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Bill Kalmar

Quality Insider

It’s Time For Heads To Roll!

No longer any room for incompetence

Published: Wednesday, November 26, 2008 - 08:34

One of my favorite movies is a dark gangster movie starring Joe Pesci entitled "8 Heads in A Duffel Bag." Pesci, a mob courier is hired to transport the heads of eight murder victims to a mafia boss to prove that the “hits” had in fact taken place. Unfortunately and comically, the duffel bag becomes mixed up with a similar bag of a college student who is off on vacation. Pesci tries to find a way to get the heads back and what follows is a series of misadventures and hilarious incidents, as the heads keep turning up in unlikely locations such as an industrial clothes dryer. Yes, I said it was dark but my kind of humor.

Recalling this movie led me to believe that what with the current state of politics and the financial downturn we are experiencing, it may be time for some additional heads to roll.

Let’s start with all the mortgage executives who encouraged people to take out loans without even verifying their income or resources of the borrowers. People were led down a crimson path somehow believing that their modest incomes would allow them to occupy homes well out of their economic reach. The loans were structured so that the first couple of years were within their income. Once the higher interest rate was triggered, the mortgager usually ended up in default but by then these predator lenders had made their commission and had moved on to other victims. Time for their heads to be placed in a duffel bag!

Moving on, let’s not forget about the dreadful decisions made by Wall Street executives who, despite internal information to the contrary, kept informing investors that all was well. Now we have the government and of course us, taxpayers, bailing out these monetary moguls. Most have been able to keep their well-padded salaries but their lack of remorse or responsibility doesn’t sit well with the general public. Open up another duffel bag!

While we are on the subject of parasites, let’s not forget the mental giants at AIG, the giant insurance company. After a bailout of billions of dollars from our benevolent government, executives of AIG along with what was characterized as “top performers,” who steered business to AIG, were feted to a spectacular couple of days at a top resort in Monarch, California. Congressional reports indicate that more than $23,000 was spent at the spa alone!

My recent phone call to AIG confirmed the details of the soirée, however the representative stated that “no AIG management benefited from the spa.” Quizzing the rep as to whether or not the AIG execs had pedicures provided an indignant “no” response. I guess asking the rep if she had examined their feet for signs of a pedicure would have been a stretch. In any event, I think a solid case for more heads to roll and find a place in my duffel bag is not out of the question!

My purpose in suggesting that heads should roll isn’t to be construed as an attack on what some would consider extravagant salaries. I’m not a proponent of class warfare. In my opinion, placing limits on salaries or even instituting a tax on windfall profits discourages productivity, something our nation excels in. What concerns me is when high-salaried executives engage in deceit, malfeasance, or just bad decisions, and they are allowed to maintain their salary and perhaps trigger a “golden parachute.” Case in point would be AIG executive Joseph Cassano who earned $280 million over eight years, then left the company in March 2008 and was slated to receive $1 million a month through the end of the year. It would be counterproductive to dispute his salary but shouldn’t there be some consequences for the CEO when a company fails. Frankly, I think there’s a special place in my duffel bag for his head!

Now that our government with their largesse has provided huge cash infusions to many of these companies, it’s incumbent upon our representatives to establish strict and measurable goals for the executives. Failure to meet these mutually agreed-upon goals should result in immediate termination with no severance pay or golden parachute. What with the high unemployment in our nation, I’m confident that there won’t be a lack of qualified candidates to fill these roles and agree to the terms. As a final incentive for these execs to succeed, a subtle reminder that there’s always additional room in my duffel bag may suffice!

The automotive conundrum—ride a bull or private jet
Mammoth third-quarter losses for GM and Ford were reported recently and we’re told that a major restructuring is in the works. In conjunction with that let me offer some thoughts on restructuring that I think are shared by many in our nation.

First of all, it might be interesting to discover how the automotive executives traveled to Washington, D.C. for their recent bailout meeting. Did they each fly on their private jets or opt for coach fare? Any reason they could not have traveled on one plane? Yes, I know some will argue that if a plane goes down we would lose the brain trust of three companies. But that’s a weak argument as far as I’m concerned. Doesn’t each company have a succession plan in place and if not, why not? Why do we continue to pay bonuses and extravagant salaries to these captains of industry? The argument is that companies need to retain these talented individuals otherwise they will bolt to the competition. Well, if these all-knowing mega-minds are that talented, why are their companies flirting with bankruptcy? Strategically, it might be a good move to let them flee to the competition since their lackluster track record might just have a similar effect there and thus trim the number of competitors for Ford and GM.

Here’s another question. Does Ford chief executive Alan Mulally’s family still fly free on the corporate plane? According to an earlier Ford Proxy, Mulally is required to use company aircraft for all business and personal air travel for security reasons, and that his family and guests were allowed to accompany him on the aircraft. How about when Ford vice president for the Americas region, Mark Field, was flying home to Florida on weekends via the company jet? The outcry from the public was such that it was discontinued. But perks for those in the ivory tower seem to be the norm even when those in the trenches are moments away from going on life support units for survival.

Here’s a thought: how about William Clay Ford selling the Detroit Lions for some additional cash flow? Everyone knows that the franchise is the Edsel of football teams. Two TV blackouts in a row should send a strong message that fans won’t buy an inferior product. And that goes for automobiles also.

These are obviously small expenses when compared with the overall budget, but they demonstrate executives’ mindset, which keep them out of touch with the average worker. These guys need to hang out with us more often so that they can gain an appreciation of how people are struggling. Soaring through the skies being pampered in a private plane tends to make one lose focus of what’s happening on the ground.

While I’m on the subject of cutbacks, have you noticed now that gas is selling below $2 a gallon there hasn’t been a similar reduction in supermarket prices or airline pillows, beverages, or baggage fees? The airlines are still charging for checked baggage and making every effort to discourage carry-ons by lowering size requirements. One might suggest that there’s some lag time between fuel reductions and the resulting price constriction in other commodities, but I would rather attribute it to bold-faced greed.

Yes, our country is in the throes of an economic tsunami and no one has an answer for a course correction. Maybe we should just emulate rodeo bull riders who consider it a success if they can stay mounted for eight seconds on their crazed steed. For ourselves, we’re just hoping for a reappearance of the bull market and hoping we don’t go crazy awaiting it. In the meantime, it’s going to be a rough ride so saddle up and hold on tight!

A potpourri of quality opinions
Now that I have filled my duffel bag with the heads of incompetent titans of industry, it’s time to lighten up a bit. Here’s what’s been swirling around in my head lately:

  • I just read the other day that, because of the enormous amounts of rain on the East Coast there will be a pumpkin shortage this year, which will last through year-end. Well, here in my hometown there’s an abundance of pumpkins—every grocery store, gas station, and roadside vegetable stand have pumpkins galore. What makes me so excited about viewing these orange globes along the highway is that none of them were made in China.

  • When frequenting your favorite restaurant, most often you encounter a message on the menu stating: “There may be a risk in eating food not thoroughly cooked.” As such, at restaurants in the five-star Shangri-La Hotel in Dubai, beef patties served anything less than well-done now come with an unusual side dish—a legal waiver.

  • Great news for my friend Simon Cooper, president and chief operating officer of The Ritz-Carlton Hotel Co. He has been named 2008 "Corporate Hotelier of the World" by HOTELS magazine. The award, determined by votes cast by more than 60,000 readers in 170 countries, was presented during a Nov. 10 ceremony at The Marriott Marquis in New York City attended by hoteliers from around the globe.

    Cooper was described in a HOTELS magazine cover story as a "consummate professional with a distinguished career who has earned the respect of his colleagues and peers." Editor-in-chief, Jeff Weinstein, credits Cooper with leading the evolution of the iconic Ritz-Carlton brand from a conservative and formal profile to a "service culture that would be keeping with a new generation of luxury guests... as traditional positioning would undermine the future of the organization." In his comments about the changes he has overseen to The Ritz-Carlton brand, Cooper cited a favorite quote from former U.S. Army General John Shalikeshvili, "If you don't like change, you will like irrelevance even less." Having done some work with Cooper over the years, I can personally attest to his leadership skills. His caring for staff and guests is what has catapulted the Ritz-Carlton to the top tier in hotels worldwide.

  • With all that has been going on in politics this year, it’s appropriate to recall the words of the 33rd President of the United States, “Give ‘em hell” Harry S. Truman, when he uttered this famous rejoinder, “I never did give anybody hell. I just told them the truth and they thought it was hell!”

Until next month, let’s quit looking at our 401 Ks. King Solomon was once under some trying times and thus one of his aides asked a jeweler to design a ring for the King thinking that this would somehow cheer him up. When the ring was sent to the King, inside were inscribed the words: “This too shall pass,” and thus that phrase has been in our lexicon for centuries. Hopefully our financial quagmire will somehow pass, too.

Discuss

About The Author

Bill Kalmar’s picture

Bill Kalmar

William J. Kalmar has extensive business experience, including service with a Fortune 500 bank and the Michigan Quality Council, of which he served as director from 1993 through 2003. He served on the Board of Overseers of the Baldrige Performance Excellence Program and has been a Baldrige examiner. He was also named quality professional of the year by the ASQ Detroit chapter. Now semi-retired, Kalmar does freelance writing for several publications. He is a member of the USA Today Vacation Panel, a mystery shopper for several companies, and a frequent presenter and lecturer.

Comments

Not a bad idea...

The elite have systematically exported good jobs to Asia, and continue to reduce the purchasing ability of the American consumer, via less-than-inflation raises, gutting of pensions, take-backs from health care plans, and layoffs. All the while, drawing even larger bonuses for the short term (paper) profits. This crash was forseeable, avoidable, and pretty much due to their greed. They deserve to suffer. Rather than kill them, I'd put them and their families out to live under a bridge for a year or two. If there really comes a depression, we'll see class warfare for real.

Also, I support heavy taxes on every industry requiring government bail outs. Clearly, they were unable or unwilling to self-regulate. And let's reinstitute usury limits on interest. That will cut out a lot of the high risk lending.