Quelch’s Laws of Executive Hubris
When taxi drivers know the name of a FTSE boss it’s a bad sign.
In an article in The Sunday Times on 31.8.08 John Quelch, Professor of administration at Harvard Business School, listed 10 signs of a company CEO likely to underperform:
1. The chief executive is collecting awards for community service from the local Rotary Club and the industry trade association. This usually means he believes his contributions have already been made and his career has peaked or, even worse, his peers believe this to be the case.
2. The chief executive’s smiling face starts appearing on the front covers of business magazines. The search for external approval often reflects increasing internal opposition. Publicity fans the flames; the hero leader is rarely a team builder.
3. The chief executive wines and dines board members the evening before every board meeting. This says little for his attention to cost controls, especially if no formal board business is conducted during the dinners.
4. The chief executive builds a mansion, buys a winery, starts a vintage-car collection or, in other ways, flaunts his success, displaying excessive self-confidence and becoming more interested in things other than the business.
5. The chief’s home is nowhere near company headquarters. Despite protestations about family values and work-life balance, this is a sure sign that he is hedging his bets and sees his assignment as temporary. Even worse: he moves company headquarters to be close to his home, disrupting the family lives of his HQ staff in the process.
6. The chief executive builds a lavish new corporate headquarters and insists on taking every visitor on a personal tour of his Taj Mahal. Worry even more if the new HQ has a helicopter pad or en suite exercise and bathroom facilities attached to his office.
7. The chief executive launches his own blog. This usually makes him appear inauthentic rather than cool. And a blog is no substitute for doing face-to-face meetings with the troops. Even worse: the chief blogs under a pseudonym to boost his company’s share price at the expense of competitors.
8. The chief becomes a big fundraiser or policy adviser for a high-profile political candidate. Worse: he “encourages” his key employees to help. Politics in a business enterprise should be left to the director of government relations.
9. The chief executive funds a chaired professorship or research centre in the company’s name (or, worse, his own) at a leading business school. No more need be said. Dump the shares.
10. The chief is always out with customers or, rather, is attending Wimbledon, Ascot and Henley with customer-hospitality tents providing the perfect cover. Back at company headquarters, you can be sure that absence is not making the hearts of the little people grow fonder.
