Thursday, June 01, 2006

Final (Thank Goodness) Thoughts on Lay and Skilling

So Ken Lay and Jeff Skilling are now officially guilty of the lies and deceptions that cost investors and employees billions of dollars—and which damaged the integrity of the capital markets that are so essential to the health of our free market economy. It’s encouraging that the legal system does work even when the defendants spent $60 million on high priced attorneys whose job was to dress up scoundrels in a way as to make them indistinguishable from the folks who lost their entire retirement portfolios.

Here’s what always rankled me the most about their defense. When Enron was flying high in the late ‘90’s, Lay and Skilling were more than willing to take full responsibility and ownership for the company’s glowing status. (And they were certainly more than willing to enjoy the public perks, privileges and compensation of their positions). Can you imagine either Lay or Skilling stating in, say, 1999: “Gosh, I can’t explain our success. I don’t really know what’s going on. I’m sure it’s all due to people throughout the company doing things that I have nothing to do with, and often don’t even understand. In fact, I don’t have that much to do with what’s going on.”

But after the company’s crash and burn, that’s exactly what they said. How disingenuous. The reality is that leaders set the tone, initiate the primary courses of action, bless the initiatives, articulate the standards, and both promote and live the values that ultimately all define the persona and direction of the company. That’s precisely what Lay and Skilling did for years. And then they denied it when their company imploded.

My own research shows that high-integrity leaders step back and let team members share the glory and rewards. In fact, they lean towards attributing all successes to the people who report to them. On the other hand, high-integrity leaders don’t blame others when things go sour. They take public and personal ownership for setbacks and failures. They truly lead by the old adage that “the buck stops here”.

Lay and Skilling did the opposite. They played the roles of geniuses and Supermen during the good times, and the roles of finger-pointers and idiots (“I knew nothing”) during the bad times. I know that’s not a criminal offense, but it’s the leadership offense that bothered me the most.

Remember Jerry, George, Elaine and Kramer in the last episode of Seinfeld? They learned nothing from their trial, and reverted back to their usual “M.O.”s while sitting in their jail cell. I think that’s precisely what will happen with Lay and Skilling. In this case, it’s too bad life is not a sit-com.


Anonymous Anonymous said...

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5:33 AM  

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