Ram Charan is largely viewed as one of the most influential advisors and prolific writers ever to consult for a living. His latest views withstanding, http://management.fortune.cnn.com/2012/08/08/why-boards-fail-to-choose-the-right-ceo/, Charan’s cult status points to relatively new realities in senior-level leadership circles that seem worth pointing out:
1.) While it still counts for a great deal, advisors no longer have to be “in the room” to have influence. Charan, for example, was not present when IBM chose Louis Gerstner to be CEO. And to no one’s direct knowledge, Charan failed to play a direct role in this groundbreaking selection, which led to one of the most notable corporate turnarounds ever. Yet he opines as if he were.
2.) Guru status means you’re granted grand leeway with characterizing situations. In the Fortune piece, Charan says “no one at Citi is questioning Pandit now.” That may be true from Charan’s point of view, but it was just a few months ago when the board rejected a new executive compensation plan outright that would have raised Pandit’s pay substantially. That type of move usually doesn’t happen if everyone is in the same boat. Citi remains a reputational lightning rod, but their bigger brethren, JP Morgan and Barclays, continue to steal critical light. The missing fact here is boards question their CEOs daily, especially ones in big brand name companies where performance lags. The not so missing fact is they rarely do anything about the situation until the bottom falls out. To that end, both Citi and Barclays have new Chairmen, leaving Jamie Dimon at JP Morgan all alone at the top as both CEO and chairman. It would appear that in the big bank class yesterday’s governance mandate, separating the two roles, continues to be left solely to those holding the power.