Melito S. Salazar Jr.
In business, executives serve for a short stint when their performance does not meet expectations. Others do when their predecessor suddenly departs and the company has no sucession plan in place; they remain briefly while the Board looks for a more permanent successor. In a huge conglomerate with many subsidiaries executives are seconded to head them and sometimes the time served can be quite short.
There are spectacular examples of short stints in the United States business and industry which exemplify why an executive is led to an early exit. Carol Bartz served as CEO of Yahoo for 2 years, 8 months but left because of mistakes – losing top talent, “throwing employees under the bus” and missed opportunities with Microsoft and Hulu. Philip Schoonover, Circuit City (2 years and 6 months) was unable to build up the electronics dealer with losses topping at $300 million and stock price tumbling 70%. James Goodwin of United Airlines couldn’t execute a merger with US Airways, labor disputes led to 26,000 flights cancelled in the summer of 2000 and he oversaw a settlement with striking pilots that helped send industry costs skyward. He was ousted a month after terrorists used the company aircraft in September 11, 2001. Robert Willimstad of AIG spent only three months as AIG’s shares dropped 97% during his tenure. He was forced out once the Federal government took control of the company, which eventually accepted $182 billion in bailout funds and was largely blamed for the Financial Crisis of 2008.
Business Insider gives a litany of the reasons why these executives had to go – takeovers in the midst of an industry financial crisis when the regulators stepped in, killing off brands post-bankruptcy, not flexible in working with the Board, product launch failures, public relation disasters, affair with another executive, aggressive restructuring plan that did not work, etc. Regretfully there is no comparable studies for Philippine business. But I do know an instance when a Philippine business executive planned an early exit. Asked to assume the CEO position on condition that he follows the dictates of the controlling interest, he agrees. Once in the position he acts independently and he is removed with a golden parachute, his three years compensation.
There are CEOs who know they are transition executives, taking care of the enterprise while the Board looks for a CEO for the long term. Normally coming from within they are expected to just keep the company going and that is what they do. Others try to do better by preparing the organization for the new CEO by having orientation materials and information sheets ready. Some want to have a legacy so they chose a project or two that their predecessor started and is ready for launching. They get it off the ground with the hope that it can in some way be linked with them in the public view rather than with their predecessor. A few are bold enough to try to attempt an initiative but in most cases are held back by a Board that does not want to invest any funds and would rather wait for a new CEO.
In the Philippine setting one can find short stints of CEOs in government corporations especially when they have been appointed near the end of the term of the appointing authority. The new President puts in his own choice. One wishes that keeping or not keeping the incumbent should be based on performance rather than political patronage.