Whole Foods, FIFA, and how leaders can respond to bad news

 

Facing bad news is a large part of what leaders get paid to do, and how they do it is an excellent measure of leadership.

The legendary consultant Ram Charan likes to ask CEOs, “Are you hearing lots of bad news?” If not, that’s a problem. Every organization has bad news every day, and if the leader isn’t hearing it, then he or she is dangerously in the dark. Facing bad news is a large part of what leaders get paid to do, and how they do it is an excellent measure of leadership.

Here’s how four high-profile leaders have faced bad news in the past day or two:

Whole Foods’ share price has plunged 46% in the past seven months. That’s bad. Yesterday the company announced it was cutting 1,500 jobs in order to reduce costs. Co-CEOs John Mackey and Walter Robb said exactly why they were doing it and noted that the company has 2,000 open positions, so some of those being laid off might well continue as employees; if not, they’ll get eight weeks of severance pay. That’s stand-up leadership, but Mackey and Robb still face the giant question of addressing investor skepticism about the company’s strategic direction.

Royal Dutch Shell announced yesterday it was pulling the plug on a multi-billion-dollar Arctic exploration program north of Alaska. This is a brutally difficult kind of decision—to give up after investing billions that cannot be recovered—but every major oil company has to do it from time to time. In this case, it must have been especially unpleasant because environmentalists had campaigned fiercely against the project, and the decision could be seen as capitulating to them. I just wish CEO Ben van Beurden had made the announcement himself rather than leaving it to a high-level executive.

General Electric CEO Jeff Immelt continues his rapid response to Congress’s vote not to fund the Export Import Bank, which helped U.S. companies finance exports; the company announced yesterday it would close a factory in Waukesha, Wis., and move production to Canada. Some 350 workers will lose their jobs. GE has already announced similar moves that will cost thousands of U.S. jobs. Immelt will get nothing but grief for this, but he’s doing his job of working for the shareholders. And yes, Ex-Im was corporate welfare, and the case against it was strong. But other countries—in this case, Canada—are delighted to offer corporate welfare in order to attract employers. Thus the need for a tough real-world decision.

FIFA president Sepp Blatter is certainly hearing plenty of bad news. Unfortunately, much of it is about him. Swiss authorities announced a criminal investigation of Blatter on Friday, a few months after the U.S. Justice Department indicted nine FIFA officials for their alleged roles in a $150-million bribery scheme. Ominously for Blatter, U.S. Attorney General Loretta Lynch said earlier this month, in Switzerland, “Our message is clear: No individual is impervious to the law. No corrupt organization is beyond its reach.” Blatter said yesterday he had done nothing wrong and would remain FIFA’s president until February, when he had previously planned to step down. This is the opposite of leadership. If Blatter believes he is serving world soccer or the billions of fans who make FIFA possible, he is delusional. The alternative explanation is that he’s simply doing what he always intended, and the world is finally noticing. For soccer, that would be good news.

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