The Guest Blog

Chatman: Once a CEO, Always Act Like a CEO

Jennifer A. Chatman|Professor of Management, University of California, Berkeley 

People who have never been fired know instinctively that it can’t be much fun.

Getting the axe over the phone is likely to be even more unpleasant.

Reminiscent of the universal ego-bust of being dumped in high school, the impersonality of a phone conversation to deliver such momentous news makes a low moment lower, adding to the very human feelings of being disrespected and diminished.

Who wouldn’t be angry and feel the need to shift blame and vindicate their self-worth?

The question, however, is what should you actually do to get through it?

It turns out that the range of options is significantly reduced if you are the CEO of a publicly traded company, indeed, if you are Carol Bartz.

Here’s why: Being a CEO of a company comes with the expectation that you are, and will continue to be, committed to the company’s and shareholders’ long term interests.

A CEO is the single most important and influential person in a company.

This is not to say that CEOs are solely responsible for an organization’s performance – that would be absurd since performance in large modern corporations emerges from many people and myriad internal and external forces. But, CEOs are ultimately accountable for an organization’s performance; they are typically the visible face to employees and shareholders, and compared to any other single individual within an organization, they have the most potential power to guide the organization on a strategic path. As such, CEOs are obligated to do everything they can to promote effective organizational performance both while they are CEO and even after they leave.

Some have said that Ms. Bartz was simply being an authentic and transparent leader when she wrote the now infamous email to Yahoo employees, just hours after getting the bad news from Board Chairman Bostock. In it she relayed that she had been “fired over the phone” and she wished employees well. But, if her true intent was to, as she later stated, “make sure that the employees don't believe that I've abandoned them” she wouldn’t have included the part about the phone.

Providing unnecessary details in an email blast about the immediate circumstances of her firing was not constructive, and reads instead as an attempt to dodge the blame for disappointing results.
Professor, UC Berkeley
Jennifer Chatman

Ms. Bartz was understandably angry. And being transparent is an element of good leadership. Employees will be better able to make strategically aligned decisions, judgment calls, and tradeoffs if you are clear about organizational events and priorities. But, CEOs don’t have the luxury of publically undermining the company or its board; transparency needs to occur in service of an organization’s long term interests. Providing unnecessary details in an email blast about the immediate circumstances of her firing was not constructive, and reads instead as an attempt to dodge the blame for disappointing results. One can only conclude that a chief executive who was thinking first about the long-term interests of her company, which she is distinctively obligated to do, would not have sent that email but instead tried to find ways to relay her concerns about the future of the company directly to the board and senior managers.

Of course, supporting the company is also beneficial for a departing CEO. Most CEOs negotiate gigantic severance packages at the time they are hired that should motivate them to support the company’s performance and growth even after they leave. Bartz’s severance package for being dismissed without cause from Yahoo is estimated to be worth $10.4 million. As is typical, a significant portion of the package is in the form of restricted stock that, in this case, has not yet vested - literally tying Bartz’s financial well-being to Yahoo’s future performance. Even more curious, Ms. Bartz professed her plans to remain a member of the Yahoo Board in the very same interview that she said that the board had “f---ed her over” and called her fellow directors “doofuses.”It is hard to see how employees or shareholders can use these inflammatory statements to increase the value of Yahoo’s stock. Instead, they escalate the turmoil for everyone at Yahoo, including Ms. Bartz who may lose the rights to her severance entirely as a result.

Despite her terrific record at AutoDesk and at least some evidence of progress at Yahoo, which was known to need a big turnaround when she accepted the job, other boards are likely to think twice before hiring her if it means risking the prospect of a similarly public battle if things go wrong.

Professor Jennifer Chatman is a Professor of Management at UC Berkeley’s Haas School of Business. She is also a board member of Simpson Manufacturing.

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