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CEO Daily Brief – Jan. 6, 2011

Ford’s Alan Mulally Named by Morningstar as CEO of the Year Alan Mulally, president and CEO of Ford, was named …

Ford’s Alan Mulally Named by Morningstar as CEO of the Year

Alan Mulally, president and CEO of Ford, was named the 2010 CEO of the Year by Morningstar. He was chosen after reviewing his record at Ford in a challenging time for the U.S. auto industry.

Morningstar explains that the award is designed to honor a CEO who “exhibits exemplary corporate stewardship, demonstrates independent thinking, creates lasting value for shareholders, and has put his or her stamp on an industry.”

“Alan Mulally has implemented various measures since he took the reigns of Ford in 2006 to position the automaker to compete better,” said Paul Larson, the editor of Morningstar StockInvestor. “Ford has prospered under Mulally’s leadership, and we expect the company’s earnings growth to rise over the next few years as the industry absorbs … latent demand.”

Under Mulally’s watch:

• Ford has shifted over to manufacturing high-quality cars. Ford was ranked fifth in the 2010 J.D. Power and Associates Initial Quality Study. It surpassed both Toyota and Honda.

• Ford is making cars on “common, global platforms.” This lets Ford change production quicker when demand changes.

• The Voluntary Employee Beneficiary Association (VEBA) has taken over the employee health-care costs from Ford. That makes U.S. labor costs for Ford close to its non-U.S. competitors.

In addition, Mulally tried to get as much cash as possible by opening new lines of credit and selling off non-core assets, when he first became CEO. That meant when the recession and the credit crisis occurred in 2008, Ford did not have to get government aid, in contrast to some other U.S. automakers.

For more about the CEO of the Year award from Morningstar, please click here.


Personal Influence Is Important Leadership Skill

Managers find they often can’t get employees to do what he/she has asked them to do. Even CEOs, who are supposed have the ultimate authority, may find things don’t get done in today’s large organizations.

Harold Scharlatt, a faculty member at the Center for Creative Leadership, says that’s why it’s important to use the skill of persuasion through “personal influence.” He says in a recent article in Forbes that influence is the “power and ability to personally affect others' actions, decisions, opinions or thinking.”

That means that the person in charge needs “true commitment” so that employees “endorse and truly support you or your task or plan,” Scharlatt said.

When this kind of commitment is achieved, teams get “more efficient, creative and focused,” he added.

The center identifies three types of tactics to influence employees: logical, emotional and cooperative.

The logical tactic reaches out to someone’s reason and intellect. The emotional tactic reaches out to individual goals and values. The cooperative tactic creates a connection between the boss and the employee (or employees) who the boss is trying to influence.

The ideal method is to use each of the three tactics. In that way, leaders can be more effective, Scharlatt said.

For more about building influence, as explained by Harold Scharlatt in Forbes, please click here.


Overhaul of U.S. Corporate Tax Code on the Horizon

It appears that there is growing realization from both President Barack Obama and Congressional Republicans that the corporate tax code needs to be overhauled, according to a report from The Wall Street Journal. The move has been advocated by business leaders. Specific changes to the corporate tax code have yet to be presented.

But Obama and Republican leaders both appear to realize it would benefit the economy if corporate tax rates were lowered, The Journal reported. It’s not clear whether Obama would back such a move this year, The Journal reports. Republicans are eager to see such a reduction.

"Tax reform could be a significant boost to our competitiveness," Rep. Eric Cantor (R., Va.), the new House Majority Leader, told The Journal. "I'm hopeful and expect the president to put some action behind his statements."

The current corporate tax code in the United States charges businesses more than some other countries where U.S. businesses have strong rivals. Lower corporate taxes may lead to more U.S. exports.

For more about changes in the corporate tax code, as reported by The Wall Street Journal, please click here.

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