As commanding officer of a nuclear powered aircraft carrier, Captain David Dykhoff had one of the most prestigious jobs in the Navy. But despite his superlative record, it only took one incident to end his career. When one sailor aboard his ship lit a cigarette in an unauthorized area and caused a fire, Captain Dykhoff was unceremoniously dismissed, with the Navy stating that it had “lost confidence” in his ability.
The Navy holds the Captain personally responsible for everything that happens aboard ship.
Perhaps the private sector could learn from the Navy’s model of executive accountability.
Former Bank of America chief Ken Lewis’ penalty for the Merrill Lynch takeover that resulted in a $21billion loss and a government bailout was to be stripped of his Chairman - but not CEO- title. Only later was he ushered out with a $53 million golden parachute.
HP CEO Carly Fiorina drove the disastrous merger with Compaq – halving the company’s stock price and laying off 20,000 employees. For that she received a $21.4 million severance package and a new life on the board of director’s circuit.
Navy Captains don’t get to look indignant in front of Congressional committees and claim they didn’t know what was going on. If the Navy “loses confidence” a brilliant naval career is quickly and ignominiously over.
If a corporate board loses faith in a CEO however, he or she is gently shown the door with an unfathomable severance package and a chance to start over.
In too many companies today, boards have traded their oversight function for a too-cozy relationship with the executives they’re supposed to be governing. While far from a perfect model, one could argue that the Navy is certainly not enabling failure. The same could not be said today about many corporate boards.