CEO OF THE YEAR 2005
June 1 2005 by Chief Executive
George David Steps Out
At Darden, we’ve had the privilege to know and work with George (Darden, Class of ’67) and have long admired him. His individual talents are remarkable, especially his ability to propel others to exceptional levels of aspiration and performance, and his high standards and belief in learning have paid off for UTC, its employees and its shareholders.
Those exceptional traits have also paid off for Darden. As one token of recognition, Darden awarded George its highest alumni honor in 2003. He has personally recruited students, appeared in Darden classes, supported executive education programs for UTC at Darden, and chaired our trustee board. The list goes on. His financial support made a vital addition to our facilities possible, and he graciously requested that it be named after our school’s founding dean, Charles C. Abbott. This act honors our school’s values and serves as a testament to George’s elevation of mission and results above personal agenda.
I thank you for recognizing George, and I thank George for his extraordinary example and leadership.
Robert S. Harris
I don’t always get to read all the pages of Chief Executive, but you caught my eye with the reference to Eliot Spitzer. Here’s the question I would have liked to throw back at him: If you are sworn to uphold the laws and the U.S. Constitution, etc., why do you make the knee-jerk presumption of CEO guilt? (Good thing you didn’t sling back€¦quot;you could have ended up in his court with RICO charges.)
Misuse of power is misuse of power, whether done in the name of a corporation, a government, a family, a religion, etc. This sounds like a massive case of projective identification to me.
The difference between a functional organization and a dysfunctional one is that functional ones have balance between forward motion and thoughtful restraint. With corporations, the board and executive team at least have the option of diversity of style that would create that balance. (Enron didn’t, hence the weak and too-late entry of their whistle-blower.) Government has no such rules.
Most heads of agencies rule with the iron fist they project onto those who work in the private sector, both the managerial CEOs and the entrepreneurial ones. But without the cooperation of the team, nothing good happens in any organization€¦quot;especially the entrepreneurial ones where people work more for love than immediate compensation. There’s no such need in government, where you’re forced to pre-pay, via taxes, for services you may not want, that aren’t productive, that are run inefficiently at best and are often dangerous€¦quot;and where you can’t even get the protections afforded a minority shareholder.
Keep up the good work. I learn a lot from you.
I read your “Editor’s Note” in the May 2005 issue. While I agree wholeheartedly with your comments regarding Eliot Spitzer, I cannot help but wonder how you and your magazine justify the CEO of the Year award given to Hank Greenberg two years ago given that so many of the measurement criteria that earned him the title appear to have been fabricated? Is this award worth the risk to the recipient or the publication?
Eliot Spitzer was wrong. No question about it. He is playing a political game in response to your opinionated comment, but New York is a great place to do business. Honest CEOs have nothing to “think twice” about. While I deplore the attack made by Spitzer, I do believe your comment was unnecessary and may have been motivated by factors not specifically identified in your article.
Donald A. DiFrisco
There has been a lot of moaning and groaning since Congress passed the Sarbanes-Oxley Act, but I personally cannot understand how a business can function without appropriate controls and with material weaknesses.
I am the owner and CEO of my business. I have controls to ensure that things are as they should be; if I didn’t, the business would go downhill and employees would go into business for themselves on my time and my dime. I have the right employees, systems that allow them to succeed and reward them for that success, financial and accounting reporting both from the business and from an independent accounting firm, and an understanding that the results are still my responsibility.
So why shouldn’t big business wish to embrace sane and reasonable measures to ensure its long-term success? It starts at the top. If the top is lax or relaxed about accountability and controls, then no one else will have any reason for concern. Instituting controls that are the requisite for long-term success will more than pay for themselves, so let’s make friends with Sarbox. We may find that “he” is a real friend after all.
While many affected organizations have invested significant time and money related to ensuring compliance with Section 404, others have utilized the process to achieve business improvements and to secure competitive advantage. These firms have done so by taking a broader perspective beyond financial controls when addressing enterprise risk management.
A number of leading organizations in the financial services and communications industries that are dependent upon digital technology for their critical missions have adopted this broader perspective based on two key factors. First, the COSCO framework includes “the efficiency and effectiveness of operations” within the defined objectives of internal controls. Second, downtime and/or security breaches at mission critical operations may have material impacts on financial results.
While the financial performance of the host organization often depends on these digital systems, the systems may be outside of the scope (and the expertise) of the controls compliance reviews prepared by the independent outside auditor. Recent events have shown that these systems should not, however, be outside of the scope of the senior executives and boards of directors responsible for protecting shareholder value and who are charged with overseeing enterprise risk management.
Broader perspective will not only mitigate liability exposure, but, if planned and executed properly, will also lead to the identification of improvements to internal business operations and to the development of programs that will enable the host organization to establish competitive advantages.
Why? Because in addition to cost/benefit analysis, the improvements will be evaluated to ensure that they will be well-received, important initiatives to one’s own customers. The customers realize that any breakdowns in the supply chain to their own customers, whether from internal or external sources, may have cascading impacts on others, including themselves.