A Leader in Name Only

By John Hollon

Jan. 13, 2006

Never let it be said that Ken Lay didn’t try to rally the troops and use his personal willpower to motivate the workforce.

    Just before Christmas, the former Enron chairman and CEO gave an impassioned speech that was described by The Houston Chronicle as “a call to arms to Enron employees to defend the honor of the company and Lay himself.” He called on Enron people to “stand up now–and prove that Enron was a real company, a substantial company, an honest company, a company that had a vision and values.”

    This is what a leader does best: use the power of his or her position, the bully pulpit, to set a vision that drives others to take action and help move the business ahead.

    Unfortunately for Enron, there is no longer a business to move ahead. Once one of the 10 largest companies in America, Enron collapsed from a huge business and accounting scandal in 2001. Thousands of employees not only lost their jobs but also had savings and pensions wiped out when the company went bust. And Ken Lay faces conspiracy and fraud charges for his alleged role in the Enron scandal that could put him in prison for the rest of his life.

    Lay’s pre-Christmas speech wasn’t about motivating his former employees. It was a self-centered attempt to publicly frame his defense strategy and maybe even lobby the jurors who will be sitting in judgment when his case goes to trial later this month.

    He’s entitled to that under our system of justice, of course, but it made one wonder: Where was this rallying cry from Ken Lay when it still mattered, when Enron was still a going concern?

    It’s debatable that anyone, much less Ken Lay, could have fixed Enron, but it doesn’t get past the truism that strong leaders can use the power of their positions and personal persuasion to motivate people and point them the right way.

    And, there’s something else a leader can do to send a strong and powerful message to the workforce: lead by example.

    For instance, when Jan Carlzon was CEO of SAS Airlines, he reinforced the notion that quality service was a key to the company’s strategy (and ultimate success) by flying coach instead of first class, giving up his seat to wait-listed customers. His personal example sent a powerful message to the workforce that even the CEO was willing to accept responsibility to do the right thing and help the business achieve its goals.

    Alas, this is a lesson Ken Lay seems immune to. He’s never really taken any responsibility for Enron’s collapse, blaming the company’s problems on the illegal conduct of a few key employees, overzealous prosecutors and public hysteria that drove the stock from a high of $90 down to about 25 cents.

    “This is what I call the Elmer Fudd defense–that I went to work every day and was paid $6 million a year and had a Ph.D in economics, and somehow, despite all of this, I didn’t know anything that was going on. It’s laughable,” attorney Bill Lerach told the CBS news program 60 Minutes. Lerach has been involved in the investor lawsuit against Ken Lay and the company as well as its bankers and accountants.

    “What was he doing in his office? Reading comic books? The man was CEO of the company,” Lerach says. “He had an obligation to be informed about what was going on in that business every day in every way. And he utterly failed to do it.”

    That’s the real lesson of Ken Lay. Executives can lead a workforce by personal willpower and rallying the troops. Or, they can lead by example–either for the good, the not so good, or the very bad.

    Ken Lay has set an example of how not to lead, and no impassioned speeches can change that. Now it’s up to 12 good citizens of Houston to pass judgment on him, his leadership, his vision and his values.

Workforce Management, January 16, 2006, p. 46Subscribe Now!

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