Thursday, March 14, 2013

Is this a victim of Trap 4 – Not Letting Go of Control?


One of the more extreme examples of a leader falling into Trap 4 may be the case of Robert Nardelli, CEO of Home Depot from 2000 to 2007. The following story of Nardelli’s controlling conduct at a 2006 shareholders’ meeting, highlighted in Forbes’ “10 All-Time Great CEO Outbursts, tells the tale. During 37 brief minutes, Nardelli stood onstage with men who “looked like bouncers,” while the very board members who were up for re-election were nowhere in sight. As the meeting unfolded, Nardelli restricted shareholders from speaking for more than a minute at a time and literally had microphones cut off to ensure the time limit. With each and every proposal that was put forth by shareholders, Nardelli, standing alone on stage, responded “The board recommends you reject this proposal.” Finally, when taken to task by a shareholder who described the meeting as “really disturbing” to which a round of roaring applause ensued, Nardelli simply responded, “Thank you, the board recommends you reject this proposal.” Shortly thereafter the meeting was called to a close.

 
            To be fair, I have never met Bob Nardelli and I don’t know any of the extenuating circumstances that may have been involved in this particular situation. Yet on the surface this story represents the ultimate in the elusive and risky nature of keeping control; it can always backfire on you. A shareholder’s meeting, meant to give those who had invested in the company the freedom to inform themselves on its financial health and the strategy the senior executives are using to lead the organization, was transformed into a farce, in which the CEO automatically shot down proposal after proposal. If that is how Nardelli carried himself in public, can you imagine what it might be like to work for Bob Nardelli?

 
As an outsider looking in, it’s hard to speculate as to whether Trap 4—not letting go of control—hampered Nardelli’s overall effectiveness as a leader. However, the results during his tenure may give some insight. As Forbes points out, competitor Lowe’s stock almost tripled during Nardelli’s tenure while that of Home Depot only remained steady. Chrysler, which Nardelli then went on to run, filed for bankruptcy in 2009. I can imagine that the reason for these unheroic endings are multi-faceted, but the extreme degree of control that Nardelli exercised at that 2006 shareholder’s meeting causes me to pause and wonder whether he may have stepped into Trap 4 a few too many times during his tenure at Home Depot and Chrysler. Certainly his Home Depot shareholders were not happy with his controlling approach.  Eventually the casualties and contagious negativity of this approach often ensures that we lose the very thing we want to hold onto the most. 

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