When CEOs write books, there can be more than vanity

The Argument

Surprisingly, for cultists and critics alike, the best of the top-dog memoirs offer powerful insights


February 08, 2004|By David Kusnet | David Kusnet,Special to the Sun

In the post-Enron era, corporate chief executives seem likelier candidates for the Most Wanted List than the Best-seller List. So it came as a surprise that HarperCollins just signed retired General Electric chairman Jack Welch to write a how-to business book for a $4 million advance.

But, less than three years ago, the Cult of the CEO was in full swing, and Welch's first book, a memoir of his years at the helm of GE, was on its way to selling more than 800,000 copies. Publishers signed other prominent CEO's, including IBM's Lou Gerstner and Honeywell's Larry Bossidy, to tell their stories, too.

Now that the Dow Jones averages have gone south and several top executives at scandal-ridden companies may be going to prison, are CEO books good bets for a bum's rush to the remainder bin? Not necessarily.

Readers can learn a lot from business leaders' memoirs and manifestos, including what's wrong with the corporate culture they represent. Welch, Gerstner and Bossidy saved some of the nation's largest corporations, and have serious ideas about how other businesses can cope with corporate paralysis, international competition, and changing tastes and technologies. For cultists and critics alike, their books explain what they were thinking when they downsized their work forces and outsourced or offshored important operations.

Taken together with recent studies of corporate behavior by the management consultant Michael Maccoby, the academic observer James Hoopes and the liberal business leader Sidney Harman, these books address important questions: How can troubled companies turn themselves around? Decide what to cut and what to keep? And change their entire way of doing things -- their corporate culture, in today's business-speak?

Welch says the answer is the Heroic CEO -- "the productive narcissist," in Maccoby's phrase -- who boldly goes where gentler souls fear to tread, abandoning entire divisions, product lines and work forces without regard for past practice and current employees. Harman and Hoopes say: "Not so fast, what about the work force's morale, the company's reputation and its obligation to the community?"

Is there a middle ground between slash and burn and standing pat? The search for a sensible synthesis shouldn't mean splitting the difference but answering the toughest questions: How can employees be expected to do their best work when a quarter of their colleagues have been axed? How can management ask workers to buy into change without allowing them an organized voice, including the dreaded "u-word," unions? And, while the best performers should be rewarded, should CEOs earn more than 400 times as much as the average employee?

The best answers come from Harman, who built a $2 billion business, and the practical visionaries whom Hoopes cites: Allow employees some kind of formal voice. Treat workers as if they're as important as other corporate assets.

And understand that, as Harmon writes, ethical behavior isn't only "the right thing" but also "a great marketing tool."

If visionary management became a cult during the 1980s and '90s, then Welch was its prophet, and Jack: Straight From the Gut, by Jack Welch with John A. Byrne (Warner Books, 479 pages, $29.95), is his testament. Welch was the first modern CEO to transform a major company, and he did it before he had to -- when GE was still the ninth-most profitable and the 10th-largest company in the Fortune 500.

Taking over in 1981, he got GE out of most businesses where it wasn't first or second and eliminated 118,000 employees, a quarter of the entire work force. He earned the nickname "Neutron Jack," and Fortune magazine listed him as "one of the ten toughest bosses."

Welch is "tough." He believes in "differentiation" -- a word that Bossidy and Gerstner also use. Rejecting across-the-board raises in good times and pay cuts in bad times, he favors rewarding the stars and sacking the slackers.

He makes a convincing case that it is "false kindness" to give poor performers good ratings that they don't deserve or to postpone mass layoffs until hard times when workers will have a harder time finding new jobs.

He's proud of how he knocked heads and tore down bureaucratic barriers to get the kind of freewheeling exchange of ideas that he sees as essential to corporate strategizing. At age 65, he's still the abrasive adolescent that his early personnel evaluations described him as being. He demands that his colleagues be as "passionate" about business as he is, lavishly praises his friends and favorites, and ignores those he's discarded along the way.

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