Just how disconnected some people are from the the notion of true leadership is made plain by the fact that the government has seen the need to put limits on travel expenses for executives from companies receiving bailout money. Every effective lean leader I have ever encountered has a sense of personal humility that precludes them from indulging in this sort of nonsense. They do not seem to share this need to demonstrate their power through the pomp and circumstance that requires government intervention.
It is pretty obvious that justifying layoffs and outsourcing due to the primacy of shareholder value is nonsense. Shareholder value isn't enhanced by having meetings at resorts and country clubs, rather than in your own conference room. The shareholder gets the same value whether the employee stayed in a Comfort Inn or at the Plaza – in fact they get more value if everyone was at the Comfort Inn because of the money saved. Ridiculous expense accounts aren't about shareholder value – they are about selfishness and egos. Most of all, they demonstrate an outrageous lack of respect for the employees in the trenches.
Beyond the money, the people who indulge in this nonsense cannot imagine how little credibility they have within their companies. The path to maximum shareholder value is a lean culture, rooted in respect for everyone in the organization – a genuine belief that everyone's work has value and that everyone's input is necessary for success … you know – the old 'There is no I in TEAM'. So when the senior guys charter a limo to take them to the suburban airport to catch the corporate jet because their time is so precious, while middle management and the technical folks take the shuttle to the big airport to get there two hours early and fly coach, I guess that says their time is not quite as valuable.
If these people are fooling anyone with such nonsense, it is only themselves. Between laptops, cell phones and Blackberries, they can keep busy while they wait at the gate at the airport if they have so much to do. They might be surprised to learn that their employees, whose time they seem to believe is not nearly as important as theirs, are doing just that.
A guy who wears an expensive suit to work, has a company paid Persian rug in his office, and a company paid Lexus parked in the spot closest to the door cannot lead a lean transformation. In fact, that guy cannot lead anything. None of that nonsense enables him to do a better job – it just makes him look good in his own insecure eyes. Everything about him screams to the employees "I am better than you". And that is a failure of leadership in its most fundamental form. The image of the auto execs in their tailored suits heading off in their corporate jets to Washington to plead for their bailout last year is real live, tangible proof of the adage that you can put a silk suit on a monkey – in fact, you can put three monkeys in silk suits and Gulf Streams – but they are still monkeys.
If everyone in the organization carries equal value – and they do in terms of all having to contribute to make the whole organization succeed, there should be one policy – you stay at the same hotels whether you are an entry level engineer or the CEO. Everyone gets liquor and golf, or no one does; everyone flies on a private jet, or the company doesn't need one. There is no room for royalty or a privileged class in the pursuit of excellence.
Kathleen says
You know, I don’t even think they see it. The barre to which they’ve become acclimated, the “lifestyle” of their workplace amenities, is only obvious to them (at the outset) as a comparative, iow, how do the amenities or even “basics” of this job compare to a previous one? I doubt they see these affects as anything less than necessities. Far be it for me to defend what we would define as superfluous spending but consider it in the context of one’s own lifestyle. We are remiss to give up things to which we’ve become accustomed. As a personal example, it’d be difficult to cut anything from the household budget; we pride ourselves on our frugality. However, there is some fat in there. Seriously, how many households need two internet service providers in the event one goes down or traffic is so high that connection slows -like we do? I know it’s fat and it causes a twinge of guilt but I ignore it because I tell myself it’s not hurting anyone.
You know I don’t disagree with your premise but I think another tack is needed; that of seeing -with a dose of compassion.
Jeff Holloway says
My first thought was so how can one apply lean concepts to Wall Street bankers? They don’t do any manufacturing of tangible products, but they sure believe in the exalted class perks.
I agree with the point of the article, but by the time I got to the last paragraph it was starting to sound like communism.
JM says
We were just discussing the ridiculous travel habits of some of our global key account managers and VPs, such as staying at $150-$200 per night hotels on a regular basis. It’s absurd. But I know they don’t think twice about it. On occasion I have to fly to a client meeting and I am forced to stay at one of these hotels because the key account manager “likes” that hotel.
The bright side is that we have a VP in our small division who is not like that at all. He doesn’t believe in “executive privilege” and is very frugal..he won’t stay at expensive hotels unless required to do so.
Guys like this inspire the rest of us.
Bill Waddell says
Kathleen,
I don’t care what these guys do on the company tab, I am merely saying that if the executives from TRW Automotive are going to spend a week at the Four Seasons getting a physical at the California Health & Longevity Institute, rather than simply drive over to the Cleveland Clinic (which has a bit better reputation in the medical community than the CHLI), while TRW is laying off empployees, they lose credibility. That the personal lifestyle of a TRW executive may blind him to the inequity of this doesn’t strike me as justification, or cause for compassion.
If the executives at Deutshce Bank AG want to put hookers on their expense account – as you say, maybe they are used to traveling with hookers – that is fine by me, but everyone ought to get a hooker when they travel – not just the senior guys.
Same with the 6 Barclays guys who ran up a $62,000 wine tab on a company lunch in London. Maybe they always drink $10,000 worth of wine when they have lunch, but they ought to let all Barclays employees drink ten grand worth of wine when they travel.
I am simply saying that, regardless of what explanation they offer, when there are travel expenses for the senior people that have no business justification – spas, hookers and wine – that are not available for the rest of the employees, a chasm exists between the execs and the employees that seriously erodes their ability to unify, inspire and motivate the employees. They engender an ‘every man for himself’ culture – the antithesis of lean.
Jeff: Sounds like communism? I think the TARP companies crossed that divide when they took the taxpayers money – now they are learning the age old principle that whoever provides the money calls the shots, which is true in just about any endeavor in life.
JM says
Bill,
LOL…how does one actually expense a hooker on their travel expense report? I looked at all the cost categories in my company’s travel expense tool, and I didn’t see anything for “hooker”. Oh, wait, we have an “entertainment” category for those big drinking escapades with clients. It could go in there. But corporate policy dictates we turn in physical receipts for expenses over $10. Help!
Mark Welch says
This all comes down to the DEGREE to which execs indulge themselves, and this is a gray area to which there will never be complete agreement. But, I think the main premise that execs separate themselves from their associates with such behavior is NOT debatable. In fact, a no-brainer. You want another example of such behavior? How about a retiring exec. who invites his $10/hr. employees over for a free tour of the $30MM lake home he built? How do we suppose those who worked hard (provided the real value for their customers)at that wage felt while they did the tour? Happened in my home town.
The communism issue? I don’t think anyone is advocating that, and most everyone would say that those who have paid their dues and performed well deserve higher wages, maybe a little nicer perks, etc. But the more the higher ups separate themselves with such behavior, the less credibility they will have with their associates.
Bill Waddell says
JM
I am highly offended that you would think I might know anything about how to hide the cost of your hookers in an expense account. I pride myself on my high moral standards, resulting from my strong Catholic upbringing. It would be a sin to indulge in hookers and liquor and charge the company – so I always pay for them from my own pocket.
If you are determined to do it, however, I suggest you visit your local ACORN office, where accounting for prostititution seems to be an area of particular expertise.
Martin B says
In the capitalist system, there is supposed to be a link between risk and reward. The more you risk, the bigger your reward.
But this is turned on its head with remuneration. The guys at the top generally don’t seem to have to meet performance goals to keep their jobs, but they are hugely rewarded. It’s the other way around for the guy on the bottom.
Mark H says
Let’s be honest. These things have been going on for decades. Why are we getting all excited about it now? Communism? ACORN?? Please. Next thing you know you’ll be name-checking Hitler. Times are hard so we are looking for people to blame, whoever is in power, whoever isn’t making us rich. Bill Waddell would not refuse a night at a $150 hotel and insist on an $80 hotel if that is where he was teaching a group of executives how to be lean. None of us would risk getting “kicked out of the club” once we made it to the C-level executive suite at a major corporation by rocking the boat, “Hey guys, let’s nor stay at the $200 hotel…” Right. I agree with Bill that when we do these things we lose credibility with the “rank and file” we are supposed to be leading, who don’t have these privileges and who toil for just better than minimum wage every day. But hey, let’s not give them a hand up, that’s communism. This what we’ve come to. It’s the American way.