Management Turnover as Change Agent

Monday, November 30, 2009

Recommended Reading - Making Sense of Leadership,’s author, Dr. Leslie Gaines-Ross, had another insightful piece today on leadership. She examined the specific difficulties leaders particularly CEOs have today as compared in the past. Her blog piece focuses on the latest issue of the Economist’s World in 2010. Dr. Gaines-Ross focused specifically on an article in the Economist authored by Carol Bartz, Yahoo’s new CEO, on leadership. The article entitled, Leadership in the Information Age according to Dr. Gaines-Ross was full of useful advice. There was one section of the Bartz article that Dr. Gaines-Ross quoted that I thought was especially insightful and worth reading.

How are leaders expected to lead when they are on stage for everyone to throw tomatoes or applaud madly? Bartz suggests that the old model of command and control is obsolete. Leaders have to change direction and be able to explain this new world order to those around them. To make that happen, she suggests listening carefully to employees. Leading from the bottom up. Second, she recommends finding the thought leaders within your organization. Why? Bartz says: “But equally pressing is finding those employees who, though perhaps not the best managers, have the ability to digest and interpret information for others. Grooming these in-house ideas people helps foster a culture of openness to fresh thinking—the greatest energy an organization can have.” Leaders need to lead by ideas, not by force of power. Products and services alone are not enough.

Readers interested in leadership, should read the entire Economist piece as well as the short blog by Dr. Gaines-Ross.

Monday, November 23, 2009

Recommended Reading - CEO Blandness Banned,

Dr. Leslie Gaines-Ross, who writes the ReputationXchange blog and Weber Shandwick’s chief reputation strategist, put together a clever blog post today on the need for visionary CEOs. She focused on the need for leaders (CEOs included),

… to step out of the shadows and speak up.

She goes on to briefly discuss a recent article in the Economist entitled, The cult of the faceless boss . The article,

… advises leaders to be bold, not bland. In another line that hit home, the writer says: “These are people who have created the future, rather than merely managing change, through the force of their personalities and the strength of their visions.” Less managing and more leading.

While not fully in favor of celebrity CEOs, I do agree that CEOs must lead by example and remain vocal to help their companies, guide their employees and work to improve the overall reputations of leaders which has been so damaged over the last few years. Check out the ReputationXchange blog.

Thursday, November 19, 2009

Recommended Reading - CEO Swap, The $79 billion plan, Fortune

Jennifer Reingold wrote a story for Fortune on the ’science’ behind the CEO succession process that recently transpired at Procter & Gamble. I wrote an earlier blog praising the process at P&G but Reingold has managed to go into the process with just a bit more depth. According to Reingold,

It is something strange in this era of failed leadership, abysmal succession planning, and dueling egos: a transition atop one of the world’s largest and most successful companies that is notable for what’s gone right.

Like just a handful of other companies, including PepsiCo (PEP, Fortune 500) and General Electric (GE, Fortune 500), P&G (PG, Fortune 500) has seen its ability to groom top talent as a competitive advantage — as much of one as its trademark on Tide or patent on Pampers. Although the company is 172 years old, it has had only 12 chief executives, all insiders, and among them two family members.

Check it out.

Wednesday, November 18, 2009

Marks and Spencer Hooks Big Fish for CEO

Marks & Spencer’s MKS (LSE) well known CEO Sir Stuart Rose, who has been instrumental in turning the fortunes of the British clothing retailer around, will officially be replaced next year. The company has been working on a CEO search for nearly two years. Rose was even on my CEO Watch list back in September 2008. M&S selected Marc Bolland ,the highly regardeSir Stuart Rosed CEO of supermarket group William Morrison Supermarkets PLC, as it new CEO. Bolland is a real catch for M&S and a serious loss for William Morrison. According to a story by Sarah Shannon for Bloomberg,

Bolland joins M&S as the company seeks to restore same- store sales growth after two years of decline. He spent three years as CEO of Morrison, restoring profit after the 2004 purchase of competitor Safeway led to the company’s first-ever loss. M&S gets close to 50 percent of saMark Bollandles from food.

“To get someone with credibility in place is a huge positive,” said Paul Mumford, a fund manager at Cavendish Asset Management who holds Marks stock. M&S’s food division has been “suffering” from cheaper-priced supermarkets and Bolland will “help them move towards winning back market share.”

… The appointment “removes the uncertainty that’s been hanging over the stock for some time,” according to Mumford.

… “He brings a wealth of consumer marketing experience and has made a great success of his time at Morrisons,” Rose, who will remain as M&S’s part-time chairman, said in the statement. Rose will stay on to “ensure a smooth transition,” the retailer said, and will leave as planned by July 2011.Marks & Spencer’s One Year Stock Performance

Bolland’s selection is a real feather in M&S’s hat. Despite the long amount of time it took to find a CEO, Bolland has many of the qualities M&S needs as it moves forward. According to a story by James Davey and Mark Potter for Reuters,

Bolland is widely regarded as having delivered a successful turnaround at Morrisons. Previous to that job he was chief operating officer at Heineken (HEIN.AS) based in the Netherlands.

… He took the reins from Ken Morrison, son of the founder and a major shareholder, and showed the kind of diplomacy he may need during what could be a period of powersharing with Rose.

Rose said the handover period would be about six weeks.

Ignoring some analysts’ calls for him to sell off Morrison’s food manufacturing operations and invest in non-food ranges, Bolland stuck with the group’s traditional “Market Street” format of fresh food counters and gave it a makeover.

Combined with innovative promotions and new product ranges, he transformed Morrison into the fastest growing of Britain’s top four food retailers for most of the past two years.

Bolland’s greatest risk as M&S’ new CEO is his lack of clothing expertise. He seems to be a quick learner and I would expect he will rely on his team to help him come up to speed. Stay tuned.

For more:

Wall Street Journal

Management Today


IB Times

UK Guardian

Monday, November 16, 2009

Recommended Reading - Why 'say on pay' won't work - Fortune

Colin Barr wrote a fascinating piece for Fortune on why investors, particularly institutional investors, will not restrict top executives’ salaries. According to Barr,

Waiting for investors to slam the brakes on runaway executive pay? Don’t hold your breath. Although Congress may give shareholders more of a say on pay soon, big money managers seem content to keep their mouths shut.

…The biggest investors — institutions such as mutual funds and pension funds that hold more than half of all shares — have shown little interest in playing pay watchdog. And it’s not clear that will change even if the government mandates say on pay as part of the financial reform taking shape in Washington.

“We just haven’t seen a huge amount of effort being put out by institutional shareholders to affect compensation levels,” said Bernard Black, a law professor at the University of Texas. “Whether it’s because they don’t mind the pay practices or because the money managers are making millions themselves, you don’t see them jumping up and down.”

… A recent study co-sponsored by a union pension fund and a top governance firm dubs many of the biggest mutual fund firms — including Ameriprise (AMP, Fortune 500), AllianceBernstein (AB), Barclays (BCS) and MFS — as “pay enablers” for supporting management pay proposals and opposing those by shareholders.

I highly recommend investors and corporate governance specialist read Barr’s piece.

Friday, November 13, 2009

EMS Technologies Makes Change at the Top

EMS Technologies EMLG (NASDAQ), the maker of software used in satellite and ground networks, on Wednesday announced the immediate resignation of Paul B. Domorski, as CEO and board member of the firm. In his place, the company selected Neilson A. Mackay, the company’s executive vice president and chief operating officer. The announcement came shortly after the firm’s stock suffered a 28% fall after the company announced a sizeable decline in net profitsPaul B. Domorski retiring CEO for the third quarter. According to a story by Peralte C. Paul for the The Atlanta Journal-Constitution,

John B. Mowell, EMS Technologies’ chairman, said the change is not because of the company’s recent earnings performance. The company reported last week it made a third-quarter profit of $5.3 million, down from $6.1 million a year earlier.

EMS Technologies One Year Stock Performance“It was a tough decision; it was not instigated by earnings,” Mowell said in an interview Wednesday. “This is not a reaction to an over-weakness on the part of Paul. He is a great leader, and he is a great man.”

The chairman then went on to state,

… the board opted to put Mackay at the helm because the company needs a leader with the technology and engineering background in addition to the business credentials.

It appears obvious that despite what the chairman said, the change was precipitated by the significant earnings decline and poor performance of the firm during the third quarter. The change from within may actually bode well for the firm going forward. Mackay has been with the firm for some time and understands the business. Domorski was not the only key change at the firm over the last number of months. Back in August , David A. Smith abruptly resigned as vice president and general manager of the company’s Defense and Space Division.Keep a close eye on the firm for the next couple of months.

Wednesday, November 11, 2009

Must Read - AIG's Benmosche Threatens to Jump Ship, Wall Street Journal

Anyone following top executives has to read today’s story by Liam Pleven, Serena NG, and Joann S. Lublin in the Wall Street Journal. The column is entitled, AIG’s Benmosche Threatens to Jump Ship. Benmosche, AIG’s hard charging CEO, appears to be exacting pressure on the AIG board and the Obama Administration.

At a board meeting last week, the strong-willed industry executive told fellow AIG directors that he was “done” but agreed to think it over after other board members reacted with shock, according to the people.

… It isn’t clear whether Mr. Benmosche would actually resign. In his short tenure at AIG, he has developed a reputation for making provocative remarks and ruffling feathers as he seeks to achieve his goals.

He has only been CEO for three months and continues to make waves. He has a little of AIG’s famous former CEO Hank Greenberg in him. Check out the story.

For more:

Altantic Wire

CNN Money

Crain's NY


Monday, November 9, 2009

Suggested Reading - Subprime Leadership,

Dr. Leslie Gaines-Ross wrote a clever piece in her blog ReputationXchange entitled Subprime Leadership. Dr. Gaines-Ross is the public relations firm Weber Shadwick’s chief reputation strategist. Her piece focused on a presentation David Gergen, the presidential consultant, current CNN commentator and Harvard professor, made at the Council of PR firm’s Critical Issues Forum the other day. If you are interested in CEO leadership or what it might mean to a company’s performance check out the blog or go directly to Gergen’s comments.

Thursday, November 5, 2009

Recommended Reading - BofA Could Take Cue From Ford, IBM,

Dan Freed wrote a spot on piece for the on how Bank of America might consider replacing Ken Lewis as CEO. Freed thinks, and so do I, hiring a CEO from outside the bank and possibly outside the banking industry is good idea.

Bank of America’s board might do well to look outside the banking sector for a CEO to replace Ken Lewis, who will leave the post at the end of the year.

Certainly the strategy has worked for Ford Motor Co. which is in the midst of an impressive turnaround without having to rely on government aid as GM and Chrysler have had to do. The architect, of course, is Alan Mulally, who joined Ford as President and CEO in 2006 after a long career at Boeing Co.

Perhaps the best example of an outsider fixing a troubled company is Lou Gerstner, who had no experience in the tech industry when he took the top job at IBM (IBM Quote) in 1993. Gerstner, a veteran of RJR Nabisco and American Express (AXP Quote) is widely credited with saving the company, which was under threat from the rise of the personal computer.

Bank of America needs to find the right candidate rather than settle for someone willing to take on the challenge. Despite rumors of continuing difficulty in finding candidates from the outside, the board needs to redouble its efforts and make sure it diligently pursues a variety of potential candidates. We will just have to wait and see.

Tuesday, November 3, 2009

CEO Watch List - S. Sundaresh, Adaptec Update #1

Sundi Sundaresh’s reign as Adaptec CEO is looking more and more precarious. Steel Partners, an activist investor/shareholder, is claiming to have the votes to get him dismissed. Steel Partners has been working for more than a year to make management changes at the firm. According to a story by Chris Mellor in the UK’s Register,

AP is now reporting that Steel Partners claims it has amassed enough proxy votes from shareholders to boot Sundaresh off Adaptec’s board. The board says it’s waiting for certification of the votes cast before ceding or claiming anything.

If Steel Partners is certified as having sufficient written consents from shareholders then Sundaresh better pack his CEO bags, as can the anti-Steel Partners board members. Adaptec faces having a new CEO, probably an interim one, and a new board that will quite rapidly announce a new strategy aiming at getting Steel Partners a return on its Adaptec investment.

Stay tuned as the answers start rolling in on Sundaresh’s fate as well as that of the firm.

For more:

Steel Partners Press Release