Wednesday, March 11, 2020

Dilemma of a CEO!!!

I have been meaning to write this for so long.

A new CEO was appointed for a 70 years old company. The company had always been a very profitable venture. 

However, off late, several troubles had been brewing. The year on year growth in the revenue has been below the estimated numbers. Management decisions have been questionable at best. Different employee unions were always at war with each other. Several departments have started to operate as an independent entity with no concern whatsoever to the well being of the parent company. Some employees have also been rumored to sell confidential internal information to competitive companies for various incentives. One particular manager even had the audacity to have his wife fill in for him, while he was incarcerated on a scam.

The past three CEOs have been from the same family. Hence, a lot of key management personnel were from within their family. In fact, a lot of subsidiaries were being held by various persons loyal to the previous CEOs. Various key decision-making persons from different departments were appointed by, and hence loyal to them. Several loss-making companies were inorganically absorbed, and the corrupt officers taken in good position or offered a hefty severance package!

The stakeholders, several lakhs, were ill-informed about the internal politics but displeased with the general state of the affairs of the company.

Furthermore, the structure of the company was indecipherable with no accounting for who is responsible for whom. In addition to the direct reporting structure, because of different loyalties, there were several indirect reporting structures as well.

And the best part? Nothing properly documented. Blatant scams going on in different subsidiaries, in different departments, across various levels of management. Several fake employee IDs withdrawing salaries for several decades. Some fake IDs even collected their retirements benefits as well. :)

Now the task facing the new CEO was:

A) How to put a new structure in place?

B) How to get everyone to accept the proposed new changes?

C) How to trim the un-necessary manpower placed by the previous CEOs without creating a mass hysteria? How to let go of Non-Performing Assets?

D) How to reduce the dependence on the majority of components being outsourced and how to inculcate internal problem-solving abilities?

E) How to combat the internal friction between the different departments and unions and to impress on them the need to follow a similar set of rules and regulations?

The major challenge being, how to do all of that when the internal structure has become so corrupt. Any new change introduced is met with a vehement disapproval from the employee unions, even if it were a change for their benefit. All because, the loyalists to previous CEOs were so deeply interspersed within the ranks.

The choices with the new CEO are simple:

A) Brave all the odds and the shouts from the unions. Be prepared to get hated but take the moral high road and think of the benefits to the company masses and shareholders.

B) Let the things continue as before, and accept own kickbacks.

If you were in the shoes of the new CEO, what would you have done?


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