Tuesday, February 3, 2009

The CEO Mentality

The front page of the Wall Street Journal featured an interesting article on CEOs' second chances, focusing on one CEO in particular. The article raised, perhaps inadvertently, some issues of what kind of person becomes a CEO and what the market for top jobs is like. Here are a few key excerpts:

When Joseph Galli Jr. got forced out as chief executive officer at Newell Rubbermaid Inc., he was certain he would brush himself off and try for another CEO job. From his father, a school dropout who built a successful scrap yard near Pittsburgh, Mr. Galli learned to work hard and never give up.

But the lessons that propelled Mr. Galli to the top of the corporate world proved less useful in selling himself to a new employer. Instead, he encountered a paradox known to many out-of-work CEOs: Though they are driven like few others to succeed, once they fail, many don't get a second chance to run a public company.

Mr. Galli is an exception....He endured a year of humbling unemployment and self-reflection before returning to the corner office, this time as the CEO of Techtronic Industries Co., a Hong Kong-based manufacturer of Ryobi power tools, Homelite outdoor products and Hoover and Dirt Devil vacuum cleaners.

I encourage everyone to read the full article to learn the details of Mr. Galli's life, but if you don't, these paragraphs represent the essence of the man:

During an overnight stay at the 26-acre Galli farm in Maryland, Mr. Pudwill asked Mr. Galli to run Techtronic's roughly $450 million floor-care division...

Mr. Galli was prepared. He brought Mr. Pudwill to his basement and handed him a one-page summary of a 15-page strategic plan for expanding Techtronic. He scribbled details on a whiteboard. Mr. Galli proposed moving the company into South America, among other things, and trying to dominate the market for cordless power tools. They talked until nearly dawn.

In November 2006, Mr. Galli took over Techtronic's ailing floor-care unit. He and colleagues say he cut costs, shifted U.S. production overseas, strengthened management and sped introduction of new products. The unit lost money in 2007 but turned profitable in the first half of 2008.

I like this article, because this scenario is so representative of the kind of capitalist hero that Objectivists admire. These individuals do exist, and a disproportionate number of them work in the corner office. The drive to succeed, the singular vision, and the constant idea-generation are rare traits among the general populace, but are more common among CEOs, as the article mentions. Many people, if they had fallen from the top spot at Newell Rubbermaid, would have taken what was left of their wealth, given up, and felt miserable the rest of their lives. It is so refreshing to read about Mr. Galli scribbling grand ideas on a white board in his basement for the Chairman of a public company. I know nothing about Mr. Galli other than what I read in the article, so I cannot say I endorse everything about him. Based on what I do know, however, I don't think I would mind sharing a drink with him.

The article raises another issue I think people often fail to understand. CEOs exist in an unusual job market. If you're in demand, you can demand exorbitant pay for your services. That only applies to the best and best-known, however. Far more CEOs get one shot, and if things do not go as planned, they are very likely to be let go, and never hired as CEO again. It is an incredibly stressful position, and most take the stress in stride.

Slimeballs exist in every profession, and chief executives are no exception. Nevertheless, to climb to the top of a corporation requires talent, drive, and a fundamental rationality most people never achieve. Those of us who understand the value of productive work can take solace in the knowledge that, despite the big names' behavior of late, many CEOs still display the virtues their position demands.

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