The Impact on Employees of CEO Theft |
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| Suzanne M. Hopgood is President of the Hopgood Group,LLC
She is on the Board of Directors of Del Global Technologies Corp., Inc. (DGTC) and is also Chair of the Audit Committee. Ms. Hopgood is the former CEO of Houlihan's Restaurant Group and the former CEO and Chairman of Furr's/Bishop's, Inc.(FRG) |
CEO's set the tone for their corporations, not only the public face of the organization for marketing purposes, but also, and perhaps most importantly, the internal atmosphere that affects every file clerk, every vice president and every employee up and down the organization. If the tone is one of commitment to the company and its customers and shareholders, then all decisions have, at their heart, adding value to the company. But if the tone from the top communicates dishonesty, self dealing, recklessness or other forms of inappropriate behavior, all actions will be measured against that standard -- and the results are predictable. The highly visible scandals that have rocked some of America's largest corporations have been educational for those unfamiliar with that world, but outsiders will never know the damage that has been inflicted inside those companies. There are no secrets in sophisticated business organizations. For every complex financial scam that sneaks through undetected, there are dozens of indiscretions, large and small, that are identified by staff at all levels, that spread through the company like a terrible infection, affecting the decision-making and moral compass of the workforce. Most employees within a company know exactly how a CEO behaves and they take it as a model for their own behavior. If the CEO takes advantage of his or her position to inappropriately charge items to the company, or claims inappropriate reimbursements, the moral defect starts a chain reaction throughout the organization. If the CEO charges the company for a birthday party of a spouse, employees absorb the message that it is appropriate for them to charge personal expenses to the company. The rot prompts decay, both large and small. It becomes the "culture" of the company. The press has entertained us with stories of CEOs reimbursed for prostitutes, dry cleaning, clothes, greens fees, family trips, Cuban cigars, expensive wines, and spouses hired as "consultants." The repugnant behavior may have been a revelation to the outside world, but inside the walls of the corporations involved, the destructive nonsense was well known. All charges and reimbursements are processed through the accounting department -- and egregious behavior is often facilitated through various layers of management and staff. These stories circulate through the organization, directly, and indirectly, purposefully and inadvertently. How long, for example, did it take for employees of Tyco to hear the story of the company paying for an ice sculpture of David that “served” vodka? The story spread faster, I suspect, than the ice melted or the vodka flowed. The clear message to employees who are aware of such CEO behavior is that adding hours to a time card, stealing product or misappropriating cash is the coin of the realm, in an environment where one can never hope to match the CEO for lucrative looting. To be sure, my CEO stints have been at troubled companies in severe trouble, where a cost-conscious executive's message and behavior may have had more resonance. But in my experience consulting at many companies, on several boards, the standard operating procedures of the CEO becomes the culture of the organization -- and a sense of entitlement at the top spreads quickly and destructively. Here are some suggestions for setting the tone:
These procedures aren't dreamy theory, drifting out of an "ethics" workshop. This is nuts-and-bolts good business practice that shouldn't be difficult to implement, shouldn't be onerous to manage -- and shouldn't be unusual at companies committed to their shareholders and owners. |
| The Hopgood Group On-Line Copyright 2003 |
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