CalPERS CEO Marcie Frost Pressed Senior Staff to Wear Burgundy to Show Loyalty

CalPERS as an institution is either unable to curb its poor impulses or so lacking in self-awareness as to not even recognize them. And more than ever, these pathologies start at the top of the organization.

One case study is l’affaire burgundy, in which CEO Marcie Frost asked the CalPERS senior leadership team to wear burgundy to show their support for her. This is obviously inappropriate since a request made by a CEO is effectively an order. CalPERS executives and employees are civil servants, not Frost’s personal retainers. As an expert on managerial and political conduct reacted:

I don’t even know what category to put this in. A scandal-plagued boss orchestrating support by inventing gang colors and pressuring employees to wear them? What happens to the employees who don’t perform this ritual of fealty? Should they be polishing their resumés and practicing their swimming skills?

These incidents smack of underlying panic. Frost is working overtime to shore up her position as CEO in the face of fully deserved questions regarding her long history of misrepresentations about her background, which include committing perjury in Washington on a gubernatorial questionnaire. Not only is Frost pushing her subordinates far too hard to back her up, since they can only do so much for her and coercing them will diminish their good will, she is also showing a lack of a sense of professional boundaries.

As we’ll show, Frost’s burgundy campaign may well have crossed the line into creating a hostile work environment. One senior staff member who came to the office and saw the “dress burgundy” request too late to comply issued a written apology. Similarly, when “asked” to wear burgundy to an offsite, one employees who wears only black and white felt compelled to buy a burgundy outfit to comply.

We managed to catch this sorry affair as it devolved into cultism, when the pressure to sport burgundy went beyond senior staff to the rank and file. In case you missed it, we learned about this abuse from a CalPERS employee who sent a short e-mall and a photo:

Now executives are making employees wear badges to show if they support Marcie or not!!! These are in every break room at CalPERS!!! They say participation isn’t mandatory but you know they’re making note of who is wearing them and who isn’t.

At least the -m is not Marcie Frost, but Michele Nix, who used the “-m” signature in records produced in the response to our Public Records Act request #4075 and CalPERS confirmed that Nix produced the document above in response to Public Records Act request #4134. More on our forensics on this pathetic episode in due course.

Let us step back and point out the obvious:

A “show of support” for a boss is nothing o the kind. Like the Big Lies that have become routine at CalPERS, it is a mislabeling. Frost has orchestrated a required demonstration of loyalty. Not participating would be seen as opposition and insubordination. This clip is a reminder that refusing to show allegiance is hazardous:

Recall that Frost has a reputation for vindictiveness that goes back to Washington. Just because she can’t roast people alive doesn’t mean she would not resort to other forms of punishment. Two sources in Washington State who had worked for Frost said that other former subordinates who had serious reservations about her leadership were unwilling to speak about Frost even now, years later, out of fear that Frost would find a way to retaliate.

This “show of support” is toadying. Giving such priority to the personal needs of the CEO is corrosive. It puts employees in a position of worrying that they have to out-do each other in displays of sycophancy to maintain their good standing with the boss.

A “show of support” for someone in a senior position is an admission of weakness. As we wrote:

This childish effort is a sign that Frost is desperate and needs positive reinforcement from her immediate environment to maintain what looks to be a tenuous hold on authority. The fact that this push for employees to wear ribbon more than two months after the scandal broke, on the first day of the monthly two and a half day board meetings, also suggests that she or her key staffers suspect that Frost is still in a rocky position with the board. And the note pumping for the ribbon show is a diss to State Treasurer John Chiang, by pretending that his request for an independent investigation of Frost’s claims before and after she was hired didn’t exist.

Pushing ribbons on the rank and file was a big backfire. High profile uses of ribbons include showing support for the fight against AIDS, and more recently, breast cancer. From Disabled World:

What are Awareness Ribbons?

The use of various colored ribbons is designed to create public awareness to health, medical conditions, disability, and other issues….

Today, awareness ribbons are now considered as a universal symbol for social or disease awareness, and a formidable path to cures.

So CalPERS employees chose a symbol says that Marcie is a disease or social problem that needs to be fought vigorously. Well done!

From the section on “Burgundy Awareness Ribbons Causes and Meanings”:

And staff also appears not to have considered that individuals who have suffered from serious medical problems would take offense at Marcie’s boosters misappropriating their symbol. As one CalPERS retiree wrote:

As a breast cancer survivor, I am appalled to see CalPERS staff using colored ribbons to try to defend CEO Marcie Frost. I was already troubled by the evidence of her resume misrepresentations, which says she is untrustworthy and not fit for office. The fact that she did not support calls for an investigation is an admission of guilt.

But this is a slap in the face of breast cancer survivors, the relatives of women who died of breast cancer, and campaigners against serious ailments generally. These ribbons are badges of dedication to serious causes. For Frost to use them as a tools of her careerism shows her ego is beyond bounds.

Let’s work back from what we learned about the ribbon episode, to how the burgundy campaign got rolling.

What Did We Learn About the Ribbons?

Someone at CalPERS who was not in the PR department saw our post on l’affaire ribbons and e-mailed about it a mere seven minutes after the article went live. This says CalPERS is overstaffed, since people have time to surf the web during the day rather than do their work. This was one of the responses to that e-mail:

The fact that the presence of the ribbons in breakout rooms was no surprise meant that many, presumably most, people at CalPERS had seen them by mid-PM.

A couple of hours later, by the time the top brass had found out about our post, the ribbons appear to have been removed. Recall that Matt Jacobs is the General Counsel:

It’s rich for Hoffner to feign ignorance, since as we’ll see shortly, he was a major instigator of the burgundy campaign.

And this is cute. Notice that this is time -stamped the day after Jacobs ordered the discreet sweep of the break rooms. Apparently word had not gotten out that the ribbons were now a dodgy idea. Further notice that a relatively new employee had one presented to her in person:

General Counsel Jacobs e-mailed back, “Please do not. Thanks.”

Mind you, this is what the General Counsel role has now become, cleaning up after what we will see was a Marcie-Frost-originated mess.

What Did We Learn About How the Burgundy Campaign Got Started?

Marcie Frost was the instigator. Recall that our series on her hiring and later misrepresentations launched on August 27. Many business press outlets picked it up, with the most important from Frost’s perspective being the article by Pulitzer Prize winner Mike Hiltzik of the Los Angeles Times, CalPERS needs to come clean about its CEO’s educational background, on September 19. The September board meetings were starting on Monday the 24th, with Frost’s annual review on the 25th.

Frost solicited senior employees to wear burgundy on the day of her CEO review on Tuesday the 25th:

Frost’s close confidante Kelly Fox quickly moved to institutionalize the color-as-loyalty-show late that Tuesday, as you can see from this message on the 25th. “SLC” refers to the CalPERS senior leadership team, although I do not know who uses that address:

Frost was obviously in on this, since these screenshots from Wednesday the 26th show her wearing burgundy a second day. And staff compliance was high, with departing Chief Investment Officer Ted Eliopoulos the only person I could identify who did not fall in line:1

The word clearly got around quickly, including the notion that non-compliance was risky.2 A woman who didn’t get word in time to make the right wardrobe choice felt she had to ‘splain herself:

This shows that participation could not be considered to be voluntary:

Hoffner was not writing to make sure that “Justin” was attending the meeting, since he makes clear he was fully aware that “Justin” was joining. The follow up was obviously to enforce the burgundy display.

More proof that everyone understood that they needed to participate:

Donna Luma wears only black and white, so she was forced to abandon her well-known personal signature or else brand herself as an apostate to the Church of Marcie. And Luma was not the only woman forced to shop to please Marcie:

Kelly Fox was also pushing for high compliance, um, participation. Recall that Brad Pacheco is the head of the Communications and Stakeholders Relations department, meaning PR. “DEOs” are “Deputy Executive Officers”. For instance, CalPERS has DEOs for Benefit Programs Policy and Planning and for Customer Services & Support.

Aa an aside why did CalPERS refuse to comply fully our the Public Records Act request? The request was to send all records with the word “burgundy,” “ribbon,” or “ribbons” in it from September 1, 2018, shortly after we published our series on Marcie Frost’s resume misrepresentations, to November 17, 2018. See the first embedded document at the end of this post, where the response shows the title of our November 13 post, and apparently reproduced it in full, yet redacted that. What sort of nonsense is that? The post contained all the words sought in the PRA and hence was required to be disclosed. Or is CalPERS tying to pretend that is it not still abusing copyright by reproducing and circulating copyrighted material without having obtained the legal right to do so?

And in a final bit of irony, the Public Records Act request also turned up a document from one of the board’s consultants which gives apple pie and motherhood advice which the board is ignoring as far as Frost is concerned, letting her get away with misconduct and compounding the damage with junior-high-school level antics. Key section:

* * *

For a CEO who appears to be exceptionally PR oriented, Frost is making a hash of it. The point of the burgundy dress and later ribbons was to be noticed at stakeholder events and by the board at board meetings which are videotaped and posted on YouTube. It apparently never occurred to Frost that this display would be recognized for what it was, a show of narcissism and insecurity. Even if an employee had naively dreamed up this idea, a competent leader would have squashed it immediately.

In addition, Frost appears not to grasp a fundamental rule of marketing: never misrepresent the product. Embellish, yes. Deceive, no. But Frost has repeatedly and consistently misrepresented herself via her whoppers before and after her hiring, and now the painfully amateurish efforts to shore herself up as CEO.

Notice neither Frost nor her staff have offered a credible explanation. Frost clearly pressured one of the members of the Stakeholder Relations department, Wayne Davis, to tell the howler that was the source of the resume fabrications, when they predate Frost’s hiring. Both the Financial Times and the Los Angeles Times pours cold water on that tall tale. Frost then claimed she was misunderstood, which is obviously inconsistent with her embellishments of her history appearing on multiple CalPERS documents.

Because she has no defense, Frost is willing to fall back on an emotional appeal, that her subordinates appear to back her. But so too did every army led by its generals into slaughter, like Napoleon’s march on Moscow. The display is merely an exhibition of an ugly aspect of a superior-subordinate relationship, and no proof of the caliber of the person in charge. And in this case, it is clearly a negative indicator.

____

1 Forest Grimes did indicate he was not going along, but I am not sure whether he knuckled under and wore a wine-colored tie that day, since he would have seen the e-mails all showing assent: His Wednesday early AM message:

Sorry but burgundy is not in my fall collection this year! I will be thinking burgundy thoughts
however since bringing red wine to the meetings is frowned upon.

And he had decided to comply by the October meeting. From an October 8 e-mail:

Melissa and I will be arriving on Tuesday afternoon to present on Wednesday. While burgundy is
limited in my fall collection this year I will find something and pass the word along.

2 If you think Frost enjoys the genuine support of most of her employees, I have a bridge I’d like to sell you. I have been following CalPERS intensely, and often critically, since early 2014. I did not have any current employees sending me inside information when Anne Stausboll was CEO. I now have a meaningful and growing number of sources who are currently at CalPERS, including ones who were said they and many others were distraught and demoralized by the board’s failure to take any action regarding clearly documented fabrications by Frost. And I have never had anything even remotely like this happen at any other organization I have covered intensively, including mortgage servicers (the Bank of America whistleblower series is not an apt comparison since our sources were all temps who were no longer assigned there when they spoke to me).

OK - FW Just posted (2)_Redacted
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41 comments

  1. vlade

    Doh. So now the most important thing the SLC spends their time on is whether the wear burgundy, or to apologise if they don’t. I see their got their priorities right.

    I’m still amazed that no one in Cal (except the Treasurer a bit) pays any attention to this.

    Reply
    1. Tom Stone

      Vlade, California is a one party state and has been for a long time.
      The coverage by Adam Ashton of the Bee, Michael Hiltzik of the LA Times and Tony Butkus of the LA Times has been almost all the coverage the CA MSM has given this issue.
      Three dead tree columnists.
      It is officially not a matter of importance or one open for discussion.

      Reply
  2. lyman alpha blob

    Wow, that has to be a little embarrassing. Or at least it would be if these people had the capacity to feel shame. Thanks for keeping the heat on!

    Reply
  3. pretzelattack

    wtfb is it with burgundy, anyway.
    marketing idea–little burgundy guillotine pins to sell to disgruntled calpers staff.

    Reply
    1. ChrisPacific

      I couldn’t figure out why burgundy either. Is Marcie in the habit of receiving cases of Domaine de la Romanee-Conti with no sender address, or something?

      Reply
      1. Skip Intro

        She often spills at lunch (particularly on bottle 2). Burgundy went from being an embarrassing necessity to an inside joke to a trademarked badge of defiance… and now, back to an embarrassing necessity.

        p.s.
        If I had survived a disease big enough to have a fundraising branch, and the symbol their PR team came up with was ignorantly misappropriated by some clueless petty Napoleon, I would be mightily aggrieved, that much is clear.

        Reply
  4. Clive

    Here at my TBTF (as regular long-suffering readers may know, I work, in as much as that description applies, at a Too Big to Fail bank which is like CalPERS in so far as it struts around pretending it is looking after its stakeholders — shareholders in the case of my TBTF, the state legislature and beneficiaries in the case of CalPERS — but in reality exists now only to further the dubious aims of its executives and staff) there’s two parts to my typical day.

    The first hour or two is taken up by proper work. As in, tasks which are legitimate, further the aims of the business (dubious though they are) and, if they weren’t done, would have negative effects. Roughly speaking, these tasks are:

    + to make one or two key decisions based on the reported information I receive about a situation or situations and communicate these decisions to people who need to know what I’ve decided along with a clear, unambiguous instruction “this is what we are now going to do”

    + to scan through information I receive and be attuned to some, often quite subtle, shifts that, if not nudged back into the correct path, could end in disaster — having (hopefully) identified these weak signals, to do a bit of nudging

    + feed the bureaucracy which needs constant love, care and my unwavering devotion with whatever it is demanding — without the imperial bureaucracy being kept ticking over, all spice production on Arrakis is jeopardised and the spice won’t flow; this is, thusly, the most important thing I do.

    So, like I say, that’s a couple of hours work or thereabouts. Efficient? Hell no, you must be joking. But if my TBTF’s shareholders don’t care (and for the few months which most shareholders hold the shares for, these days, why should they?) why, too, should I. To add a little context as to how inefficient a typical modern-day large-scale business or other similarly large (-ish) undertaking like CalPERS is, in my TBTF there’s a publishing team which produces some blurb to go to a market segment we target. It has a full time team of 10, of varying management grades. It manages to produce in a month what Naked Capitalism’s merry band (I forget how many that is, if I recall correctly, it’s Yves more or less full time equivalent, a half of Lambert, a bit of Jerri-Lynn and some smidges of other behind-the-scenes helpers, let’s call it three, tops) produces in a typical week. Maybe a little less.

    That’s par for the course and CalPERS is probably a little worse in terms of productivity than my TBTF. It is the subject of a separate post in its own right, but it is I would say inevitable in any large organisation (short version: narrow spans of control coupled with fiefdoms and internecine warfare cripple the ability for an undertaking comprised of more than a hundred or two people to get anything done). Good people of CA, if you’re annoyed by this, write to that darling Governor of yours. But that’s how it is.

    What, then, to do with the rest of my time? Well, dear reader, I’m glad you asked. Avoiding the following perils, which are entirely composed of my fellow employees. The common characteristic of this rogues gallery is an inability to discern that we’re all in the same boat — not an awful lot of real work to do and so how, therefore, to keep your head down, appear to be busy, while not ending up merely making trouble to fill the time. Here’s my Fearsome Four:

    1) The eager, if you were unkind, you might call them desperate, usually younger staff who are constantly trying to make a name for themselves, get their name in lights and catch the eye (and patronage) of someone in the ranks of top management. I don’t have any problem at all with people doing this. But don’t try to drag me into your little schemes.

    2) The incompetent (or lazy) who, even though they have similarly very little work to actually do, nevertheless still apparently want me to do it for them

    3) The greasy pole climbers, usually a little older (early middle age) who are full of bright ideas, want to be seen to be Doing Something Useful, currying favour with the top management, saying “yes” to every bright idea which somehow is allowed to escape form the c-suite, but haven’t a practical bone in their bodies and their inability to bat off the worse of the executive nonsense has them trying to interrupt me, steal my resources, time and budgets in a bid to try to rescue their doomed-to-failure sycophancy.

    4) The weary-why-me’s who don’t seem to have mastered the art of stepping back from the line quickly enough when one of the above succeeds in mobilising one of their Frankenstein’s monster brain-children into action, end up caught in having to perform some role or other in it, and come to me looking for a shoulder to cry on.

    So, in sympathy and solidarity with hapless CalPERS staff, who, as is self-evident from Yves’ post clearly have nothing else better to do with their time (like, oh, what could I think of… ahh, yes, I know, managing the investment funds pool while avoiding getting your pockets picked by all and sundry and administering beneficiaries’ benefits without turning the pork barrel into an art form), let me invite y’all to Clives CalPERS Quiz ! Using the Reply button below, go through the various happy emailers in the post and tell us which of my Fearsome Four you think they are.

    I’ll start you off, to get the ball rolling. Matt Jacobs is a “2”. Why’s that, Clive, I hear you ask? Wellie, he can’t even be arsed to go and round up the goddam ribbons himself ! He had to order an underling to do it for him. Stay classy, Matt !

    Reply
    1. David in Santa Cruz

      Kelly Fox is of course a Type 3.

      Terrific categorization of so many bureaucrats. You leave out the Type 5’s — the 5% of staff who actually show up, make decisions, and try to keep the bilges dry!

      Reply
    2. monday1929

      Thank you Clive. Very glad not to be part of the well-fed ass-kissing culture of corporate amerika.
      Happy to exist on the fringe.

      Reply
      1. Lambert Strether

        I’m not so sure about this one. Via Kurt von Hammerstein-Equord:

        I divide my officers into four groups. There are clever, diligent, stupid, and lazy officers. Usually two characteristics are combined. Some are clever and diligent — their place is the General Staff. The next lot are stupid and lazy — they make up 90 percent of every army and are suited to routine duties. Anyone who is both clever and lazy is qualified for the highest leadership duties, because he possesses the intellectual clarity and the composure necessary for difficult decisions. One must beware of anyone who is stupid and diligent — he must not be entrusted with any responsibility because he will always cause only mischief.

        I don’t think we have nearly enough clever and lazy people at the Pentagon or in the political class. Hence the flap about keeping our occupation of Syria going, because reasons.

        Reply
  5. The Rev Kev

    Mwahahahahahahah! This is rich. Actually no, change that – this is embarrassing to read and I mean really embarrassing. I can see why that Michele Nix pushed this idea of the ribbons though. She only started back in early September as Controller so I guess that this was a good way to suck up to her new boss. Hmm. Frost as Daenerys? Well I suppose that the take away lesson is that if Frost is your boss, then you know that Winter Is Coming. I was going to make a smart alec comment that perhaps that some people should wear burgundy to a board meeting when, oh my god – those images. I haven’t seen anything so embarrassing since there was that jury that convicted some guy of terrorism and so they all wore red, white and blue in court. Gawd. The only thing wrong with those images is that the names of the people should have been inserted over those people in it so it will be recorded forever on the internet.
    There are about 2,875 people working for CalPERS so perhaps this could be made the uniform of the day for them. For the women, they could wear something like this which comes in Burgundy-

    https://www.sharperuniforms.com/polyblzr-vest-ladies.html

    And so the guys don’t feel left out, here is another suggestion-

    https://www.sharperuniforms.com/polyblzr-vest-mens.html

    But for the unisex casual look, burgundy scrubs could be a great item to wear for that casual look-

    http://scrubs4lessofjax.com/product/burgundy-two-piece-unisex-uniforms-scrub-set/

    But as far as this whole burgundy/maroon look, perhaps I will let a respected Hollywood star say it all-

    https://www.youtube.com/watch?v=7mqVlkHSOJg

    Reply
    1. Yves Smith Post author

      Danerys is universally predicted by GoT sites to die in the final season for being ambitious in a bad way. For someone who says she wants to “break the wheel” and was nice to ex-slaves as a loyalty/retention tactic, she’s awfully keen about the “bend the knee” business as she gets closer to seizing power in Westeros. And the scene above has overwhelmingly negative comments about her behavior on YouTube. Her recruiting speech amounts to: “I’m not as bad as Cercei says and if you don’t buy that, you’ll become Drogon’s next snack.”

      Reply
      1. The Rev Kev

        Danerys says that she is not as bad as Cercei? That sounds like a democrat strategy as in “at least we are not as bad as Trump. Vote for us or you are doomed – doomed we say!”

        Reply
  6. Another Insider

    Doug Hoffner is in for a big pay raise. The new Chief Operating Officer was created for him. His new salary will be approved by the Board today.

    It is unclear if he organized “Burgundy Day” as a thank you for the promotion or is the promotion a thank you for the kind of loyalty that would lead to organizing a “Burgundy Day”.

    Maybe it is all just a coincidence. Remember Santa lives!

    Reply
  7. John Wright

    Calpers missed enlisting the obvious spokesman for the burgundy campaign, that being the Will Ferrell character of blowhard Ron Burgundy in “Anchorman: the legend of Ron Burgundy”

    Maybe Will Ferrell can visit CalPERS and help Marci?

    I have worked for US corporations for many decades and it is unusual to see this ham-handed campaign to “help the boss keep their job”.

    From my observation point from a very low non-management level, once someone is wounded in the corporate world, many others want their high paid job and behave accordingly.

    Maybe these CalPERS climbers can be identified by their studious avoidance of the burgundy Marci support campaign?

    CalPERS, what it lacks in ROI it supplements with entertainment value.

    Reply
  8. George Phillies

    There are several amusing outcomes here. The one that came fiirst to mind, since much money was spent from someone’s pocket for the ribbons, was having the ribbons adopt a medical condition.

    Dunning-Kruger Effect came immediately to mind.

    Reply
  9. John Zelnicker

    Yves – It appears that you have inserted the wrong email just above the first picture of Marcie. The one that fits the text is further down the page. It’s just a bit confusing.

    I join the other commenters in thanking you for your continuing diligence in exposing the shenanigans at CalPERS.

    Reply
    1. Wukchumni

      New age cult– Heaven’s Gate

      New leverage cult– CalPERS

      Other than that & hue and cry, I don’t see any commonalities.

      Reply
  10. shinola

    I am at a loss as to why this Frost person is still able to maintain her position after her lies & incompetence have been brought to light.

    Blackmail comes to mind. Does she have some dirt on someone higher up? Perhaps multiple someones…

    Reply
  11. David in Santa Cruz

    I find it ironic that the General Counsel is personally ordering the retreat after this sycophancy was exposed.

    Cover-ups appear to be his job description. No surprise, since the GC is a white-collar criminal-defense attorney with Democrat connections and mob-lawyer moves, hired in the wake of the exposure of a former CEO and a former board member for fraud.

    Follow the money…

    Reply
  12. RUKidding

    OH FFS.

    Yeah: a cult.

    The Cult of frickin’ losing liar Marcie Frost.

    WTF??

    How horrible must it be to work there?? I live in CA & currently am a CalPers contributor and HOPE some day to be an annuitant (if there’s anything left). I DO hear rumors all the time about how horrible it is to work at CalPers. Can’t validate; can only report what I hear. I think it’s why there’s also a ton of open positions, some of which are probably mission critical.

    But nothing’s more Mission Critical, apparently, than kissing Marcie Frost’s hugely entitled, but worthless & incompetent, lying butt.

    Sheesh.

    Reply
    1. RMO

      WTF? is supposed to come before OH FFS :-) (the former is reaction, the latter analysis)

      Totally voluntary with the ribbons, no pressure at all… “Nice career you’ve got going here… sure would be a shame if something were to derail it…”

      Reply
  13. Concerned Citizen

    I worked at pers from 2009-2014. I was not in management but I can say that even then this organization showed signs of still being rotten to the core. It never has recovered from the days of Buenrostro and Villalobos and never will until middle and upper management and execs are gutted.

    Reply
  14. Jack Parsons

    This is some Caligula-level trash right here.

    https://www.youtube.com/watch?v=NJvVEt6F_Xw

    I can’t find a clip but there’s a great scene in “I, Claudius” where the head of the guard explains to Claudius and someone else that Caligula has become a god. I later realized that the subtext of the scene is the guard communicating, “of course Caligula is watching us secretly and if you laugh or show any sign of disbelief, I’ll have to kill you”.

    Reply

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