Fired > Apprentice-style.
The average tenure of a CEO at his / her position is now a little over half (5 years) of what it was twenty years ago. In 2018, CEOs were being fired at an alarming rate; about 25% more than the previous year. The trend is continuing in 2019.
Main reasons? The two top reasons for the firings were lack of performance and ethical lapses. About a third for historically reasonable and understandable reasons: poor business performance, relationship issues with the board, lack of key skill sets and alienating the management team. But the distressing reason, according to a PWC report, for the turnover in 2500 global public companies was “Ethical Lapses” at a whopping 39% (18% more cases than the year before). In other words, it is now lack of ethics and NOT lack of performance that leads executives to be canned! To put this in context, four out of every ten public company CEOs were let go because of serious ethical issues. Offenses ranged from fraud and bribery to insider trading and sexual misconduct.
Research shows an erosion of trust in leadership. Edelman research suggests that less than 50% of people trust the advice of their CEO but over 60% believe the recommendation of “a person like me” a fellow employee. To this end, Financial Times suggests that Horizonal trust is increasing faster than Vertical trust. Progressively, we are trusting each other more than we trust our leaders!
Some claim that the increased unethical actions are because we have changed our standards of “what is ethical” — more refined and narrowed. Others suggest that we are now more informed and can catch the misbehaviors more often. Because of the prevalence of social media crooked leaders are exposed faster. Some CEOs are going to court and pushing back by claiming that the trend is guilty and get fired first and never get a chance to prove innocence. They claim that perception as opposed to facts are driving deeds.
REGEDLESS OF REASONS> The KEY questions are: Are top American leaders forced to choose between hard to achieve productivity and growth targets and crookedness? And, should we trust them with that choice?
Do the negative ethics trends suggest that money now corrupts more than it used to? Are we facing a change in our ethics as a nation? As the top gets rotten, do the millions of small businesses in America also face the choice between being “unethical” or “unsuccessful”? When it comes to performance, are we losing a grip on reality? Do we expect too much from ourselves and companies or do we deserve more and should do whatever it takes to get there — Including fraud!
It seems that continually rising expectations and pressures of global innovation and execution are redefining Capitalism itself. Capitalism is an economic system in which individuals as opposed to States / Governments can own and profit from their ownership, had work and efforts. It appears that America’s core reason for success is under attack; Capitalism is turning into a system that private entities and their stewards (Executive leadership) can benefit from their ownership and dishonest endeavors.
The point is: Do the increased fraudulent and unethical behavior of leaders in corporate America fundamentally challenge our approach to prosperity? Do they impact our trust not only in our leaders, but also in our collective future?
To explore we should examine two sets of ideas:
- The first — and my preference: Make changes in hiring criteria and standards of ethics and then stand firm and start measuring the right metrics and reward the right qualities. Guide people’s greed towards just and moral behaviors. Reestablish trust by simply doing the right things and by rewarding genuine efforts with reasonable incentives and not dishonest efforts with unreasonable compensations. Remembering that by attempting to increase shareholder value through unethical and questionable actions, we are compromising our American and human values. The very values that have delivered our success until now.
- The second — not my choice: Admit that it is a “dog eat dog” world. Realize and accept the transition of our society from hard work to uncontrolled greed. The transition from wholesomeness, honor, individual and equal rights to dishonesty. An admission that will lead to losing ourselves and our history into a vortex of deception, self-indulgence, voracity and unreasonable expectations.