Wednesday, October 17, 2012
Yesterday's resignation/firing of the CEO of Citigroup was yet another reminder to company leaders that they no longer control their fates. Boards do, and boards have become more activist. Vikram Pandit, by all accounts, is an intelligent man but he couldn't get the bank moving to the satisfaction of its directors. There is speculation that the new CEO will "right-size" the bank and spin off more businesses that are marginally profitable or don't fit a new model of what Citigroup should be. From a PR perspective, CEOs need to pay more attention to board management. Directors should never be surprised, and CEOs should achieve what they promise to do. Both tasks are harder than they seem. Deluging directors with information is not a solution. Who has time to read it? It is a matter of giving directors the right information at the right time and allowing them to absorb it. Missing performance goals is a guarantee of raising tension. It is better to under-promise and over-perform. CEOs are beginning to understand that they are "hired hands" and not the kingly overlords of yore. It is a come-down but, perhaps, better in the long run.