Skilling's Sgt. Schultz defense peeves CEOs
usatoday.com
03/12/2002 - Updated 09:42 PM ET
Skilling's Sgt. Schultz defense peeves CEOs
If a CEO doesn't know that his company is about to sink faster than an olive in a martini, then what the heck does a CEO actually know?
Seems like a ripe time to ask that of some CEOs, considering the current sullied public image of the job.
These days, the most famous CEO — ex-CEO, more precisely — is Enron's Jeff Skilling. Although, former General Electric CEO Jack Welch is climbing the fame charts, now that his nickname has changed from "Neutron Jack" to "Hot Love Machine Jack."
Anyway, with the entire nation paying attention, Skilling testified before the House and again before the Senate that he didn't know his company was about to crumble. In one reply, Skilling said, "This was a tragedy. I had no idea the company was in anything but excellent shape."
Rep. Ed Markey, D-Mass., called Skilling's testimony the "Hogan's Heroes Sgt. Schultz defense." But that's the wrong character. Skilling has shown us that the role model for today's CEO is Col. Wilhelm Klink.
Klink never left his spacious office, which he kept quite spiffy for a prisoner-of-war camp. He got information from only one ineffectual line manager (Schultz) who used ignorance as an excuse. And a second-tier executive (Hogan) ran a rogue operation right under the chief's nose.
Oh, and when the outside directors (those Gestapo guys) showed up, Klink reported that everything was fine.
See? Just like Skilling. I bet he read one of those books that management consultants write, like The Stalag 13 Way or Klink Rules! How to Stay Oblivious Yet Keep Your CEO Perks.
All of that makes CEOs look like either goofs or scoundrels, and other CEOs are pretty steamed about it.
Unfortunately, the other CEOs would go off the record and rant, and then only some would go back on the record and be more tactful. So I can't tell you the really good stuff. I can tell you that in describing his feelings about Enron's executives, one CEO used words I couldn't have put in the newspaper anyway.
When the CEOs settled down, they said something that, at first, sounded a little alarming: CEOs don't know a lot of things that go on in their companies.
It would be impossible. "There is an overwhelming amount of information," says Royal Farros, who had been CEO of Internet company iPrint and now is chairman. Here's a guy who runs an information-industry company, and despite all the computers and software and BlackBerrys and cell phones out there, he finds it impossible to collect and digest all his company's internal stuff.
"I put in 70-plus hours a week on the job, and time is a zero-sum game," says Dan Hesse, CEO of Terabeam and a former AT&T executive. "Time reading a large legal document is a couple of strategy meetings missed, a customer sales call missed."
As one CEO points out, most parents don't know everything their own kids are doing. Personally, I'm not even sure what my dog is doing. She could be on the Internet, searching Google for tips on how to catch those squirrels in the back yard.
So, "Of course a CEO of a giant firm can't know all the details," says business author Tom Peters, who has had some ethical controversies of his own.
But if a CEO doesn't know all that's going on, how does he or she manage the company? How does a CEO prevent the company from doing an Enron?
Two keys I'm hearing:
Checks and balances. With only one source of information, Col. Klink was set up to fail. Successful CEOs get information about major decisions from multiple points.
One of the most important points is the chief financial officer, who in the Enron fiasco allegedly ran an operation that doomed the company. But CEOs are astounded that any CFO could act alone. Anything a CFO or CEO does would be reviewed by the general counsel. All the executives would have to tell the board.
That's the bare minimum. As part of his checks and balances, Farros adds in accountants, lawyers and investment bankers from outside the company.
One of the checks on executives can be compromised, maybe even two. In Enron's case, relying on Arthur Andersen as a checkpoint was like counting on a bar owner to make sure you don't drink too much. But when numerous entities are in the loop, getting all of them in cahoots would be darn near impossible.
In some instances, a company might need a special checkpoint. At Enron, Chairman Kenneth Lay "knew Skilling was a wild man, and a strong one," Peters says. Lay "should have put a P-A-W-M in place — that is, a Powerful Anti-Wild Man."
Now we know what to call Dick Cheney.
Culture. Great companies tend to have strong corporate cultures. One reason is that it's a way for the CEO to guide decisions without even knowing about them. "The CEO doesn't have to check on everything all the time if the CEO has taken the time to clearly articulate a code of conduct," Hesse says.
If everyone knows how they're expected to behave, they'll generally do it — and, conversely, people who behave that way will want to work at that company.
"It seems to me that the tone was quite promiscuous at Enron," says Peters. "And driven by moving hell and high water and then some to prop up the stock price."
In the end, there's a difference between knowing about everything inside a company and being responsible for everything that goes on inside a company. "The CEO is the 'buck stops here' job," Farros says.
So Enron's Skilling possibly could have been telling Congress the truth. He might be the Col. Klink of business.
But it doesn't matter. He was the CEO. Other CEOs say that whatever happened at Enron was his fault.
As for Skilling's future, maybe he'll continue to follow Klink and get into TV. If Hollywood producers could make a sitcom about a Nazi prisoner-of-war camp, then they could make one about Enron.
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Kevin Maney writes a weekly column about technology. Send e-mail to Kevin at kmaney@usatoday.com. |
