Leaders in Trouble

When is enough enough? That’s a question that bubbles beneath the surface anytime a high profile executive is in peril. Paul Wolfowitz, former president of the World Bank, is one prominent example. He waged a public and ugly battle to save his job over a pay scandal involving his girlfriend. Finally he threw in the towel after assurances that the board of directors of the bank would say that he did nothing improper. That admission may appear on the surface preposterous, but Wolfowitz, who was appointed by President George W. Bush, was not a popular choice when he took the job in 2004. He was a leading architect of the War in Iraq, and as such was unpopular with European directors of the bank. So he was behind the eight-ball from the beginning.

Embattled Leader Imperils Performance

While he put an emphasis on ethics and good governance to governments accepting loans from the World Bank, his granting of a huge promotion and hike in pay to his girlfriend did not square with anyone’s impression of integrity. While Wolfowitz made headlines, employees of the World Bank were left to twist in the wind. Lately the mandate of the World Bank (lending money to poor nations) has been debated; lack of leadership at the very top—including from the board of directors—does not help build loyalty inside or outside the organization.

Public bodies are not the only institutions that put leaders’ woes front and center. Bob Nardelli, former CEO of The Home Depot, angered shareholders with a pro forma appearance at an annual shareholders meeting in which he was the only board member to appear and in which he himself did not take questions. He did not try to defend his nine-figure compensation package despite the company’s stagnant revenues. Carly Fiorina, formerly CEO of Hewlett-Packard, became radioactive when the company’s fortunes turned south. Her imperious demeanor did not help her win the support of her team nor HP employees. Hank Greenberg put AIG, a company he had built virtually from the ground up, at risk when he did not step down upon allegations of fraud and mismanagement. Nardelli, Fiorina and Greenberg eventually were removed, but not before their leadership became questionable and in the process harmed the public image of their companies.

When Is Enough Enough?

So the question arises, when is enough enough? Such questions are not reserved solely for the big honchos; the performances of imperiled department heads who never make headlines or team leaders who are unknown outside their departments must be held equally accountable. The issue is less about getting rid of the leader; it is about protecting the integrity of the organization and its people. You can get to the heart of the matter by framing the “when is enough enough?” question with three other questions.Do the imperiled leader’s woes affect performance? The World Bank suffered a lack of guidance from above when Wolfowitz and the board were feuding. This feud detracted from the mission of the World Bank to fight poverty and also reflected negatively on Wolfowitz’s own mission to clean up corruption. Likewise when the leader becomes the story, especially adversely, it is time to consider new leadership.

Does the imperiled leader still maintain trust? Trust is not the same as loyalty. In the case of Greenberg, he had stocked AIG’s board with cronies. But he lost the trust of the capital markets as well as the financial media. For managers, trust is every bit as important. If their actions or behavior causes employees tune out and turn away, it is time for new leadership.

Can something be gained by leaving? We see this happen all the time in sports. In fact, some head coaches in the professional ranks say their tenure is three to five years. After that, players are not listening. Winning helps prolong tenure, just as good numbers keep a CEO on top. But when the losing starts, players and employees—not to mention boards of directors—start looking for new blood. The promise of a new day typically trumps the drudgery of the same old losing.

Standing Tough

Affirmative answers in at least two of the three questions above would indicate that the leader should step down sooner than later. But that’s not an excuse to sack an unpopular leader. To be fair, Carly Fiorina was wildly unpopular inside Hewlett-Packard when she campaigned for the merger with Compaq. Even the son of one of the founders, Walter Hewlett, himself a board member, disagreed with the decision and left the board when the merger went through. Time has proven that Fiorina made the right move. HP is a much stronger company today, in part because of that decision, which, if nothing else, removed a competitor.

There is one other issue that arises when a leader gets in trouble—blindness. Most leaders rise to their positions because they are people who can achieve against the odds; they are smart, bright and savvy. But they may lack an ability to look at themselves. Introspection is often overlooked, or at least overshadowed by the outward signs of success. So they develop blind spots—as we all do. It therefore becomes the job of trusted advisors, if any are left, or the board to stand up to tell the leader to stand down because he or she harming the institution they claim to lead. It’s a tough call that may grate against years of service and even friendship, but leadership is not reserved for those at the very top. It is a responsibility that every manager at every level must exert.

Teddy Roosevelt, himself no stranger to challenges personal and political, once said, “In any moment of decision, the best thing you can do is the right thing. The worst thing you can do is nothing.” Leaders must be tough; that’s what they are paid to be. They must make hard decisions that affect lives of employees and customers and those decisions may be vilified. But when the leader, or more especially his or her behavior, becomes larger than the performance of the company, it is time to go. Stakeholders—employees, vendors, customers and shareholders—are owed full-time leadership, not leadership that is squandered on defending ego or misbehavior. Enough is indeed enough!

John Baldoni is a leadership communications consultant who works with Fortune 500 companies as well as non-profits including the University of Michigan. He is a frequent keynote and workshop speaker. He is the author of six books on leadership; the latest is How Great Leaders Get Great Results. Readers are welcome to visit his leadership resource website at www.johnbaldoni.com.