But here's the good news. When managed effectively, companies in distress can recover. Ford provides one of the strongest examples of how superior leadership can trump adversity. With CEO Alan Mulally at the helm, struggling Ford proactively arranged for its own financing and refused to accept a government bailout. Mulally turned the tide at Ford with exceptional leadership and effective management. The result: Ford recently announced third-quarter profits of $1 billion, released 2011 guidance for solid profits, and received an investment rating upgrade from Moody's.
And what's Mulally's reward for being at the helm? He earned total compensation in excess of $17 million in 2008 and remains in a position where the government's opinion has absolutely no bearing.
I am not a proponent of compensation caps or the government running any business. Free enterprise, capitalism, risk-reward, entrepreneurship, and innovation have made the U.S. the wealthiest nation in the world; and I'd like to keep it that way. Let's start by holding executives and boards accountable for their successes and failures -- not the taxpayers.
Important Lessons -- Characteristics of Quality Leadership
Having helped many different companies over the years achieve sustained profitability, I have learned some characteristics that ultimately make a superior leader a strong contributor to achieving and accelerating profitability. Below are a few.
- Demonstrates relentless pursuit of vision and results
- Consistently exceeds profitability objectives
- Demonstrates an unyielding commitment to the business
- Faces tough realities and avoids excuses and rationalization
- Develops an early-warning system to identify problem areas
- Acts quickly to overcome problems as they arise
- Is decisive regardless of popular opinion
- Is ethical, fair, and consistent
- Runs leaner than the management team would prefer