Sonnenfeld: ‘Moral model’ must be CEO

Jeffrey Sonnenfeld, the Lester Crown Professor of Management Practice at the Yale School of Management, is an expert in corporate leadership and is the senior associate dean of SOM’s executive programs. Sonnenfeld has authored and edited nine books, including “The Hero’s Farewell” in 1988 and “I See Nothing, I Hear Nothing” in 2004. In an interview with the News, Sonnenfeld discusses SOM’s future and the issues currently affecting corporate leadership in America.

Q: The School of Management has recently instituted a new curriculum and has hired an architect to design a new campus twice the size of its current home. Where is the school going?

A: It’s an incredibly exciting time. We team-teach the courses, so you realize that to be successful you have to have multiple disciplines, multiple functions, multiple fields in a business working together. We actually model it the way we teach. I believe we are the only business school in the world that is doing that. And then, the subjects themselves — the case studies — show an integrated view of leadership and organization life, so we just look at it from multiple perspectives. There is the excitement of doing something new and different — the Yale way of doing it. So, the MBA education itself is so different an approach. That is really paying out for us. I think Yale sees a distinct mission.

Q: In your book “I See Nothing, I Hear Nothing,” you mention fraudulent and criminal transgressions of high-ranking executives at different companies. Since this book was published, many executives were exposed for backdating their stock options. How do you feel about this emerging phenomenon?

A: It is a breach of moral character, and it is cheating. It is cheating the IRS, cheating the shareholders and the owners, and putting out the message to employees and consumers that the rules don’t matter. The really important part of a CEO’s job is the moral model they send.

Q: Is corporate fraud bad for the economy?

A: We expect our leaders to have high integrity, to do what they say and to operate within the bounds of the law. We have confidence that commercial activity operates this way. Without such confidence, the economy could never have evolved as it has.

Q: One of the main topics you deal with in “The Hero’s Farewell” is the line of succession of chief executives corporations. Since then, corporate boards have increasingly looked to outsiders to run their companies. What are some of the reasons and consequences for this shift?

A: There is a diminished belief that the internal candidate is as good as somebody from another company. It winds up undermining the credibility of internal leadership development programs, and there is a disparagement of the familiar leaders. Instead of having the inside track, the insiders — just from the mere nature of having been loyal and proud from within — tend to have a strike against them. The board is made up of purely independent and outside directors, and they have an unconscious conspiracy to pick an outside candidate. The internal candidate has less filial piety — less of a link, strangely enough. Also, the directors need to have gone through the cosmetics of an outside hire because they think it looks like better governance. But in fact, it profoundly demoralizes the firm when you bring in somebody who knows a lot less about your business. Sometimes, when wrenching change is necessary and there is a depleted stock of internal candidates, the board has to turn to the outside, but it shouldn’t be their first choice.

Comments

  • JCP

    To paraphrase Animal House: “Fat, drunk, naked, and stupid is no way to go through life, son.”