Will Someone’s Dirty Laundry Damage Your Brand?

Dont Damage Your Brand

A very public battle is taking shape at Pulte Group (NYSE: PHM), the homebuilding company which also owns the Centex, Del Webb, and DiVotsa brands, and it’s got my attention.

The surprise isn’t that founder Bill Pulte, along with his grandson (also Bill Pulte) and board member James Grosfeld, recently launched a campaign for the immediate ouster of the current chairman and CEO, Richard Dugas. Boardroom showdowns over leadership are becoming increasingly common.

What’s distinctive this time is the level of venom and vitriol making its way to the public forum. According to the Atlanta Business Chronicle, Bill Pulte’s letter to the board stated Dugas’ “lack of performance and repeated bad decision-making has led me to conclude that the company needs new leadership.”

The letter continued to outline Pulte’s frustrations, included Dumas’s decision to move “the Company’s headquarters from suburban Detroit to Atlanta, which cost the shareholders tens of millions of dollars.”

Bill Pulte also said he wanted to “reiterate my extreme disappointment in the leadership of CEO Richard Dugas and the lack of performance of Pulte Group under his watch.

When the board failed to act immediately on Bill Pulte’s demands, things got uglier. He sent another letter to the board, this time saying his decision to support Dugas’ appointment as CEO in 2003 was “perhaps the biggest mistake of my career.”

In this letter, Bill Pulte asserted that:

  • He (Pulte) “started receiving all kinds of negative feedback about Richard, his decisions, and his leadership.”
  • Dugas exhibited a “uniquely disastrous track record of cumulatively losing so much money.”
  • Talented employees left because Dugas “was either unaware of how good these people were, or he felt threatened by them.”

There’s more, but I’m sure you get the idea by now. For his part, Dugas has refrained from engaging in retaliatory mudslinging, saying of the dispute, “It’s one of those crazy things in life,” according to the Chronicle. The Board sent a letter to shareholders outlining their point of view on the situation and reiterating support for Dugas.

Now I don’t know either man and I’m not a close follower of Pulte Group, but I can say that Bill Pulte’s public complaining is not healthy and will likely damage the brand. It certainly doesn’t set a positive tone for the future of the company.

The company’s stock has dropped about 3% since the dispute broke out, a change that could easily be attributed to the announcement of Dugas’ planned retirement. It could also be a broader reflection of the instability made apparent by Bill Pulte. The markets will decide that over time.

Clearly, there’s bad blood here. The Pulte’s vocal and public personal attacks on Dugas are a rare window into what sometimes happens behind the scenes in business. It makes me wonder not only what it must have been like to work for Bill Pulte (did he lob personal attacks at employees whenever he didn’t get his way?) and what impact that might have had on the company’s culture at the time.

Any executive who feels it’s OK to treat people so poorly is probably toxic to his company. Sure, getting ahead isn’t easy and it takes a certain amount of swagger to overcome the kind of obstacles one encounters when building a business, especially one worth $6 billion dollars.

But when do you go too far? When does in-your-face behavior start to undermine all the hard work invested in building a respectable brand? Whether you’re leading a startup or trying to wrest back control of your billion-dollar baby, character counts. Dragging the dirty laundry out for everyone to see will never entice buyers and it certainly won’t enhance your brand.

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If you’re reading this and see yourself reflected in Bill Pulte’s behavior, be thankful you haven’t (yet) taken your disputes to the streets. There’s still time to take a deep breath, swallow your pride, and find a way to work out differences with employees, partners, and customers that preserves the relationship so you can both benefit in the long term.

Check your emotions, fold the clothes, and give it another go.

Laundry photo by Terri Heisele.

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