Rutgers President Dr. Robert Barchi's admission that he erred by not watching the video of the state university's basketball coach verbally abusing and hurling balls at his players is a wake-up call for chief executives who routinely delegate key decisions to other members of the management team.
But experts said CEOs can avoid getting blindsided if they foster an open culture where employees feel safe alerting top management to problems before they become full-blown crises.
Management consultant Howard Guttman has closely followed events at Rutgers after the video was boardcast nationally on ESPN and picked up by local news outlets and on social media, resulting in the eventual firing of coach Mike Rice and the resignation of athletic director Tim Pernetti, among others.
Guttman, who advises major corporations on how to create high-performing teams, said the Rutgers events highlight the need for CEOs to establish explicit ground rules for how decisions are made.
Guttman, founder of Guttman Development Strategies, in Mount Arlington, said the CEO ought to explicitly "contract" with executive subordinates, so they know the three levels of decision-making — when to make decisions unilaterally; when to seek advice from colleagues, and when the issue is so critical that the full leadership team, including the CEO, needs to get into the huddle and arrive at a consensus on how to deal with the problem.
For example, Guttman said, "If there are issues that involve integrity, or public relations issues that affect the whole enterprise, then the CEO has to be in the game."
Jim Barrood, executive director of the Rothman Institute of Entrepreneurship at Fairleigh Dickinson University, in Madison, said the Rutgers situation highlights the need for companies to put a crisis management plan in place. "This is even more important now, with social media," he said. "Everything is being recorded, everything is being shared, and those warts are going to come out. Areas where a company or an organization stumbles are going to be amplified."
Barrood said companies have not been eager to spent money on crisis management planning during the recession and the slow recovery that has followed. "Companies have gotten very lean, and anything that is not perceived as critical to the core business has been trimmed," he said. "So unless you have had a recent crisis, this is one area that has been on the chopping block."
Robert Devine, a management consultant with Sax, Macy, Fromm, in Clifton, coaches companies on how to create a transparent culture where bad news "bubbles up" from the bottom of the organization and into the executive suite. He trains teams of workers who are empowered — and expected — to identify problems and bring them to top management.
"The people who actually do the work will tell you where the problems are," Devine said, as they're aware of work processes that create waste or require jobs to be done over.
"When everyone is attacking and fixing things that are wrong, there are no surprises," Devine said. "There is no shock that you have a renegade coach or a renegade manager who is doing something that is not consistent with the organization."
Devine said when bad behavior at a company gets into the public view, "the leaders say they are surprised — they didn't know their employees were doing these things."
But bad behavior may be an open secret long before it erupts into a scandal, he said: "The question is, are the leaders willing to create an open and visible culture, so everything bubbles up that is not following the mission and the values of the company?"
Without explicit clarity from the CEO on how to make decisions, "people make it up" as they go along, and just hope for the best, Guttman said.
Guttman said CEOs can't disengage from decisions that impact the entire company internally, or pose an external threat. So a central part of the CEO's job is "to initiate conversations with your subordinates as to when you (the CEO) have to be in the loop versus not: When is it OK for them to act unilaterally and when do they need to consult with you?" Otherwise, "you cast your fate to the winds."
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