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Nero Fiddles While Rome Burns, Part III

The final installment in Dr. McTague's series on horrendous management traits.
Michael McTague, Ph.D., Executive Vice President, Able Global Partners in New York, serves clients in a variety of industries that seek capital for expansion, acquisition, consolidation or re-financing.
Michael McTague, Ph.D., Executive Vice President, Able Global Partners in New York, serves clients in a variety of industries that seek capital for expansion, acquisition, consolidation or re-financing.

September 2019 — Myth Buster

This final installment on horrendous management traits (please see Part I and Part II) reveals the worst executive quality, which harms products, profits, company reputations and the public. Number one on the toxic hit parade is the sneaky, secretive executive who undermines the organization by making private deals. The trait is difficult to uproot because the other managers in the organization who are involved in these plots think they are doing the right thing.

The CEO approaches a manager, discusses a sensitive decision and lays out a plan that sounds credible. The manager who hears this from the CEO feels empowered. He or she is now in the inner sanctum and holds the edge on other managers. The CEO’s new buddy moves forward through a freshly developed camaraderie with the top person.

All the other managers in the organization are blindsided. These shifty deals are frequently illegal or unethical. Wall Street has had its fair share. Even if they are not illegal, the secrecy prevents everyone else from acting as part of a team. Others act at odds with the secret plot. After all, they know nothing about it. Since our concern is bad management, when the plot is made public — and they almost invariably are — other managers feel betrayed. Trust evaporates. More often than not, the secret deal flops. Good managers quit; lawsuits begin; the share price plummets.

Facebook Exposed

Mark Zuckerberg of Facebook [FB] provides the most visible example of this trait. The Myth Buster has been pointing out the company’s quirky and damaging management practices for some time. Private, personal information is sold in secret. Doing so may or may not be legal. Either way, the people whose data are being disclosed know nothing of what is going on. The real motivation at Facebook is not helping people discover good retail opportunities; it is making money. When these practices come to light, Facebook does a razzle dazzle tap dance using the word “algorithm” in every sentence. Hoping that no one knows what they are talking about, they expect the ballyhoo to fade.

Near the end of 2018, Facebook lost $22 billion in market capitalization and they were recently slapped with a $5 billion fine. While Facebook’s market capitalization takes periodic hits, the company continues to grow. So, the toxic practices have not completely caught up with them. But, remember what Yogi Berra said, “It ain’t over ‘til it’s over.”

As perturbing as Facebook is, in this series, we have tried to have some fun, pointing out the foibles of toxic managers. From the Myth Buster’s experience, the clearest example of the worst of the worst was a sneaky CEO who also had a range of peculiar personal traits. Nearly opposite the terrible executives we discussed in July and August, he stood 6’3” and weighed 275 pounds. His shoes were size 18. He had real presence! Here are a few of his dumb traits. The organization had recently set up food kiosks around its buildings. This CEO was not familiar with the word “kiosk.” So, he referred to them as “f&%$ing key-socks” [spelled the way he said it]. He liked to appear impressive, so he demanded financial reports and often said to managers, “You got the f&%$ing numbizz ?” [spelled as he pronounced it].

He came off as a street punk with enough brains to impress others. But, he had many rough edges. This shifty leader drank heavily and it showed. In the morning, he was edgy and angry. In the early afternoon following “lunch,” he turned mellow. In the evening, he became increasingly confrontational.

His traits surfaced when the organization needed to raise $35 million for a new building. He thought he could raise the funds by the force of his personality and went from lender to lender talking about himself. Unfortunately, he was alone in admiring his personal charm and investors were unwilling to trust him with their hard earned cash. Even his secret conspirators who promised success could not bring home the gravy.

In the process, he made many secret deals, offering “fees” and “no interest loans” to “friends” who promised to help raise the funds. None of them delivered but some of them got their “fees” and “loans” anyhow. After all, they were part of his star chamber and deserved rewards. Being so sneaky by nature, he failed to tell the financial team about the “fees” that had to be paid. So much for the budget.

A compulsive liar, he took credit for every good idea and of course blamed someone else for every mishap. His peculiar technique was to shoot down ideas as useless and stupid and then reintroduce the idea a few days later as his own. Surrounded by sycophants, the newly introduced idea always received strong support. In his organization, people were rewarded for their loyalty not for their accomplishments. Through his secrecy, decisions and decision making became increasingly peculiar. No wonder many W-2s had white out on them. He hired an Information Technology (IT) expert who had minimal IT knowledge. The IT people who did not interview the candidate laughed because of her lack of knowledge and because they had all seen her in a porno movie.

This series has exposed three awful characteristics of the worst managers imaginable. Lack of knowledge about the industry and laziness ranked second and third. First place is reserved for the sneaks who bend the rules openly and break them privately often drawing others into plots that undermine team effort. The Myth Buster hopes your organization is free of all of these toxic traits. All three types prove difficult to spot and even harder to remove.

Next month, we shall return with a new series of business insights.


Michael McTague, Ph.D. is Executive Vice President at Able Global Partners in New York, a private equity firm.


Equities Contributor: Michael McTague, PhD

Source: Equities News

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