Leading by example
We’ve all read about the obscene salaries that CEOs and senior executives take home. And we’ve all read that only months after top dogs walked away with record bonuses, the financial system started to collapse – suggesting that responsibility for the financial hissy fit can be sheeted to the financial whiz kids of Wall Street. If you want to freak yourself out, read this conference paper, which examines the pay and bonuses of CEOs in a selection of the major world banks. Shameful if you ask me.
During tough times, it’s essential that leaders show the way. If they talk about cost cutting, then they should prune their own salaries as well as that of their employees. They should give up the chauffeur driven cars to the airport and give Economy class travel a go. I can fully recommend Etihad’s Economy class cabins – at least the toilets are slightly larger so you can swing a cat or two!
But I have stumbled onto a CEO that is actually showing ethical leadership and has…gasp, horror!…voluntarily taken a 60% pay cut. Like many airlines, Japan Airlines (JAL) has been suffering during this time of financial turbulence. Haruka Nishimatsu is the CEO and Japan Airlines is one of the top ten airlines, so you’d probably expect him to have a few luxuries. Nope. This CEO takes the bus to the office, works in an open plan environment and lines up in the cafeteria for lunch with his fellow employees, hoping that his lunch doesn’t get cold.
As Japan Airlines struggled, Nishimatsu had to slash jobs but he also slashed all his executive perks and took the razor to his own salary, cutting it by 60%. He makes around $US 90,000, which is less than JAL’s pilots earn. He had to ask older employees to take early retirement and because Nishimatsu is around the same age he said he “should share the pain with them”.
Now compare this to the grilling Richard Fuld, chief executive of Lehman Brothers, received at the hands of Congress recently. Did you see this dude on TV squirming in his chair under the bright glare of the Congressional spotlight? And so he should be squirming – Fuld’s personal remuneration is said to have totalled $US480 million over eight years – including payouts of $91m in 2001 and $89m in 2005. Given that he said “I take full responsibility for the decisions I made and for the actions I took” and that he feels “horrible” about the collapse of Lehman Brothers, I wonder if he’ll be giving back a large chunk of the obscene payouts he received? Or perhaps he’ll hand over his $14m ocean-front villa in Florida or his property in the playfields of the rich and famous, Sun Valley, Idaho?
Meanwhile, Nishimatsu is showing he’s a pretty smart dude. He believes that companies that pursue profits first fail and that during a crisis it’s important for him to feel empathy for his employees and customers. He is even digging into his life savings to survive and his wife is blaming him for the airconditioning breaking down and the car needing repairs they can ill-afford.
Nishimatsu actually began his cost-cutting measures back in 2007 before the current financial meltdown. Can you imagine some of the CEOs of banks and multi-national companies doing the same thing pre-meltdown? Yeah right! Normally, you find CEOs waging war on their own staff by axing jobs or asking employees to take pay cuts.
Is there a Nobel Prize for demonstrating integrity, empathy and sound personal values? If so, JAL’s CEO should receive it! If you want to be inspired by a CEO showing leadership, then watch this video from CNN.