Writing in a political context in the Financial Times, Janan Ganesh said that “High office is an audit of the occupant. It brings out what is actually there.” The Man From FCPA was struck by this maxim as it is also true of senior management in a business, particularly a CEO. I thought about this when considering the response by former GE, CEO Jeff Immelt about the use of ghost planes which followed Immelt’s corporate jet when he traveled on behalf of the company. The idea was that he would have a second jet follow him when traveling internationally, in case his own plane developed problems. This way, he could continue without delay. But that's a very expensive failsafe. Spendthrift, even.
In a letter to John J. Brennan, chairman and CEO of Vanguard and GE’s lead director, Immelt said, “Given my responsibilities as C.E.O. of a 300,000-employee global company, I just did not have time to personally direct the day-to-day operations of the corporate air team.” He added, “Other than to say ‘hello’ I never spoke to the head of Corporate Air in 16 years.” The CEO of the company goes 16 years without once ever having a substantive conversation with the head of the group mandated with handling his air travel? If it is true what does it tell you about the Imperial leadership style of Immelt. If he is not telling the truth, it tells you about the liberties he is taking with his facts.
Any CEO so imperial that he will not even engage in small talk with company employees bespeaks of a culture where a disaster is in the making. For GE, there has not been a public scandal but a huge drop in share price and corporate value. If your CEO will not even speak to the head of corporate aviation except to say hello for over 15 years, how many employees are going to feel comfortable speaking up about how things are really going?
This episode with Immelt also speaks the need of the Board of Directors to engage in appropriate oversight of senior management. This means when an allegation comes in about the CEO, as was the case at GE around the issue of Immelt and the ghost plane, the full Board needs to be apprised of the situation; not finding out when the Wall Street Journal breaks the story.