In the Navy: Another Accountability Model in the Age of Golden Parachutes

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.

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Profile Photo Patrick Quinn

It is illuminating but ultimately sterile to compare the obligations and standards of military command w/ the requirements of corporate leadership. Operational military commanders--such as warship commanders--strive to meet or exceed mission objectives for an audience of hypercritical professional peers and budget-conscious legislative overseers. The leadership of large corporations strive to maximize stockholder and senior management compensation, often at the direct expense of the corporation's stated mission, for an audience of self-interested shareholders and passive and sometimes corrupt regulators.

The two tendencies are captured in a single example, also derived from naval history: Duke Cunningham. Terrific fighter pilot, corrupt legislator. Two different games in two different arenas with two different sets of "rules."

Profile Photo Matt Pope

Thank you for your comments. Yes, you are correct in that the model of a warship C.O. and a corporate CEO are inexact comparisons. What I find most interesting though is how they resonate in their contrasts.

Whereas the Navy model extolls, and seeks to reinforce the notion that everything that happens on the skipper's watch is ultimately that officer's responsibility, the corporate model suggests that significant failure for seemingly irresponsible decisions is substantially cushioned.

Granted the military model is generally risk averse while the business model - especially in a bull market- tends to encourage risk, the two notions of absolute accountability vs seemingly diffused responsibility is striking.

I actually served under Capt Dykhoff when he was XO aboard the USS Nimitz and he impressed me as the model of an attentive, engaged officer, which is why I was particularly struck a few years later when I read that he was summarily dismissed after the incident on the Washington.