Some will argue that such dalliances happen all the time. Its the job that counts. At least Welch has retired. So has ABBs Percy Barnevik who resigned as chairman of the Swiss engineering conglomerate last November. The problem here is that ABBs share price has collapsed. Now both Barnevik and Goran Lindahl, the man who succeeded him as chief executive in 1997, have agreed to give up more than half of the combined $138 million awarded to them in pensions, amid claims that the payments had not been properly approved by other directors.
It only seems like yesterday that every management book on the shelves was extolling the virtues of these fine upstanding executives. Barnevik was the Stanford-educated wizard whose model for internationally decentralised business was hailed as the 1990s successor to that of Alfred Sloan at General Motors. In 1997 ABB was described in the Financial Times as Europes most admired company.
Not any more. Some of the problems now surfacing at ABB can be traced back to decisions made much earlier in Barneviks career. One acquisition, the $1.6 billion purchase of US manufacturer Combustion Engineering has exposed the company to damaging asbestos-related legal actions that could cost it $1 billion.
All of these revelations are causing real problems for the management gurus. How can they possibly plan their next book, packed with glowing examples of wonderful business leaders when they run the risk of yet another business implosion between manuscript delivery and publication? The worst fate they can suffer is to be Hamelled. A Hamelling is an embarrassing experience akin to being caught with ones trousers down after betting your reputation on the excellence of a business and/or its chief executive.
Anyone who has read Leading the Revolution knows what Im talking about. It was here that Gary Hamel, one of the worlds highest-paid business speakers, trumpeted the success of a US energy company called Enron. Here was a company, he wrote, where it paid to hire the best. You cant build a forever restless, opportunity-seeking company unless youre willing to hire restless, opportunity-seeking individuals.
These wealth-driven opportunists, he explained, were working under the controls of the legal, risk management, finance and portfolio management departments. Controls form the cauldron in which Enrons innovative activities circulate. The heat comes from Enrons ambition to transform global energy markets and from the chance individual deal-makers have for personal wealth accumulation.
There is much more of Hamels take on the Enron business that I could highlight but it seems cruel to do so, or at least it would seem so had he not poured so much scorn on the risk-averse stewards who were looking after established old-economy companies.
If we can draw any lesson from these experiences it is that business leaders are not superhuman or infallible.
Making mistakes is part of business. One reason there are so few books on entrepreneurs is because of the high trip-up rate in their formative stages. But when companies get to the size of ABB and Enron we expect to see evidence of prudence and sound business thinking. The HR strategists, who ought to be the guardians of common sense in any business, should be the people who keep the top team in touch with reality.
Enron was trying to inject entrepreneurism into a traditional business. But it didnt work. The lesson from these stories is that we should not put our business leaders on pedestals. To do so was always a mistake. As Warren Bennis, the leadership guru, once pointed out, Its not companies that fail; its their leaders that fail. Perhaps this explains an observation of Bill Gates: The more successful I am, the more vulnerable I feel. Thats the way it has to be.
richard.donkin@haynet.com
Richard Donkin is employment columnist at the Financial Times
