The Consequences of This CEO's After-Hours Outburst Show Why Accountability Is a 24/7 Job
Free Book Preview: Unstoppable
KB Home CEO Jeffrey Mezger recently went on a tirade against his neighbor, comedian Kathy Griffin, and her boyfriend. Not only was his expletive-filled rant captured on security camera, but it also made the local paper, and the audio recording was published online by major media outlets. The backlash on social media was fierce. As a result, KB Home's board docked 25 percent of Mezger's year-end bonus and promised to fire him if it happened again.
Why was this such a big deal, since it happened on Mezger's own time? Here are three reasons why CEOs are held accountable for their actions, even when they are off the clock:
1. The CEO is the public face of the company.
There are many unique aspects of the CEO role, but few people appreciate the job's personal and public nature. The CEO is the one person whose every action reflects on the company. Many new CEOs don't realize that employees, shareholders and customers will analyze their every move and utterance. An offhand comment can cause people to spring into action or make them wonder about the future of the company. People will scrutinize how CEOs treat their families, what they do in their spare time and how they spend their money, which can impact their ability to lead an organization.
2. The company's brand and the CEO's personal brand are often hard to separate.
It will be many years before people will think of Apple and not think of Steve Jobs. Jack Welch is still tied to GE in people's minds, more than 15 years after he left the company. People are more likely to know the name Warren Buffett than Berkshire Hathaway.
3. The CEO's behavior can dramatically impact the company.
The difference between being the CEO and reporting to the CEO is night and day in the eyes of the public. A vice president who does something stupid that reflects poorly on the company can be replaced. If he gets into a public shouting match with his neighbor, the local paper may not even mention the VP's place of employment. The company can move forward without taking much of a hit. If a CEO commits some grievous act, it can negatively affect everything from the company culture to employee engagement to reputation to stock price.
What Mezger failed to appreciate is that as CEO his stakeholders will have a hard time distinguishing between his personal views and the views of the company. This is as it should be. The CEO drives the culture of the organization and his or her personal views are invariably tied to how the business operates.
So how should CEOs manage their public and private lives? Here are three simple rules:
1. CEOs should always protect their personal brands.
No one wants to work for an arrogant jerk, so don't be one, ever. In the modern world of cell phones and social media, CEOs might as well assume that they are on camera everywhere and always. Anything that plays to the idea that a CEO is not a nice person will damage his or her brand.
2. CEOs should not get involved in unnecessary political fights.
If some political policy directly affects their business, then CEOs must engage. However, using the CEO position to get media coverage or encourage employee action around non-related issues is just asking for trouble. CEOs can make donations or support candidates, but appearing as CEO of ACME Corporation to drive an issue can cause the company to lose focus as well as alienate customers, employees and investors.
3. CEOs should separate the company's mission and vision from their personal brands.
CEOs need to be very clear about the mission and vision of the company. Many CEOs enjoy the attention that being the chief executive brings and wrap themselves up in the company flag. Great CEOs create great companies that they merely steward for a period of time. They are concerned about their successor's success from their first day on the job. The mission should be bigger than any one person. Great CEOs create a brand that is bigger than their own.
In short, CEOs shouldn't do anything they wouldn't want on the front page of the newspaper -- or blasted all over social media.
Related Video: 5 Reasons Why Even Small Companies Need a Board of Directors