Intake Blog

Moments of Truth – They Matter

posted July 09, 2012 by

In case you haven’t been following the $32-billion merger of Duke Energy with Progress Energy, you’ve missed the building corporate intrigue: As the merger closed last week, the head of Progress, William D. Johnson, was expected to become CEO. And he did – for a few hours. Then the newly constituted Duke board met and voted to replace Johnson with Duke’s CEO, James Rogers.

The New York Times Saturday reported that the news of Johnson’s ouster sent shock waves through the energy industry. A former Progress director, who resigned from the Duke board in the wake of Johnson’s dismissal, described the switch as “one of the great corporate hijackings in U.S. business history.”

It remains to been seen how Standard & Poor’s and the state and federal regulatory bodies involved in the 18-month merger of these two companies may react. One thing is certain, however. CEO Rogers is scheduled to meet with Progress employees in Raleigh, N.C., on Tuesday, and he will surely be on the firing line. (The new Duke Energy operates in six states and has 29,000 employees. It becomes the largest electric utility in the country.)

What were they thinking? It’s a logical question. There may be more to Johnson’s termination than we’ll ever know, but it seems today that corporate leaders fail to understand how surprise decisions like the one made Tuesday at Duke Energy can devastate and demoralize employees of the predecessor company.  I’ve seen it too often – in the aftermath of mergers in the energy, pharmaceutical and technology sectors.

In June 1987, I was external public relations counselor for Uccel Corp., a Dallas-based based software company acquired by Computer Associates for about $800 million. Uccel’s CEO was a former GE planner named Greg Liemandt who had trained under the legendary Jack Welch.  I remember Greg Liemandt as a golden boy who listened intently, spoke with precision and made all the right moves.  That is, until the day the merger was announced.

It remains fresh in my mind all these years later: Liemandt ushering me into his office to tell me his triumphant entry before a room filled with employees would shortly turn euphoria into despair when he announced reductions-in-force would be a requirement of the merger. And that’s exactly what happened. Employees cried out in anger and anguish. Some wept bitterly. The news coverage that resulted was devastating. The golden boy walked away wealthy but his reputation was bankrupt with the very people who took him to the Promised Land.

It was all very predictable, and a great deal of pain could have been avoided.

Twenty-five years beyond CA-Uccel, the rise of the strategic counselor in public relations and the evolution of the corporate manager as a more enlightened leader, we still experience these reputational gaffes inside great companies. It’s a simple thing – listening to your employees, considering the affect of decisions, studying the implications of certain transactions, and mapping out key stakeholder needs to understand how they may act or react to decisions we make. Great companies do it every day.

As Jeff Bezos of Amazon said, you remember that your “reputation is what people say about us when we’re not in the same room with them.” And you act with integrity.