Rarely has a CEO lost his job over a party, but MY what a party it was! The total bill for the birthday party Tyco CEO Dennis Kozlowski threw for his second wife Karen was $2 million. Tyco only paid $1 million. What a deal!
The birthday party was disguised as a shareholder meeting in order to justify billing the company. Of course, is hard to imagine billing the company for any party held on an Italian island featuring an ice sculpture of Michelangelo’s David urinating Stolichnaya vodka. It didn’t help that in a video shot at the party, Kozlowski says that this will show Tyco’s core competency: the ability to party hard.
It is easy to watch the video and wonder what could ever possess a CEO to think this kind of company funded extravagance was okay. Unlike many examples of CEO failure, the company was actually performing quite well under Kozlowski. Even after he was removed as CEO, the company continued to perform well.
Good performance never justifies the CEO treating the company as his personal bank account. When a CEO makes expenditures that don’t have a clearly defined business purpose, he crosses the boundary from CEO to Emperor. Whether the action is criminal – as it was determined to be in the case of Kozlowski – or just wasteful, it sends a message to the team that the wants and desires of the CEO are more important than what happens to the business.
People will only place trust in leaders who they believe put the interests of the team ahead of their own personal interests. When that trust is violated, the leader loses the ability to ask anyone on the team to sacrifice for the greater good. By the way, the Tyco party came to be called the Tyco Roman Orgy. It’s probably not good when your parties are named so suggestively.
To see if you have verged on going Roman Emperor style in your organization, ask yourself these questions:
1. Have you ever spent corporate money on something that did not have a justifiable business purpose?
2. Have you ever exempted yourself from otherwise all-encompassing policy changes?
3. When times are tough and cuts are made do you take a bigger hit than you force on the team?
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CEO Credibility: Ethos in the 21st Century
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