Leadership Trust Gap – Part 2 of 3

In a perfect organizational world, we would be blessed with transformational servant leaders who are intrinsically motivated to provide benefits to their followers. But, in the real world, corporate executives are rarely that accommodating. We nevertheless expect our leaders to make things better for both the business and our careers.

Corporate leadership is simultaneously envied and disdained. We are in awe of strong personalities who take charge and earn big compensation packages, bonuses and perks. At the same time, we cannot deny that the gap between the rich and poor has been steadily increasing for decades, and the middle class has declined.

Furthermore, the financial crisis—the worst since the Great Depression—has been slow to recover. Many blame executives at our top financial institutions for eroding trust in leadership. We are left with an impression of widespread corporate corruption that continues to be amply rewarded, even when CEOs are dismissed for poor performance.

A 2011 Gallup poll confirmed that corporate America’s reputation is in tatters, with 62% affirming they want major corporations to have less influence in the future—a figure that increased 10% in a decade. A whopping 67% of those polled said they resent big business’ influence.

A survey of Fox News’ right-of-center viewers found that most overwhelmingly believe (a 6:1 margin) that corporate leaders have done more to hurt than help the economy.

Income Disparities

Most of us expect our leaders to be paid more than we receive. We recognize that they work long and hard, are intelligent and experienced, and shoulder responsibilities and risks most of us wouldn’t want.

But, has the economic and lifestyle gap grown absurdly large?

Between 2002 and 2007, the bottom 99% of American incomes grew only 1.3% a year, compared to a 10% bump in compensation for the top 1%.

Let’s look at a few examples of CEOs’ annual compensation:

·         In 2008, Oracle’s Larry Ellison received nearly $193 million

·         Countrywide Financial’s Anthony Mozilo: $102.84 million

·         Aflac’s Daniel Amos: $75 million

·         Safeway’s Steven Burd: $67 million

The median pay for top executives at 200 big companies in 2010 was $10.8 million, a 23% jump from 2009.

These examples contribute to our dislike and distrust of those at the helm. These leaders seem to grow excessively rich as the average American struggles to make ends meet.

Flawed Followers

Perhaps today’s leaders can get away with various and sundry peccadilloes because their followers fail to demand accountability.

“Leading in America has never been easy,” writes Barbara Kellerman in The End of Leadership. “But now it is more difficult than ever—not only because we have too many bad leaders, but because we have too many bad followers.”

Many of us are too timid, disengaged or alienated to speak up, making it easy for corporate leaders to do what they want—and what’s best for their bank accounts.

The leadership-development industry has become huge, with $50 billion a year spent on corporate training. Shouldn’t the curriculum include elements of followership? Everyone, including the CEO, has to answer to someone, be it a board, stockholders or a senior team.

Tomorrow, in the concluding Part 3; I'll examine some of the assumptions with the leadership development in the business world.