The legendary consultant Ram Charan likes to ask CEOs, “Are you hearing lots of bad news?” If not, that’s a problem. Every organization has bad news every day, and if the leader isn’t hearing it, then he or she is dangerously in the dark. Facing bad news is a large part of what leaders get paid to do, and how they do it is an excellent measure of leadership.
Here’s how four high-profile leaders have faced bad news in the past day or two:
-Whole Foods’ share price has plunged 46% in the past seven months. That’s bad. Yesterday the company announced it was cutting 1,500 jobs in order to reduce costs. Co-CEOs John Mackey and Walter Robbsaid exactly why they were doing it and noted that the company has 2,000 open positions, so some of those being laid off might well continue as employees; if not, they’ll get eight weeks of severance pay. That’s stand-up leadership, but Mackey and Robb still face the giant question of addressing investor skepticism about the company’s strategic direction.
-Royal Dutch Shell announced yesterday it was pulling the plug on a multi-billion-dollar Arctic exploration program north of Alaska. This is a brutally difficult kind of decision – to give up after investing billions that cannot be recovered – but every major oil company has to do it from time to time. In this case it must have been especially unpleasant because environmentalists had campaigned fiercely against the project, and the decision could be seen as capitulating to them. I just wish CEO Ben van Beurden had made the announcement himself rather than leaving it to a high-level executive.
-General Electric CEO Jeff Immelt continues his rapid response to Congress’s vote not to fund the Export Import Bank, which helped U.S. companies finance exports; the company announced yesterday it would close a factory in Waukesha, Wis., and move production to Canada. Some 350 workers will lose their jobs. GE has already announced similar moves that will cost thousands of U.S. jobs. Immelt will get nothing but grief for this, but he’s doing his job of working for the shareholders. And yes, Ex-Im was corporate welfare, and the case against it was strong. But other countries – in this case, Canada – are delighted to offer corporate welfare in order to attract employers. Thus the need for a tough real-world decision.
-FIFA president Sepp Blatter is certainly hearing plenty of bad news. Unfortunately, much of it is about him. Swiss authorities announced a criminal investigation of Blatter on Friday, a few months after the U.S. Justice Department indicted nine FIFA officials for their alleged roles in a $150-million bribery scheme. Ominously for Blatter, U.S. Attorney General Loretta Lynch said earlier this month, in Switzerland, “Our message is clear: No individual is impervious to the law. No corrupt organization is beyond its reach.” Blatter said yesterday he had done nothing wrong and would remain FIFA’s president until February, when he had previously planned to step down. This is the opposite of leadership. If Blatter believes he is serving world soccer or the billions of fans who make FIFA possible, he is delusional. The alternative explanation is that he’s simply doing what he always intended, and the world is finally noticing. For soccer, that would be good news.
What We're Reading Today
Obama, Putin clash over Syria
Both presidents signaled a willingness to work together, but Barack Obama described Syrian President Bashar al-Assad as a tyrant. Russia's Vladimir Putin said there was no alternative to working with Assad. The stark disagreement puts in question whether the two leaders can find common ground. Yahoo News
Jack Dorsey's interim Twitter CEO title...
...could become permanent. It would give him two full-time roles, as Dorsey also leads mobile payments company Square. Some Twitter investors - and even some Square supporters - say he's the right person for both gigs. NYT
GM to offer more connected offerings
CEO Mary Barra plans to add more IT capabilities; for example, a smartphone app could let a Chevy owner get into a Cadillac and tell the car his or her preferences. GM can also track customers this way, gathering data on how they use certain features. While Apple and Google want to build software for vehicles, Barra reiterated GM's opportunity as builder of the platform - formerly known as cars - those companies want to use. Reuters
Yahoo's Mayer pushes Alibaba spinoff forward
Yahoo will spin off its 384 million shares of Alibaba stock, valued at about $22 billion. CEO Marissa Mayer had held off on the move after the IRS said it could not confirm the deal would be tax-free. A new regulatory filing says Yahoo will go ahead anyway if it receives a legal opinion explaining how the move would not incur taxes. Fortune
Building a Better Leader
Gender inequality tab runs as high as $28 trillion
If all women in the world got paid and participated in the economy on a par with men, says McKinsey, global GDP would be 26% higher by 2025. McKinsey
Don't fall prey to these decision-making pitfalls
They're the path to poor leadership. Fortune
Talented CEOs can fix struggling companies...
...only about 60% of the time. As companies grow larger, it's the moats that matter most. Harvard Business Review
Labor Troubles
Whole Foods to cut 1,500 jobs over two months
That's about 1.6% of the company's workforce. Co-CEO Walter Robb spoke about the tectonic shift millennials have caused in the food industry at the Fortune Brainstorm E conference. He added that Whole Foods still plans to open about 40 new stores this year. USA Today
NBA faces cheerleader lawsuit
A former dancer for the National Basketball Association's Milwaukee Bucks, Lauren Herington, has filed suit over not receiving minimum wage while performing for the team. In the National Football League, five such suits have been brought against teams in recent months. Fortune
Fiat Chrysler workers rejecting union deal
Some United Auto Workers members have rejected the Fiat Chrysler labor agreement in spite of union leaders' insistence. The dispute is over providing wage cuts for future investment in the U.S. Fiat Chrysler CEO Sergio Marchionne may face renegotiations or a potential strike. Reuters
Up or Out
Petsmart has named Rob Anderson its new CFO. Business Insider
Liz Heron, who worked as Facebook's head of news partnerships, will become Huffington Post's executive editor. WSJ
Visa has hired former Seattle Police Department CIO Greg Russell as senior vice president for corporate IT. WSJ
Billionaire dealmaker Richard Rainwater passed away on Sunday, succumbing to the rare brain disease progressive supranuclear palsy. He was 71. Fortune
Fortune Reads and Videos
A former Carly Fiorina employee...
...defends the presidential candidate's leadership record. Fortune
Walmart expands pickup service
The option for customers to pick up groceries at a store is one feature that a major competitor, Amazon, can't offer. Fortune
Shell, Dow, GE launch the Energy Transitions Commission
It's an advisory group that will provide companies solutions for solving the climate change riddle. Fortune
Once again, that Facebook legal notice...
...doesn't work. Fortune
On this day...
....in 2008, the Dow Jones Industrial Average fell 777 points, still the largest one-day point decline on record, following the House of Representatives' vote against a $700-billion bailout to aid struggling banks in the financial crisis.
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