The Financial Times just devoted a special section of the paper to "individuals and companies who have displayed courage and vision in the aftermath of the most wrenching financial crisis since the Great Depression." This piece of journalism -- and the awards that were granted -- were especially designed "to recognize boldness on a global scale."
A few years ago, in a book I titled It Takes a CEO: It's Time to Lead With Integrity (Free Press, 2005), I tried to identify all of the traits -- including boldness -- that I believe characterize truly successful CEOs. It would have been a pleasure to collaborate with the FT's editor and writers -- they did a great job -- however, when it came to matching specific companies and CEOs with leadership attributes, I think that in at least one instance they missed the "Integrity" trait.
Let me elaborate.
In its Foreword, the FT said: "While recognizing the profit imperative, these awards have also paid due weight to the impact of a company on the wider community, whether through innovation, education or philanthropy."
But there's are a lot more things -- and, especially, a lot more important things -- than what flows from "innovation, education or philanthropy." Specifically, it's the impacts on employees, communities and nation which are transcendent, and given how extremely difficult this current economy is, we should be particularly interested in how these impacts significantly help strengthen the American economy and create jobs.
When the FT chose Sergio Marchionne, the CEO of Fiat and now also of Chrysler, for its Driver of Change Award, it picked a CEO who is responding admirably to these two economic challenges. And in Marchionne, the FT also found a recipient who evidences an abiding responsibility to others than just his shareholders, and who leads his life with grace.
For most of the last century, American industry's successes were hallmarked by a commonly held belief among CEOs that they had equal responsibility to shareholders, employees, customers, communities and the nation -- and the nation as a whole was the beneficiary. It wasn't until the late '80s, with the advent of 'trickle down economics' and wildly excessive executive compensation, that sense of responsibility began to be noticeably and widely lost.
On the day that he became the CEO of Chrysler, Marchionne said, "No executive has the birthright to lead, and no company has the right to exist" -- and ever since, in trying to fulfill his stated commitment to creating a 'sustainably profitable company', he has shown great sensitivity to the communities in which Chrysler operates, to the nation -- the United States -- which gave him and Fiat the Chrysler opportunity, and, notably, to the employees of Chrysler who for two decades bore the brunt of the company's really crappy senior management. Beyond owning a large piece of the company through their Union, the employees of Chrysler are now active at the Board level in its management and, when hard decisions need to be made, they have a major role in working them out fairly.
The other trait that is a sine quo non of a great CEO is grace, a fine old trait with religious roots that in today's corporate and secular worlds denotes dignified, polite and decent behavior and, especially, the capacity to accommodate and forgive people. It's living your life to earn and keep the respect of others -- and while hard to describe, we all know grace when we see it, and we all miss it when we don't.
Mr. Marchionne seems to live this way, and a telling example is the relative ease and fairness with which he reached agreement with Chrysler's beleaguered employees and their primary union, the United Auto Workers. (Of course, no one gets it right all the time or in all ways, and I must note that Marchionne, who is definitely a tough guy in a very tough business, still has some important fence mending to do with the Teamsters, which he needs to get to.)
All in all, however, Sergio Marchionne was a great choice to receive the Driver of Change Award. Which is why the FT's choice of Roger Agnelli and the company Vale to receive its Emerging Markets Award is so puzzling, as pretty clearly the FT failed to require each of its Award recipients to manifest both grace and broad stakeholder responsibility.
Vale is a 67-year old Brazilian company that many people still remember as Companhia Vale do Rio Doce or CVRD, and that until fairly recently operated essentially only in Brazil. It is now in 36 countries and the world's largest producer and exporter of iron ore, and thus certainly worthy of a lot of recognition. And to its particular credit, much of Vale's growth has been organic and achieved through steady investments in modernizing its mines and rail & port infrastructure, especially in South America and Africa which it sees as "the future of the world's natural resources and of food production".
But what really pisses me off is that all the while Vale has been executing of late on its grand global mission, it is, to quote the FT, "embroiled in a long-running dispute" with its workers here in North America, a dispute that I lay squarely at the feet of its CEO, Roger Agnelli, and that arises from nothing other than Vale's greed and Agnelli's obstinacy.
And all the while, Vale, under the leadership of Agnelli, is also a long way from being the world's 'most environmentally friendly' mining company, and it has at best only a passing interest in seeing South America and Africa enjoy the important fruits of non-resources based development. It is critical that powerful nations and powerful multinational corporations never again treat, with disregard, countries, regions and continents as their storehouses, bread baskets, cheap labor sources, or environmental dumping grounds -- yet this is precisely what Vale does every day, to one degree or another.
Now here in North America we are seeing firsthand Vale's insensitivity to its workers and their communities, as it tries to run away from fair wages and benefits that are the product of longtime collective bargaining.
When Vale purchased the large nickel mining company Inco in a high-value auction in late 2006, it promised not to reduce the workforce for three years. But the company, now called Vale Inco, broke that pledge in a big way in March 2009 when it laid off workers and shut down operations for two months. Immediately thereafter, the company demanded from its remaining workers, who are mostly represented by the United Steelworkers, harsh concessions while conditioning any bargaining on workers first accepting these concessions.
As unfair as they would be in good times, the cruelty of these demands in a recession is beyond the pale -- and then to further drive home its power over its employees, Vale used the resulting -- and ongoing -- strike as the excuse to cut many of its ties with local services companies and to offshore that work and related jobs. Almost nothing in labor relations is more vile than 'conditioned bargaining', yet Vale has made this approach the base of its demands -- and just this past weekend, using this demand, it again cavalierly broke of all negotiations for the umpteenth time.
For all the accolades it is receiving from the financial community -- heck, the company earned $5.3 billion in 2009! -- Vale is obviously employing the global economic crisis to impose on Vale Inco its philosophy that corporations bear no duty to meaningfully share gains with or to accept long-term responsibilities to others than just shareholders. Vale's concessionary demands clearly illustrate this intent -- even if the concessions Vale is demanding saved the company $25 million in the first year, which is fair estimate, they would change Vale's cost of extracting nickel by only about 5 cents per pound, yet these demands, which have been accompanied by some of the most aggressive anti-union tactics since the Appalachia 'coal wars' in the 1930s, would economically devastate the company's 3,500 union employees and their communities.
Politicians of all stripes are fond of saying that "our best days are still ahead of us," or words to that effect. Part of me -- my heart, I think -- dearly wants to agree with this.
The problem, however, is that getting to these best days isn't going to happen automatically. Whether as a person, a CEO, a company or a society, it's going to take smarts, courage, vision, sacrifice and persistence -- plus, for the CEO in that crowd, grace and a broad, unselfish sense of responsibility.
Leo Hindery, Jr. is Chairman of the Economic Growth/Smart Globalization Initiative at the New America Foundation and a member of the Council on Foreign Relations. Currently an investor in media companies, he is the former CEO of Tele-Communications, Inc. (TCI), Liberty Media and their successor AT&T Broadband. He also serves on the Board of the Huffington Post Investigative Fund.
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