When it’s time for the CEO to go, the message is often best sent by his former supporters on the ... [+]
Corbis via Getty ImagesCorporate board leadership should consider use of the so-called “Goldwater Message” as a serious option to resolve certain types of CEO controversies, in a manner that would be discreet and far less damaging to all concerned. A more traditional termination option might only serve to enflame the circumstances and cause further harm to the company.
The Goldwater Message refers to that crucial point in American history when, at the deepest point of the Watergate crisis, three senior elected Republican officials met with President Nixon in the White House and convinced him to resign for the good of the country. Prior to that, Nixon had steadfastly projected his innocence, rejected resignation calls, and indeed retained hope that he could escape legal peril and remain in office. In the ultimate demonstration of playing “hard ball,” the visit by Senators Barry Goldwater and Hugh Scott, and House Minority Leader John Rhodes, ended that hope.
Their argument was simple and direct: by his conduct, Nixon had lost the support of the electorate and of the Congress. His ability to govern the country had disintegrated and the fate of democracy was in balance. The nation would suffer from a drawn out impeachment process and other prosecutions. But chillingly convincing was Senator Goldwater’s recitation, by name, of each one of Nixon’s prior supporters in the Senate—both Republicans and Democrats—who were prepared to vote against him in an impeachment proceeding. Nixon resigned the next day.
And as it is in politics, so as it is often in business. There are increasing circumstances of CEO conduct that, short of illegality or breach of contract, nevertheless infuriates one or more corporate stakeholders (stockholders, employees, customers, communities, suppliers) to the great harm of the company. Take, for example, the CEO who tolerates the wanton destruction of cultural artifacts for the sake of resource development. Or who undermines workforce morale by vulgar and indiscreet personal behavior. Or who infuriates consumers by insensitivity to data breaches. Or who undermines diversity commitments through budget cuts or hurtful public comments. Or who embarrasses the company with a highly public drunken driving incident.
These actions, comments and sentiments aren’t necessarily breaches of duty, violations of law or contraventions of ethical codes. Rather, they reflect a course of conduct contrary to what corporate stakeholders have a right to expect from the CEO. They are the injudicious comments; the callous disregard for public institutions; the ignorance of societal needs; the disrespect for cultural traditions; the recklessness in personal affairs. It is conduct that projects impunity, rather than dignity; self-promotion rather than selflessness. And it is injurious to the company, its brand and its culture.
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And in those circumstances, the Goldwater Message offers a discreet path by which the board can often gain the CEO’s resignation short of a destructive removal battle. Charge the most prominent of his former supporters on the board—people he will likely respect and believe—with going forth and delivering the message. It is, quite simply, the board’s equivalent of Scott, Rhodes and Goldwater visiting the executive office and confronting the CEO. No matter the timing, no matter your achievements, no matter your prominence—it’s time to go.
Utilization of the Goldwater Message is also consistent with perspectives of the National Association of Corporate Directors (in its 2019 whitepaper “Fit for the Future’), on how seismic changes confronting business require a new modus operandi for boards.
The conversation of the Goldwater Message is grounded in actuality rather than advocacy. The board leaders don’t seek to convince the CEO that he’s wrong; indeed, he may have a point, a justification, an excuse for his conduct. Rather, those leaders seek to convince the CEO that he’s lost the crowd; that his structure of support is gone and he has no platform from which to lead the company forward. In such a situation, further resistance would be futile.
Sure, the CEO could force the company to fire him, but what would that accomplish? It would likely damage his legacy beyond repair, and would also most certainly harm the company, its reputation and its prospects. You don’t have the votes in the boardroom; let us walk through the names for you. Leave now, with some dignity and with some form of settlement. Logic and reality prevails over hubris and narcissism, and the company is best served.
The board’s number-one duty is the oversight of the CEO, and within the performance of that duty there may be a time when directors are called to address controversies prompted or exacerbated by the personal eccentricities of that executive. Over time, many boards have adopted differing responsive approaches. Both history, and recent business news headlines, suggest that sending the Goldwater Message may prove particularly effective and straightforward.
The Link LonkNovember 20, 2020 at 10:42PM
https://www.forbes.com/sites/michaelperegrine/2020/11/20/when-corporate-boards-need-to-send-a-goldwater-message/
When Corporate Boards Need To Send A Goldwater Message - Forbes
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