When Rank Hath Too Much Privilege

We all know that many corporate CEOs are high-fliers, but now things seem to have gone too far.

A Wall Street Journal investigation this week found that “dozens of jets operated by publicly traded corporations made 30% or more of their trips to or from resort destinations, sometimes more than 50%.”

And anyone who thinks that these resort destinations might have had a business justification should probably think again. Regarding the travels of Joseph Tucci, CEO of computer-storage giant EMC Corp., the Journal reported that “EMC jets landed a total of 393 times at three resort locations where Mr. Tucci has vacation homes: Cape Cod, Mass.; the New Jersey shore; and the Florida keys.”

Peter Drucker, who tended to shun material excess, would have found fault with such activities on several levels. For one thing, he disliked the use of perks in compensation packages, favoring instead more straightforward and transparent arrangements for all concerned. “Compensation in money is far preferable to hidden compensation such as perquisites,” Drucker declared in Management: Tasks, Responsibilities, Practices. “If he gets money the recipient can choose what to spend it on rather than, as in the case of ‘perks,’ taking whatever the company provides, be it a chauffeur-driven car, a big house, or . . . a governess for the children.”

[EXPAND More]Drucker may also have lamented how self-indulgent executives have become since the days of Alfred Sloan, who served as president and then chairman of General Motors from 1923 to 1956.  Because Sloan “commuted regularly each week between the two GM headquarters in New York and Detroit, he was urged by his associates to rent a private railroad car,” Drucker recounted in his memoir, Adventures of a Bystander. “Instead he took a roomette—or at most a single bedroom—on the New York Central’s Detroiter each time. . . . Once when I was on GM business from Detroit to St. Louis, I had a lower berth in a Pullman which the GM travel people had booked for me. Then I noticed Mr. Sloan—seventy years old and arthritic—painfully climbing up the ladder into an upper berth.”

But above all, Drucker would have seen the jetting around as an indication of poor leadership—a subject we’ve touched on before. “The effective leader,” Drucker wrote, “sees leadership as responsibility rather than as rank and privilege.”

Are today’s executives too focused on “rank and privilege”—and, if so, is there anything that can be done to change that attitude? [/EXPAND]