Downsizing the CEO

BusinessWeek has a cover article on the downsizing of CEOs -- especially in Corporate America. The resizing of CEOs are coming as a result of the bad apples being thrown out -- from Enron, WorldCom, and Fannie Mae to the recent shenanigans of AIG's former boss, Maurice R. Greenberg. More power is being wielded by the directors, auditors and lawyers, who in the past have played the advisor role to CEOs, in helping them helm their companies, and are now questioning, countering and generally being confrontational. Why the change? Fear. Sarbanes-Oxley alone has gone the distance of making the advisors accountable for shareholders and the public. Now, there is liability. Advisors can find themselves in the hot seat just as much as CEOs. This is all a great thing. Public accountability -- the stymieing of bad accounting practices, lying to investors and breaking of the law. But it also has a downside. More and more, the advisors are commanding higher fees, and are curtailing potential risky and lucrative moves by CEOs. That translates to CEOs becoming risk-averse, steering the companies along safe but unwise paths.

The opposite view of course is to return back to the good ole days, where CEOs did as they wish and were above reproach. A big proponent of this world is Thomas J. Donohue of the US Chamber of Commerce. According to Donohue, "An accounting error should never be seen as a crime." He represents the extreme, and his flippant views would take us back to the glory days when Enron's executives milked their investors and laughed as they committed their crimes. I don't think so.

Somewhere there must be a middle ground -- a balancing of public accountability with risk taking and agility. I may be over oversimplifying it, but I think honesty, transparency and ethics might just be the magic formula. What I don't get is, when did those words become a burden?