How to stop radical CEOs from going rogue
Carlos Ghosn, now sitting in a Japanese jail, is the ultimate Type A personality
Dec 4, 2018
Carlos Ghosn, chairman and CEO of the Renault-Nissan-Mitsubishi Alliance, attends the Tomorrow In Motion event on the eve of press day at the Paris Auto Show, in Paris, on Oct. 1, 2018. REUTERS/Regis Duvignau/File Photo
By Edward Hadas
LONDON, U.K. (Reuters Breakingviews) - Type A Behavior and Your Heart, a 1970s bestseller, claimed that heart disease was more likely among people who are involved in an “aggressive and incessant struggle to achieve more and more in less and less time”. The connection with cardiac health has been questioned. But many managers could do with a different title: Type A behavior and Your Soul. Carlos Ghosn would be the prime exhibit.
The 64-year-old former multinational chief executive, now sitting in a Japanese jail, is the ultimate Type A personality. He hardly sleeps, pushed his way to the top of two large and troubled car companies — first France’s Renault and then Nissan of Japan — and energetically broke a series of corporate and national industrial taboos to bring them to good health. He even acquired a nickname suited to a business action-movie superhero: “Le Cost Killer”.
It looks like Ghosn was too bold. Despite reported annual remuneration of close to $20 million, he stands accused of not disclosing his full Nissan pay. According to Japanese press reports, he also bought property in Lebanon and Brazil with company cash, among other alleged transgressions.
Ghosn is in custody and has not spoken publicly about the allegations. But even if he did not break any rules, the disclosures suggest that an enormously successful, almost universally lauded and hugely wealthy executive thought he deserved more than a sum which looks absurdly high to most people.
It looks like a dismal end for a glorious career. The sudden reversal of fortune makes Ghosn something of a tragic hero. Here is a great man whose greatness is inseparable from a devastating character flaw.
The combination of greatness and great weakness is fairly common among successful chief executives. From General Electric’s Jack Welch to film mogul Harvey Weinstein, the careers of many of the most dynamic and successful bosses have been tarnished by scandals of excess pay, sexual intimidation or reckless risk-taking.
The tragic curse is closely connected to the professional blessing. The restless confidence and endless desire to get things done which leads to breaking established corporate patterns and reshaping cultures can sometimes also lead to inappropriate efforts to satisfy what the Bible calls the “the lust of the flesh, the lust of the eyes, and the pride of life”: the desire for inordinate quantities of sex, money and power.
In other words, Type-A transgressions that initially spur corporate success can easily slip into classic individual sins. The tendency is not exclusively corporate. Power has been corrupting rulers for millennia. However, emperors and kings often escaped punishment because they were considered quasi-divine and were therefore allowed to behave differently from lesser mortals.
Corporate bosses are an uncomfortable hybrid of chief and executive. They are paid and honoured like royalty, but are expected to follow the same rules and show the same restraint as every other employee. Type-A behaviour often enhances the chief side of the job, but is always an imperfect fit with good conduct.
Companies have four lines of defence to avoid Ghosn-style debacles. Each of them needs to be kept strong.
The first is bureaucracy. Like all their underlings, chief executives are expected to subject their decisions to committees and submit to audit trails and standard rules of conduct. These systems never work perfectly, but without them there would be far more tales of Type-A bosses suffering from the ethical equivalent of cardiac arrest. Still, additional bureaucratic checks — say regular personalized audits and a direct line between whistleblowers and the board of directors — might be even more effective.
The board is the second firewall. Powerful bosses all too often choose directors who are Type-B weaklings and give them a free hand. Without genuine discipline from strong, cautious types, though, the boss’s lack of restraint is all too likely to wander into inappropriate pursuits. A special committee to supervise the CEO, made up of truly independent directors, could help.
Third comes the conscience of the boss. Successful Type-A people are usually very persuasive, and can usually persuade themselves that, say, very high salaries do not provide an adequate reward for their exceptional contributions. It is hard to stimulate helpful self-doubt, but mandatory spiritual retreats are worth a try. Or perhaps, like absolute monarchs of the past, bosses need court jesters with a licence to tell the CEO some hard truths.
Finally, there is punishment. Fear can helpfully concentrate otherwise unwilling minds. Imprisoning, impoverishing and shaming one or two bosses will not discourage many egomaniacs. Their confidence that they should be judged by different standards is remarkably hard to shake. However, as CEO pay has risen, CEO punishments have declined. Both trends make moral errors more likely.
The common theme in all of these defences is disbelief. If underlings, directors, shareholders and prosecutors did not think that the big boss walked on water, professionally speaking, then bad behaviour would be less tolerated. Then future cost killers and company builders would be less likely to also destroy their souls.
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