Posted on Political Animals: November 21, 2008 11:42 AM
When a health care provider or an attorney is negligent to an extent that deviates from accepted standards of professional practice, and when this negligence causes injury, there can be consequences. He or she can be sued for malpractice. Accountants and investment advisors can also be sued for malpractice, as can other professionals now held to a standard expected on the basis of their training and expertise. In light of this recent history, there is no reason to exempt leaders, people in positions of authority, from analogous accountability.
Leaders today are no better and no worse than before. It's the nature of the human condition to have some superiors who are incompetent, callous, corrupt, or even evil. However, what has changed is the level of information. In the past leaders were remote from their followers—what exactly the former did for, or to, the latter was largely unknown. But in the 21st century information is copious and widely dispersed. As a result we can assess how leaders perform, especially those who are the most visible, at the top, either in business or government.
Some bad leaders remain elusive and outside the realm of malpractice. Moreover a distinction must be made between leaders who are elected and can be voted out of office, censured, or impeached, and those who are appointed. It is leaders who are appointed, especially in business, who tend to escape accountability, no matter the level of their performance. Leadership malpractice, then, should be applicable to people in positions of authority who are (or were) in some obvious way woefully bad, but who are not subject to meaningful checks and balances. Some executives are of course held accountable for poor performance: they are sued for breach of fiduciary duty. But most are not. Nor does this kind of arcane legal exercise constitute a simple signal that leaders who fall far short are subject to being punished.
Because it was generally known that things were going badly, in the first nine months of this year a record 1,132 CEOs quit or were shown the door. Overwhelmingly, though, even those who performed miserably left without suffering consequences of any kind; to the contrary, most left with their financial futures handsomely secured. While some of the nation's most notorious corporate leaders are paying for their (criminal) sins by doing time in jail, what about the rest? What about whole casts of other characters whose abject failures are not criminal, but who nevertheless could reasonably be considered guilty of leadership malpractice? No insignificant number of top executives have been culpable of negligence, failures that caused injury to others. To take only a few glaring examples, top executives at A.I.G., Lehman Brothers, Washington Mutual, or for that matter at General Motors, all failed abysmally to protect employees and stockholders alike.
Consider the case of Rick Wagoner. For the last five years, he has been chairman and chief executive officer of General Motors. During this period he presided over an extreme example of short term profits being advantaged over long term interests, to the point where G.M. now claims that, absent an immediate federal bailout, it will be unable "to continue as a going concern." Put another way, with Wagoner at the helm one of the greatest companies in the history of American business has been brought to its knees. This is not by any means to argue that the blame is entirely his, or that he in particular should be scapegoated for the calamity that has befallen Detroit. But it is to ask a hard question: should leaders like Wagoner be held in any way accountable, and if yes, exactly how? One possibility is to bring to the fore the concept of leadership liability—and by extension leadership malpractice. In cases of alleged negligence the medical and legal malpractice model, in which either there is a settlement or a trial in a civil court, could serve as precedent.
Since the 1970s, the number of malpractice suits against professionals has greatly increased. The reasons are several, including lawyers who profit from a litigious society. But the assumption underlying malpractice has the virtue of assuming that the experts on whom we rely should do no harm—a general obligation from which leaders ought not be exempt. Among other reasons, although advanced degrees in leadership are still rare, leadership is increasingly considered a profession. It is taught in professional schools, in schools of government and public administration, and in nearly all business schools. There are countless books on how to exercise good leadership, and countless courses and seminars, both in and out of the academy, in which leadership is taught. It's time then to apply to leadership the same standard that we apply to other professions. Similarly, when this standard is not met, even minimally, it's time to hold leaders accountable by suing them for malpractice.
Cuts in executive pay will not suffice to fix what's broken. Nor for that matter would leadership malpractice be a magic bullet. But sending the signal that leaders, like other professionals, can be sued for negligence, would deter bad behavior.
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