A Bad CEO Can Wreak Havoc

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- So who are the latest victims of flawed leadership?

There's the venerable, HP ( HP) -- "old school" icon of technology.

There's recent entry Solyndra -- the green "new school" technology sweetheart that received a half billion dollars of taxpayer money thanks to the current White House administration.
Former HP CEO Leo Apotheker

There's Swiss financial giant UBS ( UBS), whose most recent rogue trader stole $2 billion in investors' monies.

There's the sad state of affairs for the American innovator, Kodak ( EK) and their continuing decline toward being a footnote of photography history.

This won't be the end of falling or fallen giants: BP Oil, Enron, AIG, Goldman Sachs, Lehman Brothers, Kmart, Sears, Tyco, GM and others were/are tragically regarded as less than stellar due to a combination of failed leadership and flawed governance.

Sadly, the never-learned lessons of terrible CEO execution and board oversight always center on one or more of the following Four Root Causes of Failed Leadership and Flawed Governance:

Corruption: Some leaders have criminal tendencies, but many are simply people who have learned they can advance by simply focusing on profits not principles.

Complacency: Many historically or recently successful executives and companies can lose their competitive drive to adapt and innovate from what I refer to as, "The curse of success."

Incompetence: In some cases there is simply a poor fit between the talents of the CEO or board members and what the company truly needs at a certain stage in their lifecycle. Often the motives of both executives and directors can be skewed to personal gain rather than a greater good.

Complicity: A culture of corruption or intimidation exists when too many warning signs go unheeded due to coziness between CEO and board members, among board members and/or CEOs with their management teams. That familiarity results in not questioning decision making regardless of risk.

Guarding against the Four Root Causes of Failed Leadership and Flawed Governance requires better:
  • Definition of experience, style and values of CEOs and board of director candidates
  • Monitoring and periodic audits of strategic progress, execution, and outcomes of plans
  • Succession planning for CEO and board positions in anticipation of planned and unexpected shifts
  • Definition and enforcement of essential leadership values and advocating and defending the corporate integrity and value
  • Until we embrace an unwavering stance for less tolerance for mediocrity, let alone abuse and neglect of CEO and board leadership essentials, can we be intellectually honest in matters of renewing the trust in business.

    And some other things to consider: How about zero severance for perpetrators of poor performance, moral turpitude, or a pattern of poor judgment?

    Multi-million dollar separations are an insult and a blatant unethical consequence in the eyes of those victimized by bad leaders: the employees whose livelihoods and reputations are daily linked to their employers; retirees whose senior-year lifestyles are linked to stock performance; to the investors whose hard-earned dollars are squandered; to the communities devastated by closings and unemployment from fallen companies; and to the preservation of capitalism and minimizing zealous government intervention.

    Leadership is a role for disciplined, ethical, focused adults. Anything less can destroy the best companies, organizations, and countries.

    This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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