tag:theconversation.com,2011:/global/topics/chief-executive-officer-6085/articlesChief Executive Officer – The Conversation2021-08-24T12:17:03Ztag:theconversation.com,2011:article/1657882021-08-24T12:17:03Z2021-08-24T12:17:03ZCorporate directors don’t see stopping wayward CEOs as their job – contrary to popular belief<figure><img src="https://images.theconversation.com/files/417478/original/file-20210823-16-16kt99b.jpg?ixlib=rb-1.1.0&rect=49%2C74%2C8194%2C5413&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The realities of a boardroom are different than what many people assume. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/conference-table-in-meeting-room-royalty-free-image/1278042768">xu wu/Moment via Getty Images</a></span></figcaption></figure><p>In December 2001, Enron Corp. <a href="https://www.investopedia.com/updates/enron-scandal-summary/">collapsed into bankruptcy</a> – at the time the biggest U.S. publicly traded company to ever do so – following years of fraudulent accounting. Two decades later, Theranos CEO Elizabeth Holmes <a href="https://www.businessinsider.com/the-history-of-silicon-valley-unicorn-theranos-and-ceo-elizabeth-holmes-2018-5">faces criminal charges</a> that she defrauded investors as she built her blood-testing startup. </p>
<p>In both cases, the companies’ respective boards of directors <a href="https://www.govinfo.gov/content/pkg/CPRT-107SPRT80393/pdf/CPRT-107SPRT80393.pdf">have been blamed</a> for <a href="https://www.forbes.com/sites/groupthink/2016/04/27/the-theranos-crisis-where-was-the-board/?sh=6b0e8272c58e">allowing misdeeds</a> to happen – or not doing more to prevent them. </p>
<p>That’s because boards are <a href="https://www.weil.com/%7E/media/files/pdfs/150154_pcag_board_requirements_chart_2015_v21.pdf">broadly seen by regulators</a>, <a href="https://theconversation.com/corporate-boards-are-supposed-to-oversee-companies-but-often-turn-a-blind-eye-118162">governance experts</a>, lawmakers, newspaper reporters and the public as the main body meant to hold senior executives accountable. Legally, their role as overseers is baked into the <a href="https://www.investopedia.com/terms/s/sarbanesoxleyact.asp">Sarbanes-Oxley Act</a>, which is the most recent major legislation targeted at boards, and written into the <a href="https://www.nyse.com/publicdocs/nyse/listing/NYSE_Corporate_Governance_Guide.pdf">guidelines of major stock markets like the New York Stock Exchange</a>. </p>
<p>It may come as a surprise, then, that board members view their role very differently. </p>
<h2>Inside the boardroom</h2>
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<a href="https://images.theconversation.com/files/417496/original/file-20210824-15-1l46aar.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Two men – one carrying a bag, another a portfolio – are walking and appear to be talking toward another man who is standing and looking at them with folded hands." src="https://images.theconversation.com/files/417496/original/file-20210824-15-1l46aar.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/417496/original/file-20210824-15-1l46aar.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=569&fit=crop&dpr=1 600w, https://images.theconversation.com/files/417496/original/file-20210824-15-1l46aar.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=569&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/417496/original/file-20210824-15-1l46aar.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=569&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/417496/original/file-20210824-15-1l46aar.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=715&fit=crop&dpr=1 754w, https://images.theconversation.com/files/417496/original/file-20210824-15-1l46aar.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=715&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/417496/original/file-20210824-15-1l46aar.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=715&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Former Enron CEO Jeffrey Skilling, right, and founder Kenneth Lay, center, became household names after the company collapsed in 2001.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/ENRONLAYSKILLING/5857231a49e3da11af9f0014c2589dfb/photo?Query=enron&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=97&currentItemNo=85">AP Photo/David J. Phillip</a></span>
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<p>I <a href="https://mays.tamu.edu/directory/sboivie/">have been studying executives</a> and corporate governance for nearly 20 years. I have always been fascinated by boards of directors and wanted to better understand what they actually do, as well as whether they approach their jobs the same way external observers believe they should.</p>
<p>But <a href="https://doi.org/10.5465/19416520.2016.1120957">most research on boards</a> has relied on assumptions about what directors believe. And those assumptions have been shaped by <a href="https://www.doi.org/10.1257/jel.48.1.58">agency theory</a>.</p>
<p>Agency theory stresses that there is always a risk of managers being self-interested and using a company’s resources to enrich themselves. Because of this risk, scholars have long assumed that directors need to exercise careful oversight and control over their decisions. </p>
<p>The problem is, scholars weren’t asking directors what they actually believe their role is. </p>
<p>In a <a href="https://doi.org/10.1002/smj.3320">new study</a> with fellow management professors <a href="https://mays.tamu.edu/directory/mwithers/">Mike Withers</a>, <a href="https://www.terry.uga.edu/directory/management/scott-d-graffin.html">Scott Graffin</a> and <a href="https://wpcarey.asu.edu/people/profile/825483">Kevin Corley</a>, I conducted extensive interviews with 48 corporate directors – some of whom were also executives at other companies. For the study, we also interviewed two executives who have never served as directors. </p>
<p>The directors we interviewed sit on the boards of more than 140 different companies – both large and small – in pretty much every industry. Some of them were veterans with nearly 30 years of corporate director experience behind them, while others were relative newbies serving on their very first board. </p>
<p>The interviews resulted in more than 1,000 transcribed pages, which we coded and analyzed, in the most extensive data collection effort involving corporate boards in <a href="https://www.jstor.org/stable/4164980">over 30 years</a>. </p>
<h2>Supporting CEOs</h2>
<p>Our overarching finding was that directors generally said they viewed their jobs as primarily supporting managers, not monitoring them. In fact, we were surprised by just how uniform this sentiment was among directors, regardless of demographics like gender or time spent on a board. </p>
<p>In practice, this means they rarely seek to vote down management decisions. Rather, directors seek to become partners with executives and provide input and improve decision-making. Many directors said that the best way to protect shareholder value or help their company thrive was by collaborating with the chief executive officer. </p>
<p>“To be a board of directors, in my mind, you’ve (got) to understand where management is coming from,” one of our interviewees said. “But your job is to ask a lot of questions and focus what they are telling you and not to step into the role of management.”</p>
<p>When we asked about monitoring the work of CEOs and other executives, most of the directors said it wasn’t possible to do this effectively – even if they wanted to. Our interviewees said this is because of the simple fact that CEOs know a lot more about their company than the directors do. </p>
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<img alt="Elizabeth Holmes gestures as she speaks at a conference." src="https://images.theconversation.com/files/417499/original/file-20210824-19-1yc9sjs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/417499/original/file-20210824-19-1yc9sjs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=395&fit=crop&dpr=1 600w, https://images.theconversation.com/files/417499/original/file-20210824-19-1yc9sjs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=395&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/417499/original/file-20210824-19-1yc9sjs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=395&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/417499/original/file-20210824-19-1yc9sjs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=497&fit=crop&dpr=1 754w, https://images.theconversation.com/files/417499/original/file-20210824-19-1yc9sjs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=497&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/417499/original/file-20210824-19-1yc9sjs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=497&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Some critics blamed the Theranos board for not conducting sufficient oversight over Elizabeth Holmes, the founder who faces criminal charges of fraud and conspiracy.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/Theranos-Holmes/9ad9c1f9928344709708cb6145b15c04/photo?Query=theranos&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=42&currentItemNo=1">AP Photo/Jeff Chiu</a></span>
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<p>When we pushed directors on this point, they confessed that they do not even want to monitor the CEO. We interpreted their view as basically: Either trust the chief executive officer and give him or her your total support, or fire the CEO and hire someone you can trust. </p>
<p>“You don’t go back to … the CEO, and say, ‘You know what, that strategy is wrong. We’d like you to do this strategy.’ That’s not what you’re paying him for,” one director told us. “You’re paying him to make the decisions. And if he is consistently making wrong decisions, you find somebody else to make the decisions.”</p>
<p>Our other main finding was that directors tend to see their jobs as a form of service, even though they get paid as well. That is, they said they feel like they are giving back by serving on corporate boards.</p>
<p>“It’s a way to engage and serve, and learn about different industries and businesses,” one director said. “It’s rewarding to be able to take things that you’ve learned over many years and apply them.” </p>
<p>Our interviews suggest that this feeling of service makes them unwilling to tolerate conflict or tension in the boardroom.</p>
<p>[<em>Get the best of The Conversation, every weekend.</em> <a href="https://theconversation.com/us/newsletters/weekly-highlights-61?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=weeklybest">Sign up for our weekly newsletter</a>.]</p>
<h2>Realistic expectations</h2>
<p>When a <a href="https://www.globalbankingandfinance.com/is-the-board-to-blame/">company runs aground</a> or <a href="https://qz.com/1015378/dont-just-blame-travis-kalanick-blame-ubers-complicit-board/">faces scandal</a>, <a href="https://www.businessinsider.com/directors-and-blame-where-does-the-fault-lie-2012-6">investors</a>, workers, <a href="https://hbr.org/2016/05/boards-arent-the-right-way-to-monitor-companies">local politicians</a> and <a href="https://www.latimes.com/business/story/2020-01-03/boeing-board-bad-management">others</a> with a stake in its operation often look for <a href="https://www.linkedin.com/pulse/failure-company-always-boards-fault-anbu-ganapathi-muppidathi/">someone to blame</a>. That someone is <a href="https://fortune.com/2017/04/14/wells-fargo-fake-accounts-2/">usually the company’s board of directors</a>. </p>
<p>But our study shows investors and regulators need to reconcile their expectations of directors with the realities of the boardroom. A board’s ability to monitor for fraud, corruption or other problems is limited at best, especially given the information gap between managers and boards. And since directors say they see their role as helping CEOs increase profits, it seems unlikely to expect them to clash with executives over how they go about it. </p>
<p>If investors or others believe companies need oversight, they’ll probably need to do it themselves.</p><img src="https://counter.theconversation.com/content/165788/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steven Boivie does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A new study involving extensive interviews with dozens of directors shows that they see their roles as more about supporting executives, not challenging them.Steven Boivie, Professor of Management, Texas A&M UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1565552021-03-18T18:13:04Z2021-03-18T18:13:04Z3 ways employers could help fight vaccine skepticism<figure><img src="https://images.theconversation.com/files/390228/original/file-20210317-13-gu5no6.jpg?ixlib=rb-1.1.0&rect=34%2C89%2C4580%2C2982&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Monterey Mushrooms, an agricultural employer in California, teamed up with its union and the local county to get its workers vaccinated. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/VirusOutbreakCalifornia/6b624dec0f084bc7a6cc33706b4f1cf5/photo?Query=vaccine%20AND%20employer&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=17&currentItemNo=13">AP Photo/Jeff Chiu</a></span></figcaption></figure><p>Ending the pandemic depends on achieving herd immunity, <a href="https://theconversation.com/how-many-people-need-to-get-a-covid-19-vaccine-in-order-to-stop-the-coronavirus-152071">estimated at 70%</a> or <a href="https://www.nytimes.com/2020/12/24/health/herd-immunity-covid-coronavirus.html">even 80% to 90%</a> of a population. With some <a href="https://www.npr.org/sections/coronavirus-live-updates/2021/03/12/976172586/little-difference-in-vaccine-hesitancy-among-white-and-black-americans-poll-find">30% of Americans telling pollsters</a> they have no interest in getting vaccinated, that’s cutting it a bit close. The <a href="https://doi.org/10.1038/s41591-020-1124-9">numbers are even worse</a> in many other countries. </p>
<p>In the fight against vaccine skepticism, <a href="http://www.doi.org/10.1177/1529100618760521">employers can play</a> a key role. This is not only because it’s an important precaution for the health and safety of their employees, but also because a recent survey shows people around the world, including in the U.S., <a href="https://www.edelman.com/trust/2021-trust-barometer">tend to trust</a> their employers more than governments or the media. Moreover, Republicans, <a href="http://maristpoll.marist.edu/wp-content/uploads/2021/03/NPR_PBS-NewsHour_Marist-Poll_USA-NOS-and-Tables_202103091124.pdf#page=3">who are more likely to say</a> they won’t get the vaccine, are also generally <a href="https://www.edelman.com/trust/2019-trust-barometer">much more trusting of business</a>, suggesting employers may be able to have more influence on them than journalists or health experts.</p>
<p>As <a href="https://scholar.google.com/citations?user=697eQncAAAAJ&hl=en&oi=ao">someone who studies how companies communicate</a> with their employees, I have three research-based tips that can make their efforts more effective. </p>
<p><iframe id="Gdd4k" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/Gdd4k/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>1. Building trust with transparency</h2>
<p>Although many workers say they trust their employers more than some other institutions, trust erosion has been a prominent global issue. Just 61% of participants in the survey referenced above, conducted by public relations consultancy Edelman, said they trust businesses to do the right thing. </p>
<p>That’s why it’s essential for companies to communicate with employees in a way that builds more trust. And research has shown that <a href="https://instituteforpr.org/cultivating-employee-trust-authenticity-transparency-engagement">transparency has been consistently linked</a> to employee relationship with their employer.</p>
<p>By that I mean focus on giving employees the facts – while dispelling some of the myths – and being clear about where it all comes from. There are many ways to disseminate the information, such as through email, flyers, corporate newsletters and social media, but inviting in local health experts is another good way to transparently lay out the facts while also helping skeptical employees get their questions and concerns addressed. </p>
<p>The <a href="https://www.edelman.com/trust/2021-trust-barometer">2021 Trust Barometer survey</a> showed that people trust scientists and people in their local community more than national leaders. Scientists scored even higher than employees’ own CEOs.</p>
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<h2>2. It’s a two-way street</h2>
<p>That brings me to another important point: Employers will be more effective if they treat employees as partners in the internal vaccination program. And that means listening as much as talking. </p>
<p><a href="https://doi.org/10.1177/2329488420914066">Research has found</a> that companies that are pursuing a major change – such as a merger, layoff or rebranding – are more likely to win high employee acceptance if they engage in two-way communication that emphasizes listening, feedback, reciprocity, openness and trust. When employees feel their voices are being heard and taken seriously by their organization, they feel empowered and more involved, making them more likely to buy in to the organization’s decisions.</p>
<p>Besides inviting health experts for Q&A’s, employers could also host staff listening sessions such as virtual town halls to gather feedback and address even basic questions, like when people are eligible to get the vaccine, whether it will cost anything and what that means for a return to the office. It also can help address unique concerns and issues of different groups, especially those who <a href="http://www.doi.org/10.1007/s10900-020-00958-x">surveys show</a> have more hesitancy about taking a vaccine. </p>
<h2>3. Empathy works</h2>
<p>Businesses that emphasize empathy, compassion and genuine care for employees’ well-being have <a href="https://www.forbes.com/sites/jackkelly/2020/05/06/airbnb-lays-off-25-of-its-employees-ceo-brian-chesky-gives-a-master-class-in-empathy-and-compassion/?sh=79b7f105ee30">won applause</a> from employees during the COVID-19 pandemic.</p>
<p>My own recent study – which is currently under review – examined leaders’ use of motivating language during the pandemic. I found that supervisors who gave clear directions, showed empathy for how the pandemic affected workers’ personal lives and communicated support were most effective in fostering employee trust in leadership and the organization. While understandably trust that isn’t there can’t be built overnight, it’s never too late to do more. </p>
<p><a href="https://doi.org/10.1016/j.pubrev.2020.101927">I found similar results in past research</a>: CEOs perceived as exhibiting genuine care for their employees engender more support for company-wide initiatives. </p>
<p>[<em>Insight, in your inbox each day.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=insight">You can get it with The Conversation’s email newsletter</a>.]</p>
<p>Beyond the language being used, companies can show they care in other ways – actions speak louder than words, after all. For example, some companies, such as <a href="https://newscenter.dollargeneral.com/covid-19/dollar-general-removes-barriers-for-frontline-workers-to-get-vaccine.htm">Dollar General</a>, <a href="https://apnews.com/article/business-pandemics-public-health-products-and-services-media-58e454e87aafc72fe9ecdc98c5347b9c">Instacart</a> and <a href="https://www.businessinsider.com/publix-to-offer-gift-cards-to-workers-who-get-vaccinated-2021-2">Publix</a>, have offered paid leave time or cash incentive bonuses to encourage their employees to get vaccinated.</p>
<p>The U.S. and the world face one of the greatest health crises in history. Ultimately, I believe, it’s a collective responsibility of everyone – governments, individuals, companies – to help turn the tide against the pandemic. </p>
<p>And if companies needed one more reason, <a href="https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/true-gen-generation-z-and-its-implications-for-companies">surveys</a> and <a href="https://www.forbes.com/sites/nathanpeart/2020/04/07/as-millennials-and-gen-z-become-more-brand-conscious-how-will-professional-services-adapt/?sh=1dec19404148">reporting show</a> younger generations increasingly expect companies to be socially responsible. And <a href="https://www.doi.org/10.1177/2329488420907121">recent research</a> found that companies who engage in social advocacy tend to enjoy stronger brand loyalty. </p>
<p>In other words, it’s good not only for society but for companies’ bottom lines, too.</p><img src="https://counter.theconversation.com/content/156555/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rita Men does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Surveys suggest people trust companies more than government and the media, showing they have an important role in helping end the pandemic.Rita Men, Associate Professor of Public Relations, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1502552020-11-24T10:46:01Z2020-11-24T10:46:01Z‘Never let a crisis go to waste’: how three CEOs helped their companies thrive in a pandemic<figure><img src="https://images.theconversation.com/files/370813/original/file-20201123-21-p086er.png?ixlib=rb-1.1.0&rect=3%2C0%2C2612%2C1646&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Some businesses have managed to build positive outcomes from the crisis.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-vector/bankrupt-concept-people-trying-keep-downward-1439691422">MicroOne/Shutterstock</a></span></figcaption></figure><p>The COVID-19 pandemic has prompted different responses from company CEOs seeking to ensure their businesses survive. Keeping their employees safe has been the first priority, but beyond that, their task has involved understanding the situation, launching countermeasures, and trying to evolve ways of working to ensure their businesses can continue. </p>
<p>We spoke to the chief executives of three major companies in three very different industries. In their responses to the crisis we found that Winston Churchill’s adage of “never let a crisis go to waste” was as relevant as ever, with businesses finding positives during the pandemic.</p>
<h2>Accelerate strategy</h2>
<p>Shipping giant AP Møller-Maersk <a href="https://www.maersk.com/news/articles/2019/06/26/the-foundation-for-a-transformation">embarked on a historic transformation</a> in 2016 to become an integrated transport and logistics company – combining its shipping line, port operations and freight forwarding businesses into a single entity. However, <a href="https://shippingwatch.com/carriers/Container/article11958155.ece">progress had been limited</a>. </p>
<p>The pandemic brought unprecedented challenges to Maersk’s customers who, faced with falling demand, had to manage their global supply networks as effectively as possible. They wanted better information across the supply chain and the ability to change outcomes while goods were in transit. </p>
<p>These demands affirmed Maersk’s strategy to shift from being a port-to-port container transport company to an integrated, end-to-end logistics company, making use of digital technologies to provide the connectivity and visibility that customers required.</p>
<p>Maersk’s customers turned to its blockchain-enabled supply chain platform <a href="https://www.tradelens.com/about">TradeLens</a>, where the number of transactions <a href="https://www.maersk.com/news/articles/2020/10/15/tradelens-amid-surging-use-of-digital-solutions">almost tripled</a> from 70,000 a week in January 2020 to 194,000 a week in June. Transactions through Maersk.com increased by 20%-25% between January and October 2020. Maersk’s CEO Soren Skou told us: “The investments we made in the last five years in digital capabilities came in very handy during COVID-19.” </p>
<p>The pandemic accelerated Maersk’s technological transformation efforts, which led to new digital products and services while modernising its customer interface, back-end infrastructure and assets such as ships and terminals. Maersk also built expertise through acquisitions, purchasing warehousing and distribution company <a href="https://www.maersk.com/news/articles/2020/04/01/ap-moller-maersk-completes-acquisition-of-performance-team">Performance Team</a>, and customs management firm <a href="https://www.offshore-energy.biz/maersk-to-acquire-swedish-customs-service-specialist">KGH Customs</a>.</p>
<p>Skou was able to apply what he’d learned from the financial crisis of 2008-09, when Maersk and its competitors fought for market share and ended up driving down freight rates. This time, Skou focused on profitability: cutting capacity by 20%, but <a href="https://shippingwatch.com/carriers/Container/article12356025.ece">filling the remaining vessels</a> even as the pandemic caused shipping volumes to drop. The plunging price of oil also helped Maersk’s financial performance, and its earnings actually <a href="https://www.maersk.com/news/articles/2020/10/13/maersk-upgrades-expectations-for-q3-2020">increased in the first three quarters of 2020</a>, despite near-paralysis of the global economy.</p>
<figure class="align-center ">
<img alt="Businessman examines blackboard showing drawing of business performance falling as COVID rates rise" src="https://images.theconversation.com/files/370816/original/file-20201123-13-1h3hdca.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/370816/original/file-20201123-13-1h3hdca.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/370816/original/file-20201123-13-1h3hdca.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/370816/original/file-20201123-13-1h3hdca.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/370816/original/file-20201123-13-1h3hdca.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/370816/original/file-20201123-13-1h3hdca.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/370816/original/file-20201123-13-1h3hdca.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">For many businesses, the effects of the pandemic have been harsh – even terminal.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/econimical-crisis-concept-due-coronavirus-covid19-1686250051">Song_about_summer/Shutterstock</a></span>
</figcaption>
</figure>
<h2>Scale-up innovation</h2>
<p>Large companies are often seen as slow and trailing in innovation compared to smaller, more nimble competitors. Standard operating procedures mean they focus on developing “perfect” solutions, testing in pilot markets and proving the business case over a couple of years, before finally rolling out – by which time they have probably missed the boat.</p>
<p>Mars Petcare, a global leader in pet food and pet health services, found that COVID-19 necessitated scaling up innovation. Prior to the crisis, the company had been working on a <a href="https://www.mars.com/news-and-stories/press-releases/mars-pet-insight-project">telehealth service for pet owners</a>, offering video consulatations with vets at 20 veterinary hospitals, where it proved to be a valuable triage tool for prioritising cases. </p>
<p>As the pandemic took hold, pet owners started working from home, inevitably spending more time with their pets which generated more queries about minor health issues. An initial video call with a vet was an ideal solution.</p>
<p>Working with Microsoft, the company scaled its telehealth service from 20 to around 2,000 veterinary hospitals – in one month. Poul Weihrauch, global president of Mars Petcare, told us:</p>
<blockquote>
<p>This may not help our earnings in the short term, but it will make the clients happier and pets healthier today and in the long term. A common belief is that big companies are slow, but this shows that big companies can scale innovation very quickly. This time, it was done by necessity… but clearly the goal is that it should be the norm.</p>
</blockquote>
<p>These efforts, <a href="https://www.cnbc.com/2020/04/23/vet-telehealth-surges-as-first-us-pets-test-positive-for-coronavirus.html">spurred by high demand during COVID-19</a>, tied in well with Mars Petcare’s strategy to dramatically accelerate its evolution from pet food manufacturer to provider of pet care services.</p>
<h2>Engage with employees and customers</h2>
<p>When the pandemic struck, security became an “essential service”. Security company Securitas realised it needed to quickly ramp up its electronic solutions. This validated the company’s <a href="https://www.securitas.com/media/regulatory-press-releases/securitas-accelerates-the-transformation-of-the-group">strategy launched in 2018</a> to evolve from providing traditional physical guarding to digital security solutions such as facial recognition technology and remote video monitoring.</p>
<p>CEO Magnus Ahlqvist wanted to manage customers’ uncertainty, outlining how Securitas was dealing with the crisis. He and his management team worked with major clients, with a similar sponsorship system for each of the countries in which Securitas operates. Ahlqvist told us: </p>
<blockquote>
<p>“I have spent more time with clients than I would normally… Being visible and present for clients in a tough moment will pay off in the long term.”</p>
</blockquote>
<p>The Swedish company’s 340,000 frontline guards had to rise to an unprecedented challenge, for which the company pushed hard to <a href="https://www.securitas.com/our-offering/security-solutions/">equip them with better digital tools</a>.</p>
<p>Having already embarked on strategic transformations, these firms were well equipped to turn an unparalleled threat into an opportunity. Setting a good example from the top, the chief executives were able to put the crisis to work by accelerating strategy, scaling innovation and deepening customer engagement, generating the energy required for the organisation to thrive, despite the hurdles thrown up by COVID-19.</p><img src="https://counter.theconversation.com/content/150255/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The coronavirus crisis has hit many businesses hard, but some have turned their difficulties into a springboard to move the company forward.Thomas Malnight, Professor of Strategy, International Institute for Management Development (IMD)Ivy Buche, Associate Director, Business Transformation Initiative, International Institute for Management Development (IMD)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1362142020-04-16T12:18:57Z2020-04-16T12:18:57ZLeading in wartime: 5 ways CEOs should communicate with their workers during coronavirus<figure><img src="https://images.theconversation.com/files/328105/original/file-20200415-153326-vsp2k3.jpg?ixlib=rb-1.1.0&rect=309%2C316%2C4492%2C2843&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Microsoft's Satya Nadella urged his employees to show empathy for one another.</span> <span class="attribution"><span class="source">AP Photo/Elaine Thompson</span></span></figcaption></figure><p><a href="https://abcnews.go.com/Politics/trump-coronavirus-task-force-economic-public-health-steps/story?id=69646672">President Donald Trump</a> and <a href="https://www.cnbc.com/2020/04/06/chief-surgeon-at-top-ny-hospital-likens-this-week-of-coronavirus-outbreak-to-war.html">others</a> have likened the coronavirus pandemic to fighting a war. </p>
<p>As <a href="https://scholar.google.com/citations?user=697eQncAAAAJ&hl=en&oi=ao">someone who studies how leaders communicate</a>, I believe that’s an apt description. But the president isn’t the only general in this battle. America’s CEOs also have important leadership roles to play as the crisis poses a test of their ability to help their workers not only endure and stay healthy but keep them motivated and engaged as well. </p>
<p>What’s the best way to do that? </p>
<p>To find an answer, I reviewed <a href="https://www.dropbox.com/home/Temporary/CEO%20Communication%20Literature">21 academic studies</a>
on executive leadership communication and conducted a textual analysis of <a href="https://instituteforpr.org/covid-19-resources-for-pr-professionals/">12 industry studies</a> related to <a href="https://www.ickollectif.com/covid-19">organizational and leadership communication</a> during the pandemic.</p>
<p>I discovered five key themes that may provide some insights for how CEOs should communicate with their employees during the COVID-19 pandemic.</p>
<h2>1. Be transparent</h2>
<p><a href="https://doi.org/10.1016/j.pubrev.2019.04.012">Transparency</a> requires leaders to openly and proactively share relevant information to employees in a timely, frequent and digestible manner; give accurate information regarding what is happening, what the impact is and how the company is handling it; and offer clear guidance on what workers should be doing. </p>
<p>It also means encouraging employees to speak up and share their feedback and concerns. This kind of openness <a href="https://doi.org/10.1016/j.pubrev.2019.04.012">fosters trust</a>and reduces uncertainty – especially important in a <a href="https://www.doi.org/10.1080/1062726X.2013.795869">crisis</a>. </p>
<p>In a video message to the employees, <a href="https://www.inc.com/jason-aten/marriotts-ceo-shared-a-video-with-his-team-its-a-powerful-lesson-in-leading-during-a-crisis.html">Marriott CEO Arne Sorenson</a> demonstrated this when he didn’t try to sugarcoat the losses his company has suffered in the crisis.</p>
<h2>2. Convey authenticity</h2>
<p>Authentic leadership is not a new concept to the business community and its effectiveness in generating positive employee outcomes has been supported by a bulk of <a href="https://www.doi.org/10.1177/0093650215613137">academic</a> and industry <a href="https://www.doi.org/10.1080/1062726X.2014.908720">research</a>. </p>
<p>While CEOs are wired to take action, tough times like the pandemic cast monumental challenges to leading an organization. In an era where uncertainties outweigh the certainties, sometimes they simply don’t know what to do. </p>
<p>That’s okay. CEOs that authentically share vulnerability can actually demonstrate the human side of leadership. Employees look up to leaders for assurance and support. They do not necessarily expect CEOs to be superheroes. </p>
<p>To communicate in an authentic manner, CEOs should stay true to their values and beliefs and keep their promises. They need to also be self-aware of what they’re capable of, and genuine in their communication with employees – even when they don’t know what’s going on. </p>
<p>Jeff Bezos, CEO of Amazon, <a href="https://blog.aboutamazon.com/company-news/a-message-from-our-ceo-and-founder">exhibited this trait</a> when he acknowledged to employees, “There is no instruction manual for how to feel at a time like this,” and added his own list of worries, such as the safety of his family and colleagues. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/328441/original/file-20200416-192749-1ldy9r4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/328441/original/file-20200416-192749-1ldy9r4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/328441/original/file-20200416-192749-1ldy9r4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/328441/original/file-20200416-192749-1ldy9r4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/328441/original/file-20200416-192749-1ldy9r4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/328441/original/file-20200416-192749-1ldy9r4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/328441/original/file-20200416-192749-1ldy9r4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Amazon CEO Jeff Bezos conveyed authenticity in his letter to employees.</span>
</figcaption>
</figure>
<h2>3. Show empathy</h2>
<p>The value of empathy was perhaps the most recurring theme in my analysis of best practices.</p>
<p>In my own <a href="https://doi.org/10.1016/j.pubrev.2019.04.012">recent study</a> that examined leadership communication during a planned organizational change – such as a merger – I found that communicating with empathy enhanced employee trust and drove commitment and acceptance to that change. </p>
<p>The COVID-19 pandemic poses similar challenges because employees face enormous uncertainties and unpleasant emotions, such as fear, sadness, anxiety and frustration. CEOs can help reduce worker anxiety and form a bond with them by <a href="https://www.doi.org/10.1108/01437730610692425/full/html">showing sympathy</a> and standing in their shoes. </p>
<p><a href="https://www.linkedin.com/pulse/coming-together-combat-covid-19-satya-nadella/">Microsoft CEO Satya Nadella</a> demonstrated this and emphasized the value of empathy in his message to employees, urging them to show “understanding for each other’s situations.”</p>
<h2>4. Put people first</h2>
<p>The novel coronavirus is <a href="https://www.nytimes.com/2020/04/14/business/economy/coronavirus-corporate-earnings-stocks.html">hammering companies’ bottom lines</a>, from productivity to profits. CEOs that put employees’ safety and health first are demonstrating their humanity. </p>
<p>This people-centered mindset is crucial for the organization’s survival and long-term development as employees are the backbone of the organization and eventually create the organization’s <a href="http://connection.ebscohost.com/c/articles/15905241/breakthrough-organization-performance-competitive-advantage-through-employee-centered-management">competitive advantage</a>.</p>
<p>We have seen many examples of this during the current crisis, such as the CEOs of Bank of America, Citigroup, FedEx and Visa <a href="https://www.forbes.com/sites/jackkelly/2020/03/27/prominent-ceos-promise-that-they-will-not-layoff-workers-in-2020/#f613cd9a61d5">pledging not to lay off any workers</a> as a result of the pandemic.</p>
<h2>5. Demonstrate optimism</h2>
<p>Conveying positivity or optimism is an especially important leadership quality during challenging times, when it is easy for people to experience negative feelings and frustrations. Leaders who portray an optimistic outlook in the tone of their communications and foster positive thinking motivate and inspire employees. </p>
<p>A good example of this is Levi Strauss CEO Chip Bergh, who <a href="https://sourcingjournal.com/denim/denim-business/levi-chip-bergh-coronavirus-heritage-denim-employees-201735/">wrote a letter to employees</a> encouraging them to focus on the crisis’ silver lining. </p>
<p>“One of the things motivating me through this difficult time is the idea that we can learn and adapt and adjust so we emerge stronger as a result of this test,” he wrote. The crisis “will pass. We will get through this together and be a better and stronger company as a result of it.”</p>
<p>And at my own school, University of Florida <a href="https://gatorswire.usatoday.com/2020/03/11/university-of-florida-president-kent-fuchs-issues-statement-on-covid-19/">President Kent Fuchs</a> reminded students and staff of their “tradition of pulling together and rising to meet major challenges with optimism and determination.”</p>
<p>During extraordinary times like the COVID-19 pandemic, leaders need effective communication skills like these to instill trust, confidence and hope in their workers – essential ingredients to winning the war. </p>
<p>[<em>You need to understand the coronavirus pandemic, and we can help.</em> <a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=upper-coronavirus-help">Read The Conversation’s newsletter</a>.]</p><img src="https://counter.theconversation.com/content/136214/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rita Men does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A scholar of how leaders communicate offers five key traits CEOs should use when communicating with their workers about coronavirus.Rita Men, Associate Professor of Public Relations, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1213682019-08-13T13:27:35Z2019-08-13T13:27:35ZDismissal of directors: South Africa’s law needs clarity on the role of courts<figure><img src="https://images.theconversation.com/files/287178/original/file-20190807-144862-1xybj1i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Legislature must clarify courts' role and assistance it may provide to an unfairly removed director</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Over eight years ago South African <a href="https://www.polity.org.za/article/the-companies-act-2008-and-transitional-arrangements-2012-08-01">company law</a> gave boards of directors the power to <a href="https://www.polity.org.za/article/removing-a-director-under-the-companies-act-71-of-2008-2015-06-30">remove</a> a fellow director, provided they do so in defined circumstances. The law also requires them to follow the correct legal procedures. For example, a board may remove a director if the director is incapacitated, convicted of theft or fraud, has neglected their duties, or been derelict in their duties. </p>
<p>The director must be given notice of the board meeting and the reasons for his proposed removal. He must also be given an opportunity to state his case in the board meeting before the board may vote on his removal. </p>
<p>But every now and then directors are unfairly removed from office by a hostile board. When this occurs, they face numerous challenges. One of them is that the legal remedies open to them are unclear. </p>
<p>A director who is removed from office is immediately suspended, even if his removal was unfair. He has 20 days to apply to court to “review” the board’s decision, after which he will lose this right. But the review process is not entirely clear and the Companies Act leaves many questions unanswered.</p>
<p>Since the board’s power to remove directors is relatively new in South Africa our case law jurisprudence in this area is still developing. The only case involving the unfair removal of a director reported thus far relates to the state-owned Armaments Corporation of South Africa. The Constitutional Court <a href="http://www.saflii.org/za/cases/ZACC/2014/18.html">ruled</a> that the removal of two directors of the Armaments Corporation by the Minister of Defence and Military Veterans was unlawful because the Minister had not followed proper procedures under the Companies Act.</p>
<p>The unfair removal of directors is not unique to South Africa. Other countries also face the same problem. There have been similar cases reported in the UK and the US. However, the statutory remedy under South Africa’s Companies Act, which requires directors to apply to court for review of the board’s decision, is unique to the country’s company law.</p>
<h2>Uncertainty about court powers</h2>
<p>Due to the technical legal meaning of the term “review”, it is debatable whether a court can evaluate the merits of the board’s decision. An example is whether the director was indeed neglectful or derelict in carrying out his duties. Another question that arises is whether the court may only examine the procedural steps for the director’s removal, such as whether he was given a reasonable opportunity to defend himself. </p>
<p>A strict reading of the relevant provision in the Companies Act suggests that a court may only assess the procedural steps of the director’s removal. This is worrying as it does not fully protect directors in a situation where the board has abused its powers. The statutory rules are also not clear whether a court can reinstate directors if it finds that their removal was unfair.</p>
<p>Reinstatement is further complicated when the case involves an executive director, who is both a director and full-time employee. If the board removes an executive director from office, he will not automatically be dismissed as an employee. </p>
<p>To dismiss the director as an employee, the proper procedures under the Labour Relations Act must also be complied with. If these are not followed, the unfairly dismissed director can rely on remedies under the Labour Relations Act. A board that doesn’t follow the prescripts of both the company and labour laws in removing an executive director does so at its peril. </p>
<p>For example, a recent Johannesburg High Court <a href="http://www.saflii.org/za/cases/ZAGPJHC/2019/229.html">judgement </a> found that Old Mutual had unlawfully fired its chief executive officer, Peter Moyo, because the company had not followed proper labour law procedures. It does not appear that Old Mutual took the additional vital step under the Companies Act of removing Moyo as a director of the board when it dismissed him as an employee. </p>
<p>This step should have been taken since the dismissal of an executive director as an employee does not automatically mean that he is no longer a director.</p>
<p>But the reinstatement of an executive director could be trickier because he is also an employee. The hostile removal of an executive director may result in an irreparable breakdown of his relationship with the company. This makes reinstatement challenging, as illustrated by Moyo’s case when the court temporarily reinstated him. </p>
<p>Moyo’s return to work has been met with <a href="https://www.iol.co.za/business-report/companies/axed-old-mutual-ceo-still-barred-from-premises-insurer-files-for-declaratory-order-30359338">resistance</a> by Old Mutual, on the basis of a breakdown in relations between him and the board. Old Mutual is now appealing the court’s order.</p>
<h2>Who pays legal fees?</h2>
<p>It is also not clear from the Companies Act whether, in review proceedings, a court may order compensation to be paid to the unfairly removed director. An example of compensation would be board fees.</p>
<p>Petitioning the court to review a dismissal could leave a director with huge legal fees. The Companies Act is silent on which party is to pay the costs of the review application. Presumably, the general principle regarding <a href="http://www.saflii.org/cgi-bin/disp.pl?file=za/cases/ZASCA/2000/75.html&query=kilian%20para%2024%5D">costs</a> will apply. The convention is that costs are awarded against the unsuccessful party. But courts can depart from this general rule and decide each case on its own merits. At the end of the day, at stake is the issue of fairness to both sides.</p>
<p>It may be comforting to executive directors to know that if their untimely removal by the board breaches their contract with the company, they may claim compensation for loss of office. For example, if a director is contractually appointed for five years but the board removes him without justifiable cause after three years, he may claim compensation from the company for the early removal from office. </p>
<p>If a director suffers harm to his reputation as a result of his unfair removal from office, he could sue the board for defamation. If he proves that the board breached its fiduciary duties in removing him, he may even be able to ask the court to declare the board members delinquent for seven years or longer. </p>
<p>This is exactly what Moyo <a href="https://www.moneyweb.co.za/news/companies-and-deals/moyo-now-wants-the-entire-old-mutual-board-to-be-purged/">plans to do</a>.</p>
<h2>Abuse needs to be watched</h2>
<p>The new power given to directors to remove one of their own must not be abused. The courts must keep a watchful eye on it. To strengthen the review application, it is my view that courts should have the power to examine the merits of board decisions to remove their members. They should also have the power to reinstate the unfairly removed director, and where this is not appropriate, to at least order appropriate compensation.</p>
<p>The right to a review is precious. It is a safeguard against boards abusing their removal power. But, for this process to be fully effective, the legislature must urgently clarify the courts’ role and the assistance they may provide to unfairly removed directors. Directors must have certainty on their right to review decisions to kick them out of office.</p><img src="https://counter.theconversation.com/content/121368/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rehana Cassim does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Directors who are unfairly kicked out of office by a hostile board face challenges since the legal remedies open to them are unclear.Rehana Cassim, Senior Lecturer in Company Law, University of South AfricaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/723932017-02-17T02:00:00Z2017-02-17T02:00:00ZWhite House in turmoil shows why Trump’s no CEO<p>Throughout the 2016 presidential campaign, Donald Trump <a href="https://www.donaldjtrump.com/press-releases/donald-j.-trump-remarks-in-charlotte-nc">made much of his business experience</a>, claiming he’s been “creating jobs and rebuilding neighborhoods my entire adult life.” </p>
<p>The fact that he was from the business world rather than a career politician was something that <a href="http://www.usnews.com/news/the-report/articles/2015/10/01/donald-trumps-supporters-and-why-they-love-him">appealed to many of his supporters</a>.</p>
<p>It’s easy to <a href="http://hbswk.hbs.edu/item/what-ceos-do-and-how-they-can-do-it-better">understand the appeal</a> of a CEO as president. The U.S. president is indisputably the chief executive of a massive, complex, global structure known as the federal government. And if the performance of our national economy is vital to the well-being of us all, why not believe that Trump’s experience running a large company equips him to effectively manage a nation?</p>
<p>Instead of a “<a href="http://www.telegraph.co.uk/news/2017/02/16/us-politics-us-defence-secretary-james-mattis-says-little-doubt/">fine-tuned machine</a>,” however, the <a href="https://www.nytimes.com/2017/02/14/us/politics/trump-white-house.html">opening weeks</a> of the Trump administration have revealed a White House that’s chaotic, disorganized and anything but efficient. Examples include rushed and <a href="https://www.nytimes.com/2017/01/30/us/politics/trump-immigration-muslim-ban.html">poorly constructed executive orders</a>, a <a href="https://www.nytimes.com/2017/02/13/us/politics/donald-trump-national-security-adviser-michael-flynn.html">dysfunctional national security team</a> and unclear and <a href="https://www.nytimes.com/2017/02/14/us/politics/trump-white-house.html">even contradictory messages</a> emanating from multiple administrative spokespeople, which frequently clash with the tweets of the president himself.</p>
<p>Senator John McCain <a href="https://theintellectualist.co/john-mccain-nobody-knows-whos-charge-trumps-dysfunctional-white-house">succinctly summed up the growing sentiment even some Republicans are feeling</a>: “Nobody knows who’s in charge.” </p>
<p>So why the seeming contradiction between his businessman credentials and chaotic governing style? </p>
<p>Well for one thing, Trump wasn’t a genuine CEO. That is, he didn’t run a major public corporation with shareholders and a board of directors that could hold him to account. Instead, he was the head of a family-owned, private web of enterprises. Regardless of the title he gave himself, the position arguably ill-equipped him for the demands of the presidency.</p>
<h2>Public accountability</h2>
<p>Several years ago, I explored the distinction between public and private companies in detail when the American Bar Association <a href="https://www.amazon.com/Understanding-Your-Business-Clients-Fundamentals/dp/161438830X/">invited me to write</a> about what young corporate lawyers needed to understand about how business works. Based on that research, I want to point to an important set of distinctions between public corporations and private businesses, and what it all means for President Trump.</p>
<p>Public corporations are companies that offer their stock to pretty much anyone via organized exchanges or by some over-the-counter mechanism. In order to protect investors, the government created the Securities and Exchange Commission (SEC), which imposes an obligation of transparency on public corporations that does not apply to private businesses like the <a href="http://www.trump.com">Trump Organization</a>.</p>
<p>The SEC, for example, <a href="http://www.legalandcompliance.com/securities-resources/sec-requirements-for-public-companies">requires</a> the CEO of public corporations to make full and public disclosures of their financial position. Annual 10-K reports, quarterly 10-Q’s and occasional special 8-K’s require disclosure of operating expenses, significant partnerships, liabilities, strategies, risks and plans.</p>
<p>Additionally, an independent firm overseen by the <a href="https://pcaobus.org/">Public Company Accounting Oversight Board</a> conducts an audit of these financial statements to ensure thoroughness and accuracy.</p>
<p>Finally, the CEO, along with the chief financial officer, is criminally liable for falsification or manipulation of the company’s reports. Remember the 2001 <a href="http://www.investopedia.com/updates/enron-scandal-summary/">Enron scandal</a>? CEO Jeffrey Skilling was convicted of conspiracy, fraud and insider trading and initially sentenced to 24 years in prison. </p>
<h2>Internal governance</h2>
<p>Then there is the matter of internal governance.</p>
<p>The CEO of a public company is subject to an array of constraints and a varying but always substantial degree of oversight. There are boards of directors, of course, that review all major strategic decisions, among other duties. And there are separate committees that assess CEO performance and determine compensation, composed entirely of independent or outside directors without any ongoing involvement in running the business.</p>
<p>Whole categories of CEO decisions, including mergers and acquisitions, changes in the corporation’s charter and executive compensation packages, are subject to the opinion of shareholders and directors.</p>
<p>In addition, the <a href="https://www.sec.gov/news/press/2011/2011-25.htm">2010 Dodd-Frank Act requires</a> – for now – regular nonbinding shareholder votes on the compensation packages of top executives.</p>
<p>And then there’s this critical fact: well-governed firms tend to <a href="http://www.nber.org/papers/w15912">outperform</a> poorly governed ones, often dramatically. And that’s because of factors like a strong board of directors, more transparency, a responsiveness to shareholders, thorough and independent audits and so forth.</p>
<h2>Trump’s business</h2>
<p>None of the obligations listed above applied to Trump, who was owner, chairman and president of <a href="http://www.investopedia.com/updates/donald-trump-companies">the Trump Organization</a>, a family-owned limited liability company (LLC) that has owned and run hundreds of businesses involving real estate, hotels, golf courses, private jet rentals, beauty pageants and even bottled water. </p>
<p>LLCs <a href="https://www.thebalance.com/what-are-the-tax-advantages-and-disadvantages-of-an-llc-397768">are specifically designed</a> to offer owners tax advantages, maximum flexibility and financial and legal protections without either the benefits (such as access to equity capital markets) or the many obligations of a public corporation. </p>
<p>For example, as I noted above, a corporate CEO is required by law to allow scrutiny of the financial consequences of his or her decisions by others. As such, CEOs know the value of having a strong executive team able to serve as a sounding board and participate in key strategic decisions. </p>
<p>Trump, by contrast, as the <a href="http://fortune.com/donald-trump-businessman/">head of a family business</a> was accountable to no one and reportedly ran his company that way. His <a href="https://www.nytimes.com/2016/12/25/us/politics/trump-organization-business.html">executive team comprised</a> his children and people who are loyal to him, and his decision-making authority was unconstrained by any internal governance mechanisms. Decisions concerning what businesses to start or exit, how much money to borrow and at what interest rates, how to market products and services, and how – or even whether – to pay suppliers or treat customers were made centrally and not subject to review. </p>
<p>Clearly, this poorly equips Trump to be president and accountable to lawmakers, the courts and ultimately the voters. </p>
<p>Another important aspect of the public corporation is the notion of transparency and the degree to which it enables accountability. </p>
<p>A lack of transparency and reluctance to engage in open disclosure characterized the formulation of Trump’s immigration ban <a href="https://www.nytimes.com/2017/02/04/us/politics/visa-ban-trump-judge-james-robart.html">that was quickly overturned</a> in federal court. That same tendency toward secrecy was manifest throughout the campaign, such as when he refused to disclose much about his health (besides this cursory “<a href="https://www.nytimes.com/2016/09/16/us/politics/donald-trump-health.html">note</a>”) or release any of his <a href="http://www.cnn.com/2017/01/22/politics/kellyanne-conway-trump-tax-returns/">tax returns</a>. </p>
<p>While there’s no law that requires a candidate to divulge either health or tax status, that lack of transparency kept potentially vital information from U.S. voters. And Trump’s continuing lack of transparency as president has kept experts and advisers in the dark, leading to precisely the confusion, mixed messages and dysfunction that have characterized these early weeks. And, of course, this can quickly lead to a continuing erosion of public trust. </p>
<p>Trump, it should be noted, made one stab at a public company: <a href="https://theconversation.com/can-trump-create-millions-of-jobs-dont-bet-on-it-66104">Trump Hotels and Casino Resorts</a>. That was an unmitigated <a href="https://www.washingtonpost.com/business/economy/as-its-stock-collapsed-trumps-firm-gave-him-huge-bonuses-and-paid-for-his-jet/2016/06/12/58458918-2766-11e6-b989-4e5479715b54_story.html?utm_term=.d474b4bb5d11">disaster</a>, leading to five separate declarations of bankruptcy before finally going under, all this while other casino companies thrived. Public investors ignored all the signs in favor of the showmanship and glitz of the Trump brand and, as a result, lost millions of dollars. Trump allotted himself a huge salary and bonuses, corporate perks and special merchandising deals. </p>
<p>What is especially telling about this experience is that, rather than speaking on behalf of fiduciary responsibilities for the best interests of the corporation, <a href="https://www.washingtonpost.com/business/economy/as-its-stock-collapsed-trumps-firm-gave-him-huge-bonuses-and-paid-for-his-jet/2016/06/12/58458918-2766-11e6-b989-4e5479715b54_story.html">Trump noted</a>, “I make great deals for myself.” </p>
<h2>Multiplicity of voices</h2>
<p>There is no need to be overly naive here. </p>
<p>Some <a href="https://www.amazon.com/Discourse-Leadership-Appraisal-Bert-Spector/dp/1107049784/ref=sr_1_1_twi_har_1?s=books&ie=UTF8&qid=1487190488&sr=1-1&keywords=bert+spector">CEOs</a> also operate in a highly centralized manner, expecting obedience rather than participation from direct reports. All business executives expect a shared commitment from their employees to their corporate goals and value dependability, cooperation and loyalty from subordinates. </p>
<p>But the involvement of a multiplicity of voices with diverse perspectives and different backgrounds and fields of expertise <a href="https://www.amazon.com/Implementing-Organizational-Change-Theory-Practice/dp/0132729849/ref=sr_1_1?s=books&ie=UTF8&qid=1487190523&sr=1-1">improves the quality of resulting decisions</a>. Impulsive decision-making by an individual or small, cloistered group of followers can and often will lead to disastrous <a href="http://www.nytimes.com/2003/03/09/weekinreview/the-nation-nasa-s-curse-groupthink-is-30-years-old-and-still-going-strong.html">results</a>. </p>
<h2>What lies ahead</h2>
<p>Virtually every U.S. president, ranging from the great to the inconsequential and even the disastrous, have emerged from one of two groups: career politicians or generals. So why not a CEO president?</p>
<p>Without question, a background in politics does not guarantee an effective presidency. Abraham Lincoln, the consensus choice among historians for the <a href="https://www.washingtonpost.com/news/monkey-cage/wp/2015/02/16/new-ranking-of-u-s-presidents-puts-lincoln-1-obama-18-kennedy-judged-most-over-rated/?utm_term=.a8a054bce031">best president ever</a>, was a career politician, but so was his disastrous successor, Andrew Johnson. </p>
<p>Likewise, we can think of many traits of an effective corporate CEO that could serve a president well: transparency and accountability, responsiveness to internal governance and commitment to the interest of the overall corporation over and above self-enrichment.</p>
<p>Sadly, that is not Trump’s background. His experience overseeing an interconnected tangle of LLCs and his one disastrous term as CEO of a public corporation suggest a poor background to be chief executive of the United States. As such, “nobody knows who’s in charge” may be the mantra for years to come.</p>
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<p><a href="http://aom.org/">Bert Spector is an Academy of Management Scholar</a></p>
<footer>The academy is a funding partner of The Conversation US.</footer>
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<p class="fine-print"><em><span>Bert Spector is an Academy of Management scholar.</span></em></p>He campaigned on the notion that his business experience would equip him to ‘make America great again,’ but running a family company is poor training for the presidency.Bert Spector, Associate Professor of International Business and Strategy at the D'Amore-McKim School of Business, Northeastern UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/385862015-03-16T19:16:02Z2015-03-16T19:16:02ZIs CIO the new route to chief executive’s suite?<figure><img src="https://images.theconversation.com/files/74602/original/image-20150312-13485-1cvwlva.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The importance of data and “just-in-time” decision-making may mean the background of CEOs could change.</span> <span class="attribution"><span class="source">Image sourced from www.shutterstock.com</span></span></figcaption></figure><p>Some may wonder whether the appointment of Richard Umbers to the role of Chief executive of retail group Myer, is a one-off. Before his elevation, Umbers was the group’s Chief Information Officer, a role not usually associated with a straight-line route to the CEO’s office.</p>
<p>According to the UK FTSE, approximately half the CEOs appointed in 2012 and 2013 had a finance background. In the United States, 25% of those appointed as CEOs of the <a href="http://qz.com/179301/how-cfos-took-over-the-boardroom">largest listed companies in the USA were once CFOs</a>.</p>
<p>Some Boards look for CEOs who understand the needs and wants of their customers; others want CEOs who are skilled at managing resources (people and money); and others look for a CEO who can grow the company. Traditionally candidates only needed to excel at one of these to be chosen as CEO, but had a better chance of being selected if they excelled at two. Only a few had the knowledge or breadth to tick all three boxes.</p>
<p>Based on the growing importance of information and “just-in-time” decision-making, I think we will see even more CIOs being promoted to CEO of major corporations in the future. Here’s why.</p>
<p>Traditionally, the CIO reported to the CFO who had access to financial data about all aspects of the business. CFOs knew more about the top and bottom line than anyone else. They understood how to manage the balance sheet, and they were often seen as a good counter-balance to the visionary CEO. Some boards believed the CFO’s numbers-driven, analytic reports of “reality” more than the brilliant CEO who was in love with the company’s products or the silver-tongued salesman who could “sell ice to the eskimos”.</p>
<p>But now, the CIO is emerging as a very real alternative path to the CEO position. Technology has become ubiquitous across all facets of the business, from the supply-chain management systems and back-of-house software to the customer-facing web and mobile platforms. Those who are managing these transformational projects have gained a comprehensive insight into how the business functions and how each function inter-relates. Next to the CEO, the CIO is the executive most likely to have a bird’s eye view of what is going on in the organisation.</p>
<p>Digital disruption has changed the game of business. We live in an increasingly data-driven world. Those who understand which technology will generate what kind of data, from whom, at what intervals - and know how to glean data driven insights, in real time, about all aspects of the business - will have an increasingly important role to play in large corporations. And at the moment they are in short supply.</p>
<p>Richard Umbers is an executive who understands all this. He has held general management positions at Aldi, StarTrack and Australia Post, and was responsible for customer engagement at Woolworths. Every shopper at Myer can see that he has used technology to make it a more efficient and effective retailer. Customer information collected at the point of sale enables executives to get immediate insights about everything from product sales to customers’ changing buying habits, to supply chain hiccups and much more. </p>
<p>No doubt Umbers understands how to mine that data for even more insights. His tech-savvy skillset, combined with his past management experience, suggest that he’ll do well as CEO of an organisation such as Myer.</p>
<p>It’s the age of big data, and CIOs are in a position to access, process and understand the data that reveals what’s happening in the business, what’s likely to happen in the future, and what trends are impacting the business. Learning from the past, managing the current, and crafting the right strategy for the future has become a high priority for leaders of companies that want to grow.</p>
<p>[Peter High, consultant and author of an article in Forbes.com], <a href="http://www.metisstrategy.com/world-class-it-book/">World Class IT: Why Businesses Succeed When IT Triumphs</a> identified some common qualities of CIOs who’ve moved into CEO roles:</p>
<ul>
<li>They focus first on what and how to add value to the business; technology comes second</li>
<li>Most worked in other business disciplines prior to taking on the CIO role</li>
<li>Many work within organisations that promote from within</li>
<li>A majority have an MBA or advanced degree in a business discipline</li>
<li>Many have spent time as consultants, hence have broad experience with many kinds of companies impacted by digital disruption.</li>
</ul>
<p>I have worked closely with scores of CEOs, helping them develop their growth strategies and change their roles as the company moves through rapid growth and into continuous growth. As a company grows and faces new challenges in the market, executives who learn how to manage digital disruption and change, to use data to enable them to operate at the speed of growth will succeed. Those who don’t will stunt their company’s growth.</p><img src="https://counter.theconversation.com/content/38586/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jana Matthews does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Finance backgrounds have traditionally been the preferred skills for an aspiring chief executive. But in the age of Big Data, that may be changing.Jana Matthews, ANZ Chair in Business Growth, Director, Centre for Business Growth, University of South AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/152242013-06-27T04:47:22Z2013-06-27T04:47:22ZMen at the helm – mad, bad and dangerous to know<figure><img src="https://images.theconversation.com/files/25956/original/d46ndbbg-1371777761.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C1000%2C667&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Sixties style - Mad Men characters Roger Sterling and Don Draper still show men how it's done in business and politics.</span> <span class="attribution"><span class="source">AAP </span></span></figcaption></figure><p>Labor may have “ditched the witch”, but does the ejection of Julia Gillard from her seat of power close the book on the debate about sexism that she championed and the role of women in leadership? </p>
<p>Our first female prime minister is gone, but the feminist challenges she raised, and the battles she fought, are far from forgotten. They continue to sound their clarion call from the depths of a business and political culture that regresses increasingly to the <em>Mad Men</em> days. </p>
<p>We may think that we have left behind the attitudes found in the award-winning television series, where sexism and discrimination is overt and celebrated, but the legacy of the 1960’s remains deeply embedded in our DNA and that of our organisations.</p>
<p>But corporate and government leaders have an influence footprint that transcends the boundaries of these organisations, and they must exercise it by showing the way for a more mature, ethical and sustainable society where men and women are equal partners.</p>
<h2>Board games</h2>
<p>Thanks to the big stick of the ASX corporate governance guidelines, <a href="http://www.companydirectors.com.au/Director-Resource-Centre/Governance-and-Director-Issues/Board-Diversity/Statistics">women now hold 15.6%</a> of board seats compared to 8.3% three years ago. However, the rate of progress has stalled. In 2011, 68 women were appointed to the boards of ASX 200 companies. In 2012, this dropped to 41 and in 2013 there have been just nine appointments.</p>
<p>A <a href="http://www.mallesons.com/Documents/Directions_2013_Final.pdf">2013 report</a> by law firm King & Wood Mallesons found that only 13% of directors regarded diversity as a key priority, compared to 63% the previous year. According to the authors, directors believe the diversity issue has been adequately dealt with. Good intentions have also not translated into action on gender issues: four in 10 companies do not have policies or targets in place, according to a <a href="http://www.bain.com/offices/australia/en_us/publications/creating-a-positive-cycle.aspx">2013 gender parity report</a> by <a href="http://www.bain.com/">Bain & Company</a> and <a href="http://www.cew.org.au/">Chief Executive Women</a>.</p>
<p>Failure to harness female talent continues for the following reasons:</p>
<p>First, there is a dissonance between corporate citizenship and profitability. Business has a social licence to operate irrespective of commitment to diversity. Reputational capital is acknowledged as a major strategic asset; however, most companies under-invest in corporate citizenship efforts, including diversity, and their <a href="http://landor.com/#!/talk/articles-publications/articles/2012-global-corporate-reputation-index-citizenship-deficits-limit-reputations/">citizenship ratings</a> significantly lag their ratings on other basic performance attributes, such as quality and innovation.</p>
<p>Second, the business case is too often biased towards one-dimensional frameworks that encourage perverse drivers of business practice that privileges the short term and immediate over the sustainable and ethical. It is these very business frameworks that led to the corporate disasters associated with GFC and more recent examples of corporate malfeasance. They treat female labour as disposable, embracing or dispensing with it according to the vagaries of the economy.</p>
<h2>Art of leadership</h2>
<p>Third, it is hard to shift old-aged paradigms that align leadership with masculinity in the minds of both men and women. </p>
<p>By the sixth iteration, popular-culture heroes like James Bond might be expected to portray a softer, more sensitive male presence. Not so Daniel Craig, the most recent 007, who has been described as an ideally muscular Bond, less of a gentleman and more of a street fighter than previous incarnations. </p>
<p>In the business world, such masculine language and imagery has been co-opted to portray leadership – often as individualistic acts with back-stories of larger-than-life characters. Brash, driven, tough, the new adventurer, bold enough to challenge the status quo, leader as a helmsman, captain of a ship, eager and fearless young entrepreneur, corporate saviour - these are the descriptors for CEOs of the future, highlighted in recent research from Fortune 500, <a href="http://www.haygroup.com/au/">Hay group</a>, IBM and <a href="https://www.kornferry.com/">Korn/Ferry</a>.</p>
<p>While many of these traits raise a man’s status in masculine cultures such as Australia and the US, where competitiveness, assertiveness and ambition are valued, they are likely to make a woman less acceptable. Moreover, society reinforces masculinity at the helm. <a href="http://workingwithourselves.files.wordpress.com/2009/03/executive-presence-report-g-dagley-2013.pdf">Recent Australian research</a> indicates that both men and women nominate men as leadership exemplars, with women nominating men more often than men do. </p>
<h2>More than words can say</h2>
<p>Fourth, is the vilification of women. While subtle, hidden and subversive sexism has been acknowledged as a benign but virulent force that continues to stymie women’s progress, the rise of shameless and overt vilification of women is of major concern. </p>
<p>I refer to the increasing culture of tirade against female authority and the disrespectful depiction of women as an acceptable part of infotainment, a form of larrikinism that brings comedic levity to our political debate. </p>
<p>The mock menu of “Julia Gillard Kentucky Fried Quail – Small breasts, Huge Thighs & Big Red Box…” was not an aberration. It was the continuation of a verbal-abuse diet that was regularly meted out with impunity, a slap on the wrist at most: “ditch the witch”, “a menopausal monster”, “a lying cow”, “a horrible mouth on legs” and “political slut”, “get over it Julia, you’ve got a big arse”.</p>
<p>This ranting is not benign humour but the slippery slope of degradation that normalises disrespect for women in everyday discourse and is responsible, in part, for the unconscionable abuse and violence against women in our society. It provides a red light to masculine cultures, such as the defence forces that are once again exposed for recidivist sexism and misogyny at the highest ranks, with footage of soldiers engaged in sex. It fuels the default position of sporting bodies with displays of off-the-cuff commentary from high-level sporting officials that women should “shut up in public”.</p>
<p>As a society we hold ambiguous feelings towards women, particularly those at the helm, and attempts to address discrimination and sexism so far have been insufficient. More leadership is needed now. </p><img src="https://counter.theconversation.com/content/15224/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hannah Piterman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Labor may have “ditched the witch”, but does the ejection of Julia Gillard from her seat of power close the book on the debate about sexism that she championed and the role of women in leadership? Our…Hannah Piterman, Adjunct Associate professor, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.