March 2016 Leaders & Laggards

Leadership Leader

Beurden_ShellI don’t generally support pay reductions. They seldom have the desired effect. Having said that, and in contrast to others (mentioned below), Shell’s Ben van Buerden is the poster-child/rock star for CEO pay reductions, after he saw his total package drop nearly 10% amid our crazy oil pricing environment.

Contrast that with BP’s Bob Dudley, who recently received a 20% increase in his pay package, after smoothly revealing that 2015 was the worst financial year in the oil giant’s history. The worst. The Board’s compensation committee also said that executive directors received no increase in base salary in 2015 and that senior leadership would not see salary increases this year either.

How, exactly, does that conversation work? “I’ll take 20%, please. Let them eat cake.”?? I didn’t want to give Dudley any more airtime, or we could have made him this month’s Laggard.

Shell’s Board said: “Shell’s executive compensation reflects delivery of our strategy… there is a clear alignment between the company’s performance and our compensation policies.” I should say so. If van Buerden has to go back to the cost-cutting well with added layoffs and/or pay restrictions, at least he’s felt some of the pain, and has some degree of personal credibility.

Look, we can all argue for days about CEO compensation. Having the burden of thousands of families depending on your decision-making is certainly worthy of compensation. But optics matter as well. In these times for Oil & Gas, a CEO accepting/insisting on a pay reduction (or at least not a pay raise given only to you) is a solid standard to which others should aspire.

Shell’s Ben van Buerden set that standard, we appreciate it, and he’s our Leadership Leader for March.

Leadership Milquetoast

WWP LogoBeing a veteran doesn’t give me any special standing to be disgusted at the waste that brought down the CEO and COO of the Wounded Warrior Project. It’s a way too familiar story in the non-profit world, and we’ve all been warned to be careful who we give our money to.

I’m disappointed, of course, because that means millions of dollar (possibly tens of millions) were diverted from helping a cause near and dear to my heart. But I can’t say I’m surprised.

Oddly, what was least surprising to me was the milquetoast way WWP handled the firing of CEO Steve Nardizzi (who helped found WWP in 2003) and COO Al Giordano. Nardizzi has long been a vocal critic of the charity rating system, and even predicted this very reaction to alleged wrongdoing in his July 15, 2014 post about how charities “should lead the dialogue about charity ethics and effectiveness.”

(The fox guarding the henhouse? The first sentence presciently reads, “There’s no shortage of news coverage on the charitable sector when a charity … is suspected or proven to be fraudulent.”)

I watched with disappointment as WWP Chairman Anthony Odierno’s attempted to regain the nation’s trust on the morning news. He said that while the charity’s independent review may have uncovered some opportunities to strengthen some controls and policies, “a lot of the allegations were not accurate.”

Hardly a damning enough indictment to justify decapitating the senior leadership team. In fact, Odierno’s dead-pan assertion that the dismissals were for “certain judgment decisions that could have been made better” left my spin-detector buzzing.

CBS news claims to have spoken to over 100 current and former WWP employees who described lavish spending and a toxic culture. That’s enough smoke for me to reach for a fire extinguisher.

Leaders get just one opportunity to admit wrongdoing in their organization the right way. Acknowledge it, take responsibility for it, and apologize for it. Odierno missed his chance.

So congratulations for another apology-that-isn’t, Mr Chairman. It didn’t win our trust back, but it did win you this month’s Leadership Milquetoast award.

Leadership Laggard

Zenefits logoFull disclosure: someone from Zenefits keeps spamming me asking if I want their help running my business. Not likely.

What a month it’s been for Zenefits, the beleaguered San Francisco-based human resources software startup who’s CEO resigned last month over “compliance failures.” Parker Conrad stepped down amid “revelations” that some of the Zenefits salesforce was selling health insurance without required licenses, and David Sacks was promoted from COO to CEO and promised to fix their “inadequate” compliance processes and controls.

According to Sacks, the company grew so fast, it outgrew its culture and controls, which (I suppose) would have kept it from breaking so many laws. To un-grow, Zenefits gave out about 250 pink slips – almost all to the salesforce (whose boss left right after Conrad). Hopefully, they didn’t let anyone go who had a broker’s license… they didn’t have enough of those in the first place.

Oops, I forgot. Right before the layoffs, Sacks banned drinking at work. Talk about kicking employees while they’re down.

Culture’s a funny thing – sometimes literally. Last summer the company’s management felt its culture needed adjusting so it sent out a memo last summer that declared building stairwells were no longer to be used for smoking, drinking, eating, or sex.

So what’s the big deal? Sounds like a great place to work.

The problem is Sacks. Or more accurately, Sacks was already part of the problem, and now he’s CEO. What was the board thinking?

Are we to believe that the COO didn’t know that the salesforce was selling insurance without brokers’ licenses – that’s been public knowledge since at least November! Zenefits would certainly like their clients and investors to believe it, but I have a hard time with the idea of a CEO and VP of Sales creating a culture void of ethical behavior by themselves. What is this, Volkswagen?

Apparently, Sacks has disavowed any knowledge of wrongdoing and laid the blame for the culture at Conrad’s feet; that seems to be good enough for the board.

And it’s good enough for us… to make the Zenefits board – including Sacks – our Leadership Laggards for March. Congratulations, gentlemen.

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