FACES AND PLACES: CEO "churning" and UNA: reflections on corporate change (04/15/01)

FACES AND PLACES

by Myron B. Kuropas

CEO "churning" and UNA: reflections on corporate change

Today the Ukrainian National Association (UNA) is at a crossroads.

Under consideration by delegates to the last UNA convention are new by-laws which would significantly change the time-honored structure of our 107-year-old organization. If approved, the UNA would be transformed into a corporation with a chief executive officer (CEO) chosen by an 11-member board of directors. The board of directors would be elected by convention delegates.

Despite opposition from some delegates, a motion was passed at the last convention to vote on the measure - perhaps the most significant change in the history of the UNA - not in an open forum, but by mail. This resolution is being honored. The recommended changes have been printed in The Ukrainian Weekly and Svoboda, and ballots have been mailed to all 1998 UNA delegates.

The proposed revisions in our by-laws were fully discussed by the UNA General Assembly last December. A vote to have the assembly formally endorse the new by-laws failed to win approval.

There are many reasons to oppose the measure. I believe the proposed corporate structure will weaken our fraternal status. Branches, branch secretaries and district committees, already dangerously weak, will become even less viable in the new scheme of things.

The proposed 11-member board will never be as representative of the diversity within the UNA as our present 25-member assembly. Six members of the new board could easily control the entire organization. Conceivably, the board could change every four years. Six new members could vote to fire all the executives hired by the previous board. This actually happened in one ethnic fraternal organization.

Question: Which collection of individuals is more likely to provide abundantly better ideas, more wisdom as it were, 25 people or 11?

An experienced and talented chief executive officer of high caliber and Ukrainian heritage will be difficult (if not impossible) to entice into our ranks. Any self-respecting and productive CEO will hesitate taking over an organization with our current problems without some assurances the he/she can succeed. In all probability he/she will demand a salary of at least $100,000 and a three-year contract. Once hired, a dynamic, non-sentimental CEO will most certainly look for ways to cut expenses. This is what CEOs do best. That means that Soyuzivka, Svoboda and The Ukrainian Weekly will be on the chopping block.

And what if our CEO doesn't work out? If we fire him/her, we will have to honor the remaining years of the contract. The UNA once signed a salesperson to a 10-year contract. When he didn't produce, we had to honor our agreement. He was paid $150,000 to leave early.

Supporters of the new by-laws have provided not a scintilla of hard data to demonstrate that cooperate changes are in the UNA's best interests. They speak of the need to "move forward," to be in touch with "the 21st century" and so on. Nice phrases. Little evidence. There is information available today to suggest that the CEO approach that once captured the imagination of the American business world might have been more romance than reality.

According to a recent article by Warren Bennis and James O'Toole in the Harvard Business Review (reviewed in the March 17 issue of The Economist), CEOs are coming and going at an unprecedented rate. Defined by the authors as "CEO churning," the process appears to be building steam. Last February, for example, 119 CEOs left their jobs with significant American companies.

The reasons for churning are varied. Poor performance, mega-mergers, corporate re-structuring, CEO burnout, the economic slowdown and the increased stresses of a global economy are just some of the factors that force high-flying executives out of their jobs.

The most important reason for the failure of CEOs, however, appears to be the way boards of directors select their CEOs. According to Prof. Bennis, boards "typically go into a kind of collective trance, rhapsodizing about 'leadership' and the big need for it without ever taking even the first steps to define what they mean by the term." They generally rely on paper qualifications (résumés and letters of recommendations) or breadth of experience, elements which are often misleading. Have UNA supporters of change taken the time to define what we are looking for in a leader? What if we make the changes and discover that there is no consensus regarding this crucial point?

Leadership has always been difficult to define. A proven leader in one company may be a disaster in another. Jim Collins' article in the January issue of the Harvard Business Review summarizes his study of successful corporate leaders in 11 companies. All of them, surprisingly, possessed "a paradoxical mixture of personal humility and professional will." They were "timid and ferocious; shy and fearless." Significantly, almost all of them were appointed from within their respective organizations .

Has the UNA ever had any shy but fiercely determined leaders over the years? You bet. Nicholas Murashko, president from 1929 to 1949, guided the UNA through the worst economic times in American history. During his stewardship our membership almost doubled, The Ukrainian Weekly was born and UNA sports teams were organized for our youth. During Dmytro Halychyn's tenure (1950-1961) our membership increased by some 30,000 members with a program geared towards the inclusion of our third wave of immigrants. So successful was this drive that by 1978 UNA membership peaked at 87, 655.

There is no necessity for the UNA to change to a corporate structure. We should preserve the fraternal tradition that has served us well for 107 years. I believe the UNA can find a patriotic leader with focused vision and commitment from within our ranks. We can ill-afford an outside hired gun who will "churn" out at the first opportunity.

On May 16, 1970, The Ukrainian Weekly published an editorial which included the following caution: "To change for the sake of changing is as bad as clinging to the past. To build new vistas on the time-tested foundations is the key to future success. And that spirit is best reflected in the UNA's jubilee motto: 'In Tribute to Pioneers - With Eyes Toward Youth.'" Wise words then. Wise words today!

Myron Kuropas' e-mail address is: [email protected].

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