InformationWeek
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April 23, 2001 |
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Secret CIO:
Bad Blood In The Executive Suite
Executives have to put on a united front to subordinates or risk having unresolved squabbles weaken the company
By Herbert W. Lovelace (lovelace@home.com)
ur company's quarterly senior officer luncheons generally are dull affairs, designed to build camaraderie among people who for the most part aren't close outside the office. One of the unspoken rules is that harsh words, rarely spoken anyway in business meetings, are never used at these gatherings. So it was significant when Gornish, our CFO, and Kratmeyer, head of international operations, started throwing not-so-veiled barbs at each other instead of trading pleasantries (see "Loud Break In Code Of Silence"). Obviously, not everything in a big company is harmonious, but the big shots who run the place don't take potshots at each other in front of the rest of us, especially at the senior officer luncheon. It was only by happenstance that I learned of the reason, and when I did, I wasn't at all comfortable.
Ron Stagweg, the head of domestic operations, and I have a pleasant working relationship. I admit that when he was first appointed, I was critical of him--and his initial actions did little to change my mind. But Ron has tried hard and seems to be recovering from many of his early mistakes. He's a decent guy trying his best. So when I mentioned that I was taken aback by the Gornish-Kratmeyer exchange and asked him whether I was imagining the tension, I was intrigued when he sighed a deep sigh, leaned back in his chair, and said, "Herb, in a way it was my fault."
As Ron related the story, it made perfect sense, given the cast of characters. It all started when, in a minor reporting adjustment, a small domestic plant that makes products mostly for export was transferred to him from Kratmeyer. Everything was fine until Gornish was reviewing the preliminary accounting numbers for the year. These figures are used for lots of things, not the least of which is to determine the size and distribution of the executive bonuses. For someone like me (the head of a corporate staff group) the concern is about how much money the company makes. But for the head of a business group, who earns the profit matters a lot.
Upon investigation, Gornish found that Kratmeyer's helpers had submitted ledger adjustments transferring three extra months of manufacturing expense--but not sales revenue--from the plant to Stagweg. The result, if left untouched, would have meant a significant increase in the bonuses for Kratmeyer and his subordinates at the expense of Stagweg and his minions.
Gornish went to Kratmeyer and informed him of the problem. Kratmeyer waved it off as Gornish misreading the numbers. Gornish checked and found he was correct, whereupon Kratmeyer said it was an innocent mistake and suggested it wasn't worth a lot of fuss. When Gornish persisted, talking about tax rules and legal liability, and wanted to know how such an error could happen, Kratmeyer refused to pursue it with his group, saying as long as it was corrected it wasn't worth stirring up trouble.
At this point, Gornish went to Phil Whitestone, our CEO, and complained about the lack of cooperation. Phil, characteristically, didn't want to get involved and Gornish was left to stew about what he saw as an attempt to play games with his pristine ledger. All this time, Ron was on the sidelines watching Gornish protect his pocketbook as well as the integrity of the company's books.
The result is that a) we're now legally in compliance, b) Gornish has made changes in the accounting procedures (over Kratmeyer's objections), c) Stagweg and his people will get their proper bonuses, d) Gornish is convinced that Kratmeyer was pulling a fast one and that Phil wasn't willing to slap down an executive whom he depends upon for significant company revenue, e) Stagweg looks like a spineless wimp, and f) Kratmeyer is furious with Gornish.
Executives need to have mutual trust to work together effectively. Until things get resolved, or are forgotten because of some other crisis, we're weakened as a company. In all their anger, our leaders have forgotten that the attitudes of the elite trickle down and harden to become the actions of the middle management. I'm less optimistic about our future than before as we enter this period of economic contraction.
Herbert W. Lovelace shares his experiences (changing most names, including his own, to protect the guilty) as CIO of a multibillion-dollar international company. Send him E-mail at lovelace@home.com and read his online column at informationweek.com where he will provide real, and sometimes whimsical, answers to your questions.
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