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Corporate Mismanagement

October 26, 2011 13:18:52.185

I have to say, I'm not surprised by the news that the head of McKinsey was engaged in unethical behavior. Not because of anything I know about that company; rather, because of what I saw years ago at ParcPlace. Here's what Walter Russel Mead has to say, in part:

That a criminal could win the trust of so many of the ‘best and the brightest’ in philanthropy and business chillingly demonstrates the moral and intellectual vacuum in the corporate world. Years of excessive payment for executives, okayed by go along to get along boards of directors, a culture of entitlement and a lack of personal character and strong moral codes have created a dead zone at the core of American life.

That took me back. Recall PPS back in the mid 90's, spiraling down under the management of Bill Lyons. His leadership was clearly flawed; he deserved a swift boot out with something along the lines of "and don't let the door hit you on the way out". However - that's not how it worked out.

He, like many execs, had a golden parachute. I don't recall the number now, but when he left - failure in his wake - he took a tidy sum with him. At the very least, that represented a complete failure on the part of the board. He was hardly the only guy to walk from a failure with a huge check; such golden parachutes are common. At the upper ranks, it's quite common for failure to be well rewarded.

But why? Why do boards do such things? Because it's not their money, and everyone is pals, I guess. Something is very rotten in the way a lot of boards and executive suites work together when failure is so regularly rewarded.

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