3 Famous CEO Blunders, and What You Can Learn From Them

By David Hassell

From allegations of insider trading to illicit affairs, there are no shortage of headline-grabbing stories of CEOs behaving badly. But if we take a moment to look beyond sensational accusations and dramatic outbursts, what kind of impact have these famous management blunders had on the organizations that they involve?

And — more importantly — what can you learn from their mistakes?

Intimidation – Real or Perceived?

A few days before the 2012 American Presidential election, timeshare mogul David Siegel sent an email to the employees of his company, Westgate Resorts, warning of potential layoffs and downsizing should President Obama be re-elected.

While Siegel maintains that he was not threatening to lay off employees if they voted democrat, the fact that many employees perceived it as intimidation is important to consider. Siegel explained to the media that he was not directly threatening to fire employees, should Obama get elected — he simply perceived an economic threat to the company should the democrats come to power. This email spread like wildfire online, causing protest and sharp criticism of Siegel’s approach.

The takeaway: The lesson to be learned with this story is that as a leader, it is essential to evaluate your communications from the perspective of your employees, who may perceive your words differently. While Siegel may not have intended to threaten employees with layoffs, the reality is that the imbalance of power in the organization (and Siegel’s perceived power by his employees) meant that many staff understood it as a threat. It is important for leaders in vertical organizations to remember that while they may not feel they have significant power, their team members do — and they should choose their words accordingly!

Acts of Aggression

While there is no question that being CEO is a high-stress job, there is never any excuse for being aggressive with staff and colleagues. Famous executives like Meg Whitman (eBay) and Steve Ballmer (Microsoft) have been accused of verbally and physically harassing employees, creating a culture of fear and distrust.

When leadership chooses to manage through fear, it creates a toxic ripple effect that makes its way through the entire organization. While fear may give the temporary illusion of increased productivity, it is neither sustainable, nor the most effective way to motivate staff.

The takeaway: The lesson to be learned from these famous mistakes is that a significant amount of culture comes from the top-down, largely through behavior role-modeled by company executives. You can invest in ‘culture’ all you want through perks a beautiful office space, but if your CEO is behaving in a way that contradicts your values, your culture will disintegrate. After all, your culture is built on people — which means it lives and dies by their individual beliefs, thoughts and actions. It is essential that leaders exemplify these values and behaviors, and that staff are not prevented from living out the company values because they live in a permanent state of fear.

Honesty Should Be the Only Policy

In May of 2012, former Yahoo! CEO Scott Thompson stepped down from his position following a high-profile debacle over an inaccuracy on his resume. Thompson’s resume (which was included in Board documents) stated that he had an accounting degree as well as a computer science degree, when in fact he never obtained the latter. Thompson initially attempted to blame a recruiting company for the error; the recruiting company later disproved Thompson’s claim. Many argue that it was not Thompson’s misrepresentation of his education alone that led to his downfall, but also the way in which he handled the situation.

The takeaway: The lesson to be learned is that honesty and integrity at the senior executive level are paramount to the health and security of the organization. Honesty begets trust, and all things (culture, productivity, relationships, innovation, etc) flow from trust. When company leaders model honesty and accountability, they are sending a message to staff that no one (despite their title) is perfect, and that we must all strive to be better, together. This type of behavior also encourages experimentation and innovation, as team members know that it’s acceptable to be wrong, as long as you own up to your mistakes and provide a solution.

What kind of CEO will you be?

While there are plenty of blog posts and articles claiming to have the “secret” to leadership, the beauty is that no two leaders are alike. We have our own unique strengths…and weaknesses. The important thing is to be aware of the behaviors, beliefs and thought patterns that hold us back from being the very best managers/bosses/CEOs that we can be.

Make a decision about the type of leader you want to be, and surround yourself with the people and the tools that will help you make that happen. Not only will you be a happier individual, but your staff will be more productive, and your company more profitable.

It’s the ultimate win-win.

What is one of the biggest mistake and lessons learned either yourself as a leader made or someone close to you made? How did they recuperate, if at all?

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