Stockholders or Stakeholders: a look at 2 different management styles

There are a few important lessons that any executive may want to take away from the CEO of AOL’s rather public stumbles of late. Tim Armstrong’s recent 401K fiasco is an example of management style lacking compassion. To recap, early this month AOL quietly decided to amend its 401K policy, which would severely penalize any employee who left before the last day of the calendar year, stripping them of any contribution the company would have made to their 401K account.

Once the inevitable backlash began, Armstrong attributed the 401K decision to two AOL employees and their “distressed babies” that cost the company one million dollars in medical bills each. Even though AOL’s recent earnings call announced its most successful financial year -- in the last decade. The CEO’s insensitive comments only intensified the Internet storm.  Facing his self induced “P.R. Nightmare”, he had no choice but to reverse the 401K policy move and publicly apologize.

This isn’t the first time that Tim Armstrong has gotten himself into hot water; he fired an employee, in front of everyone, because the employee took a picture with his cellphone during an internal company meeting. How he handled dismissing the employee ultimately led to another public apology that he had to make.  In the age of Twitter, Instagram, Vine, etc., the notion of an “internal” meeting isn’t so “off-the-record” anymore, neither verbally or otherwise.  Given the range of technologies, apps, and devices that people have at their disposal to capture any and everything that is said or done, executives need to exercise great restraint in what they say or do to who, how, when and where.  Just ask the 2 U.S. diplomats whose “private” phone conversation was recently leaked, revealing an f-bomb insult at the EU.

In recognition of Wisdom Week that kicks off tomorrow, Soren Gordhamer, founder of Wisdom 2.0 Conference, held a special lunch earlier this week with Jeff Weiner, CEO of LinkedIn.  The leadership approach of Tim Armstrong and Jeff Weiner appears to be vastly different.  During the keynote lunch, Jeff  discussed his genuine belief in and ongoing practice of compassionate management. Arguably, the art of being compassionate and managing compassionately is non-trivial for most people -- let alone managers and executives. For most of us, it is a noble trait that must be practiced often. Jeff Weiner shared how by actively making compassionate management a part of the company’s core values, LinkedIn has benefited greatly. LinkedIn’s management team and employees have internalized this value and put it into practice daily. Mr. Weiner believes that compassionate management should be taught in K12, higher education, and executive development as well.

There is a growing movement around a similar management style called “conscious capitalism”. Conscious capitalism underscores an effort to take care of “ALL” stakeholders (employees, customers, investors, etc.) -- not just stockholders.  Studies have shown companies that practice conscious capitalism outperform the S&P 500 by more than 10X. With more than 240 million active users, some are predicting that LinkedIn is on a path to becoming the most important publisher. With LinkedIn’s stock hovering just below $200 per share, Mr. Weiner may be onto something with his compassionate management approach.