an accounting firm with an excellent reputation.

I am thinking of the hard-working employees of Duke Energy whose leaders have been less than forthcoming about a significant breach in a retired plant coal ash site knowing for years a problem existed and not moving quickly enough on some current ash sites where seepage into neighborhood water systems were a concern. Duke’s employees were incredulous by these actions.

I am thinking of the hard-working employees of Marsh and McClennan Companies whose leaders set-up and turned a blind eye to a small part of the company that was steering business and not operating in the best interests of the clients. They paid a huge fine and leaders were asked to leave.

These hard-working employees deserve good, honest leadership. The loss in stock price and jobs wear on them, but also the deflated pride in their companies. I worked for a subsidiary of Marsh and McClennan and it embarrassed and upset me that our leadership would do what they did and not address the problem when it was raised. Plus, being a stock holder through a 401(k) plan, stock purchase plan and some options, I was hurt financially as were folks who also lost their jobs due to the resulting downturn. I knew innocent folks who were asked to leave because of downsizing due to the impact of the malfeasance of this small group.

We need our leaders to be strategic and cognizant of issues, but we also need them to be honest and supportive of their employees. When problems arise, they need to be swift and contrite in addressing the issues.  Johnson and Johnson quickly addressed a Tylenol tampering incident many years ago when a nefarious person was removing lids and poisoning the pills. They did what they had to do to weather the storm.

From reading and watching news, apparently more than a few hard-working federal employees are not taking much pride in their new boss. That is unfortunate as they deserve more. So do we, with all of our leaders.

Let’s lessen bureaucracy, but acknowledge the need for regulations

When I hear we need fewer regulations, I usually have two thoughts running through my mind. First, I believe many confuse bureaucracy, which we need less of, with regulation, which are needed. Second, we do need to review our regulations to make sure that they are providing sufficient governance. Some may need to be loosened, some may need to be tightened and some could be eliminated. But, at all times we should look to make the regulations effective and not bureaucratic.

Erskine Bowles, of the Simpson-Bowles Deficit Reduction Committee, was asked to co-chair this committee after serving as President Clinton’s Chief of Staff. Bowles got this position after he had served as Clinton’s Director of Small Business Administration (SBA) once he left a very successful business career. One of his claims to fame as director was he reduced the SBA application for assistance from 42 pages to 2 pages. He noted the repetitive nature of the form and that it caused far too much work for the applicant and reviewer. This streamlining of bureaucracy is a model for others.

John Oliver on his most recent “Last Week Tonight” show highlighted another terrible bureaucracy which is offensive to those who serve. His show is a comedy, but within its format, he does some excellent news reporting on various subjects, better than many newscasts. Oliver noted that we have committed to help the many Afghani and Iraqi interpreters who helped our troops in these countries. These people saved the lives of our troops many times and are valued members of their squads. Yet, they are in danger once we departed and some members of their families have been killed.

We promised to make them citizens, but the forms and process are so unbelievably bureaucratic, only a handful of the interpreters have made it here. This is beyond shameful. Oliver notes after Vietnam, we patriated hundreds of South Vietnamese who helped us, through an organized process in Guam that took about eight months. Some of these Afghani and Iraqi interpreters have been waiting almost three years. This process has to be changed to make it work better for everyone, while still allowing risk management over people we need to closely at, but these interpreters saved US lives.

Yet, we need regulation as human nature demands it. One of our constants is the “haves” will take advantage of the “have-nots.” It has always been thus, and will forever be this way. The system will be gamed no matter what the government and economic construct. President Teddy Roosevelt took on the Robber Barons who ran the country going against his own party. He wanted a “square deal” for everyone. Today, in America, we are returning in some respects to the Robber Baron period, with the vast amounts of money to win elections and the undue influence that follows.

For those who disagree with my opinion, let me offer some true stories, some in the public domain, some I am aware of through my consulting work experience.

Greed is not often good – altruistic leaders are not common

  • I have known a CEO who had every perquisite and a multi-million dollar income, but he invited customers to his daughter’s wedding, so his company would pay for the cost.
  • I have known executives who tried to have animal hospital bills paid by their spending accounts, expense light bulbs, etc. purchased for their homes and got a second company chauffeur, as the CEO and COO’s wives fought over the use of the lone chauffeur.
  • A colleague worked with a minister of a large church who answered his question about the scope of a compensation consulting project with these immortal words – “Your job is to look after the shepherd; the Lord will look after the flock.”
  • We have more immortal words uttered by the former head of the PTL Club to Ted Koppel on ABC Nightline about the extravagance of a solid gold faucet in his house at the expense of innocent donors – “The Lord wanted me to have nice things.” This was before he went to jail for defrauding his flock..
  • We had a local CEO of the United Way who single-handedly decimated future funding levels of the United Way from $40 million to $15 million, with her trying to ram a Supplemental Executive Retirement Plan through for herself without the full Board’s knowledge, coupled with a PTL Club worthy expense account.
  • Then, there are the tales of the Rigas family who led Adelphia and Dennis Kozlowski who led Tyco International, who basically treated the corporate money as theirs which led to scandals over lavish spending.
  • Bank of America and former Wachovia (I am a shareholder of both), one of which is now owned by someone else, have had a series of aggressive marketing, fraud, malfeasance, insider trading, etc. settlements (of course, without admitting guilt) which have totaled in multiple tens of billions of dollars. They both have been part of three of the worst merger transactions in banking history – the names Moneystore, Golden West and Countrywide will live on as reminders of poor decision-making that harmed many customers and employees, in addition to shareholders.
  • The name Enron will live on as well as its executives had code names for various financial gimmicks that sheltered earnings or created fictitious gains for reporting purposes. And, when the company was about to get caught, its CEO was asking employees to buy more Enron stock in the 401(k) plan to prop up the price.
  • Beazer Homes is one of the poster children for the financial housing crisis as they inflated a buyer’s ability to buy a home, did not disclose they owned the mortgage lender, did not fully describe variable loans, and did not let people know the realtor and inspector were in on the game. So, people bought a house they could not afford under terms that were not suited for their income. The CEOs recent appeal in Court was denied and he is back to jail.
  • The other financial crisis culprits were rating agencies like S&P, Moody’s who stamped AAA ratings on more risky financial products which packaged all these bad loans together and sold them to investors. They sold their ratings by gaining more business from the people whose products they were rating. Goldman Sachs got chastised for selling these products to clients while betting against them with their own money. The above sleazy activities are why the Consumer Financial Protection Bureau exists and should remain.
  • A West Virginia coal mine owner paid for a judge’s campaign for office, so penalties for EPA violations would go away or be lessened. Later, this sloppy operator later had a coal mine collapse which killed many.
  • The petro-chemical and fossil fuel industries have made so much profit, they will effectively use those profits to get their way with regulators and sway public opinion. The movie” Erin Brockovich” is a great movie as it shows how one person can fight an industry that was harming people, but her heroic efforts should not be an anomaly. I would encourage you to watch “Toxic Hotseat,” “Living Downstream,” and either/ both “Gasland” movies to show how industry can steam roll people. If someone says we should do away with the EPA, ask them why on earth would anyone want to do that?

Regulations are needed to keep things fair. Regulations are needed to keep our children and parents safe. We should test our regulations to make sure they are effective, but we should be ever vigilant to minimize bureaucracy. Bureaucracy and regulations are not the same thing. If we are not careful, we may throw the baby out with the bath water.