Toxic leadership and the downfall of Al Dunlap

Toxic Leadership: The Story Of Al Chainsaw Dunlap

Leadership is the lifeblood of the organization. Leaders set the tone for organizational culture. The workers and managers look to top leaders for examples of communication style, dress, and attitude. The leader can make or break the organization, from this standpoint. For better or worse, the leader determines the course that the organization will take on all levels (Curry, 2002). The following will explore an extreme case of "toxic leadership," that is leadership that takes the corporation down the road to destruction. One of the most famous examples of "toxic leadership" in recent years is the case of Al "Chainsaw" Dunlap. We will explore what makes him different and why he chose the path that he did.

Case of Dysfunction

Al "Chainsaw" Dunlap is famous for his tendency to "downsize" a company. Chainsaw earned his nickname by ruthlessly cutting jobs in order to increase the share price of the corporation. It is a basic assumption that the CEO will have the interests of the organization at the forefront. However, one must wonder if it were incompetence, or self-serving interests that caused Al Dunlap to plunge Sunbeam-Oster into bankruptcy (Byrne, 1998).

Dunlap developed his style while at Scott paper and Crown-Zellerbach. His methods encompassed cutting costs drastically in order to inflate the profits, thus giving a false sense of security to investors. This caused an unrealistic increase in share price and boosted investor profits. However, Dunlap misjudged the Sunbeam corporation and his plan backfired, plummeting stock prices from $53/share to $11/share four months later when industry leaders revealed that Sunbeam's revenues had been padded (Byrne, 1998).

One of Dunlap's key techniques involved deceptive accounting practices. Dunlap worked side deals with retailer to give them deep discounts. This enticed them to buy more than they could handle. Excess merchandise was shipped to warehouses and delivered later. However, the sales revenue was realized in the books immediately (Byrne, 1998). The money was not actually there, but it appeared as if Sunbeam were realizing huge revenues through massive sales. Shareholder's grew weary and Dunlap was fired. He had to repay $15 million in a shareholder lawsuit (Byrne, 1998).

If one examines this story on the surface, it would appear that Dunlap was simply a poor manager, but there is more to the story that lies just below the surface. When one begins to look at organizational culture, it becomes apparent that Dunlap did more than simply mislead shareholders. Behind Dunalp was a fiery personality that was known for storming out of Board Rooms, leaving others dumbstuck at his actions (Byrne, 1998). This hardly paints the picture of as a CEO who is calm, reserved, and wise. There were some that became truly concerned by his apparent emotional state and began to question his ability to lead (Byrne, 1998).

Eventually, the board became split between supporters of Dunlap and those that felt he was leading them down the road to destruction> Dunlap promised backing from major investors, but they never delivered (Byrne, 1998). Furthermore, the backing that Dunlap promised did not make sense from an investor's point-of-view.

Eventually the chism between Dunlap and the board grew to the point where Chief Financial Officer Russ and other board members were ready to quit (Byrne, 1998). The board became distrustful of Dunlap. Four days after he stormed from the board room, the board decided to fire Dunlap (Byrne, 1998). This was ironic because Dunlap had made himself famous for ruthlessly firing others. Upon hearing the news, many former employees that had felt the Chainsaw's bite expressed outward jubilation (Byrne, 1998).

The Final Analysis

Dunlap was the shareholder's best friend until the walls came tumbling down. In the finals analysis it is difficult to determine a person's true motive for doing something. Was Dunlap a psychopath, or was he simply a self-serving autocrat? Did he feel that he was doing something for the good of the shareholders? No one will truly ever know his motives or intentions in his actions. However, one thing is certain, as a leader he set the tone for the companies that he managed.

Dunlap set a tone that created hostility between board members. Dunlap's style of leadership went against common principles of good leadership qualities. There are many different leadership styles and philosophies. However, none of the accepted models include a style that destroys the morale and team spirit from the inside out. From this perspective, it is difficult to justify Dunlap's leadership style from any logical standpoint, even from the financial success that he brought. Jean Lipman - Blumen (2005) called these types of leaders "sociopaths."

Dunlap is a poster child for toxic leadership. Even if he had not ran the Sunbeam Corporation into bankruptcy, his abilities would have to be measured by the atmosphere that he created. A true leader is a person to be respected and looked up to. It appears that even his closest relatives found it difficult to respect him. Dunlap's biggest mistake and the one that also represents the biggest lesson for others is that he failed to see the value in people. He placed corporate profits above and beyond anything else. This type of atmosphere was one that his fellow board members were unwilling to accept. However, in the end, the scars that such an event leaves are difficult to heal. Dunlap swept through spreading his toxic ideals, and in the end, those left behind have to pick up the pieces.