Espírito Santo's Ricardo Salgado has been noted on the BBC website as the winner of the Worst Chief Executive Officer in 2014 award, in a list released today that highlights those who have destroyed shareholder value with dedication or just sheer stupidity despite earlier successes.
"The worst CEO of the year is the leader of the Salgado family of Portugal," states the news item on the BBC website, pointing out that Ricardo Salgado was the "head of an interconnected and complex set of entities that controlled the second largest bank in Portugal - and which he then led into bankruptcy '.
The document is acerbic in its appraisal of the Espírito Santo clan's perfomance under Salgado who led BES for 23 years; 'if you put 250 family members in positions of leadership and management, this can be good for family gatherings, but can hardly be justified on the basis of sound practices."
Rinardo Salgado, pictured here being driven away after his arrest in July in connection with a money laundering and tax evasion probe, is among some fine company including, in the top five, Dov Charney (American Apparel), Philip Clarke (Tesco), Eddie Lampert (Sears Holdings) and Dick Costolo (Twitter).
The list was prepared after exhaustive research by Sydney Finkelstein, a professor of strategy and leadership and author of Why Smart Executives Fail, who commented,
“Past success at any stage is never a guarantee of continuing success. In fact, my research has shown time and again that great success is almost always a warning sign for future failure.”
And so it is with the worst CEOs of 2014. In virtually each instance, the seeds of failure were sown in earlier success. These five chief executives all were once celebrated for their genius, but all have fallen, sometimes in spectacular ways.
Why Smart Executives Fail was the culmination of an extensive research process that uncovered the most common drivers of failure in organisational life. While the specifics often varied, in the end the book shows that it was always about human nature.
For the last five years Finkelstein has been publishing his annual list of the worst CEOs of the year and his research team analyses hundreds of companies to identify the select few that not only reported exceptionally poor financial results, but were also led by a CEO whose actions, or inactions, directly affected those results.
CLICK HERE to hear the BBC’s Mike Johnson asked Sydney Finkelstein to explain his research.
Comments
Hopefully this author is making absolutely clear between a CEO whose business has been wrong footed by changes in the market place. Such as an entirely new competing product that solves the problem his did previously - like a bagless vacuum cleaner. Or perhaps new legislation that transforms the business environment.
But that implies a regulated environment in which everyone is clear about, and almost all follow, the rules of the game.
But there is a world of difference between that and what is coming out about the Espirito Santo business and banking empire. Their crash was entirely avoidable.
We must remember that the upper echelons of Portuguese society have never been subjected to the limits of behaviour that a more developed society has.
Portuguese royalty worked with, not against their local barons, and the Great Leader locked Portugal away for much of the 20th century.
So these Espirito Santos were lords of all they surveyed. And knew well that no-one had ever or would stand in their way - anywhere in the Portuguese speaking world.