AMERICA'S TOUGHEST BOSSES Stop complaining about your own company's Mr. Big -- these guys could scare cream into butter and make money on the deal. Here's what they're like to work for.
(FORTUNE Magazine) – WHO HASN'T FACED a boss's fury? White hot or stone cold, it is hard to prepare for even when you know it's coming. Your brow moistens. Your gaze falters. Your gut flutters. Suddenly he is stomping with rage, and you are carpet. Tim Pettee, formerly vice president of investor relations at Texas Air and now a security analyst at Merrill Lynch, remembers that feeling. One evening while at Texas Air, Pettee alerted Wall Street analysts to a drop in earnings to be announced the following day. He extended the courtesy to improve relations with analysts who followed the company. He goofed. Chairman Francisco Lorenzo didn't know what Pettee was up to, and when Lorenzo walked into his office the next morning his first phone call was from an investor demanding to know why the price of Texas Air's stock was plunging. Lorenzo had no answer. Recalls Pettee: ''When Frank found out, he stared at me, into me, through me. He stabbed me hard in the chest with his finger and he said, 'You are going to take care of this, you are going to take care of this now.' I can still feel his finger hitting my breastbone. That afternoon he put his hand on my shoulder, and I knew I would make it. But there's not a person there who doesn't face sooner or later Frank's baleful stare that says, 'You have totally and utterly failed me.' '' That's one reason Lorenzo now joins the outstanding taskmasters chosen in 1980 and 1984 (see box, page 50) as one of FORTUNE's toughest bosses. Earning membership was no piece of cake. Tough bosses abound. More than 60 top executives were in the running before this year's list was narrowed down to seven. FORTUNE solicited nominations by polling executive search firms, consultants, academics, financial analysts, and high corporate executives; their observations fill the ''How Others See Him'' section of the boxes accompanying the photos. To be fair and impartial, pollees could not nominate their own bosses. And contestants had to be in top jobs of major U.S. corporations. That ruled out such prime candidates as the two Rosses -- Johnson and Perot. Moreover, FORTUNE's staff was ineligible to nominate candidates; this is not a FORTUNE hit list. Those invited to nominate candidates asked, ''What is tough?'' Tough question. A glance at the thesaurus shows a word packed with nuances like tenacious, strict, hard, immovable, obstinate, violent, and more. Common sense dictates an open, democratic approach. So we define ''tough'' broadly as ''demanding and hard to please, for whatever reason.'' That yielded a nifty variety of toughnesses in our toughest bosses, from tenacious to obstinate. We uncovered no violence. Toughness, it should be stressed, can be good or bad. A good toughness pushes people to the limits of their abilities, and no further, for constructive and legitimate purposes. The bad variety pushes people to their limits or beyond for capricious or inconsequential purposes. Most of these tough guys exhibit a mixture of both. How many ways can a boss be tough? Let us count a few. -- LOOSE CANNON. Frank Lorenzo of Texas Air might be called many things. He is a visionary, a dealmaker, a union buster, and a showboater. But to Lorenzo's subordinates, ''loose cannon'' probably fits him best. For Lorenzo, 48, sometimes creates as much havoc among his crew as he creates among the competition. Lorenzo, who grew up in New York City with the roar of LaGuardia's passing planes in his ears, has built a small regional carrier, Texas International, into America's second-largest airline (after American) by purchasing Eastern, Continental, and People Express. He has been battling the Machinists union at Eastern for two years; the conflict just began a federally mandated 30-day countdown that could lead to a settlement or a strike. Two chains of command lead to the top at Texas Air. One is the official hierarchy of line managers. The other is a small cadre of executives with whom Lorenzo feels personally at ease and whom he uses for special projects and to gather information. The cadre, says a former executive who worked for Lorenzo, is extremely difficult to penetrate and dates from Lorenzo's early years, when he organized a junta of ''bright young entrepreneurs to challenge the system.'' Texas Air's Houston headquarters is a lean operation with almost no staff, so Lorenzo uses his cadre to perform staff chores. Often he ends up undermining his line managers. According to several former employees, Lorenzo assigns lower-echelon people to projects that their bosses are unaware of. Or he recommends to members of his fifth column that they not support their superiors' plans. Fare changes or route expansions in the planning for months ! may be canceled abruptly. Planes bought for one of the company's airlines may be suddenly diverted to another. Says a former executive: ''Planning is impossible.'' Observes another: ''You never know who's on your team, so you are always off balance. The intrigue is incredible.'' While Lorenzo fancies himself a good family man, he can be hell on the families of subordinates. Fourteen-hour days and six-day weeks are the norm, and executives are often moved from city to city. Tim Pettee thinks the bizarre working hours result in what he calls Texas Air's ''rampant divorce rate.'' Nevertheless, he says, ''there was always a lot of loyalty and esprit based on the feeling that Texas Air was on the cutting edge of change.'' That esprit may be running low as earnings at Continental and Eastern sag dangerously. -- OLD BLOOD-AND-GUTS. As a young infantryman in World War II, Harry Figgie Jr. learned toughness from a master: General George Patton. ''I liked being in Patton's army,'' says Figgie, ''because he scared the Germans shitless.'' Today Figgie runs Figgie International, a conglomerate based near Cleveland, with much the same joie de combat. Some of the people he frightens most are his own. One staffer who left in 1988 says Figgie (who is 65 and has no plans to retire) can be the nicest fellow in the world one day and totally abusive the next: ''Men running $100 million divisions would come into my office and ask if it was safe to see Harry that day.'' Says another former employee: ''Figgie takes no prisoners when it comes to insult. He'll call anyone a horse's ass anywhere.'' Figgie, who once coached Triple A minor league baseball, is quick to give young people responsibility and quick to fire them if he isn't pleased. One who has survived for 25 years, human resources senior vice president James Anderson, recalls his first 12 months at Figgie's side: ''Headquarters was like a tomb. People were scared. Harry chewed me out again and again and again. Every day he'd work me over. I lost 40 pounds putting in six days a week until ten o'clock every night, never sure I'd have a job in the morning. One day Harry told me to smile more, or else people might think the company was in trouble. So I tried. A week later he said to me, 'What the hell are you grinning at? You don't understand one damn thing about our problems, do you?' He said many hard things to me, even called me a liar. I wanted to suck my thumb, but that's not our image. So I started chain-smoking.'' After a year, Anderson's cohorts presented him with a sketch depicting him with the seat of his pants chewed off. Anderson framed it and hung it on his office wall. Why has he stuck with Figgie so long? Anderson, who began his career as a payroll clerk without a college degree, says, ''He has made me do things I never dreamed I was capable of. And after all these years, the money is good.'' Figgie founded Figgie International in 1964, when he bought an ailing sprinkler company with sales of $20 million. He has since bought dozens of businesses, which he sifted and sorted into today's 36 divisions with about $1.2 billion in sales. The company makes hydraulic pumps, fire extinguishers, Fred Perry brand sportswear, and Rawlings sporting goods. Piecing together so many small parts was ''like a Chinese fire drill at times,'' says Figgie. ''People don't understand the ungodly pressures of that. If I flare, it's exertion, or something going on that people don't know about. But I won't deny that I know how to chew ass.'' -- COST BUSTER. Beating down costs is a religion at Wells Fargo & Co., and Chairman Carl Reichardt, 57, is chief zealot. In six years as CEO, Reichardt has cut expenses from 72% of revenues to 54% (third lowest in banking) and quadrupled the price of the stock by slicing away at everything from personnel to poinsettias at Christmas. Says Reichardt: ''Yeah, I'm tough -- on costs. There's too much bullshit waste in banking. Getting rid of it takes tenacity, not brilliance.''
Reichardt holds noses unrelentingly to the grindstone of parsimony. His flair for symbolic acts is most memorable. Once, during a cost-cutting campaign, he required those wanting to spend money on capital improvements to make their cases to him personally. Reichardt, who has a mighty grip and a blunt manner, received supplicants while sitting in a chair with torn upholstery and the stuffing hanging out. Sometimes he would pick at the stuffing while he listened to their pleas. Recalls chief financial officer Clyde Ostler: ''A lot of must-do projects just melted away.'' For two years Reichardt froze the salaries of the bank's top 60 officers, and today they have to pay for such common executive-suite perks as coffee and Christmas decorations. Reichardt habitually flips off lights he finds burning in empty offices. He banned green plants from his executive office as too costly to feed and water. When a vice president gave Reichardt a report in a handsome binder, Reichardt tore the cover off, stapled the pages together, and barked, ''Do it like this next time.'' He reviews all loans of $5 million or more. ''You never know,'' says executive vice president Charles Johnson, ''when he'll call you on some little deal, say it's the dumbest loan he's ever seen, and then gobble you alive. At least he does it in private, and he's not personally abusive.'' Reichardt wants to make Wells Fargo the McDonald's of banking. He relies heavily on consumer deposits for assets and has simplified the bank's menu of services until only the most profitable ones remain. This tough guy first became a crusader against costs as a loan officer in Wells Fargo's real estate division. In the highly cyclical real estate business, expenses must be held low to survive downturns. As chairman he settled on a low-cost strategy because, as he sees it, deregulation of banking will heat competition to the point where only the lowest-cost producers will prosper. -- DETAIL MONGER. Robert Crandall, chairman of AMR Corp., parent of American Airlines, is in many ways the opposite of his competitor Frank Lorenzo. Working with a large staff, Crandall studies options in fine detail and discusses all his moves with committee after committee. Says John Pincavage, a security analyst for Paine Webber: ''Crandall could write a book on every move he makes.'' Therein lies the rub -- Crandall is a bear for detail. ''I'd call it an obsession,'' says a former subordinate. ''Bob has this fear that someone will ask him a question that he can't answer, and he will have to say, 'I don't know.' So he is endlessly probing, questioning, challenging.'' Crandall is notorious for his budget reviews. American averages 2,300 flights a day, but he has sat down with managers who oversee cities that may have only a few flights daily, going through budgets line by line. Subordinates joke that Crandall, who can remain in conference for eight hours without a break, possesses ''mankind's biggest bladder.'' His willingness to scrutinize the tiniest details, plus the encyclopedic knowledge he has acquired from that scrutiny, puts extraordinary pressure on executives to do likewise. Staff meetings are his way to thrash out plans, and egos often get thrashed as well. Tom Plaskett, a former American executive and now chairman of Pan Am, says Crandall totally dominates his lengthy meetings with an intimidating mixture of energy, verbosity, profanity, and bluff. ''Bob is not a tyrant,'' says Plaskett. ''He's an angry man who is angry at the problem. Some people learn to manage him by countering him with logic. Others will do anything to avoid getting into an argument with him.'' Under Crandall's direction, American founded the highly successful Sabre system of computerized airline reservations and invented the ubiquitous frequent-flier programs. ''I don't believe he originated these ideas personally,'' says a former subordinate. ''He drew them out of the endless meetings and discussions.'' The results of Crandall's approach are hard to argue with. In FORTUNE's survey of the most admired corporations, AMR ranked No. 2 (after UPS) among all transportation companies. Texas Air was tenth out of ten. -- 20-PERCENTER. When Richard Mahoney became chief executive of Monsanto in 1983, he began hammering the company into what he calls a ''great corporation.'' As Mahoney sees it, greatness for a company as big as Monsanto (1988 sales: $8.3 billion) means a return on equity of 20% annually. So 20% is Mahoney's rallying cry, and, says a consultant who has worked with him, Mahoney is ''absolutely ruthless'' in pursuing it. His strategy for getting to 20% is to take the company out of the commodity chemical business and into specialty chemicals and pharmaceuticals. In his first year Mahoney cut unwanted businesses and excess costs with such vigor that bumper stickers began appearing around the company reading, ''Dick Mahoney before he dicks you.'' According to an executive who was there at the time, Mahoney tried but failed to catch the creators and distributors of the stickers. With the worst of the cutting over, Mahoney has lost none of his zeal. ''We set targets for cash flow, income, and return,'' he says. ''Once those are agreed to, I expect an unfailing promise to deliver.'' Trouble is, the promise can be one-sided. Mahoney has a habit of unilaterally adjusting the targets upward before they are even reached. In 1986 the cash-flow target for the chemical division was set at $200 million, but when it appeared that $200 million would be achievable, Mahoney reset it at $250 million. ''He keeps the pressure turned up,'' says division president Robert Potter. Early last year Mahoney told A. N. Filippello, vice president of financial communications and chief economist, that he wanted the price of Monsanto stock to rise from about $80 to $100 by year's end. As it approached $90 in the fall, Mahoney said, ''Make that $120.'' The stock didn't make it (the price at year's end was $81.75) because the company's pharmaceutical division, G.D. Searle, lost a lawsuit, which frightened investors. Mahoney never held Filippello solely responsible for the stock price. Nonetheless, says Mahoney, ''you might miss once, but you can't miss consistently. And consistently isn't very many times.'' Mahoney has a tendency to lecture and is prone to idealistic pronouncements. That 20% return on equity, he says, is not an end in itself but an ''enabler.'' Once Monsanto enters the tiny elite of great corporations, which Mahoney says includes Merck and IBM, it will be able to ''enrich'' the lives and the communities of employees. He even takes the moralistic highroad when he's dressing people down. Recalls a subordinate: ''I made a mistake on a trip once and he tore into me on the plane home. For the entire flight he told me that I wasn't living up to my potential.'' Oh, yes. In the years since Mahoney became CEO, Monsanto's return on equity has risen from 9% to 15%. -- MEGABRAIN. The analytical powers of Jim Manzi have become legend around Lotus Development. Folks at the software firm in Cambridge, Massachusetts, describe their chairman in metaphors of computerese. Listen: ''Manzi is a brilliant on-line thinker, not a batch processor.'' He packs ''a 32-bit brain in a 16-bit world.'' He has ''an intellect of tremendous bandwidth and awesome throughput.'' What they mean is that Manzi, a former consultant with McKinsey & Co., has a mind like a steel trap. What they usually don't say is that Manzi springs the trap with crushing efficiency on unwary or ill-prepared underlings. Analytical skill is the weapon by which Manzi, who is only 37, preserves his authority. He often labels ideas that don't please him ''dumb'' or ''stupid,'' and cuts people short if their explanations are too slow. ''He demands quality thinking and no waste in transmission,'' says Michael Kolowich, Lotus's former marketing vice president and now publisher of PC/Computing magazine. ''When he gets bored in meetings, he'll set a clock for two minutes and say, 'Finish up.' Or he'll lean over and tell someone to call him when something happens. Then he leaves. That frightens a lot of people.'' Displeasing Manzi has its price. Since Lotus was founded in 1982 the company has been in nearly constant reorganization, the result of the explosive growth in sales of its Lotus 1-2-3 spreadsheet program. In the past year Manzi has * been struggling to get a new version of Lotus 1-2-3, called Release 3, to market. Competitors are threatening Lotus's market share while Release 3 has suffered repeated delays; it is scheduled to appear in June. In the course of expansion and churning reorganization, says a close aide, Manzi has fired 50 to 100 people. Manzi says he never bounced anyone for shoddy thinking alone, but that he did fire one person for not thinking at all. ''He tried to justify something he did based on his rank rather than on its merits,'' says Manzi. ''I find that gross and disgusting.'' Concludes a former colleague: ''The best way to communicate with Jim is by electronic mail, maybe because in private he's a much softer person. Still, I was careful to limit my messages to two sentences each.'' -- COMMANDO. When ex-Marine Hugh McColl became chairman of NCNB Corp., some executives of the big banking company in Charlotte, North Carolina, presented him with a realistic dummy hand grenade. He used to keep it on his desk, and once, during a meeting in his office, he pulled the pin to see who would flinch. Concerned about his image, McColl has since removed the grenade. He is, after all, a banker. And yet the grenade stood for something: McColl is a banker who is also a warrior. In a four-year campaign of acquisitions, he has built NCNB from a local bank into the nation's tenth-largest regional. Says he of his creation: ''You've got to feed the tiger, and what the tiger demands is victory. That's what galvanizes this company.'' Hey, a winner. And his people seem to like him. What's so tough about that? Two things. First, in order to play for Hugh McColl, you must check at the door that most cherished of American attributes, individuality. ''There's no place for the lone wolf here,'' he says. ''We're team driven.'' And driven and driven. The company's executives are almost hyperspirited, rather like members of a cult. In recruiting, NCNB looks for people who are ''malleable,'' says James Thompson, chief of the southeastern banking division. Recruits who don't last are, in the words of one executive, ''people who didn't let themselves get helped.'' McColl walks the halls often and expects to see people in their shirt sleeves, with office doors open. ''The fastest way to get to see Hugh,'' says a subordinate, ''is to close your door. He hates that.'' Says another: ''Hugh's always breathing down your neck. He's such a forceful person that it's hard to be who you are.'' Second, be prepared never to rest. McColl never does. He's always moving, leaning, shifting. ''Sometimes you just need to digest things,'' says Joe Martin, vice president of corporate affairs. ''But his energy forces you to your feet. It's hard to keep up; that's what's so tough here.'' Does the commando banker have a slogan? Not officially. But he once considered ''Crush the sons of bitches and have a nice day.'' According to Chuck Cooley, vice president of personnel, ''That slogan shows that warmth and sensitivity are paramount -- we want to win, but we don't want to ruin anyone's day.'' Is he kidding? Apparently not, but no velvet glove on an iron fist was ever more transparent.
Considering the success many of these executives have achieved, seeking lessons or observations about toughness is irresistible. A few are apparent. -- Tough bosses often have difficulty telling constructive toughness from the destructive kind. When they cross the line to capriciousness, performance suffers. So toughness is a high-risk, high-gain management style in which the boss constantly plays chicken with the limits of his subordinates' endurance. -- The toughest bosses often don't know what it is about themselves that is toughest for their underlings to deal with. They imagine that the final resort of their authority -- the power to kick someone out the door -- is the hardest thing any subordinate may have to endure. Not so, say some who have felt the boot. When you work for the toughest, getting fired can come as a relief. -- While toughness may consist of abuse, more often it is unrelenting pressure that keeps subordinates always off guard, never feeling safe. Says David Roux, vice president of Lotus: ''It's easier to deal with a table-pounder than with tenacious, insistent pushing.'' -- Toughness seeks its own. One man's lion is another's pussycat. Most tough executives eventually sort out a team of subordinates with at least limited immunity to their boss's brand of terror. Otherwise these bosses could not be as successful as many are. The outlook for CEO temperaments? Toughness of the kind these seven exemplify will probably become more prevalent. Most nominees for this list rose to prominence in industries shaken by rapid change -- airlines, banking, software. As global competition heats up and turmoil rocks more industries, tough management should spread. So look for more bosses who are steely, & superdemanding, unrelenting, sometimes abusive, sometimes unreasonable, impatient, driven, stubborn, and combative. And have a nice day.
BOX: THE TOUGHEST BOSSES OF YORE
Here are the top taskmasters FORTUNE chose in 1980 and 1984: -- A. ROBERT ABBOUD of First Chicago, now president of First Bancorporation of Texas (1980) -- FRED ACKMAN of Superior Oil, now retired (1984) -- MARTIN DAVIS of Gulf & Western (1984) -- THOMAS MELLON EVANS of Crane, now runs Evans & Co. (1980) -- MAURICE GREENBERG of American International Group (1980) -- ANDREW GROVE of Intel (1984) -- RICHARD JACOB of Dayco (1980) -- JOHN JOHNSON of Johnson Publishing (1984) -- WILLIAM KLOPMAN of Burlington Industries, now retired (1984) -- DAVID MAHONEY of Norton Simon, now runs David Mahoney Ventures (1980) -- ROBERT MALOTT of FMC (1984) -- ALEX MASSAD, executive vice president of Mobil, now retired (1980) -- ANDRALL PEARSON, president of PepsiCo, now a professor at Harvard business school (1980) -- RICHARD ROSENTHAL of Citizens Utilities (1984) -- DONALD RUMSFELD of G.D. Searle, now at William Blair (1980) -- JOEL SMILOW of Beatrice, now chairman of Playtex Holdings (1984) -- RICHARD SNYDER of Simon & Schuster (1984) -- ROBERT STONE, executive vice president of Columbia Pictures, now retired (1980) -- JOHN WELCH JR. of General Electric (1984) -- WILLIAM YLVISAKER of Gould, now runs Corporate Focus (1980)