Starkman’s internship program is certainly one of them. Identifying, recruiting, and training exceptional young talent is a formidable challenge for any company.  It’s something Starkman excels at; our previous two interns are now valued full-time employees.  That said, I’m clueless as to how we do it.

At some point during the first week of June each year, I show up for work and am introduced to someone identified as our new intern.  Jackie was long responsible for the program, but this year she gladly handed the baton to Lauren, who interned with us two years ago.  In what I first suspected was some sort of practical joke given my penchant for confusing names, Lauren introduced me to this year’s recruits as “the Katha(e)rines.”  Technically, that’s not quite true as the two share a first name but use different spellings.  There was Katharine Rose – with an “a” – and Katherine Blackburn – with an “e.”   Our deep appreciation to Ms. Blackburn’s parents, who raised her with the nickname “Kate!”  It made things much less confusing.

Katharine is a student at the College of the Holy Cross, which has an impressive internship support program: The school’s alumni cover the costs of an internship stipend, provided participating companies ensure a meaningful work experience.  Kate, who was referred to us by someone whose impeccably high professional standards we very much admire, is a student at Wake Forest University.  Coincidentally, we have clients who are active alumni from both schools.

During a particularly busy time for Starkman, both Katharine and Kate proved to be fearless and relentless, and quickly demonstrated an impressive command of the client accounts they were assigned to work on.  Within days, Katharine could explain why the housing crisis is far from over and Kate readily understood that a BRIC is not something used to build houses.  For Lauren, the duo was an immediate godsend, as they relieved her of some critical time-intensive account support activities.

But it was not just their work ethic that won the Starkman team over:  Katharine and Kate also revealed an appreciation for cupcakes and bagels and were sympatico with our firm’s food-obsessed culture — the icing on the cake, so to speak.  Their will to pursue new lunchtime adventures (such as Cuban pork sandwiches) and their appetites for new culinary endeavors impressed us as much as their drive and determination.

Both Katharine and Kate successfully managed multiple projects with varying deadlines throughout their internships. We often asked them to quickly shift gears between tasks, and both did so without blinking twice. When they finished one task, they immediately asked for another, ultimately assuming more work and responsibility than typically should be expected of a college intern.  As for their dedication, on multiple occasions they both asked if it would be possible to work beyond their designated hours so they could see various projects to completion.

As for being the proverbial team players, Katharine and Kate were more than gracious when the hiring of a new employee required them to sit at a somewhat isolated workstation internally dubbed “Siberia.”  Indeed, as best we can tell, Katharine and Kate don’t have a capacity for complaining.  They also upheld another record: Never once has a Starkman intern shown up late for work.

Actions speak louder than words, so here is the ultimate endorsement of Katharine’s and Kate’s talents and abilities.  We’ve let them know they are welcome back as full-time employees after they graduate.  It’s another tradition we are hoping they will help us continue.

Blogs by Kate and Katharine:

La Vita è bella – In America, that is by Katharine Rose

Did a Company Really Tweet That? Don’t Make Me Twiggle by Katherine Blackburn

Share This Post

Shepard left in 2005 for academia and replaced by Stephen J. Adler, an aloof, Ivy League-educated former Wall Street Journal editor who, it is rumored, was once a front-runner candidate to lead that newspaper.  Adler literally drove BW into the ground by diminishing the quality of its journalism and implementing a questionable redesign.  When he exited the doors four years later, BW’s value had deteriorated so badly it was hardly worth the paper it was printed on.  BW’s longtime owner McGraw-Hill nearly shut it down, but opted instead to essentially give it away to Bloomberg L.P.

Josh Tyrangiel

At the time of the acquisition, Bloomberg had already become the premier U.S.-based business news organization.  In terms of collective talent and experience, it has unquestionably surpassed The Wall Street Journal, a feat accomplished in part by poaching a substantial number of that newspaper’s journalists and editorial alumni. Yet despite its experienced in-house stable of capable editors, Bloomberg tapped Josh Tyrangiel, a 37-year-old Wunderkind from Time to be BusinessWeek’s editor and renamed the publication Bloomberg Businessweek.

To fully appreciate the chrysalis-to-butterfly transformation of Bloomberg Businessweek under Tyrangiel’s nearly 18-month reign, you need to understand three things:  he had no previous business journalism experience when he took the job; he is, according to his boss Norm Pearlstine, a “true dude;” and he likes to pal around with fellow unabashed “dude” magazine editors.

To his credit, Tyrangiel has restored some of BW’s former excellence.  The publication once again is chock full of insightful and tightly written articles, and its overseas business coverage is considerably broader. BW’s graphics are impressive as are its business book reviews, and its iPad app does Steve Jobs proud.  Suffice to say, BW is once again as compelling as…well, as compelling as Tyrangiel himself.

That said, readers still want substance over style, and on that front Tyrangiel’s lack of business experience is abundantly clear, particularly in the magazine’s cover stories.

BW last year ran an appallingly naïve profile of Charles Schwab, portraying the founder of his eponymous brokerage as someone who champions the interests of individual investors.   While that is how “Chuck” – and his marketing team — like to portray the founder and his company, the facts are very much at odds with the story line, as this story by New York Times reporter Floyd Norris makes clear.

More recently, BW ran a gushing cover story about Facebook COO Sheryl Sandberg, painting her as a sensitive and caring boss who sometimes cries at work and provides “adult supervision” for the company’s young staff.  The reporter was so smitten by Ms. Sandberg that he opted to gloss over the not insignificant detail that the FTC will soon decree that Facebook’s privacy policies constituted “unfair and deceptive” practices and the company will be subject to periodic privacy audits.  As the story went to press, news was breaking that Facebook had hired Burson-Marsteller to conduct a clandestine campaign attacking Google’s privacy policies without disclosing that Facebook was behind it. Ms. Sandberg, a former Google executive whose responsibilities include communications, is likely tougher and politically more brass-knuckled than BW understands.

As well, some of BW’s articles of late appeal more to stereotypical “dude” sensibilities than individuals looking to gain some business insight.  For example, the magazine ran a cover story in February about Ashley Madison, a niche website that provides a venue for men and women looking to cheat on their spouse.  The article’s only particular insight was the owner of the site purports to be the consummate family man.  The magazine has also recently run articles on the “business” of cougars and lingerie football, and profiled a small 15-store lingerie chain specializing in custom-fitting bras.  It’s hard to take seriously a business magazine that refers to Victoria’s Secret as the “Goldman Sachs of ladies underwear.”

I’ve long maintained that mainstream journalism’s declining influence stems from the repeated promotion of failed editors and journalists writing stories to impress each other rather than the readers they serve.  Underscoring my point, Stephen Adler, the former BW editor, in February was named editor-in-chief of Thomson Reuters, an even bigger news organization.   Fortunately, Mr. Adler just hired former Dow Jones executive Paul Ingrassia, one of the few business journalists with a successful leadership and management track record, to serve as his deputy.

As for Tyrangiel, if he wants BW and the impressive editorial team he oversees to garner the respect they rightfully deserve, it might behoove him to spend more time focusing on the stories truly shaping the economy and the business of business.  Leave the “dude”-esque stories to publications like Maxim.

Share This Post

Much has been written about the changing role and significance of mainstream media and the myriad factors that continue to erode its once-vaunted credibility.   Chief among them is, of course, that the field is rife with unethical individuals who fabricate and plagiarize, a trend I wrote about last May when New York Times columnist Maureen Dowd was caught using prose previously published by a blogger (my take here).  Since then, at least two other high-profile cases of journalism plagiarism have emerged, as outlined in this column by New York Times columnist Clark Hoyt.

Another major factor for mainstream journalism’s decline is the profession is plagued with failed leaders who, despite their less-than-stellar track records, continue to hold their senior positions.  Mainstream journalism is in desperate need of radical visionaries, yet the industry continues to be led by people who are part of the problem rather than a source for the solution.  Is there any other business where failure and myopia is so frequently and handsomely rewarded?  If ever there was a single industry that illustrates the concept behind The Peter Principle, today’s mainstream media is it. 

Marcus Brauchli, the former managing editor of the Wall Street Journal, is a prime example.  Under the leadership of Brauchli and other senior editorial leaders, the Journal went into a near-irreversible economic spiral.  A very senior Dow Jones executive confessed to me that the company quite possibly would have gone bankrupt had Rupert Murdoch’s News Corp. not come to the rescue.  As part of the deal, Brauchli retained a degree of “veto” power over anything Murdoch might want to do with the paper, ostensibly to protect the Journal’s editorial integrity and standards.  Once the deal closed, however, Brauchli reportedly received a whopping $6.4 million to go away instead.  In this market, Brauchli’s payout is sufficient to finance the hiring of at least 10 reasonably experienced reporters.

Brauchli has since been named Executive Editor of The Washington Post, another newspaper that has suffered a significant erosion of prestige, talent, and national influence.  The paper is badly in need of an innovative editorial leader to regain the previous glory it once had under the editorial leadership of Benjamin Bradlee in the late sixties through early nineties.  Brauchli is no Bradlee; if he is doing anything of note to save that newspaper, it isn’t readily apparent.  Indeed, the newspaper’s one known attempt at, ahem, “innovation” — soliciting lobbyists to pay a hefty fee for exclusive meetings with editors and reporters — was the biggest journalism ethics debacle in recent memory.  Brauchli claims he wasn’t told of the pay-for-access program, a possible indication of how he’s regarded by the business side of the newspaper.  

Stephen J. Adler, who also held senior editorial positions at the Journal before being named editor of BusinessWeek in 2005, is another example of how journalism rewards failure. BusinessWeek, a once grossly underrated magazine that long eschewed gourmet sizzle for solid meat-and-potatoes reporting and analysis, badly stumbled under Adler’s four-year leadership.  Under his tenure, the weekly magazine essentially became the Reader’s Digest of American finance, replete with oversized typeface, condensed stories, and bulky photos and graphics that badly reduced the magazine’s news hole. The magazine was on the brink of failure when Bloomberg picked it up for next-to-nothing last fall.  Adler resigned shortly after the deal was announced, subsequently moving on to Thomson Reuters where he was named senior vice president and editorial director of its Professional division.  Since the sale, BusinessWeek is fast returning to its previously high editorial standards, which is to Bloomberg’s great credit.

The disturbing state of journalism leadership was, ironically, further demonstrated recently at a meeting held by a trade group called the Committee of Concerned Journalists who are “worried about the future of the profession” (I guess non-members belong to the Association of Reporters Who Don’t Give a Damn). As reported by Fox Business News Senior Correspondent Charles Gasparino (Full disclosure: Gasparino is a longtime friend of mine), the high-minded committee last week held a seminar to breast-beat themselves for their failure to warn the public that the U.S financial system was on the brink of collapse.   

Hank Paulson, the former Treasury Secretary and CEO of Goldman Sachs in the period leading up to the economic collapse, gave the keynote address.  If anyone there could have shed valuable light on the subject, clearly he was the one.  However, according to Gasparino, the “concerned” journalistic luminaries on the panel, including Fortune editor Andrew Serwer and New Yorker media writer Ken Auletta, never availed themselves of the opportunity to ask Paulson the tough questions about his own failure to anticipate or prevent the economic collapse.  

Hmmm…just a wild guess here, but reporters who don’t act like reporters could have something to do with the professional pickle they collectively find themselves in. 

Personally, I don’t buy into this notion that reporters should have been able to predict the financial meltdown.  It takes unabashed arrogance for journalists to believe that they are so well-steeped in economics and high finance that they can possibly forewarn the nation of a pending financial collapse.  They are on the sidelines, not in the game itself.  Most business journalists tend to mime conventional wisdom of the day, which explains why the leaders of Enron, Worldcom, and Tyco were heralded in newspaper and magazine cover stories before those companies blew up.  Journalists would serve their audiences best if they reported as many informed perspectives as possible, rather than spew out their too often misinformed and biased opinions about the companies and subjects they supposedly objectively cover. As for the prescience of mainstream journalism about Goldman Sachs and Paulson, check out this fawning profile that Fortune published in 2004.

According to a study by the Pew Project for Excellence in Journalism, less than 30 percent of Americans believe what they read in the mainstream media.  That’s a fairly sobering statistic, and one that the Committee of Concerned Journalists should be focused on rectifying above anything else.  Sadly, absent a real change in the vision, mindset and competencies of the bold-faced names that occupy the upper echelons of the business, mainstream journalism will likely only continue to go downhill.  

Share This Post

It turns out Mr. Cayne might not have been quite as “hands-on” as the Journal’s readers were initially led to believe. The paper reported last week that Mr. Cayne was hitting the links or playing bridge during much of the summer while two of the firm’s hedge funds were badly imploding. Regardless, Bear president Alan Schwartz insists that Mr. Cayne remains fully engaged.

There are some top business strategists who would argue that good leadership is all about delegating authority, even at times of crisis. Indeed, one of the savviest PR executives I know once chose to remain on vacation when his company became embroiled in a crisis. When I later asked him why he didn’t feel compelled to return to the office, he matter-of-factly replied, “I surround myself with good people and I knew they could handle it.”

For me, the Journal’s most startling disclosure in that story about Jimmy Cayne was not that he is a master at delegating or that he allegedly likes to smoke a little marijuana from time to time. Rather, it’s that talk-show host Maury Povich is one of Mr. Cayne’s golf partners. For those who are not particularly familiar with the underbelly of American culture, Mr. Povich is host of the daytime chat show called “Maury.” The show isn’t quite as exploitive as “The Jerry Springer Show,” but it’s pretty close. One of their favorite shticks is to have women drag current or former husbands, boyfriends, and one-night-stands on to the show to take paternity tests. In manners as dignified and sympathetic as the show itself, more than a few guys have pranced around the stage to hear Mr. Povich deliver his signature lines: “The results of the paternity test are in. With 99.7% accuracy, you are …NOT the father!”

That said, Mr. Cayne could teach Mr. Povich a thing or two about exploiting – err, I mean leveraging – a situation. According to “King of the Club“, a book by Charlie Gasparino about former NYSE head Dick Grasso, Mr. Cayne spotted an opportunity in the immediate aftermath of 9/11 that would be to his company’s competitive advantage and took it. Mr. Gasparino reports that when the operations of the NYSE and several brokerage firms were impaired after the collapse of the Twin Towers, Mr. Grasso wanted to hold a meeting of Wall Street’s top executives at the Exchange. Mr. Cayne, however, convinced Mr. Grasso to hold the meeting at Bear’s midtown headquarters.

As reported on page 157 of Mr. Gasparino’s book:

“It wasn’t long before it became clear why Cayne was being so accommodating. Bear Stearns’s competitors, all representatives of the top securities firms, began filing into the large conference room, many with stern looks on their faces as they realized they would have to hold a meeting not on neutral ground at the NYSE but on Cayne’s turf. They knew that Bear would get publicity as being one of the few Wall Street firms open for business following the attacks.”

Mr. Gasparino said that Mr. Cayne wanted to hold a follow-up meeting at Bear’s headquarters, but then SEC chairman Harvey Pitt nixed the idea.

“The official reason given for the change in venue was a series of bomb scares near Bear’s offices. But the real reason was much different. Pitt was blown away by all the Bear Stearns signs that appeared in the media room where the press conference was televised.”

They say things happen in threes. With two prominent Wall Street CEOs already shown the door in recent days, I can’t help but wonder if Bear’s board is pondering a similar fate for Mr. Cayne. If that turns out to be the case, maybe they should do it live on “Maury.” I can hear it now… “Mr. Cayne, the results of the Board are in. With 100% accuracy, you are … NOT the CEO!”

In the interest of full disclosure: S&A represented Mr. Grasso and I’m mentioned in the body of Mr. Gasparino’s book and in his acknowledgments.

Share This Post

While it may be unfair to tar and feather the individuals of an entire industry in one broad stroke – trust me, I know about that first-hand being in the PR business – there’s more than a little truth to the old adage “nice guys finish last” when it comes to the leadership of companies owned by some private equity firms. Fortunately, there are exceptions. Indeed, the executive who questioned the management consultant is a former very senior executive at a Fortune 100 company whose résumé boasts an impressive litany of career accomplishments. He also happens to be one of the fairest and most decent business leaders I’ve ever met.

The cover story in last week’s issue of BusinessWeek touches on this topic. Emily Thornton’s compelling “Perform or Perish” article reports on the increased pressure LBO firms are placing on the executive management of acquired companies to generate better returns on faster timetables. To quote Ms. Thornton, “The toughest CEO jobs in America just got tougher.”

She cites work done by Steven Kaplan, a professor of finance and entrepreneurship at the University of Chicago’s Graduate School of Business, and Geoffrey H. Smart, head of a management assessment/recruiting firm, on common proficiencies and character traits found among 150 private equity CEOs:

Only the most tenacious executives can survive private equity’s rigors… Kaplan found that CEOs who bring “hard” qualities such as aggressiveness, persistence, insistence on high standards, and the ability to hold people accountable are significantly more likely to succeed. Those who offer primarily “soft” skills that are often effective at public companies – like listening, developing talent, being open to criticism, and treating people with respect – are unlikely to work out. Says Smart: “Successful private equity CEOs are cheetahs.”

Ms. Thornton laces her story with examples of the seeming callousness and unmitigated ruthlessness it takes to be a CEO these days of a portfolio company of some buyout firms. Jeff Clarke, CEO of Travelport, a travel services company owned by Blackstone Group and Technology Crossover Ventures, is one of them.

Let’s just say Mr. Clarke clearly isn’t vying to make anyone’s list of “Best Bosses to Work For.” In response to rumors that Travelport was thinking of taking its Orbitz unit public, Mr. Clarke told his staff that “private equity ownership generally is not a long-term proposition. The day will come when our [owners] will decide to take Travelport public, sell off individual businesses, spin off groups of businesses, or pursue some other exit strategy.”

Yes, there are some advantages to providing such a blunt assessment of the company’s future from a “communicating organizational change” perspective. But there is also something to be said for not destroying employee morale in the process. And what about Travelport’s customers? I’d welcome hearing the inside story as to why WestJet Airlines opted to take a $30 million writedown rather than continue developing a computer reservation system in partnership with Travelport.

Ms. Thornton also shares tales of Gerald Storch, who runs Toys ‘R’ Us for Kohlberg Kravis Roberts, Bain Capital, and Vornado Realty Trust. Seeking “to administer shock treatment” and eradicate “victim thinking” among employees who seemed to have lost their drive, Mr. Storch fired virtually all the senior managers he inherited, intentionally replacing them with outsiders. Whether out of fear or forced corporate rah-rahism, rank-and-file employees are said to now walk around with badges pledging that they’re “Playing to Win”.

While there’s no debating Mr. Storch’s quoted comment that poor performers will become store managers’ biggest problems if they don’t cut them loose, the badge-wearing idea brings to mind that “Seinfeld” episode where Kramer was hunted down for not wearing an AIDS ribbon while participating in an AIDS awareness walk. Will otherwise enthusiastic, productive employees get demerits if they refuse to wear the badge? Scott Adams, please take note!

Another CEO cited is Mary Petrovich of AxleTech, who demonstrates that gender plays no part when it comes to a list of America’s most demanding and punishing CEO taskmasters. Once in office, her first move was to slash union wages and benefits by 33% in their new contract. Managers in a quarterly review of projects in the works were expected to report that they are exceeding expectations, not just meeting them. Those who reported less than 100% success were given one minute to explain their challenge and one additional minute to say how they would overcome it. Ms. Petrovich later told Ms. Thornton they would be given just one quarter to get the project back on track.

To be fair, Messrs. Clarke and Storch and Ms. Petrovich are fighting for their own survival. An Ernst & Young study cited by BusinessWeek found that buyout firms replaced CEOs or CFOs at 17 of the 23 companies they sold or took public last year. The danger, however, is not learning from the misguided “profit-at-any-price” philosophy of executives that came before them. Remember “Chainsaw Al” Dunlap? Enron’s Jeffrey Skilling? They had similar damn-the-torpedoes approaches that came back to sink their own battleships in the end. The ever-escalating pressure to do things faster, cheaper, and with better returns all too often becomes unbearable and corners start getting cut. It’s little wonder that many CEOs are secretly grappling with suicidal depression, as Philip Burguieres has warned.

One of the major benefits of taking once-public companies private was supposedly to free top managers to focus on long-term performance rather than quarterly earnings. There are private equity firms that are adhering to that principle and creating value for their shareholders and their workers as well. But these firms typically are smaller than the Blackstones of the world and generally prefer to keep a lower profile. Instead, the public perception of private equity is driven by those who embody the values and ideals of Gordon Gecko and delight in flaunting their stratospheric wealth.

Sadly, I suspect Messrs. Clarke and Storch and Ms. Petrovich are quite proud of their BusinessWeek portrayals. I know what at least one management consultant will think of them if he reads the story.

Share This Post

Rice-A-Roni is etched in the minds of an entire generation as being “The San Francisco Treat” thanks to an addictively catchy jingle that was paired with an equally unforgettable advertising campaign highlighting the city’s beloved cable cars and the jangle of their bells.

“One thing my dad insisted upon was a jingle,” his daughter Marla Bleecher told The New York Times. “He said if there is a jingle, people will say it over and over in their heads.”

Mr. DeDomenico certainly got that right.

Given that the city and its famous cable cars are so much a part of the Rice-A-Roni story, it seems only fitting that San Francisco acknowledge the passing of a man who no doubt did wonders to boost the city’s tourism over the years. Rather than a minute of silence, however, I suggest a minute of loud cable car bell ringing to commemorate his memory.

Share This Post

I know, I know… when human resources people pushed back, it probably meant they were saving me from myself. And, to be fair, I know that there are lots of exceptional, appreciated human resources professionals out there who are making significant impacts on the cultures and bottom lines of their organizations. Unfortunately for me, I’ve only had the pleasure of crossing paths with one of them in my entire career (and he was a client so I pretty much had to like him).

HR-speak is akin to PR spin. It’s filled with empty catchphrases, trendy buzzwords, and legal counsel-approved language that mollifies executive leadership and mortifies the rank-and-file who see right through it. I’m still aghast at the response an internal Human resources executive once gave me when I complained about the unimpressive job candidates she was sending me: “You know, Eric, your standards are just a little too high.”

Needless to say, I perked up when I read that Microsoft CEO Steve Ballmer shares my critical view of HR folks. According to a fascinating article in the current issue of BusinessWeek by Michelle Conlin and Jay Greene, Microsoft was suffering a serious brain drain two years ago. But instead of hiring a traditional HR executive to turn things around, Ballmer gave the HR reins to Lisa Brummel, a popular and experienced product manager that he moved over from the Home & Retail Division. Ms. Brummel has achieved considerable success in the two years she’s held the top spot, no doubt because she refused to follow “the usual HR script.”

Some examples:

• Brummel refused to benchmark “best practices” at other companies, much less impose them on Microsoft employees. “Before you go running off campus, you should know what’s going on on campus.”
• She quickly established a reputation as a “no-B.S., jargon-allergic, truth-teller” when she admitted to reading a popular and highly critical Microsoft blog written by an anonymous employee.
• She eliminated the bell curve in annual employee performance evaluations.

The BusinessWeek article is a great read for anyone desperate to have their faith restored in the potential of the human resources function. On the flip side, anonymous Microsoft employee blogger “Mini-Microsoft” suggests that BusinessWeek is a tad too generous in its praise of Brummel and her efforts. [Tough crowd – HR really is a thankless function!]

Still, Conlin and Greene deserve kudos for reporting on the untraditional approach and its impact to date. The bottom line is that Brummel seems to be staunching the company’s employee hemorrhage… at least for now (all bets are off if she takes the towels away again).

Now if only Brummel could do something about Microsoft’s ghastly “Your potential. Our passion.” tagline.

Share This Post