The Story Behind Automaker CEO PR Disasters
There’s nothing quite like a news story in which a corporate CEO is photographed in handcuffs. As the perceived pinnacle of global malfeasance, today’s CEO is widely vilified, and often for good reason. Or so it is assumed.
Nothing illustrated the wide disconnect between CEOs and the masses than Alan Mulally’s testimony in front of Congress where, after flying to the hearings in a corporate jet about the desperate situations Ford Motor Co. and other major car manufactures are in, he was asked to relinquish his salary. His reply:
“I think I’m OK where I am.”
Where he was, was at about $13.6 million, which was a 37% pay cut from 2007, when he earned about $21.7 million.
His response ended as public relations disaster that resulted in Ford Motor Co. and crew later driving to Washington in hybrid vehicles and Mulally eventually agreeing to a $1 a year salary.
Such actions, though, are window dressing and serve only public relations and political purposes, not actual corporate or operational improvement. Mulally’s salary is a mere drop in the bucket for what is needed in order for Ford to survive the economic crisis, and his later trip to Washington in a hybrid was nonsensical from a resource and policy perspective.
From a public relations standpoint, it was a no-win situation for Mulally. Jason Vines, a former Chrysler spokesperson, said: “If you do what people think is the right thing, then they’re just going to be reminded that you came in corporate jets before.”
The problem is that from an efficiency standpoint, Mulally should have been in a jet from the get-go, and he should have remained so. As someone whose time is more valuable that most of us can fathom, sitting in a cramped car for a nine-hour trip to Washington is more wasteful of Ford’s resources than flying.
The PR backpedaling may have helped to kill the story line, and the public perception was perhaps mildly satiated by this maneuver – meaning, Ford’s approach was most probably the right thing to do from a PR standpoint – but it’s a structurally unsound way to conduct business and in fact may violate company policy.
“According to Ford’s proxy, Mr. Mulally was required to use Ford aircraft for all business and personal air travel in 2007 for security reasons and his family and guests were allowed to accompany him.
“The arrangement also covers travel by Mr. Mulally’s wife, children and guests on company aircraft for personal reasons without him at company expense upon his request to ‘ease the burden’ of moving to Michigan and away from family in Seattle, according to the proxy.
“Ford’s proxy said the only other person allowed to use corporate aircraft for personal reasons is Executive Chairman Bill Ford Jr” (source).
In other words, Mulally got in trouble for following the rules.
Read Part II tomorrow.
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