Winners Never Cheat: Even in Difficult Times, New and Expanded Edition
Page 5
True leaders ought not to worry greatly about occasional mistakes, but they must vigilantly guard against those things that will make them feel ashamed.
True leaders ought not to worry greatly about occasional mistakes, but they must vigilantly guard against those things that will make them feel ashamed.
That said, though, repeating the same mistake too many times makes one a partner to the error. Strong leaders accept responsibility for problems and deal with them swiftly and fairly. If the problem is your responsibility, so is the solution.
Risk was a favorite topic around the dinner table as my children were advancing through their elementary and high school years. It prompted a couple of my sons a few years later to immediately jump into the commodities market and lose their shirts. They misinterpreted my advice (although I admit to doing the same thing in my younger years). Leaders clearly have to take measured risks.
Leaders can come in different forms and flavors, but core elements rarely vary: talent, integrity, courage, vision, commitment, empathy, humility, and confidence. The greater these attributes, the stronger the leadership.
Many business executives seek only breathtaking compensation and perks. Legions of politicians desire only to remain in office and lead with their own self-interests in mind. There are religious leaders who bathe in reverential treatment. And we all are familiar with celebrities who are addicted to adoring fans. None of that is leadership. Successful leaders maintain their positions through respect earned the old-fashioned way.
On the wall of my office, there hangs a plaque on which are inscribed the words of legendary CBS newscaster Edward R. Murrow: “Difficulty is the one excuse that history never accepts.”
I made sure my children understood what that meant. Life is difficult and success even more so, but anything worth doing must be challenging. Engaging in activities devoid of difficulty, lounging in risk-free zones, is life without great meaning. Children are perceptive. They learn as much from observation as from participation, so parental leaders especially need to practice what they preach.
In 2001, our company was on the verge of bankruptcy. Our high-yield bonds were trading at 25 cents on the dollar. Our financial and legal teams had brought in bankruptcy specialists from Los Angeles and New York. In their united opinion, bankruptcy was inevitable.
For me, bankruptcy was not an option. It was our name on the front door. Family character was at stake. Virtually all of the 87 lenders we dealt with at the time believed we would crash. Cash was tight. We were in a recession. Our industry was overproducing. Profit margins were dropping. Exports shrunk. Energy costs were spiraling out of control.
In the middle of that perfect storm, we were hit by a rogue wave, the 9/11 catastrophe.
I reminded myself in the midst of this turmoil how grateful I was that I had been chosen to lead the company at this time because I was convinced I could guide our company through this unprecedented siege. This company would not be seized by corporate lawyers, bankers, and highly paid consultants with all the answers. Not on my watch. Not one of them could truly comprehend my notions of character and integrity.
We initiated cost-cutting programs on all levels and at all geographic locations, negotiated an equity position for bondholders, and refinanced our debt with those 87 lenders. We raised additional capital to help pay down that debt. Piece by piece, we put the complex financial mosaic back together. It would have been much easier to have chosen bankruptcy, but two and a half years later, Huntsman Corp. emerged stronger than ever. Wall Street was amazed.
A crisis allows us the opportunity to dip deep into the reservoirs of our very being, to rise to levels of confidence, strength, and resolve that otherwise we didn’t think we possessed.
A crisis creates the opportunity to dip deep into the reservoirs of our very being, to rise to levels of confidence, strength, and resolve that otherwise we didn’t think we possessed. Through adversity, we come face to face with who we really are and what really counts.
There is a great “can do” spirit in each of us, ready to be set free. We all have reserves to tap in times of danger. In a crisis, a person’s mind can be brilliant and highly creative. In a crisis, true character is revealed.
Leaders are selected to take the extra steps, to display moral courage, to reach above and beyond, and to make it to the end zone. For, at the end of the day, leaders have to score or it doesn’t count.
In today’s what’s-in-it-for-me environment, humility is vital for good leadership. One must be teachable and recognize the value of others in bringing about positive solutions.
A few years ago, I met with my old friend Jeroen van der Veer, chief executive of Royal Dutch/Shell Group, at his office at The Hague. Jeroen was president of Shell Chemical Company in Houston during the early 1990s. It was clear to me then that he was on his way upward to the most senior position in the world’s largest company. We became trusted friends.
I asked him his thoughts on leadership. “The one common value that most leaders lack today, whether in business, politics, or religion,” he replied, “is humility.” He cited several cases where high-profile individuals fell from exalted positions because they refused to be teachable and humble.
“They knew all the answers and refused to listen to wise and prudent counsel of others. Their prime focus should be to create other leaders, a vision for the long term and a certain modesty about their own capabilities.”
Additionally, leaders need to be candid with those they purport to lead. Sharing good news is easy. When it comes to the more troublesome negative news, be candid and take responsibility. Don’t withhold unpleasant possibilities; don’t pass off bad news to subordinates to deliver. Level with employees about problems in a timely fashion.
When I was in the ninth grade, I secured a job assembling wagons and tricycles at a Payless Drugstore. On Christmas Eve, the store manager presented me with a box of cherry chocolates—and laid me off. I was stunned. The manager never indicated the position was temporary. It left such an awful impression on me that I vowed I would always be upfront with employees when it came to the possibility of layoffs.
Leadership must be genuine, energetic, and engaged. I have served as a director on five major New York Stock Exchange boards in the past 25 years. During that time, I have met few men and women who I felt were really providing help to the companies involved. Too many times, directors regularly make foolish, Wall Street-driven decisions, harmful to the long-term health of the company, because of today’s addiction to short-term gains.
Unfortunately, many of today’s boards are little more than social clubs that do a poor job of protecting the long-term interests of stockholders.
You would think that most corporate directors know better. After all, they are supposed to be bright, successful individuals. Unfortunately, many of today’s boards are little more than social clubs that do a poor job of protecting the long-term interests of stockholders.
Most corporate directors lack expertise in the industry of the company they are directing. Management easily manipulates such directors because the latter’s chief concerns are fees, retirement benefits, and the prestige of being on a corporate board. Typically, they have only a small portion of their net worth invested in the company. They loathe being at odds with the CEO, chairman, or other directors.
Stockholders would be outraged if they knew the lack of focus, expertise, connectivity, and good judgment exhibited by a sizable number of corporate directors. Although these directors occasionally fire the CEO in a huff when a deal doesn’t work out or an ethical gaffe is exposed, they would better meet their obligations if they stopped CEOs from making bad deals or unethical decisions in the first place.
Always cheer for the individual director who breaks ranks to propose a novel route, who offers a different perspective, who raises ethical concerns, or who focuses on the long-term well-being of stockholders.
I have great respect for many CEOs in today’s business world. They
are dedicated, gifted, and honest men and women. They appreciate why they were chosen to lead their respective companies. They accept their duties: keep business healthy; deliver a fair profit in the most professional, socially responsible way possible; display moral backbone; and are forthcoming.
When the ship finds itself in trouble, as my earlier story related, all eyes turn to the captain. Subordinates may have been the ones who erred, but it is the captain who must take responsibility for the mistake and for steering the ship out of trouble. And, be assured, it takes more effort correcting a mistake than to make it.
Leadership is a privilege. Those who receive the mantle must also know they can expect an accounting of their stewardships.
It is not uncommon for people to forego higher salaries to join an organization with strong, ethical leadership. Most individuals desire leadership they can admire and respect. They want to be in sync with that brand of leader, and will often parallel their own lives after that person, whether in a corporate, religious, political, parental, teaching, or other setting.
A good example of this is Mitt Romney, former governor of Massachusetts, who returned integrity to the scandal-ridden 2002 Winter Olympics. That classic show of leadership was infectious all the way through the Olympic organization to the thousands of volunteers. As a result, those Games came off as the most successful and problem-free in recent Olympics history.
Conversely, because leaders are watched and emulated, their engagement in unethical or illegal conduct can have a devastating effect on others.
Courage may be the single most important factor in identifying leadership. Individuals may know well what is right and what is wrong but fail to act decisively because they lack the courage their values require.
Leaders—whether inside families, corporations, organizations, or politics—must be prepared to stand against the crowd when their moral values are challenged. They must ignore criticism and taunts if pursuing a right and just route. Leadership is supposed to be daunting. Courage is an absolute requisite. Without it, noted Winston Churchill, other virtues lose their meaning. “Courage is the first of the human qualities because it is a quality which guarantees all the others.”
Some economists argue that business leaders have but a single responsibility: to employ every legal means to increase corporate profits. Commercial enterprise, such economists reason, is amoral by nature. Compete openly and freely in any way you wish so long as you do not engage in deception and fraud (rule-book violations).
Embracing a credo of that nature, without proper emphasis on morality, is an invitation for executives to rationalize ethical corner-cutting and a potential blueprint for impressionable business-school students when they are turned loose on the marketplace. Humility, decency, and social leadership become irrelevant under that sort of a scenario.
The gospel according to these economists implies that if somehow one finds a loophole in a law prohibiting shortcuts across the infield, one does not have to remain on the same oval track with the other racers. One is allowed—no, obligated—to maximize results under the broadest interpretation of the official rules of conduct, however bent, loop-holed, or indecent it may be.
I don’t totally blame the moral briar patch in which we seem to find ourselves on that line of thought. In fact, I agree with these economists to this extent: Business itself can’t have ethics any more than a building can have ethics; only humans can possess ethical standards. Where I differ is the implication that professional morals distract business executives from their fiduciary obligations.
In a technical sense, business itself may well be amoral, but its leadership must be dictated by moral decisions. It takes great courage to follow the moral compass in the face of marketplace pressures, but no challenge alters this fact: Regardless of who is holding the compass, or how they are holding it, or what time of day it happens to be, north is always north, and south is always south.
Following one’s moral compass is for neither the faint of heart nor the cold of feet. Leaders worthy of the name understand and accept that they are chosen every bit as much for their values and courage as for their administrative skills, marketing savvy, and visionary outlook.
Following one’s moral compass is for neither the faint of heart nor the cold of feet.
LET YOUR “YES” BE “YES” AND YOUR
“NO” BE “NO.”
—JAMES 5:12
THE FIRST AMENDMENT IS 45 WORDS;
THE LORD’S PRAYER IS 66 WORDS; THE
GETTYSBURG ADDRESS IS 286 WORDS.
THERE ARE 1,322 WORDS IN THE
DECLARATION OF INDEPENDENCE,
BUT THE GOVERNMENT REGULATIONS
ON THE SALE OF CABBAGE
TOTAL 26,911 WORDS.
—NATIONAL REVIEW
ONE MAN WITH COURAGE
MAKES A MAJORITY.
—ANDREW JACKSON
Chapter Five
Keep Your Word
It’s high time to corral the corporate lawyers.
Shakespeare didn’t literally mean it when he said that the first thing we must do is kill all the lawyers, but you can forgive folks for smiling at the thought, given that the legal profession, collectively and with our complicity, is stripping America of personal accountability and trust. All of us, in ways large and small, partially are responsible for this erosion of integrity, but I place the greatest culpability, with notable exceptions, on attorneys—especially corporate lawyers.
Lawyers don’t start out their lives wanting to do that, but they are trained in law school to gain the edge, to win rather than mediate. Under the guise of legal protection, many corporate lawyers have made it impossible to seal business deals with just a handshake. They—I trust unwittingly—have created a tidal wave of distrust, ended long-term friendships, and bartered the inherent goodwill between people for loopholes, escape clauses, and weasel wording.
One’s word being one’s bond has been replaced with one’s word being subject to legal review.
One’s word being one’s bond has been replaced with one’s word being subject to legal review.
Concise, straightforward transactions carry no weight unless accompanied by 100 pages of exceptions and wherebys in fine-print legalese. A deal sealed with a handshake is meaningless without a signed legal document whose complexity rivals that of the Treaty of Versailles.
This is a great weakness in our system because most lawyers have little in the way of business experience. They tend to focus on why something should not or cannot be done. Legal beagles make up the tenor and soprano sections of this choir of naysayers. Lenders, accountants, and consultants round out the hand-wringing chorale as the altos and baritones. They may hear themselves singing in perfect harmony, but to most of us it comes off as dissonance.
As Jeffrey Sonnenfeld, associate dean of executive programs at Yale School of Management, put it in a Business Week article, corporate attorneys are considered the “vice presidents of No.”
Problems nearly always arise when clients allow lawyers to make business decisions the latter are not qualified to make. In a recent Inc. magazine article, author Norm Brodsky says smart lawyers understand the boundaries of their expertise and limit themselves to providing legal advice. “Not-so-smart lawyers,” he says, “charge ahead and screw things up…. Lawyers are not business people, although many of them would have you believe otherwise.”
Many CEOs and others in the corporate hierarchy embrace every particle of “wisdom” uttered by a lawyer without realizing the person imparting the information often is the least prepared to counsel those who have developed a consistent marketplace track record.
Human beings are innately honest, but if you pack legal heat, the other side will do likewise. At that point, it becomes negotiation by attorneys.
Human beings are innately honest, but if you pack legal heat, the other side will do likewise.
Lock the lawyers in the attic until you truly need them. I came to a point in my career where I
tossed the lawyers out of all meetings where merger negotiations were ongoing, summoning them only when the technical expertise in law and language to make the deals was required.
It’s not that lawyers are inherently unethical or evil, certainly no more so than members of any other profession. It’s a matter of lawyers overriding personal ethics with professional standards. Lawyers are taught to represent the best interest of their clients even if that mandate means inflicting unnecessary harm to the other side.
Murray Swartz, a New York attorney of considerable skill and fame, who is often described as a lawyer’s lawyer, maintains that when acting as an advocate for a client, a lawyer “is neither legally, professionally, nor morally accountable for the means used or the ends achieved.”
Former Utah Supreme Court Chief Justice Michael Zimmerman considers such rationale as nothing more than a comfortable way to avoid ethical responsibility. Lawyers are more than amoral technicians.
Lawyers certainly are not the only professional group occasionally separating personal ethics from professional norms. Tobacco company executives, who only want to expand their markets and further their corporation’s profits, cloak their consciences with the simplistic observation that no one forces people to smoke. The human toll their product extracts is not addressed in the business theories that cover the jingle of cash registers.
Politicians weasel and fib, promise much and deliver little, all in the name of remaining in public office. All’s fair in love, war, the bottom line, the final score, and re-election bids.