Every year at this time I try to reflect on what I believe was the most significant leadership story of the past twelve months.
As is the case every year, there were many notable stories I touched on in the Gut Check blog.
First, there was the story of Mark Bertolini, chairman and CEO of health care insurer Aetna Inc., who raised the wages of all his employees to a base of $16, bucking the low-wage approach of other big employers.
The pay and benefit hikes introduced by Aetna will help about 5,700 employees, most of whom were making $13 to $14 an hour. Bertolini said that he could no longer justify poverty-inducing wages when his company was doing so well. “Here we are at a Fortune 50 company and we’re about to put these people into poverty and I just didn’t think it was fair,” Bertolini said during a Squawk Box interview in Davos. It’s a great story of understanding one’s broader obligation to society and the welfare of employees.
Then in September, there was the visit of Pope Francis to the United States. Many were curious to see what he would say when addressed the U.S. Congress. Would he address the bipartisan dysfunction typical in the Congress, or just ignore the issue?
As it turned out, the Pope addressed the hyper partisans head on in a simple and pointed manner. He told the members of Congress to “be better.” His story was a great example of speaking truth to power in a simple and direct manner.
However, as I reviewed all my blogs and the headlines that I included from major news organizations, I think the biggest leadership story of 2015 is the radically changing fortunes of Martin Winterkorn, former CEO of Volkswagen.
Earlier in the year, Winterkorn was the subject of one of my Gut Check for Leaders blog when he was publicly attacked by the chairman of the company’s board of directors, Ferdinand Piëch, a former Volkswagen CEO and one of the company’s largest shareholder.
In April 2015, Piëch told Der Spiegel he was withdrawing all support for Winterkorn. It was a bombshell that threw the company into a full-blown leadership crisis.
Winterkorn had done well over the previous eight years to turn around Volkswagen, which had suffered from poor sales and high labor costs. Under Winterkorn’s stewardship, Volkswagen’s production and sales grew steadily. By 2015, some observers were predicting VW would become the world’s largest carmaker.
By all accounts, Winterkorn had been a successful CEO. This is why I found his battle with Piëch so interesting. Winterkorn could have succumbed to the pressure, like other CEO’s did in the wake of Piech’s public criticism. Instead, he demonstrated resolve and fortitude to take a stand and fight.
In the end, Winterkorn won this public battle. Soon thereafter, VW became the world’s largest carmaker in sales, surpassing Toyota in the first half of 2015.
However, it did not take long for this success story to become a Greek tragedy.
In September of 2015, we learned VW had rigged emission tests on its diesel vehicles to qualify them for sale in the United States. Within the first few days of the scandal, the company’s stock dropped by 30 per cent.
While at the height of his company’s success, Winterkorn once again found himself at the center of a storm. Although he apologized for his company’s actions, Winterkorn claimed he did not have any direct knowledge of what happened. He vowed to find out who authored the deception.
However, in light of the severity of the scandal and its impact on the company’s reputation and brand, his words seemed empty. Winterkorn lost the confidence of investors and resigned from his job, just months after successfully fighting to keep it.
Weeks after he left, stories began to emerge about Winterkorn’s leadership style. It turns out he was an extremely demanding leader who put a lot of pressure on his managers. Many outsiders and insiders believe he may have encouraged his people to cut corners and falsify results because they were afraid to admit the cars would not meet U.S. emissions standards.
There are many close to Winterkorn who have defended him. Nonetheless, Winterkorn’s personal reputation and that of his company have been damaged, possibly in irreparable ways.
In the past, when I’ve reflected on the top leadership story of the year, I typically focus on someone who succeeded against all odds by demonstrating outstanding personal and professional qualities. In this instance, I felt that Winterkorn’s stoic defence of his job, followed by his remarkable fall from grace, was just too compelling to ignore. There is a strong lesson here for all of us in leadership roles.
We’re fast approaching 2016 and I can’t help but wonder – which leaders will find success, and which ones will be discarded in disgrace to the trash bin of history.
I can hardly wait for 2016.
I want to wish each of you a happy and safe holiday season. Thank you for all your great support in 2015. I will be back in January with more Gut Check for Leaders blogs, and the release of the second edition of my book The Leadership Contract.