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Bad leaders: cures and preventions
Over the past few years, the media has chronicled the misadventures of a mugbook full of corporate scoundrels. Some of the notables making lurid headlines were Kenneth Lay and Jeffrey Skilling, former Enron executives, Dennis Kozlowski, former CEO of Tyco, and convicted WorldCom chief executive Bernard J. Ebbers. But should these scandals make us reflect on the wider problems of corporate leadership? True, such convicted malefactors total just a small percentage of the Fortune 500. But there are also many CEOs who have been forced to resign in recent years because they failed leadership 101, and a scandal involving the backdating of options has raised questions about the judgment of even remarkable leaders like Steve Jobs of Apple. As one indication of the widespread climate of disenchantment with leadership, Business Week now publishes a feature on the year's "worst leaders."[1]
So it's not clear whether we're witnessing an epidemic of misbehavior, or merely watching corporate leadership under more intensive scrutiny in the post Sarbanes-Oxley environment. But in either case, several fundamental questions need to be answered. They include: Why aren't bad leaders recognized long before they bring woe to shareholders? Why isn't the process of anticipating who will be a good leader failsafe? And how can organizations deal with a brilliant candidate who obviously lacks important leadership skills but seems to be capable of delivering impressive results?
Over time it is easy to distinguish bad leaders from good ones. Good leaders find strategies that do right by all the stakeholders. They manage by influence rather than coercion, and they encourage change rather than resisting it. Effective leaders exhibit both proficiency and integrity.
In contrast, leaders who are toxic, corrupt, or simply misguided, damage the interests and welfare of the stakeholders. They inflict pain and suffering on their organizations, and on the individuals who follow them, including employees and shareholders.
The challenge is to determine in advance which potential leader will work for the stakeholders and which one will damage their interests. It's a difficult judgment because many corporate and government leaders begin as idealistic visionaries, imbued with a strong view of how to lead their organization into the future. They also initially demonstrate a strong sense of integrity. But their...