Businessweek Archives

The Best Bosses Avoid The Pitfalls Of Power


Cover Story

THE BEST BOSSES AVOID THE PITFALLS OF POWER

Traditionally, chief executives of steel companies have lived like potentates. They've drawn big salaries and held court in plush offices inside vainglorious headquarters. But F. Kenneth Iverson, CEO of Nucor Corp., the nation's seventh-largest steelmaker, comes across more like a traveling salesman.

He drives his own car to work. He flies regularly to visit Nucor's 22 plants--but not on a corporate jet, because the company doesn't have one. Instead, Iverson sits in coach and carries his own bag. His corporate headquarters is hidden away on half a floor of a four-story building across from a suburban shopping mall in Charlotte, N. C. Iverson does have a corner cffice, but it's cramped and utilitarian by CEO standards. Nor is there an executive dining room. When Iverson treats his top execs to lunch, they often walk across the highway to Phil's Deli.

It's not that Nucor can't afford a few perks. One of the nation's most profitable steelmakers, Nucor hasn't had a losing quarter in 25 years, and last year, net income jumped 30%, to $75 million, on sales of $1.5 billion. "You won't find any status symbols here," says Iverson. His philosophy: "Reduce any difference between management and anyone else at the company--destroy corporate hierarchy."

NO YES-MEN. Iverson may be a bit extreme, but he's not alone. Indeed, many of the most effective chief executives are intensely aware of the dangers lurking in the corner office and have developed canny strategies for avoiding them. They hire people willing to say what they think. They remain close to the business. They will decline an outside board commitment if it's likely to interfere with their own jobs. And they fight the dangers of isolation by making it routine practice to meet and talk with the troops.

Consider the lunchtime strategy of P. Roy Vagelos, chief executive of Merck & Co. No company's cafeteria is exactly an elite hangout. But it's where you'll often see Vagelos, swapping stories with scientists in the tray line. "That's where I get a lot of my information," he says. "The scientists can't wait to tell me what they've just accomplished. And I stay very current." The practice serves two functions: It tells everyone that Vagelos is accessible, and it helps keep him informed.

At Ford Motor Co., former Chief Executive Donald E. Petersen tried to put more emphasis on his top lieutenants by insisting on a four-person "office of the chairman," whose members shared in discussion prior to critical decisions. "I didn't want a star system," Petersen recalls, "because it isn't one star that makes the success: It's extremely successful teamwork." Petersen wasn't perfect--some detractors say he got more credit for Ford's turnaround than he deserved--but Ford flourished under this system.

Donald Perkins went even further during his 10 years as head of Jewel Cos. In staff meetings, he liked to turn the organizational chart on its head "so the customer was at the top and the chairman at the bottom." Then he'd tell top managers: "Your job is to find ways to be helpful to those above you on the chart."

Even so, Perkins, a warm and outgoing man, was bothered by what he calls the "silent pause that follows CEOs around an organization." To combat it, Perkins got into the habit of walking around the company with his coat off and his hand outstretched, ready to shake, "to put people at ease."

The most effective CEOs are also more likely to welcome a board composed largely of qualified outsiders--it's their best hope of getting the unfiltered advice they need. Because they tend to be more secure, these CEOs are more willing to recruit and promote strong managers rather than surround themselves with spineless mediocrities.

A few more treatments to combat CEO Disease:

-- Impose limits on the job's perks. The trappings of the office put distance between the CEO and workers. It's one of the reasons Robert L. Crandall of American Airlines Inc. shuns many perks that other chief executives take for granted. "I don't want to suggest to anybody that aside from my ability to do the job I'm any different from anybody else," he says.

-- Stay focused on the job itself. Many of the most admired chief executives limit their outside board commitments. PepsiCo's D. Wayne Calloway and Johnson & Johnson's Ralph S. Larsen serve on two or fewer boards of directors. "You have to know when to say `no,' " says Douglas D. Danforth, former chief executive of Westinghouse Electric Corp.

-- Don't assume toughness defines leadership. One of the favorite books of former Herman Miller Inc. CEO Max O. De Pree is Servant Leadership by Robert K. Greenleaf. It posits the notion that a leader is the servant of his followers in that he removes obstacles that prevent them from doing their jobs.

-- Keep the communication channels open. At American, Crandall hosts annual "presidential conferences" in which he and other senior managers meet employees across the country to discuss the business and answer questions. And like Merck's Vagelos, he makes the rounds. "When I travel on the airline, I try to take time to get into the crew lounges and the workplace," says Crandall.

Whether in a cafeteria line or an airport lounge, these bosses know the value of staying close to their employees. Even more important, staying close helps keep the boss abreast of the business. Execs who follow such measures aren't likely to catch CEO Disease. And they'll probably have a better chance of leading a profitable company with executives, managers, and staffers who are dedicated to its success.John A. Byrne and William C. Symonds, with bureau reports


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus