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EXECUTIVE FLAMEOUT-THE FOX AND THE CROW

GOING FROM FIRST TO WORST AND TAKING EVERYONE WITH YOUJohn TropmanUniversity of Michigan tropman@umich.edu

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DERAILMENT (Van Velsor & Leslie,1995)

STAYING ON THE TRACK - THE BIG PROBLEMS◦ INTERPERSONAL

RELATIONSHIPS◦ DO NOT MEET

BUSINESS OBJECTIVES◦ CANNOT BUILD A TEAM◦ DOES NOT DEVELOP

OR ADAPT DURING TRANSITION

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Flameout/Calamity1] Spectacular

career endings2] Great Personal

Loss3] Great Family

Loss4] Great

Agency/Firm Loss5] Lots of Publicity

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1] PeriderailmentPrecipitating Event: Negative publicity and ancillary job loss (a board seat for example)

Predisposing Events: Signature/Symptomatic Elements: Public Problems, investigations, “smoldering” issues that bring unwanted attention; conflicts of interest that invite attention; behavior that invites public negative comment.

2] DerailmentPrecipitating Event: Publicly losing your job

Predisposing Events: Signature/Symptomatic Elements: “resignation,” “retirement,” “to pursue other interests,” “to spend more time with family”; let go; reorganized out; “time for a change”

The First StagesPeriderailment and Derailment

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3] Flameout:Precipitating Event: Losing your job and bringing others with you; causing significant collateral damage; legal issues (indictments; lawbreaking)

Predisposing Events: Signature/Symptomatic Elements: Specific problems that go well beyond you that are commented upon in the press; mention of others involvements; mention of actual or potential negative sequalae

4] CalamityPublicly losing your job, bringing others with you and causing significant organizational collapse

Predisposing Events: Signature/Symptomatic Elements: bankruptcy; layoffs; pension fund collapse

5] SupercalamityPublicly losing your job; Bringing others with you; Causing significant organizational Collapse; Negatively impacting Industry/Sector/Nation

Predisposing Events: Signature/Symptomatic Elements: Huge publicity; multi-sector consequences

The Last Three Stages Flameout, Calamity and Supercalamity

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Data/MethodLooked for candidates who made

the NYT/WSJ or, on occasion, local papers.

Had at least 3 of the five criteria on the previous slide.

We did not look for historical figures, or, particularly, sports figures

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Small Themes

1]Acting Out - Substance Abuse 1 – drug use 2 – alcoholism 3 – drunk driving 4 – prescribing controlled

substances .2]Acting Out – Sexual Abuse

1 – soliciting sex 2 – using a minor in nudity oriented

materials 3 – sexual harassment

.3]Acting Out – Physical Abuse 1 – murder 2 – physically abusive 3 – armed kidnapping 4 – domestic abuse 5 – suicide 6 – theft 7 – vandalism

4].Acting Out – Verbal Abuse◦ 1 – verbally abusive◦ 2 – sexist remarks◦ 3 – racist remarks◦ 4 – homosexual slurs

5. Acting Out – Financial Abuse 1 – used the company for

personal benefits 2 – accepted illegal gifts 3 – misappropriation of funds 4 – embezzlement 5 – misappropriation of funds 6 – tax evasion 7 – extortion 8 – fraud

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Small Themes

6. Acting Out – Abuse of Power/Authority

1 – used the company for personal benefits

2 – abuse of power 3 – made rash decisions

7]Acting Out – Emotionally Abusive

1 – Sexism 2 – Racism

8] Acting Out - Misc. 1 – fabricated a story for a

newspaper article 2 – financial strain 3 – emotional strain 4 – lied 5 – attempted to obstruct

investigation 6 – missed job opportunities 7 – mismanagement 8 – divorce 9 - depression

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In the nonprofit sector we found… From Self Confidence to

Overconfidence From Challenging to Stroking From Side Kick to Sycophant From We to Me. From Observing Ego to Feedback

Deafness. From Substance to Substance Abuse.

From Need to Greed. From “At the Top” to Over the Top

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Some Examples – from a while back so as to not

become involved in current controversies

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Bill Aramony- April, 1995

President, United WayBill Aramony resigned from United Way of

America (UWA) under allegations that he conspired to defraud UWA.

On April 3, 1995, Mr. Aramony was convicted in the U.S. District Court for the Eastern District of Virginia on 25 counts, including: conspiracy, fraud, and filling false tax returns. He was sentenced to 84 months in prison and fined $300,000

(Glasser, 1994)

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Vincent Buccirosso, August, 1996

President, Washtenaw County United WayVincent Buccirosso was accused of

misappropriating funds.Buccirosso voluntarily resigned from his

position and the Ann Arbor police then launched an investigation into alleged financial irregularities at the Washtenaw United Way.

(George1996), (Oppat, 1996, 1997a,b,c,d)

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Ellen Cook-April 11, 1997

Executive Director of United Way PottawatomieCook accused of misappropriations of United Way

funds.Ellen Cook was fired from her position. George

Cook, President of the United Way stated that "We know that the campaign pledges that we publicized the past four years were exaggerated," and the United Way has been allocating more money that it has actually received. The FBI got involved and is researching the misapplication of the agency's funds.

(Billington, 1997)

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Norman Taylor, September 1, 2002 Chief Executive of United Way, National Capital Area Accused of financial mismanagement, excessive

compensations, and impeding oversight that were threatening to hurt the organization's beneficiaries

Taylor resigned after the United Way's board of directors approved a complete transformation

of the charity, cutting its budget and staff, and revamping all of its financial systems including completing an audit of the organization and eliminating staff perks such as cell phones and credit cards.

(Whoriskey & Salmon, 2002), (Strom, Senator Questions Finances of United Way. 2002),

(Strom, Washington United Way to Select New Board. 2002) (Salmon, 2002), (Johnson, 2002)

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Lewis Hickson - June 15, 2001

Executive Director of Capuchin Soup Kitchen, Detroit, MI.

Lewis Hickson was accused of embezzlement from the charity.

Hickson, the ex Soup Kitchen Chief Executive, received 14 months in prison and had to repay hundreds of thousands of dollars that he stole from the charity.

(Audi, 2001)

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Frank Hudson -August, 2000

Catholic Charities ChiefFrank Hudson used charity money to pay for

expensive meals and cosmetic proceduresFrank Hudson resigned as chief executive

office of Catholic Charities of San Francisco after the board condemned him for his extravagant spending in restaurants and on cosmetic surgery. He spent close to $73,000 of the charity's money on personal expenses.

(Zoellner, 2000)

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Louis Spisto-July 25, 2001

Director of the American Ballet TheatreLouis Spisto resigned after high staff

turnovers, hostile work environment, and financial troubles.

Spisto was hired in October 2002 as Executive Director of The Globes Theatre in San Diego, CA. The American Ballet Theater hired Wallace Chappell to be its next Executive Director in October 2001, although as of August 2002 a new Executive Director was hired: Elizabeth Kehler.

(Carvajal, 2001), (Riedel, 2001)

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Broader ImplicationsWhile we are focusing on the

nonprofit sector today, similar patterns are found in business and government◦Enron◦Qualcom◦Healthsouth◦NYStock Exchange◦Ect,ect

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What is going on? Does Power Corrupt? Does Power Enable? What is the relationship

between the individual executive and the organizational system within which the executive works?

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. The Dilemma of DerailmentA review of Derailment research

Topics◦Derailment◦Leaders who self destruct◦Why Smart People do dumb things◦Self Defeating Behavior◦Flameout to Supercalamity

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Problems with Interpersonal Relationships

Insensitive to Others

Cold, Aloof, Arrogant

Overly Ambitious

Isolates SelfAuthoritarianBetrayal of

Trust

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Failure to Meet Business ObjectivesPoor

PerformanceLack of Follow-

ThroughLack of Hard

Work

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Cannot Build and Lead A TeamFails to Staff

EffectivelyCan’t Manage

SubordinatesDifficulty

Molding Staff

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Inability to Develop and/or AdaptUnable to

adapt to a boss with a different style/culture

Conflict with upper mgt..

Cannot think Strategically

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Leaders Who Self Destruct(de Vries)

AggressionParanoidDepressionSubstance

AbuseSelf-Defeating

Behavior

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Why Smart People do Dumb Things(Feinberg, WSJ)

Recklessness the risk junki

Isolation brilliance is an

isolating factor not a substitute for

experience Feedback Deafness

the impatience of intelligence

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Self Defeating Behavior (Baumeister)

Esteem (threatened egotism)

Self-Regulatory Breakdown◦ means/ends

improper goal setting misguided

persistence choking under

pressure learned helplessness

Emotional Distress

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An Analytic Lens -The 7 Cs Perspective

Characteristics – problematic intrapersonal elements;

Crucibles – Imprinting Events Collaborations- The wrong

folks Competencies – lack

knowledge and skills in leadership and management

Conditions – organizational culture and structure permit acting out

Context – the climate of the community/industry

Change – rapid change (hyperchange) bypasses executives scale and scope

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Competencies

Conditions ContextCharacteristics

Change

CollaborationsCrucibles

The 7 Cs-Navigating Leadership

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Characteristics From Self Confidence to

Overconfidence ◦ Enough about me; what do you think

about me? From We to Me.

◦ Credit grandiosity (but enough about me, what do you think about me)

From Observing Ego to Feedback Deafness.

◦ Failure to listen From Substance to Substance Abuse.

◦ Abuse of substances From Need to Greed.

◦ Requires evermore reinforcement

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CollaborationsBelieve their own PR

◦Morning Ralph Great point Boss!

From Challenging to Stroking ◦Staff find kissing up a way to

advance From Side Kick to SycophantTop Team Imbalance

◦The counterbalance dies, or is fired; replaced by trophy staff

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CruciblesTrapped in the past

◦Every executive may be re-solving the crisis that occurred when s/he entered the organization

Enmeshed in StereotypesCaptured by False Certainty

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CompetenciesNonprofit executives have very little

actual training, other than OJT◦ This includes

training in managerial competence training in interpersonal competence

The armed forces has a “charm school” Training in differences at the executive level from

previous levels◦ Oddly similar to the problems of PHD

candidates The dissertation work is really different from all

previous work

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ConditionsThe culture permits wide

discretionThe structure of oversight is

loose◦Where IS the board?

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ContextEveryone is doing itNonprofit Executives often hang

with the elite from 9-5, but are excluded from 5-9 (and on weekends)◦The growth of “status envy”◦Can a nonprofit executive have an

“agency” Lexus?

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ChangeAs the sped and magnitude of

change increases, executives become threatened◦Default to self enhancement rather

than mission accomplishment◦Forget “its not their money.”

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A PerspectiveDoes Power Corrupt? For some power

changes people◦ But more so it looks as if people do not know how

to handle powerDoes Power Enable?

◦ For some power leverages current characteristicsWhat is the relationship between the

individual executive and the organizational system within which the executive works?◦ Each matters - but untrained executives in high

permission/low control firms are the worst;◦ The culture of privilege is also of great importance-

it influences both executives and agencies

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What to Do?At the Executive

Level◦ Prepare Nonprofit

Executives for Self Reflection

◦ Provide Executive Training that addresses issues at the top Parson’s Institutional

Level Mintzberg’s “Strategic

Apex”

At the Organizational Level

Address issues of high permission and low control◦ Intra agency◦ At the board level

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• Give lots of feedback – • Provide lots of support and assessment during

times of transitions• Do not allow individuals to get stuck in the

same functional area for too long

Preventing Calamity

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Resources Audi, T. (2002, October 25) Ex-soup kitchen chief gets jailed. Detroit Free Press, p. A01. Baumeister, R. (1997). Esteem threat, self regulatory breakdown, and emotional distress as factors in self-defeating behavior. Review of General Psychology, 1 (2), 145-74. Billington, J. (1997, April 11). United Way director fired: Allocations reduced. Shawnee News-Star,p. Carvajal, D. (2001, April 11). High staff turnover underlines offstage turmoil at ballet theater. New York Times, p. B1. Denhardt, R. B., Denhardt J. V., & Aristigueta, M. P. (2002). Managing human behavior in public and nonprofit organizations . Thousand Oaks, CA: Sage

Publications. Feldman, M. (2002. October 24). Clean state, dirty politicians. New York Times, p. A.31. Feinberg, M. & Tarrant, J. J. (1995). Why smart people do dumb things. New York: Fireside. George, M. (1996, August 31). United Way official quits Washtenaw: Faces money questions. Detroit Free Press, pp. 3A. Glasser, J. S. (1994). An insider’s account of the United Way scandal: What went wrong and why . New York: John Wiley & Sons Inc. Johnson, D. (2002). United Way official knew about abuses, memo says. New York Times, p. A10. Light, P. C. (2002). Pathways to nonprofit excellence. Washington, D.C.: Brookings Institute. Lueck, S. (2002, November 11). Chief justice’s daughter lands in hot seat. Wall Street Journal, p. A4. Malloy, D. C., & Agarwal, J. (2001). Ethical climate in nonprofit organizations: Propositions and implications. Nonprofit Management and Leadership,12, 39-

54. Oppat, S. (1996, November 20). United Way officials embrace suggestions: Board members confident changes will be made to regain public confidence and

strengthen organization. Ann Arbor News, p. A1. Oppat, S. (1997a, February 28). A1 Buccirosso will face three charges of fraud. Ann Arbor News, p. A1. Oppat, S. (1997b, March 21). United Way looks for new president. Ann Arbor News, p. C1 Oppat, S. (1997c, April 12). United Way allocation policy may change. Ann Arbor News, p. A5. Oppat, S. (1997d, May 3). United Way auditors recommend improvements. Ann Arbor News, p. A1. Strom, S. (2002, August 22). Senator questions finances of United Way. New York Times, p. A20. Strom, S. (2002, October 4). Washington United Way to select new board. New York Times, p. A18. Riedel, M. (2001, July 26). Ballet big in deep tutu quits. New York Post, p. 002. Rittel, H. & Webber, M. (1973). Dilemmas in a general theory of planning. Policy Sciences, (July), 4 (2), 155-169. Salmon, J. (2002, October 19). Nominees sought for all-new United Way board; In wake of scandals, panel hoping to make ‘clean sweep’. Washington Post, p.

B01. Salwen, K. (1993, December 1). The fast lane how lavish spending brought down head of sheet metal union. Wall Street Journal, p. 1. Tropman, J. (1984). Policy management in the human services. New York: Columbia University Press. Tropman, J. & Tropman, E. (1999). Nonprofit boards: What to do and how to do it. Washington(EDITOR’S NOTE: D.C.?): Child Welfare League of America Tropman, J. (1998). The management of ideas in the creating organization. Westport, CT: Quorum. Van Velsor, E. & Leslie, J. (1995). Why executives derail: perspectives across time and cultures. Academy of Management Executive, 9,4 (November) Waldo, C. (1986). A working guide for directors of not-for-profit organizations. New York: Quorum Books. Whoriskey, P. & Salmon, J. (2002, September 6). United Way CEO quits as charity is recast; Directors slash budgets, staff as part of overhaul. The

Washington Post, p. A1. Zoellner, T. (2000, August 11). Catholic charities chief forced out: Lavish spending berated—donations are off. The San Francisco Chronicle, A1.

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ILLNESS IN THE EXECUTIVE SUITEJohn TropmanUniversity of Michigan

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Illness in the Executive Suite

A Problem?Loss of Executive FunctioningLoss of Organizational FunctioningOur own attitudes toward illness are ambivalent

Parsons:• We typically provide exemptions • The Ill person cannot do it alone… but• The sick person must want to get well• The sick person must seek technically competent help

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Kinds of Illness

Physical DisordersCancer, stroke, heart disease

Physical/Mental DisordersAlzheimer’s, brain tumor

Mental DisordersAnxiety, mood, personality, cognitive

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Levels of Illness/Health Behavior

Pre-disease ChronicAcute

RiskySelf Hazardous

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When/How is Illness an Executive ProblemLowers Competence

Impairs EnergyImpairs Job Focus Steals Time

Creates Cognitive IssuesImpairs/Skews Decision MakingImpairs/Skews Complexity Tolerance

InterpersonalImpairs/Skews Relations with Others

IntrapersonalImpairs/Skews Self Awareness/Observing Ego

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When/How is Illness a Firm ProblemBecomes an office distractionActivates complex and conflicting

emotions in othersFamily, colleagues

Has unclear to no guidelines about what to do

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Presidential Examples

Mr. WilsonHad a strokeHad had previous

strokesMr. Roosevelt

Had polio and heart disease

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Presidential Examples

Mr. ReganAlzheimer’s?

Mr. ClintonA sex addict?

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Presidential Examples

Mr. BushDry Drunk Syndrome?

Mr. CheneyCardiac Impaired?

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Some Business Examples

Michael Walsh – Tenneco- Brain Cancer

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Some Business ExamplesRoberto Goizueta – Coke – Lung Cancer

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mJames Batten – Knight Ridder – Auto Crash/Brain Cancer

Some Business Examples

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Some Business ExamplesJim Cantalupo – MacDonald’s – Heart Attack (60)

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Some Business ExamplesCharlie Bell (MacDonald’s – and Cantalupo’s successor – Colon Cancer)

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A Survey

145 corporation by the Society of Corporate Secretaries93% did not require a CEO physical (which

MacDonald’s instituted after Cantalupo)63% had no contract clause allowing

board determination of disability80% - no plan for long term disability69% no plan for short term disability

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Personal Examples

The Morbidly Obese BossThe Boss Dying of CancerThe Speechless Mayor

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Recent Front Page AttentionIts not Executives, but has Implications

MENTAL ILLNESSSpread of Records Stirs Patient Fears

Ms. Galvin’s Insurer Studies Psychotherapist’s Notes

By Theo Francis, WSJ, 12/26/06

PHYSICAL ILLNESSDiabetics in Workplace Confront a Tangle

of LawsCosts of a Crisis

By R.N. Klienfield, NYT, 12/26/06

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Suggestions – Take Positive Action

Society of Corporate SecretariesRequire physicalsReport the results of the physicals to the boardContractual right of the board to determine

“disability”Written policies for long and short term disabilityIllness disclosure policy

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Suggestions – Take Positive Action

Do GoodMake wellness and

healthiness a part of the Executive Evaluation and the Corporate Culture

Avoid BadMake Risky and Self

Hazardous Health Behaviors Unacceptable

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Thank You Again1. Bisbort, Alan,(2002) “Dry Drunk: Is Bush Making a Cry for Help?” American

Politics Journal. Retrieved from http://www.americanpolitics.com/20020924Bisbort.html Accessed November 23, 2007.

2. Blanchard, k., D. Eddington & M. Blanchard. (1986) The One Minute Manager Gets Fit. New York. William Morrow

3. Deutsch, Claudia H. (2006, May 16). When Death Hits a Corner Office; Coping with Loss of a Top Executive Requires Planning. New York Times.

4. Francis, Theo (2006, December 26) ”Spread of Records Spurs Patient Fears of Privacy Erosion. WSJ. p.A1

5. Kleinfield, N.R. (2006, December 26) “Diabetics in Workplace Confront a Tangle of Laws”. NYT p.A1

6. Maraniss, David. (1998, January 25). In Clinton, a Past That's Ever Prologue. Washington Post. A01.

7. Mollenkamp, Carrick. (2002, June 16). In the Shadows—A CEO’s Secret: His Long Battle With Depression—After Years of Hiding Illness, Atlanta Business Leader Inspired Others to Open Up—Mr. Gellerstadt’s Icy Hands. The Wall Street Journal Eastern Edition, p. A.1.

8. Parsons, T.(1951) The Social System. Glencoe. The Free Press. 9. Romano, Catherine. (1994). In Sickness and in Health. Management Review,

83(5), 40.