From the top · 19 August 2015

Five bosses who came under fire for being out of touch

The CEO of Amazon has been criticised for being out of touch with his company
The CEO of Amazon has been criticised for being out of touch with his company

The media storm sparked by the New York Times’ 5,400 word investigation into Amazon saw CEO Jeff Bezos dispute the accusations of terrible working conditions, saying he didn’t “recognise this Amazon”.

The email Bezos sent around internally asked anyone who had seen any of the “callous management practices” mentioned, to flag concerns to HR immediately. This resulted in further debate, as many suggested Bezos was out of touch with the company.

The issue of executives and employers being out of touch with the rest of their business and sometimes beyond that, has been a long-running discussion. New research from the High Pay Centre think tank suggested this gap may be widening further. It revealed that not only did the ten highest paid CEOs at FTSE 100 companies make over £150m in total, but those in the position are now paid 183 times the average UK worker.

It’s yet to be seen how significant the reputation damage suffered by Amazon will be in the fallout, but the situation does reinforce the importance of keeping plugged into the daily goings on of your business – whatever size it is.

With that in mind, here are five bosses who came under fire for being out of touch in a variety of ways.


(1) Greg Gopman

The former CEO of tech startup AngelHack made numerous headlines after a Facebook rant about San Francisco’s homeless community quickly went viral. He branded them “degenerates” and “hyenas” and typed, “why the heart of our city has to be overrun by crazy, homeless, drug dealers, dropouts and trash I have no clue. Each time I pass it my love affair with SF dies a little”. He suggested the underprivileged should “keep to themselves” on the outskirts of the city and “beg coyly”. Gopman’s lengthy rant added that “there is nothing positive gained from having them so close to us” and if they “added the smallest iota of value I’d consider thinking different”.

Following a swift backlash – both for his lack of compassion and for being out of touch with the hardship of many, Gopman quickly backtracked, but his reputation and that of the company’s took a battering and he later stood down as CEO. He has since claimed to be remorseful and has spent a year researching homelessness, looking into how to address the issue in San Francisco. “My focus is on the impact. I hope something comes of this,” he said.


Robert_Benmosche

(2) Robert Benmosche

The financial crisis left numerous businesses in dire straits, and American International Group was one of the larger bruised names – leading to it being bailing out by the federal government. This didn’t stop CEO at the time, Robert Benmosche, arguing that the company should still be allowed to regulate itself.

“Right now, the most important thing is that we’ve go to get companies to regulate themselves and do the right thing”, he told CNN. He suggested the regulator’s job was to “figure out how to improve that system”.

Prior to the crisis, AIG had insured $441bn worth of mortgage-backed securities for Wall Street banks in the form of credit default swaps and, when the system crashed, it became clear the company that couldn’t keep up. AIG also faced criticism by paying more than $165m in bonuses to executives when the firm was brought to the brink of collapse.

During an interview, Benmosche went on to defend investment banks, saying “it could be just sloppy underwriting, it could be sloppy business. And that’s just not illegal, unless you portray something one way and you knew it wasn’t”.

He had also reportedly threatened to resign over government pay restrictions in the past.

In 2013, Benmosche gave an interview to The Wall Street Journal, comparing the public anger over AIG bonuses to the lynching of black Americans. He claimed the uproar “was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that – sort of like what we did in the Deep South. And I think it was just as bad and just as wrong”. This prompted more criticism and some calls for resignation. Benmosche later apologised, but as with Gopworth, his reputation had already taken a hammering.


(3) Andy Kessler

Greg Gopman may be slightly relieved to know he’s not the only business man to make a rather public gaffe when it comes to the sensitive issue of homelessness. While Gopman had limited his rant to Facebook, former hedge-fund manager Andy Kessler took to The Wall Street Journal for an opinion piece, where he wrote: “My 16 year-old son volunteers with an organisation that feeds the homeless and fills kits with personal-hygiene supplies for them. It’s a worthwhile project, and I tell him so – but he doesn’t like it when our conversation on the way to his minimum wage job turns to why these homeless folks aren’t also working. Perhaps, I suggest, because someone is feeding, clothing and, in effect, bathing them?

“But there is a deeper question, rarely asked: Where does the money come from that funds all this Gen-G volunteering and charitable giving? Somewhere, somehow, someone worked productively and created wealth that could be given away (and tax deducted) to help the unfortunate.”

He also suggested the solution came from simply generating more money. “Obsessing over carbon footprints and LEED certifications and free-range strawberries and charging for plastic bags will not help the world nearly as much as good old-fashioned economic growth,” he said.


(4) Bud Konheim

The CEO of luxury fashion company Nicole Miller appeared on CNBC’s Squawk Box, where he said comparatively poor Americans were rich compared to the rest of the world. “We’ve got a country that the poverty level is wealth in 99 per cent of the rest of the world. So we’re talking about woe is me, woe is us, woe is this.”

He added: “The guy that’s making $35,000 a year, why don’t we try that out in India or some countries we can’t even name. China, any place, the guy is wealthy.”

This led to calls to boycott Nicole Miller, as many criticised Konheim for being an out of touch one percenter.

Konheim hasn’t been the only one making eyebrow-raising comments about income inequality. Shark Tank host Kevin O’Leary said the unequal distribution of global wealth was “fantastic” as it inspired everybody “to look up to the one per cent and say, ‘I want to become one of those people’, I’m going to fight hard to get up to the top”.


Mayer changed the popular policy on working from home at Yahoo in 2013
Mayer changed the popular policy on working from home at Yahoo in 2013

(5) Marissa Mayer

A less controversial instance, but still an interesting example of a boss being out of touch, was an internal memo from Marissa Mayer to employees at Yahoo in 2013 which changed the policy on working from home. In a statement that came from her head of HR, the email said:

“We need to be working side-by-side. That is why it is critical that we are all present in our offices. Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings. Speed and quality are often sacrificed when we work from home. We need to be one Yahoo!, and that starts with physically being together.”

While Mayer had been credited with helping establish much of Google’s lauded working culture, this change at Yahoo – along with her initial refusal to discuss it – was arguably a misstep for a couple of reasons. A sweeping change like this, overriding a previously popular policy, is unlikely to foster employee goodwill. The change signified something of an old-fashioned perspective, that working from home automatically meant you’d be less productive and the work wouldn’t be of such a high quality.

While businesses today haven’t embraced flexible working universally, the approach towards it is changing, and Mayer’s 2013 shift suggested she was placing her company on the wrong side of the curve.

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ABOUT THE EXPERT

Rebecca is a reporter for Business Advice. Prior to this, she worked with a range of tech, advertising, media and digital clients at Propeller PR and did freelance work for The Telegraph.

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