Leadership

INTRODUCTION Businesswoman Carly Fiorina was born Cara Carleton Sneed on September 6, 1954, in Austin, Texas. She joined AT&T in 1980 as a management trainee and rose to become a senior vice president overseeing the company's hardware and systems division. In 1999, she was hired as the CEO of technology giant Hewlett-Packard (HP), becoming the first woman to head a Dow 30 company.  She starred in company commercials and joined with entertainment stars like Matt Damon, Ben Affleck, and Sheryl Crow to promote HP products at electronics shows. Her image appeared on the covers of business magazines and she was a regular at the World Economic Forum in Davos, Switzerland. However, she was fired by HP in 2005. Richard S. Fuld Jr. was chairman of Lehman Brothers Holdings Inc. and Lehman Brothers Inc. from  1994 and chief executive officer of the Company from 1993 until the firm declared bankruptcy in 2008. Mr. Fuld was president and chief operating officer of Lehman Brothers Holdings Inc. and Lehman Brothers Inc. from 1993 to 1994. He was president and co-chief executive officer of the Lehman Brothers Division of Shearson Lehman Brothers Inc. from 1990 to 1993. Mr. Fuld was a vice chairman of Shearson Lehman Brothers from 1984 until 1990 and has been a director of Lehman Brothers Inc. since 1984. He joined Lehman Brothers in 1969. Mr. Fuld is a member of The Business Council. In addition, he serves on the Board of Trustees of NewYork-Presbyterian Hospital and Middlebury College. Mr. Fuld received his B.A. from the University of Colorado and his M.B.A. from the New York University Stern School of Business. This paper will show how Carly Fiorina and Dick Fuld has been successful and become fall and I also look at leadership ethics can be withdrawn from the experience of two CEO. In additional we can learn some lesson from these two CEO to become a better leader in the furture. 1. Fiorina – Factors contributed to meteoric rise - Fiorina entered AT&T as a low-level sales manager and soon drew the attention of top management. She took on tough assignments and rapidly became "one of the great salespeople of her industry" (p. 95), rising to become president of North American sales. Fiorina played a key role in AT&T's spin-off of Lucent Technologies and was named to head Lucent's sales and marketing group. The firm's revenue and stock value rose dramatically during her time there. In 1998, she was first named as Fortune magazine's most powerful female American executive. She continued to top this list throughout her tenure at HP. - At the same time Lucent stock was soaring, HP was losing some of its luster. The company, founded by Bill Hewlett and David Packard in 1939, was one of the first to offer such benefits as profit sharing, flex time, catastrophic insurance, and tuition assistance to employees. Founders Bill and Dave believed that the company made money because they were good to their people. The company's strong culture was based on a set of values known as the "HP Way." These principles included treating everyone with respect, sound finances, trust in employees, technical excellence, teamwork, thrift, humility, and hard work. Following these principles paid offBy the late 1990s, critics both inside and outside the company believed that HP had lost the magic formula described by Burrows. Employees expected regular bonuses whatever their level of effort. HP was no longer a technical leader but had evolved into a huge bureaucracy resistant to change . It periodically missed earnings projections and its stock price lagged behind high-tech rivals like Dell and Sun Microsystems. Concerned that the company was becoming unwieldy, board members spun off the test and measurement businesses into a new firm called Agilent Technologies. CEO Lew PlaThere was no clear internal successor to Platt, so the board hired an executive search firm to locate an outsider to lead the company . Soon, Carly Fiorina emerged as the leading candidate. Unlike Lew Platt, a quiet individual who largely shunned attention, Fiorina was media savvy. She epitomized the "celebrity CEO." Celebrity CEOS are bigger-than-life figures often called upon to rescue organizations. They enjoy the limelight, acting more like rock stars than traditional business executives. Fiorina had never run a corporation and came out of a different industry. Her expertise was in sales and marketing, not in operations.tt agreed to step aside. There was no clear internal successor to Platt, so the board hired an executive search firm to locate an outsider to lead the company . Soon, Carly Fiorina emerged as the leading candidate. Unlike Lew Platt, a quiet individual who largely shunned attention, Fiorina was media savvy. She epitomized the "celebrity CEO." Celebrity CEOS are bigger-than-life figures often called upon to rescue organizations. They enjoy the limelight, acting more like rock stars than traditional business executives . Fiorina had never run a corporation and came out of a different industry. Her expertise was in sales and marketing, not in operations. - To lure Carly to HE the board offered a compensation package that included $65 million in stock options and restricted stock, a $3 million signing bonus, and a $1 million annual salary with a $1.25 million to $3.75 million annual bonus. She also received more than $36,000 for mortgage assistance, a relocation allowance, and a contract that not only allowed her to use company planes for personal use but encouraged her to do so. This package dwarfed anything offered to her predecessors. Lew Platt stayed on as an advisor to ease the transition and Richard Hagborn, founder of HP's printer business, agreed to act as board chair. Hagborn's strengths--his knowledge of HP and operational skills--were to help compensate for Fiorina's weaknesses. - The new CEO's arrival generated a great deal of excitement in the media and among employees at HE After her hiring was announced at a major press conference, Carly conducted a whirlwind tour of HP facilities to introduce herself. Business writers wrote of the new energy she brought to the moribund company and how she was going to take the firm in a badly needed new direction . To many employees, Carly signaled a welcome change, and a number of women looked to her as a role model. - Fiorina believed that the HP Way was a major cause of the company's mediocre performance. She treated workers who clung to the HP Way as the opposition. Their devotion to the past put the firm at risk. For the company to move forward, those who resisted change would have to be removed. "If one-quarter of the people in HP don't want to make the journey or can't take the pace," she told a reporter, "that's the way it has to be". - Fiorina instituted three changes, in particular, that had a major effect on HP's culture. First, she shifted priority from nurturing employees to financial performance. Financial results (sales and revenue growth, stock price) became the primary value under her leadership.. She was more concerned with revenue growth and earnings than were her predecessors. Under previous leaders, reporting quarterly earnings was routine. Not so under Carly. She and a team of advisors pored over the numbers, trying to put them in the best light. Whereas the company's founders were conservative, believing it better to underpromise and overdeliver, Fiorina continued to promise double-digit sales and revenue increases even in the face of the economic downturn of 2000-2001. Carly's second major change initiative altered HP's reward metrics. The CEO replaced HP's profit-sharing plan with an incentive program that would provide a bonus to all employees if the company hit its financial targets. Salespeople, who had been salaried, now earned commissions based on individual sales. Commissions were handed out twice a year to keep the sales force from "coasting" until the last quarter . Fiorina's third cultural change focused on structure. In the past, divisions at HP operated largely as independent businesses focusing on the development and sale of particular products. This structure kept operating units smaller to maintain the firm's person-centered culture. Carly reduced 83 units to 4. Two "back end" units manufactured computers, printers, and imaging equipment. These units then turned the products over to two "front end" units that targeted either consumers or corporations 2. The factor drive to fall : - Within a year, Lew Platt left HE complaining that the new CEO was not listening to his advice. Board chair Dick Hagborn stepped down and Fiorina assumed the roles of both CEO and board chair. Her biggest supporter at first, Hagborn would grow increasingly concerned about Carly's shortcomings and later worked to remove her. First, she asked employees to take a voluntary pay cut or a survey of 8,000 employees revealed widespread unhappiness about poor communication and poorly implemented decisions. This was a complete reversal of earlier surveys, which found that HP had some of the highest employee satisfaction scores in corporate America. Some workers booed the CEO at company meetings. The company electronic bulletin board was shut down after employees used this forum to attack Fiorina. time off worth up to 10% of their salary. Employee dissatisfaction took the form of active resistance in 2002. - Carly launched merger talks with Compaq, a move that would add 65,000 employees and increase the company's presence in the computer market. Current and past employee stockholders largely opposed the merger. They doubted that HP's culture could survive the influx of so many new workers. Their champion was board member Walter Hewlett, Bill Hewlett's eldest son. The board pushed for the Compaq deal over Hewlett's objections. An ugly, highly publicized proxy broke out. Fiorina dismissed Hewlett as "an academician and musician" in a letter to stockholders. Information about board deliberations was leaked to the press, which would later prompt Fiorina to launch an investigation to identify the source. At a crucial junction in the proxy battle, she talked to investment managers at Germany's Deutsch Bank (who would earn $2 million in fees if the merger went through) to win their support. The merger passed, but only by a slight majority. Hewlett then unsuccessfully challenged the results in court. 2004 marked the last full year of Carly's tenure. By this point, HP stock had lost half of its value. Dell began to eat away at HP's highly profitable printer business. - The business press, which had once lauded Fiorina, began to complain about her lack of operational skills and failure to chart a coherent direction for the company. Employee morale continued to drop. The CEO and her board sparred over appointments to head divisions of the company, plans for further reorganization, and suggestions that she hire a chief operating officer. Issues came to a head in the third quarter when the company badly undershot earnings projections and it looked like Fiorina was sacrificing others to cover for her mistakes. The board removed Carly in February 2005, providing her with nearly $28 million in severance pay. Employees celebrated her departure. At HP's Boise facility, employees distributed Hostess Ding Dongs to announce, "The witch is dead". Four pension funds holding HP stock filed a lawsuit claiming that the board had violated company policy by authorizing excessive severance benefits without shareholder approval. 3. The Implications for leadership ethics can be drawn from Carly Fiorina: - In contrast to the ethical leader, the unethical leader is weak as both a moral person and a moral manager. This type of individual acts immorally and promotes such behavior in the organization. The ethically neutral leader falls somewhere in between ethical and unethical classifications. On the moral person dimension of ethical leadership, the ethically neutral leader is seen as more self-centered than people centered. On the moral manager component of ethical leadership, the ethically neutral leader is more focused on the bottom line than on values and principles. This generates the impression that the leader is neutral when it comes to ethical concerns. - Carly Fiorina can best be categorized as an ethically neutral leader. There is plenty of evidence that she was perceived, fairly or unfairly, as more self-centered than other centered. In particular, the CEO seemed to lack three important leader character traits: compassion, integrity, and humility. - She proved her leadership in tough times. Her pursuit of the controversial merger with Compaq Computer is now acknowledged to be the most successful merger in high-tech history and positioned HP to become the first $100 billion information technology company, creating market leadership positions for the company in every one of its product lines.  - Carly’s uncommon record of hard work and success includes more than 20 years at AT&T and Lucent Technologies, where she led the largest-of-its-time IPO of Lucent and became President of its largest business.  - Today, Carly is one of the most recognized business leaders in the world and an opinion leader who chairs the Board of the Technology Policy Institute, served on the Board of Business Executives for National Security, is a Global Envoy for Lance Armstrong’s LIVESTRONG organization and serves as vice chair of the Initiative for Global Development. She was also a member of the Defense Business Board, and recently served on the Advisory Group for Transformational Diplomacy for the Department of State. 4. RICHARD FULD ROSE - Factors contributed to meteoric rise: - Fuld was a long-term player and knew that better days were ahead. Lehman's rebound continued in the first few years of the millennium, as the firm earned a reputation for its stellar management through three primary accomplishments: First, the company kept employees' salaries in line with earnings, with the ratio of compensation costs to gross revenues hovering around 51 percent. Second, Lehman maintained a strong focus on U.S. government bonds, global fixed income, and credit derivatives at a time when the equities and investment banking markets were losing propositions. Finally, the firm retained its best managers by handing them substantial portions of stock in the firm. In 1994 employees owned 4 percent of Lehman; by 2004 they owned 35 percent. In 2001 the firm allocated $544 million for stock-based pay, accounting for 15.8 percent of its total compensation expenses, as compared with the 6.4 percent allocated for such purposes at Merrill Lynch. Fuld's message to new recruits: If you join us, we promise to make you rich—perhaps seriously rich. And he delivered on that promise—by 2002 the company was teeming with self-made millionaires. - Despite its success, Lehman Brothers still lingered in the shadows of such megafirms as Goldman Sachs and Citigroup. Although its market cap grew from $2 billion in 1994 to $15.8 billion in early 2002, the firm still lacked the type of balance sheet that would allow it to make a significant acquisition.With 2003 sales of $17 billion, Lehman Brothers was an investment bank known as an aggressive trader. The firm offered investment and merchant banking services as well as the underwriting of equities and fixed-income products (such as bonds and other debts), asset management, institutional sales, and private client services. In addition Lehman traded stocks, currency, derivatives, and commodities. After being weakened by economic turmoil in Russia, Lehman was growing again, forming joint ventures for investment banking with the Bank of Tokyo-Mitsubishi and for online bond offerings with SOFTBANK. The firm was also a leading online bond offerer in the United States. Its 2003 acquisition of Neuberger Berman brought assets under management past the $116 billion mark. Dick Fuld success - Another nod from Wall Street came in January 2004 when Institutional Investor ranked Fuld first in its annual Best CEOs in America survey in the Brokers & Asset Managers category. - Plenty of room for improvement, however, existed within Lehman Brothers' overseas operations. The company was ranked fourth in European M&A work in 2002, with a market share of 19 percent, but it fell from number eight to number nine in the global rankings for announced mergers. As of early 2004 one of Fuld's goals was to improve the company's overseas market share, partly by appointing two top executives in Asia and Europe to the company's executive committee. In good times and bad Fuld displayed unquestionable consistency and strength. One would expect nothing less from the leader of one of the top investment firms in the world. In a tough business few proved tougher than Richard Fuld. 5- Factors drive to Dick Fuld fall TRADING FLOOR TO THE EXECUTIVE SUITE: - Richard Fuld joined Lehman in 1969 as a commercial-paper trader and earned his reputation running the firm's fixed-income business. In the early 1980s at the age of 37 Fuld became the supervisor of both the fixed-income and the equities divisions, overseeing all trading at Lehman. Fuld had met with great success as a trader, but his skills as a manager were less obvious. His interactions with coworkers were decidedly limited; when he did speak, he tended to use monosyllables. He was notoriously described in Ken Auletta's 1987 book,Greed and Glory on Wall Street: The Fall of the House of Lehman, as "the 'digital mind trader,' someone who spent so much time in front of his green screen or making rat-tat-tat decisions that he was no longer human. A CUTTHROAT CULTURE: - Fuld, who earned his MBA from New York University at night, was considered by many in the industry as one of Wall Street's supreme traders. One Lehman partner said of Fuld inInvestment Dealers' Digest, "This is a very smart guy, tough as nails" (August 24, 1992). As reported byFortune, a notorious temper earned Fuld, a weightlifter, the nickname "gorilla" (December 11, 1995). - Toughness was a prerequisite to surviving Lehman's cutthroat corporate culture. Intense acrimony nearly brought the firm to its knees in 1984, due to a power struggle between the firm's top trader and top investment banker, and again in early 1990, due to a clash between the Shearson Lehman chief executive and the chairman of American Express. - The history of Lehman Brothers could justifiably fill several books, with a chapter or two devoted solely to the firm's relationship with American Express. Shearson/American Express acquired Lehman Brothers in 1984; six years later Shearson Lehman Brothers split its operations into a Shearson retail division and a Lehman Brothers Investing banking/trading division. A primary figure during this period was Fuld. - After the 1990 operations split, Fuld became co-CEO of the Lehman Brothers division, sharing the title with J. Tomilson Hill. The pair of executives comprised two-thirds of a power struggle that also involved Fuld's longtime protégé T. Christopher Pettit. Pettit, the West Point graduate who joined Lehman in 1977, worked side by side with Fuld for much of his career and emerged in the early 1990s as a controversial rally-the-troops leader. Pettit managed to insert fixed-income executives personally loyal to him in top operating positions firmwide, provoking tensions between him and Fuld. Hill was ultimately ousted by the American Express Company chief executive Harvey Golub; Pettit and Fuld, meanwhile, would meet with further confrontation later on. Fuld, who was named chairman in April 1994, made substantial human-resources changes after his company broke free from American Express. One of the most notorious personnel shake-ups involved his protégé Pettit. A fallout between the mentor and younger employee arose after Pettit was given dayto-day operating control of the company and overstepped his boundaries. Pettit made a few dubious moves—essentially in attempts to give himself more power—and his relationship with Fuld deteriorated. As news of Pettit's alleged affair with a subordinate spread throughout the firm, tensions between him and his mentor were exacerbated further. In April 1996 Fuld stripped Pettit of his day-to-day business responsibilities and removed most of his handpicked executives. Six months later Pettit resigned. Just a few months afterward he was killed in a snowmobile accident on his 52nd birthday. Through the beginning of the 21st century Fuld refused to discuss the matter publicly. THE KEYS TO SUCCESS: I don’t understand this part so I suggest U replace it and add 6 Leadership ethic withdrawn from Dick Fuld: http://leaderswedeserve.wordpress.com/2008/09/17/lehman-bros-and-the-limits-of-leadership/ THE NEW POWER HOUSE: In 2003 Daily Deal awarded Lehman Brothers the "Top 5 Global M&A Announcements of 2003 Deal of the Year" for its consultation with Travelers for the company's $16 billion merger agreement with St. Paul Companies. All told Lehman consulted on $99 billion worth of U.S. mergers and acquisitions in 2003, increasing its market share by 6.2 points to 18.9 percent, according to Thomson Financial. That gave the firm the lead in mergers and acquisitions in the industry, over Credit Suisse First Boston, Merrill Lynch, and J. P. Morgan Chase. Among major Wall Street firms, Lehman claimed fourth place in mergers and acquisitions overall, up from ninth in 2002. In 2003 the company raised $314 billion in debt and equity issues for clients, cementing its position as the number-two underwriter of securities in the United States—behind Citigroup—up from the number-four spot in 2002. Lehman Brothers' success stories were largely a byproduct of Fuld's focus on offering a complete array of financial services, including advisement on corporate merging, raising capital, hedging risk, and making debt payments. Fuld's transformation showed foresight. As the economy picked up, bond insurance was expected to soften; Lehman's investmentbanking operations would be the counterbalance to the expected downturn in bonds. In a nod to Fuld's efforts, Blaine A. Frantz, the senior credit officer at Moody's Investors, told BusinessWeek, "It is a much more diversified shop than it was five or six years ago, and it operates in an extremely disciplined fashion" (January 19, 2004). 6. Leadership lesson can be learn become a better leader -The executive who is responsible for a company’s operations, usually the president or the chairman of the board. The highest ranking executive in a company whose main responsibilities include developing and implementing high-level strategies, making major corporate decisions, managing the overall operations and resources of a company, and acting as the main point of communication between the board of directors and the corporate operations. The CEO will often have a position on the board, and in some cases is even the chair.It  is a bureaucratic position that carries the ultimate management responsibility for an organization. Commonly, CEO is a rank that is associated with the head of the company. One of the primary duties of the CEO is to report to the board of directors which is answerable to the owners of the company. In addition, CEO carries out the job of designating other managerial officers including that of a president. Depending on the extent of his or her functions, a CEO can also have the title of President/CEO or President and CEO. A CEO is not only a key management figure, but also the face of any business establishment. Therefore CEO's career record and professional background often represent an important qualitative parameter of the overall value of the company. Chief Executive Officer is a title given to the person in a company who is in charge and responsible for the overall operations of a company. In corporations, the Board of Directors will typically elect the CEO. - Who is a CEO: A talented CEO knows that the greatest power he or she may possess is that of , sharing the work and allowing other employees to have opportunities to make executive decisions, and grow with the company. The CEO who never delegates is likely to be highly overworked, particularly in a large company. Those who are interested in heading companies are most likely to arrive at their goal by pursuing degrees in business management, particularly advanced degrees. Management skills are the hallmark of the talented CEO, as he or she stewards the company into success. A CEO is a person who has been given a responsibility to run the organisation (and make profits) and who is expected to know all aspects of the business – typically finance, manufacturing, sales & marketing, expansion, new product development etc., It’s a job that only CEOs can do because everybody else in the organization is focused much more narrowly and, for the most part, in one direction: Salespeople are externally focused; just about everyone else is inwardly focused. Integrating the outside and the inside is hard; it’s far easier to pick one. The CEO can see opportunities that others don’t see and, as the one person whose boss isn’t another company employee, make the judgments and the tough calls others are unable to make. FUNCTIONS OF A CEO; - There is no standardized list of the major functions and responsibilities carried out by position of chief executive officer. The majority of effective CEO/President leaders seem to be natural visionaries. Although, I admit, that there are successful leaders that can't see past lunch. However, those leaders without the vision that are successful are successful because they have the unique ability to surround themselves with high quality people. Almost unanimously this type of leader has at least one member of his team or Board of Directors that fills that visionary void. Today's individual leadership models, to be effective, must embrace an empowering framework not a commanding one. The most effective way to get employees to release discretionary energy, ideas and information is to mobilize their human energy through empowerment. That is the basis of the "Lead Wolf Model" of leadership. - The Visionary --- This is the platform for the functions of leadership. A visionary leader defines the company's destination. They craft the core values and define the culture of the organization. Clarification of goals and initiatives are a primary responsibility and the leader must distill a concept of success throughout the organization. - Cheerleader --- The cheerleader's primary responsibility is to keep the team focused and motivated. They in essence are the primary team builder starting at the top with the executive team. But creating an effective executive team isn't enough. The leader must instill the coaching and mentoring concept in the core belief system of his executive team to insure that these values are passed down throughout the organization. - Role Model --- Do as I do. That is exactly what employees will do. The leader is and must be highly visible to all employees. The leader has a responsibility to reinforce the success principles and core values of the organization. Day to day actions, managing by walking around, open communication, empowerment and generating employee feedback are key responsibilities of the leader as a role model. - Last Chip ---- The ultimate decision maker for the toughest decisions. This requires mental toughness, total honesty and integrity. These types of decisions are often forced by external forces, unpredictable circumstance or long term investment activity. The leadership function called the last chip is defined this way to reinforce the concept of empowerment. A leader's primary responsibility is not to make day to day decisions but to empower his employees to make the majority of those decisions with only those critical, long term, high investment, futuristic decisions reserved for the leader - “CEOs must ensure that the functions involved in managing any organization are performed to a high standard. There is a vast literature on the choices, structures, and supporting systems involved in modern management, including strategy, organization structure, planning and resource allocation, and management selection. What is not well understood is the allocation of responsibility for each of these areas among managers in the organization, and in particular, what the specific role of the CEO should be in each of them. - It is beyond the scope of this paper to catalog all the functions involved in modern management practice. - Direction: A core function of leadership is setting the strategy for the organization, and setting specific financial goals that the organization will seek to achieve. Identifyingorganizational values and ethical standards can be treated as part of setting direction. - Coordination: Organizational structure defines how individuals in the organization are grouped into units, and how these units coordinate with each other. Processes such as the product-development process or the customer-service process also enable coordination across activities and units. Both structure and processes must align with strategy. - Commitment: An organization’s leadership has to provide financial and other incentivesthat align with strategy and goals to ensure broad commitment to its mission. - Implementation: Systems such as budgeting, management development, and performance reviews are needed to ensure timely implementation of the organization’s goals and strategy to the highest standards desired by its leadership. - Selection: The leadership in any organization has to work collectively and rely on others to accomplish the work of the organization. The recruiting and retention of the management team is therefore another vital function of leadership. “In each of these areas, the challenge is not only design and implementation but also alignment and adaptation — that is, each area must be consistent with and reinforce others and be reviewed and modified as internal and external conditions change.” 7 CONCLUSION Overall, Both Carly Fiorina and Dick Fuld have been successful as a leader but in some aspect they lack of leadership ethics. Analysts their case help us know about the factor lead to success of talented leaders, and also a lesson about the form the leader in the new era, with new thinking. Just a background knowledge and know how to apply the leadership ethics, leaders will succeed without having to rely on luck. 8 REFERENCES