3 Communication tips when firing the CEO

Last week Bank of New York Mellon (NYSE: BK) abruptly announced that its CEO, Robert Kelly was leaving, citing “differences in approaches to managing the company.”

The story made headlines for a day but was quickly forgotten, and the stock price has held pretty steady – both hallmarks of a communications success.  Of course it helps that the bank doesn’t stir public passions the way some other banks do, and that its business dwells in the normally sedate world of securities custody and transaction processing.  Still, the bank did several things well from a communication standpoint.

First, its press release was brief, factual and covered all the bases.  It offered a rationale for the departure and included quotes from all quarters – the lead independent director, the newly appointed CEO and, remarkably, Kelly himself.

Second, there was nothing in the announcement that suggested a change in strategic direction for the bank, which could have spooked investors.  Kelly’s successor, Gerald Hassell, is a 30-year veteran of the bank who has served on the board for more than a decade.

Third, the announcement was released after market close on Wednesday, just late enough in the week’s news cycle to blunt the impact of most news reports.

Curiously, two days later the bank made its required regulatory filing with details of Kelly’s compensation, which generated a new round of media reports.  It would have been preferable to have the filing coincide with the news release, to dampen speculation and shorten the duration of the news coverage.

There are some unanswered questions, too, mainly around what exactly motivated the Board to act when it did, particularly after it renewed Kelly’s employment agreement in March.  And there could be new developments in litigation, regulatory matters or strategic issues that would shed new light on Kelly’s departure.   If so, the communication challenges for BK will flare up again in the coming weeks.

Cantor Fitzgerald: A Lesson in Risk Taking

Ten years after the terror attack that killed two-thirds of its New York staff and nearly destroyed the firm, Cantor Fitzgerald is thriving, the New York Times reported in a Sunday feature.  The firm’s success is due in large measure to CEO Howard Lutnick and a handful of executives who survived the day. Their determination, hard work and willingness to take risks brought the firm through an unimaginably difficult ordeal.  (Disclosure: I was the principal spokesman for Cantor Fitzgerald at that time.)

One of the biggest risks they took was the unpopular decision to end the pay of employees who were still “missing” four days after the tragedy.  The decision added to the financial uncertainty facing many of the families, but I think it also signaled that their loved ones were gone – a fact that few then were willing to acknowledge.  It appeared insensitive but the move was crucial to keeping the firm afloat, and Lutnick’s unprecedented commitment to share the firm’s earnings with victims’ families provided a powerful motivation to restore the firm.

To his credit, Lutnick communicated actively with the families on this issue and many others, and he was transparent about the firm’s performance over the months and years that followed.

It takes courage to take a risk, to stand by it amid criticism and to keep the promises you’ve made.

Keith Richards: My Business Guru

Not long ago, I read Life, by Keith Richards. Sure, he’s known around the world as the lead guitarist for the Rolling Stones, but I’d add him to the pantheon of business-management gurus. Surprised? Don’t be. Richards’s life is filled with examples of the kind of behavior that people and organizations should do to be successful. No, I don’t mean the heroin. I mean re-invention.

Keith Richards and the Rolling Stones burst onto the British music scene in the early 1960s by being exceptionally good imitators of American rhythm and blues, rock’s leading edge at the time. The band’s first top-ten hit in the UK was a cover of Buddy Holly’s “Not Fade Away.”

The Stones had great success with this formula and would be a proud but obscure footnote in music history were it not for Richards’s first self re-invention: becoming a writer of original songs with Mick Jagger.

Richards speaks movingly of his transformation into a songwriter. It’s a description that wouldn’t be out of place in an MBA class on entrepreneurship or a speech by Steve Jobs:

“I had never thought about songwriting. He [Andrew Oldham, an early producer/manager for the Stones] made me learn the craft, and at the same time I realized, yes, I am good at it. And slowly this whole other world opens up, because now you’re not just a player, or trying to play like somebody else. It isn’t just other people’s expression. I can start to express myself, I can write my own music.  It’s almost like a bolt of lightning.”  

But this was just one of the first of many self-reinventions Richards would have in his career. I’ll touch on two briefly:

By the late sixties, the Stones have a string of international hits, but Richards feels stagnant. Not content with his sound, Richards yanks a string from his guitar and discovers a “whole new universe under your fingers.” The five-string open tuning was “out of the realms of normal music” but it became the sound behind hits like “Brown Sugar,” “Tumbling Dice,” “Happy,” and “All Down the Line.”

Re-invention for Richards came again, in the late 1980s.  Some 25 years after the Rolling Stones began, Richards forms a new band, the X-Pensive Winos. His new role? Lead singer.  After years singing backup, he’s now out in front, and with a great group of musicians around him, the band becomes a huge success. If you doubt Richards’s vocal skill, check out “Take it so Hard.”

So what are the lessons from Keith Richards? First, don’t settle. Keep innovating, keep taking risks. Second, have a collaborator, someone to challenge and inspire you. It could be in an unexpected place.  Richards’s grandfather was a source of inspiration in his early life; Mick Jagger, Gram Parsons and Ry Cooder played the role at later times. And third, training and learning never stop. Richards took singing lessons to improve as a lead vocalist in his new band.  Good lessons for music, for business and for life.