Monday, November 10, 2008

Blueprint for new CEOs

A new CEO frequently gets hired when a company is in the doldrums, is losing money, has been restructured, or is otherwise in trouble. What’s the most common way for a new CEO to proceed in his job?

In order of priority (usually):

Fire a bunch of people. This is also known as downsizing, rightsizing, cutting the fat, rationalizing human resources etc. Personally, I’ve always preferred the moniker of “implementing the corporate catch-and-release program”.

Cut back on the doughnuts and free coffee at meetings. Separately, stinge on the resources that people actually need to do their jobs. Call it an “austerity drive”.

Make excessively huge write-downs and provisions for future losses under the rationale of (accounting) “prudence”.

Manage employees’ and investors’ expectations, emphasising that “we’re all in this together”.

Divest non-core assets and get rid of businesses that are unrelated to the company’s core competencies. Also known as “sticking to the knitting”, emphasise that this improves “cashflow” and “working capital”. Don’t say anything about compromising future growth.

Run down inventories and delay future purchases, making the cashflow picture look better than it actually is.

Blame your predecessor for everything that has that gone wrong. Good phrases to use on one’s predecessor are “lack of vision”, “strayed far from the company’s roots” and “allowed things to get out of hand”.

Concomitantly, take credit for everything that has gone right. Like…duh.

When the economy inevitably stabilizes, “prudently” write back some of the assets and debts that had previously been written off.

Take credit for the turnaround and continue tooting your own little horn.

Start looking for a new job.

*CEOs in Europe may ignore Step 1.

No comments: