Monday, November 3, 2008

Before you vote, I have a serious question.

Imagine that you are a shareholder of a very wealthy and powerful multi-national organization, and you, like all other stockholders, have the opportunity to vote in a new CEO. The company is in a cut-throat industry. You are also an employee of this organization. You also consume the company’s products.

Two people have been nominated.

One is a very experienced businessman with a clear record of 30+ years in management. He is a company man and believes in making decisions that he believes are best for the company as a whole, even if those decisions don’t necessarily sit well with the Board of Directors, executive management, and/or a good percentage of employees. His idea is to break down the beaurocracy that governs the company, so that the company can be run more effectively and so that processes can be more efficient, thereby saving the company money. He ensures that the savings can be passed on to shareholder value, a theory that has been well published and validated by many business scholars.

The other CEO candidate has only been in management for two years. He is a Wharton graduate. Like many leaders, he has charisma, is a great public speaker, and can effectively share and communicate a vision. His management style is custodial, which means that the company’s job is to take care of the employees needs by offering an appropriate level of benefits – no matter what the cost to the company. The only way to offer the benefits that he believes that employees want is to raise prices or to increase the company’s already heavy debt burden. His marketing plan proposes that the marketing executives work with competitors to see how they can collaborate. He also wants to cut executive salaries and raise wages on lower-level workers. Business scholars believe that his policies are detrimental to the long-term health and viability of the company.

Who would you want to lead the company and why?

Part II - added November 4, 2008

As a business scholar, I can say that leadership is a developing trend in many organizations. There are scholarly articles written that state that one doesn't have to be experienced to be a leader, nor does one have to be a manager to be a leader. However, organizations that effectively implement leadership find CEO candidates with many years of business experience and the right leadership attributes to move the organization forward. For example, Jack Welch of GE was chosen to be CEO by his predecessor because he had a reputation for shaking things up, butting heads with executive management, and getting things done for the better. His words were not empty - they were backed by action. Shareholder value, under Welch, increased significantly, and people working for the organization had a sense of company pride.

The second candidate in the above question had only two years experience in management before being considered for the CEO position. I'm sure, that this candidate would be able to rally the "typical company worker" with no company pride or loyalty. Many American workers have no sense of company pride anymore. When you go to work, do you think about how great your job is or how wonderful your company is, or do you worry about where your next paycheck is going or what you're doing for lunch? During your work day, do you think about how fortunate you are to live in the greatest country in the world? Do you have any sense of national pride? My guess is that if you answered no you probably will vote for Obama because you don't really care about the country's future as much as you do about what's best for you now.

What if you elected the second CEO candidate and he indeed cut executive salaries and gave you a raise. Sure, your paycheck would be bigger; but since you consume the company's products your "extra" take home pay will go to pay for the increase in the products you use, making your raise null and void. If the company doesn't increase prices, then the company will have to increase its debt burden and in ten years the company would have to file for bankruptcy - and you'll be on the unemployment line. If Obama is going to take care of you, then expect to either pay more for gas, milk, prescription medication and other goods because there will be a heavier tax burden to help pay for your fair share. If he doesn't raise taxes, then expect to see the Social Security fund to be bankrupt in 10 years.

If you're a high paying executive who makes the strategic decisions that move the company forward and your pay is cut, would you work as hard? Would you care more or less about your job and the company's mission? What would your reaction do for the company as a whole? In the long-run would the company and its people suffer? If you raise taxes on people who worked hard to be successful, what would the impact be on the economy? Think about your own personal finances for a second. When gas prices went through the roof, what did you do? You cut back on items you enjoyed so that you can buy the things you can afford. Raising taxes on the wealthiest Americans who employ other Americans is a bad idea. If their costs go up, they will cut back on other costs, which means layoffs.

There is also the issue of collaborating with your competitors in a cut-throat industry. So you give up your trade secrets or work with your enemies, opening your company up to become more vulnerable.

Under the second CEO choice, you would certainly get more up front, but at what cost? you want benefits now, but you run the risk of losing those benefits and your paycheck by hiring an inexperienced leader who wants to promise you everything under the sun. Vote for Obama and you may get your free health care and a bigger check during tax time, but at what cost? Are you willing to take the risk that you may not have a job to support your family? Are you willing to take the risk that you're going to have to pay more for the things you can barely afford now? Are you willing to take the risk that when you retire you won't have a supplemental retirement check?

Many people vote because they want to elect the person who will do what's best for their interests now. The problem is that voters should consider what's best for the country, both in the short run and long run. When you vote today, think about not what your country can do for you, but what you can do for your country. What you can do for your country is elect a real leader. Someone with experience with a proven track record to shake things up. Someone with a sense of national pride and who can effectively break down government beaurocracy (thereby saving us tax dollars and making our country more prosperous). That leader is clearly John McCain.

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