Management

American Society / Education / Ethics / law / Management / Political — 0 Comments
25
Nov 11

Cheating

An ongoing cheating scandal in the affluent suburbs of New York City now stains our headlines.   Students in several outstanding academic high schools paid test takers to take their college entrance exams.  Six students were arrested in September, and earlier this week an additional 19 students either surrendered to the police or were arrested.  Students paid these test takers $500 to $3500.  See More Arrests in SAT Cheating Investigation.

It is too easy to blame this behavior on the decline in morality evinced by Wall Street scandals and the behavior of our political class.  A deeper point needs to be addressed.  We have become a society of numbers and meaningless symbols.   How much do you make per year?  What school did you attend?  How much is your house worth?

Hiring by the Numbers

For much of my career, a significant part of my responsibility was the hiring and supervision of attorneys in a large legal department.   At best, hiring is a crap shoot.  Despite a glossy resume, one can never tell why someone is in the job market at any given time, or how that person will actually meet the standards and fit the profile of the job for which they are interviewing.  Usually complicating the decision making process is  the legal department’s need to hire  experienced attorneys with a minimum ten years experience. In this environment a new hire was expected to perform at an extremely competent level with little or no training or supervision, the proverbial “hit the ground running” paradigm.

One of my peers hired strictly by the numbers.  A candidate had to be a graduate of one of the top 41 law schools, and had to have more than a 700 LSAT.  My colleague preferred a candidate to have a background as a prosecutor with US Attorneys’ Office or the Judge Advocate General.

After a while, I broke the code on my colleague’s idiosyncratic requirements.  I discovered that he used the Gourman Report of Graduate Programs.  Dr. Gourman does not reveal his exact methodology or statistics.  Generally, the Gourman Report methodology asks university graduate departments to rate each other, and assess which they think are best in their field.   By definition then, this questionable methodology yields a self-reinforcing cycle of the top programs continuing to nominate each other in a reciprocal and mutual admiration society.  See Caveat Emptor: The Gourman Report for a critique of the report’s methodology.   The same large prestigious universities continue to populate these lists.  Page 1 of the Gourman Report list of law schools had exactly 41 names; my colleague’s law school alma mater happened to be number 41.  Thus, I deciphered my colleague’s “scientific” method of hiring and the inherent folly of using numbers to find good people.  (Soon thereafter, for amusement I confronted him and pointed out that to be really scientific he would have to find the Gourman report related to the year that the candidate graduated law school to really ascertain whether he was hiring a true “top 41” candidate.)

In another example of this folly, we later merged with a company which would only hire candidates who had combined SATs over 1500, LSATs over 700, a top 15 law school degree (thank goodness for Gourman) and experience in a prestigious law firm or prosecutor’s office.

I am still amazed that I was ever hired, promoted or retained after we completed several major mergers.  I fit none of these criteria nor did many of the best attorneys in our legal department.

The Hard Work of Hiring; the Harder Work of Assessing Job Performance

The SATs are primarily predictors of how well one will perform on tests like the SAT’s.  Since they were instituted as a method of evaluation, they have been repeatedly called into question as predictors of college success. Further, how well one performs in college and law school is not a total predictor of how well one performs in that first law job.  At each step, real life intrudes, essential character and temperament inserts itself into the process, and a lawyer has either learned to practice law competently or not.

No short cuts or quantitative formulas exist in making hiring decisions.  Generally, every candidate I interviewed had a good academic and work record.   Intelligence, analytical prowess and certainly test numbers were merely table stakes to get in the door.  Other more important factors determined whether or not an attorney would be successful in a corporate environment.  In evaluating candidates, I tried to ferret out the following:

  • Can they work under pressure, or under attack?
  • Can they take on a project with minimal supervision?
  • Are they willing to put in long hours, including nights and weekends, to accomplish the job?
  • Are they patient and persistent; can they see a project to its conclusion?
  • Are they creative; have they ever displayed ingenuity? Can they work with and lead a team of lawyers and business people?
  • Do they communicate clearly in speech and writing?
  • Can they accept criticism?
  • Do they respect subordinates as well as superiors?
  • Do they display emotional intelligence; can they intuit the atmosphere as well as the facts of a situation?
  • Is integrity clearly a part of their makeup?  Has it ever been tested?

The Education Testing Service and testing results cannot measure any of the above-listed factors.  And in my 32-year corporate career I firmly believe that one cannot be successful on a long-term basis without meeting the above criteria.

Despite conducting rigorous interviews and extensive background checks, an honest hiring supervisor will admit that it is difficult to judge these non-numerical factors.  Further, if a hiring supervisor is correct 50% of the time, he or she has beaten the odds.  I was lucky and was able to hire many attorneys who rose through the corporate ranks and became senior corporate leaders.  Some went to the “best” law schools, some did not. I was also required to ask some of my hires to leave.  While difficult each time, that too is the nature of hiring and corporate management.

Looking for the Easy Way Out

This returns us full circle to the Long Island SAT/ACT cheating scandal.  As a society we look for the easy way out in decision making.   Perhaps those Long Island students were thinking: if I can just achieve a high enough test score, I can attend a prestigious university which will guarantee me access to a great job or graduate program, which in turn will assure my success in life.  Success is more complicated than that.

We have deteriorated to a society of numbers and brands.  The ideal political candidate goes to the right schools, has the right tickets punched on his or her resume, gets elected to the right office and now is the right candidate for higher office.  We fail to delve into the more important factors of character, grace under pressure, emotional intelligence and integrity.  The epiphany, long since necessary for all of us, is that we entrusted our money and our government to Wall Street and Washington charlatans who went to all the right schools, held  all the right jobs and had all the right  connections.  And look what happened.

Given all of this, it is no surprise we now have a group of students on Long Island willing to sell their souls for $3500 or less.

 

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3
Aug 11

The Meal Was Great; Our Outlook, Not As Good

I had dinner the other day with two close friends, both former colleagues.  We are, in parlance, “men of a certain age:”   baby boomers, children of the sixties, sons of World War II veterans.  We all began our work lives in our twenties, worked for giant corporations, and turned jobs into long-term careers.  When first hired by our companies, we planned to stay just a couple of years and then move on to another company.  With the benefit of hindsight now, and the need for false humility ended, we can each gratefully admit that we enjoyed significant professional success, although none of us thought we would rise to the senior executive levels that we did.

We now occasionally get together for dinner and discuss our families, our current pursuits, how our former employer is doing and the general state of things.   Last time, we discussed what went wrong with America generally, why our children will not have long careers with large companies, and why they likely will not be as financially successful as we were.

We spoke about our fathers and the norms of their generation.  They fought in the War, returned and worked hard, and had few expectations about success or wealth.   They kept their noses to the grindstone and rarely complained.

We discussed the landscape of the corporations we went to work for.   When I was hired as a junior attorney, the General Counsel barely made five times my salary.  Bonuses were stingy and a modest number of stock options (in the hundreds of shares) were offered to a handful of our most senior executives.  Interestingly, it was generally a harmonious and engaging work environment. In contrast, by the time I retired, the Chairman and CEO made more than 400 times what an average employee made.  Employees were not nearly as engaged or happy.

The immediate catalyst for our wondering what has gone wrong with America was the current debate over the US debt ceiling.  I started to think back to the blogs I had written and tried to put together some hypotheses.  I caution the reader this is not a rigorous, but rather an impressionistic view of sociological, political and economic trends which shape the current state of affairs.   If it is insightful, I give tribute to good dinner conversation and fine friendship:

  • Loss of Shared Sacrifice – Perhaps it was the “Me Generation” of the 1960’s, but America has lost its sense of shared sacrifice; that is, the notion that we are all in this together and we rise or fall as one nation.   Instead we have an ethic of greed:   I want what I want and I want it now, everyone else be damned.
  • Out of Control Military Spending – Too much of America’s resources are spent in our defense budget.  Compounding this problem is a series of seemingly endless wars.  While we deploy hundreds of thousands of troops to Iraq and Afghanistan, our allies deploy hundreds.  Note that the German, Canadian, and Australian economies boomed, while ours stagnated.
  • The Volunteer Army – A volunteer army allows wars to be fought by other people’s children.  Thus, the popular outcry against wars or military spending is diminished because our own (privileged) sons and daughters are less likely to be involved.
  • Too Many Laws – The Wall Street Journal highlighted the growth in federal criminal law.  We over-criminalize too many areas of society.  One commentator archly noted that someone violates some law each day, often unaware of his lawbreaking conduct. See As Criminal Laws Proliferate, More are Ensnared
  • Unequal Enforcement of the Law – Perhaps since the OJ Simpson trial, our citizens cynically believe that if one hires a good enough lawyer, one literally can get away with murder.  This carries over to the belief if a corporation is big enough, especially a “too big to fail” financial institution, it will never be prosecuted.
  • Socialism for the Rich, Capitalism for the Poor – When the “too big to fail” institutions became insolvent, the Bush Administration, Congress and the Federal Reserve rushed in with a comprehensive program of TARP and zero interest rate lending.  The Obama Administration has continued these policies from the beginning.  Insolvent homeowners have been evicted from their homes, and many unemployed workers have exhausted their unemployment benefits.
  • Reckless Lending and Borrowing – The Federal Reserve was a major culprit in the growth of both public and private credit.  Instead of accepting the economic consequences of the internet bubble crash, Alan Greenspan reduced interest rates to below market levels to encourage real estate lending.   Subprime lending further inflated the housing bubble. Based on an inflated residential and commercial real estate market the economy boomed.  Assuming that this was permanent prosperity, debt was taken on at all levels: states and municipalities, corporations, homeowners and the federal government.  Now we cannot repay that debt.

While my dinner with friends continued all in one evening, Part Two will continue this discussion.

 

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10
Jul 11

Government’s Proper Role, Ever-Expanding?

We are in a critical time for government budget economists.  Congress and the White House are currently seeking to control budget deficits through spending cuts, tax increases, or a combination of the two.  In Thursday’s Wall Street Journal, Professor Paul C. Light suggests a comprehensive program to save an impressive-sounding one trillion dollars. His plan imports private sector tried and true management techniques:

  • Reduce by one-third senior and midlevel federal management layers and presidential appointees.
  • Freeze hiring of all senior and midlevel managers.
  • “Harvest” all monies owed to the government: eliminate mistaken or fraudulent payments to federal beneficiaries, providers and contractors;  collect  import fees, leases, fines, unpaid loans,  delinquent taxes.
  • Streamline operations: eliminate duplication, overlap, multiple administrative and payroll systems.
  •  Eliminate automatic time-on-the-job increases, pass/fail appraisals and grade inflation; assess and demand 3% per year productivity improvements.
  • Insist on comparative qualitative employee appraisal:  that is, only 10% of employees are most highly rated.
  • Cut the number of contract employees.  See The Easy Way Washington Could Save $1 Trillion

To avoid the political implementation problems, Professor Light would create the Government Reorganization Authority (GRA), a quasi independent authority modeled on the Resolution Trust Corporation (RTC).  The RTC was created during the 1989 savings and loan crisis and given full authority to hire, fire and pay executives at will in service of cleaning up failed savings and loans.  RTC was given a seven year limitation to effect the cleanup.  Creation of a GRA with a seven year sunset  and  broad powers to hire, fire, collect debts, etc. might be the modern equivalent of  the RTC.

A Better Idea than the GRA?

Why do we even need the government functions that Professor Light wants to creatively downsize?  Professor Light assumes that we must continue to perform these governmental functions, but at the same time he proposes to shrink the size of the supporting bureaucracy and make it more efficient.

In contrast, my starting point would be to eliminate these government functions altogether.  We have discussed reengineering government in previous blogs.  See e.g. Reengineer First, Privatize Second, Time to Revisit Public Sector Reengineering and Why Not Reengineer Government?  Instead of deciding to reduce the size of the bureaucracy, we should decide whether it should exist.   Remember the truism of government: bureaucracies will thrive and flourish well beyond their original mission.  Further, they will arrogate power unto themselves in fields unrelated to the original mission.

Do we need Departments of Energy, Agriculture and Education?  All three are creations of now questionable value and overlap with other agencies.   Readers should ask themselves in each case: do we have a comprehensive energy policy? Are we still paying farmers not to grow crops and are food prices higher or lower? Are our students better educated?

Do we still need the Food and Drug Administration?  Could not the free marketplace monitor and assess the quality and value of food and drugs? Could not threats of litigation police manufacturer behavior?

The National Labor Relations Board?   Our court system and the arbitration process can certainly handle workplace infractions; it happens all the time. The same logic applies to the Equal Employment Opportunity Commission.

Each of these departments, boards, agencies and commissions have deeply entrenched spending constituencies which assure their continued existence.  Unfortunately, sacred cows are expensive to feed and maintain.

Start the Conversation Now

Eliminating or combining governmental departments or functions would not be easy, but it would be a more intellectually honest approach to the problem of ever burgeoning government deficits.  Given the current crisis, now is the perfect time to begin the conversation.

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19
Jun 11

Are Corporations Really the Devil?

Charles Hugh Smith, a thoughtful, insightful and creative blogger, comments on economic, social and political issues.   However, last Friday he departed from his usual fare, and launched into a corporation bashing diatribe:

Scrape away the Human Resource Department rah-rah about “our mission” and how much your loyalty is “valued,” and what’s left? A paycheck and a sucking sound.

Let’s state the heretical obvious: Corporate America, you suck. We could count the ways–subverting democracy via your lobbying and campaign contributions, your sabotage of competition via regulatory capture, and so on–but what really matters is how you treat your employees.

We know: you really care about your employees. Really. The propaganda would be laughable if it wasn’t so bald-faced. Do corporate managers really believe in the Big Lie theory, that the bigger the lie, the easier it is to sell?  Corporate America Really Cares About Its Employees (Really)

For 32 years, I worked for two major corporations and had business dealings with scores more.  While it would be easier to agree with Smith, a little balance is needed before falling into the growing populist past time of corporation bashing.

The Role of Corporations

Corporations have a simple mission: maximize profits for their shareholders.  The rest is mere commentary.   The public, our politicians and even the corporation’s own employees often have a difficult time understanding this concept or simple mission.   These and other constituencies would like corporations to meet a number of additional Social Objectives: provide work to minorities, females, veterans and the handicapped; improve the environment; publicly eschew support for certain racist or totalitarian countries; refrain from the defense business; donate generously to charities; support local educational efforts; provide job training and help reduce unemployment.

These Social Objectives may have their foundation in law (anti discrimination laws, affirmative action), shareholder activism (restrictions on investment in certain countries), or social pressure (donations to local hospitals, arts initiatives and civic pursuits).

Maximizing Shareholder Value

A corporate CEO has many ways to maximize shareholder value.  An enlightened CEO may embrace Social Objectives because they are good business.  He or she may publicly embrace affirmative action, which may help the corporation hire more talented and diverse individuals. The corporation then can become an “employer of choice” for talented and progressively thinking individuals.   When executives provide community service and make donations to local charities it burnishes the corporation’s image.  This approach is especially helpful if the corporation makes or sells a consumer product or service; consumers then think of the corporation as caring and concerned when they go to buy a product.   In the same vein, an enlightened CEO may wish engage in socially conscious investments: avoiding racist countries (South Africa when apartheid was practiced) or investing in environmentally friendly projects.  Such foresight may limit shareholder complaints, encourage stock investment and again remove a barrier in the consumer’s mind to the purchase of the company’s goods and services.

A less enlightened CEO may adopt a different approach.   He or she may decide on a ruthless cost cutting approach: no charitable contributions, and constant layoffs and firings to “keep the workforce on their toes.”  Usually in this paradigm, executives serve on the boards of charitable organizations on their own time, and adherence to the equal opportunity laws is more marginal, or at best a lower priority,

Corporations and their Employees

Much of the anguish over how corporations treat employees is based in nostalgia and memory of how employees were treated half a century ago.   Since I worked on employee benefits and compensation issues, I was privy to this history and the evolution of human resources and benefits practices.

After World War II, there was no better place to work than a large corporation.  The War had effectively destroyed competition and America produced 50% or more of worldwide production.   With large manufacturing firms such as GM dominating the economic landscape “30 and out” became a rallying cry to retain employees for a long period of time and then permit them to retire early.    Thus, companies provided cradle to grave job security in the form of no layoff policies, free active and retiree medical insurance and lush pensions.   When I first started work in 1977, if a manager needed an employee, he or she just filled out a requisition and called human resources to find a candidate.  There was little or no questioning of a request to hire.  Raises and promotions were plentiful.   The role of human resources was to keep the workforce happy.

The world has changed.  We have new technologies which have made the skills of many employees obsolete.  We have foreign competition which has made the American worker seem expensive and unproductive compared to cheaper Asian employees.    Finally, we have a financial sector which has glorified short term performance, over long-term investment in employees and the business.

Smith inveighs against the current notion of “dispensability” of American employees.   But corporations were at their inception a legal invention designed to perpetuate themselves beyond the life of any one employee. Their essence  is that all employees are dispensable, from the CEO to the loading dock worker.  Even in the halcyon post-World War II days employees were terminated. Why is Mr. Smith surprised that corporations fire and lay off employees to maximize profits?

This more recent profit maximization formula has made the early post World War II era look extravagant and the current environment look harsh.   But were corporations good then and bad now?  Can we paint this picture in such stark terms?  My next blog will explore this further.

 

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5
Dec 10

Mission Creep

A common subversive phenomenon of corporate behavior is “mission creep.”   The behavior is subtle and almost undetectable to all but the most expert students of organizational behavior.   Let’s examine some concrete examples.

Human Resources is fertile ground for mission creep. HR generally is a staff function hierarchically below the CEO, Business Heads, the Chief Financial Officer, the General Counsel and other corporate functionaries.  What better way for an ambitious human resources executive to rise in that hierarchy to achieve importance and responsibility than by unilaterally expanding his mission into functions beyond his expertise.  So the formally humble human resources executive “volunteers,” “takes on” tasks beyond the traditional (and boring) hiring, compensation and labor relations functions, and thereby finds new more important missions.

Several employers ago, the head human resources executive evolved from the mundane, to run internal communications (and implicitly controlling external public communications), a portion of real estate and strategic planning, corporate surveys and an information technology complex. He also sat on the executive committee of the company.  So from humble beginnings our enterprising human resources executive created a veritable empire – mission creep, mission accomplished.

Education is another enterprise ripe for mission creep.  Enterprising administrators can expand their empires so that more than 50% of a public school district is comprised of highly paid administrators rather than direct classroom teachers. See Mission Creep: How Large School Districts Lose Sight of the Objective – Student Learning

Creep is not limited to corporations and school systems.

Pharmacy Creep

As we get older we also encounter pharmacy creep.   We may start with a multivitamin in young adulthood.  But by the time we reach our 50’s we may have acquired prescriptions for a statin, a blood pressure drug, niacin, an anti anxiety drug, and for males perhaps some Cialis or Viagra.  Each specialist we visit is more than happy to prescribe even more drugs to add to the medical arsenal. In addition to greater cost, eventually, the drugs start to interact with each other in unforeseen ways, usually with unpleasant, unintended consequences.

Modern Governments

Federal government mission creep makes the above examples look harmless.   It is easy to blame the Obama Administration for the current mess we are in.  But the seeds for governmental mission creep were planted eight decades ago during the New Deal.  However, mission creep thrives under both Republican and Democratic administrations.  We should highlight some areas where government has directly usurped the private sector:

-          The auto business through GM and Chrysler

-          Lending and insurance through AIG, Ally(GMAC) and Citicorp

-          Security through TSA

-          The mortgage market through Fannie Mae, FHA, GNMA and Freddie Mac

-          Interest rates, fiscal policy and even the stock market through Federal Reserve intervention

Indirectly, the government is well on its way to controlling (1) the workplace through detailed labor and employment legislation and regulation, (2) healthcare through Obamacare, and (3) the financial industry through recent legislation.  The defense complex with massive purchases and 750 overseas bases is almost an industry unto itself.

Every time a private enterprise or a state or municipality goes hat in hand to Washington for “assistance” or a bailout, we invite the government to expand its mission.

Finding a Proper Role for Government

What is missing from public discourse is a little humility.  Perhaps we cannot have it all, and asking the government to get it or do it for us is the road to diminished freedom.  We have discussed re-engineering government before.  See Why not Reengineer Government? Re-engineering is a sophisticated way of saying that we need to rethink the role of government. We need to focus on core functions of government such as physical protection of our population, and privatize what we can.   The powers that be need a little more humility, and recognize that government cannot and should not accomplish everything.

Our current economic quagmire is a message that mission creep is costly and in the long-term unsustainable.  Mission creep diminishes private sector creativity and wealth creation.

The current huge deficits and economic misery are symptoms of a government mission that has gone way off course and cannot be accomplished.

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13
Sep 10

One Year of Blogging

After one year of blogging on economic, corporate, social and political issues, I thought I would try to make sense out of trends:

  • The rule of law has taken a major hit in the United States.  Some examples of this phenomenon are the unlimited guarantees to Fannie Mae and Freddie Mac, guarantees to banks and favored companies, and Federal Reserve purchases of mortgage backed securities. See Shredding the Social Fabric
  • We have exposed monetarist and Keynesian economic solutions as intellectually bankrupt.   Amazingly, the decision makers who believe in these theories have not been fired.   More amazingly, with all the evidence that we are still mired in a deep recession, we keep trying the same tired strategies.
  • Obama’s economic acumen and performance has been disappointing.  His monomaniacal focus on a health care bill that the country cannot afford hampers new hiring.  Worse, it enriches the insurers and big pharmaceutical companies.  And worst, he has wasted important political capital.   Further, with his tepid financial reform bill he missed a real opportunity to address citizens’ concerns about the excessive power of Wall Street.
  • Congress should be tried for malpractice.   Members of Congress did not read the financial reform or the health care bill.  Nancy Pelosi had the temerity to implore Congress to pass these bills so she and the public could find out what is inside.
  • The Executive Branch and Congress appear to be for sale to the highest corporate bidder.  Industry lobbyists essentially control Congress and the executive branch.
  • Where has leadership gone?  Congress used to produce real leaders: Everett Dirksen, Hubert Humphrey, Robert Taft, William Fulbright, Sam Nunn, Henry Jackson and others.  We may not have agreed with their views, but they were serious, well-respected, independent minded individuals.   We never doubted that these leaders put the country’s interests first.  The Executive Branch also produced great leaders.  Compare past Secretaries of the Treasury– Andrew Mellon, Douglas Dillon and Lloyd Bentsen– to the flawed and unworthy Timothy Geithner.
  • Political clout, not reason and merit, determine current policy.   GM, GE, the banks, municipalities and others were saved from extinction because of campaign contributions and union ties.  Picking winners and losers based on political considerations generates cynicism and undermines the guarantee of equal protection under our laws.
  • Zero interest rate policies encapsulate everything that is wrong with our current system.  We have impoverished the thrifty and the prudent and rewarded the profligate and the incompetent.   On the backs of savers, we have bailed out the banks.  This is particularly heinous because the victims of this policy are the retired and elderly who have watched their savings dwindle and their retirement lifestyles vanish.  An economic policy which encourages savers to speculate in the stock market or buy junk bonds is unconscionable.
  • Promises of better corporate behavior after passage of Sarbanes-Oxley have been false.  Congressional pressure on the Financial Accounting Standards Board to suspend mark to market accounting has created the “extend and pretend” economy.  We no longer properly recognize losses; banks know this and refuse to lend knowing they can obfuscate the true state of their balance sheets.  More damaging, the true financial condition of the banks leads investors to purchase equities essentially under false pretenses.  Many of the bank stocks have declined significantly from their peaks.
  • Culturally, extend and pretend has permeated beyond our financial culture.  BP and the government hid many facts about the Gulf oil spill.     Even now we probably do not know the full extent of the damage and independent researchers have been denied access to information.
  • Corporate Boards of Directors are still not paying attention. In the case of Mark Hurd the violation of corporate financial policies was rewarded with a generous severance package.  (Trust in a corporation is predicated on the integrity of their financial policies.)   His unemployment did not last very long, as Oracle recently named him co-president.  Did character matter to Oracle or its Board?  Does anyone have any shame anymore? Was the HP Board afraid to fire Hurd for cause?
  • We are becoming a divided country.  The government protects the rich and the poor.  The middle class is being economically squeezed by inflation in basic goods, unemployment or the threat of it, rising health care and education costs and diminished retirement savings.   All these things plant the seeds of political upheaval.
  • Finally, blogging serves an important purpose in presenting an alternative viewpoint to mainstream media.  Blogging is the antidote to endless economic cheerleading by paid media and government officials. Blogging has become the new millennium’s populist forum. For example, bloggers steadfastly maintained that we have not emerged from the recession/depression and there were never any “green shoots” of recovery.  The mainstream media now feigns surprise at reports of economic weakness and prognostications of a double dip recession.

Watching the passing parade of economic and political folly is both depressing and exhilarating.  Depressing because we believed there would be a change in business-as-usual Washington.  Exhilarating because the public is awakening to the fact that they have been misled.  And that augers a change in the status quo and perhaps a better tomorrow.

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17
Jun 10

Gullible’s Travels

President Obama displays a worrying trend.  Confronted with major crises, the President over relies on experts.  Further, he projects a detached leadership style. One would think that with an Ivy League education and a professorship at the University of Chicago, Obama could be skeptical of expert opinion rather than openly accepting of it.

Crisis Management

Crisis management require several elements: recognition that there is problem, identification of the right personnel to solve the problem, appointment of a team leader,  allocation of resources to the team, and active involvement of the most senior executive to ensure the team leader and team are on track.

I have been in both the team leader and most senior executive role.  Both roles require that the team and supporting experts be questioned, re-questioned and “grilled.”  Interchanges need to be spontaneous, “rough and tumble.”  For a desired outcome in these sessions, one cannot indulge in deference to rank, credentials or purported expertise.

At its best, the team is a white hot crucible where no one spares feelings and sensitivities.  Questioning must be unsparing, comprehensive and intense.  After every alternative is examined and probed, team members must “push” to even greater creativity. Only then can the team start to believe that it is approaching a solution.   The senior leader must actively involve himself, and display enough self confidence to doubt any experts when appropriate.  There are no short cuts to an outcome by way of  blind deference to experts.

Obama’s Disturbing Pattern

Perhaps it is folly to speculate on the workings of the US Presidency.  The President is surrounded by myth and press handlers. However, from time to time the public can glean elements of executive style. Some disturbing patterns emerge from Obama’s carefully constructed façade:

-          In the health care debate there was an unwillingness to take on trial lawyers, health insurers, unions and big pharmaceutical companies.

-          Protecting “too big to fail” financial institutions has remained the unquestioned economic doctrine inherited from the Bush Administration.

-          Bank CEOs feel entitled enough not to attend White House summit meetings. Rather than displaying disapproval, the President lauds Jamie Dimon and Lloyd Blankfein as savvy businessmen. See Obama Doesn’t  ‘Begrudge’ Bonuses for Blankfein, Dimon

-          Deference to BP’s original oil spill estimate and deepwater spill containment expertise, has allowed the Deepwater Horizon problem to mushroom, undermining White House credibility.

In a brilliant article in Naked Capitalism, What do BP and the Banks Have in Common? The Era of Corporate Anarchy, Gonzalo Lira diagnoses the problem with Obama:

On the occasion of the BP oil spill disaster, President Obama delivered an Oval Office speech last night—a masterpiece of milquetoast faux-outrage. The speech was all about “clean energy” and “ending our dependence on fossil fuels.” Faced with the BP oil spill—likely the most severe environmental disaster ever—this was President Obama’s response: polite outrage, and vague plans to “get tough,” “set aside just compensation” and “do something”.

President Obama missed what the BP oil spill disaster is really about. Though unquestionably an environmental disaster, the BP oil spill is much much more.

The BP oil spill is part of the same problem as the financial crisis: The BP oil spill and the banking crisis are two examples of the era we are living in….

In a nutshell, it’s an era of corporate anarchy when corporations do not have to abide by any rules—none at all.

With his lack of the necessary public and crisis management leadership experience, Obama has become facilitator-in-chief of the chaos. Often he appears above the fray.

Too Cool Isn’t Cool

A well read teleprompter speech does not substitute for leadership.  Obama has carefully cultivated a “cool” persona: not uncaring, but objectively detached.  Leadership is a lot like baseball.  No matter how good the pitcher’s fastball is, if that is all he throws, major league batters will eventually hit it.  Like good pitching, good leadership requires changes in approach and speed.  “Cool” may work sometimes, but sometimes it is necessary to display genuine emotion, concern and personal involvement.   Further, at times the team leader needs to just get angry and make the team fearful of that anger. To do so requires enormous self confidence and battle testing.

Lack of experience was raised during the last presidential election.  The charge was dismissed and Obama was compared to President Kennedy.  Kennedy, however, was tested in battle during World War II and in the Senate.   Kennedy inherited a wariness of businessmen from his father.  He welcomed brilliant men and women into his cabinet; however, he never appeared star struck or naive.

It is dangerous to speculate on someone’s psychological narrative, but Obama, a person raised in modest circumstances without a father present, welcomed into the Ivy League and the halls  of academia and political power at an early point in his life, is bound to be over-awed by the “experts.”

Obama now appears gullible, weak and ineffective.  Pundits tell him to get angry.  Such a display would be faux anger, as displayed in Tuesday evening’s address.

The President has to become a genuine skeptic, an Interrogator–In-Chief, questioning more and trusting less.  Failure to do so only emboldens the enemies of our country, both internal and external.

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