When Richard Wagoner, CEO of General Motors, imperiously entered the halls of Congress a few weeks ago, his request for $10-12 billion dollars in relief was dead on arrival. Arriving in a corporate jet led a few congressmen to be critical of his cost cutting promises. He didn’t defend his actions. Before the auto crisis, the government decided to bail out the failing AIG with $85 billion. A few days later, a story appeared that was critical of the expensive resort meetings that AIG was hosting. Hardly a peep was heard from AIG management. In both these cases, management was visibly out of touch—a big problem for business today.
What happened in Congress? Congressman Ackerman was angered over the use of the CEO’s private jets. Wagoner flew in GM’s $36 million jet to tell members of Congress that the company is burning through cash. He said GM was slashing back on non-essential expenses and promised to be dramatically leaner. Here’s the disconnect. Wagoner’s private jet trip to Washington cost GM an estimated $20,000 roundtrip. If he had flown commercial it would have cost $837 first class.
Ackerman was appalled when Wagoner arrived in his private jet. The Congressman shouldn’t have been, as congressmen are notorious for hitching rides on these same corporate jets and military planes. Do you think this is the pot calling the kettle black? Here’s where Waggoner blew it. Instead of arrogantly arguing that his salary shouldn’t be reduced, he never argued with the idea that a jet plane is a business tool that has value. Do stockholders –and Congressmen– truly expect CEOs to waste their time going through security at airports with the3-ounce limits on toiletries? While I think Wagoner has grave deficiencies as a business visionary (GM is losing money on small cars), he is the CEO of a $192 billion company. His time is best spent working on business issues, not spent killing time in an airport. Wagoner missed the opportunity to educate congressman on the difference between a business tool and a frivolous ego-boosting perk. He also might have mentioned that he plans to sell a few of their private jets—which he later did.
Then there’s AIG. A few days after the company got the bailout, the media reported that AIG executives were off on a lavish half-million-dollar resort holiday. The only problem was that it wasn’t true. The participants were independent insurance agents who outsold all their competitors and won an incentive trip for their hard work. If you know anything about incentive trips, the profits generated from the hard work of the employees (independent agents in this case) is designed to outweigh the cost of the trips. Where was AIG’s management standing up and supporting their agents? It was management who blew it. Even when management was asking for a handout for the company, it should have make a public plea to recognize that there were a few agents whose contribution made their problems decrease rather than increase. Management needed to retain these talented professionals and this was how they were going to do it. Nope, they didn’t say this.
Where is the backbone of management today? I’m not apologizing for incompetence. I am asking for executives to support and explain when they do the right thing that the average person doesn’t understand. All too often you hear “no comment” when a reporter asks a tough question. Instead, why can’t we hear “Let me give you a complete explanation so your readers know why we make these decisions”? Standing up for what leadership believes to be the right thing is the best way to get back in touch with employees and the public. It’s also critical to get back on track for business success.