Al Chainsaw Dunlap: career and business impact

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).

Was it Nature or Nuture?

When Dunlap was fired, even his family laughed and chided. It appears that Dunlap had managed to effectively alienate everyone in his life. It is difficult to read Dunlap's case and not see a form of psychopathy at work. Many noted sociopaths can live a seemingly normal life and many achieve high degrees of success. According to the DSM-IV, a sociopath must have, at least three of the following characteristics: 1. Failure to conform to social norms; 2. Deceitfulness, manipulativeness; 3. Impulsivity, failure to plan ahead; 4. Irritability, aggressiveness; 5. Reckless disregard for the safety of self or others; 6. Consistent irresponsibility; 7. Lack of remorse after having hurt, mistreated, or stolen from another person" (Connor).

It does not take any stretch of the imagination to see more than three of these characteristics in Dunlap and his actions. Dunlap's decisions were illogical and extreme. His philosophy of cutting unnecessary expense would make any "Lean Management" student proud. However, his practice of accounting would raise some eyebrows to say the least. No one will argue that Dunlap managed to pad his own pockets quite nicely with the rises in stock price. However, he simply ignored many obligations to others that are considered to be the basis of ethics for upper management.

Every CEO has a responsibility to the shareholders. They did experience incredible profits, but it was a house built on quicksand. The accounting methods used by Dunlap would be considered fraudulent by many. They reflected revenues that had not yet been realized. Anything could have happened to the merchandise to jeopardize the real dollars that were promised in the future. Dunlap was the pied-paper as he rose to power and others made quick profits. However, in the end, he was less than the hero that he was in the beginning. Dunlap destroyed the team cohesiveness and morale of the companies that he attempted to save.

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.