DALLAS, May 10 (UPI) -- When a CEO gets sick, does he have a right to privacy while he's diagnosed, treated and recovers? Or, as with any other event which threatens to disrupt a company's business and threatens its reputation, does the importance of communicating with key constituencies come first? If CEOs want to be highly paid celebrities, they better be prepared to have their hearts and hemorrhoids out in the open.
Kraft's CEO Roger Deromedi disappeared a month ago with no explanation, and the company tried to claim his right to privacy. Kraft finally broke its silence to explain Deromedi was suffering from "a viral infection accompanied by acute dehydration" and that he would be back in the office soon.
Kraft's board spent several weeks trying to figure out what to do. They had just demoted Deromedi's co-CEO, Betsy Holden. After telling the world she wasn't up to the job, they could hardly appoint her. Fortunately, Deromedi was not, as at so many companies, chairman, CEO and president, and Kraft's Chairman Louis Camilleri stepped in.
How should a company handle a CEO's illness? Kraft's strategy of silence wasn't the right choice. The principles of openness, honesty and transparency need to apply when the CEO is sick, just as they would in other situations - such as a glitch in manufacturing, litigation over hiring practices, loss of a major customer and so on. Obviously, this is not particularly comfortable for the CEO, but a company cannot claim to be committed to the principles of corporate governance and then exempt the CEO just because he's uncomfortable.
CEOs today have become highly compensated leaders and stars. The whole debate over Kraft's attempt, and failure, to have two CEOs, with Deromedi "winning" is a result of the current system which makes the CEO the center of attention, like a top contender at the Kentucky Derby. The CEO who wants responsibility and huge compensation loses privacy.
Other companies and CEOs provide examples of how to do it right. In 1993, Mike Walsh, then-CEO of Tenneco, developed brain cancer. He was open and candid about his situation and kept his wonderful sense of humor. His death was a great loss, but the way he handled it was a gift to all around him. It couldn't have been easy for a hard-driving, successful individual like Walsh to have shared his deterioration, but he did it for the greater good.
Andy Grove, as CEO of Intel, developed prostate cancer and also made the details public. He tackled his illness like any other scientific business problem, exploring the options, funding research, and writing and publishing. He survived and today has become one of the leading voices prodding the cancer research community to change how it approaches the disease.
Back to Kraft, who made another classic mistake which should be avoided in crisis communication. Apparently Deromedi's doctors took several weeks to diagnose what was going on. They didn't talk because they didn't know what was happening. A large public company simply does not have that luxury today. In any crisis, management spends hours, then days, trying to figure out what is going on, but the first requirement of crisis management is to understand the importance of communicating with key audiences before you have any or complete information. The company's inability to handle this shows the deficiency in their crisis planning and a weakness in their corporate governance.
Brinker International faced a similar situation when CEO and founder Norman Brinker was injured when his horse fell on him during a polo match. He was in a coma for some time. The company was ready. The president and COO, Ron McDougall, took over as CEO. The new executive team functioned superbly while Brinker's life hung in the balance and during his recovery. When it was clear he would live and fully recover, McDougall stepped back from CEO to president and COO again.
As Kraft's CEO was in the hospital, McDonald's CEO, Jim Cantalupo died from a heart attack. McDonald's board appointed a new president within hours. From a company's point of view, communicating the death of a CEO is bad enough, but it's even more difficult with an illness. The answer isn't silence and refuge in a claim to privacy. It's full disclosure and updates on what's happening - no matter how uncomfortable it makes the CEO. Sharing information is the hallmark of real leadership.
Merrie Spaeth, the president of a Dallas-based consulting firm, is a regular commentator and writer on communication issues. She was the director of media relations for President Reagan.
