Disclaimer – The situation and characters in this case study are entirely fictional and resemblance, if any, to any individuals or organizations is purely coincidental.
The company in which you are a shareholder has been having a poor run in the past few years. What had seemed to be a money spinner with promising growth just a few years ago is struggling to even break even. There have been recent instances of some of the senior management being involved in serious misdealings. The CEO, though apparently a very honest and capable person, has not been able to exercise any modicum of leadership to stem the rot that has gripped the company. The water-fountain gossip is that he is merely a puppet in the hand of the family that owns the business.
You are to elect a new CEO. There are three applicants for the job. First is the scion of the family in question, the heir apparent set to inherit the business. He has been dabbling with back seat driving, trying to run the business without actually being a part of the board of directors, for the past few years. He has no business or administrative experience, never having held any kind of a job, within the company or out of it, even for a day. On top of it, he is not too bright, and the only thing that he seems adept at is putting his foot in his mouth every time he opens it.
The second applicant is a young, bright and energetic intern who joined the company a year back. Because of his unexpected and unprecedented success in handling sales, he was put in charge of a territory over the heads of several more experienced contenders. He resigned after 49 days to throw his lot in the race for the CEO. He has a reputation for being scrupulously honest, and he is obviously very well intentioned. However, his brief experience is restricted to sales.
The third is the seasoned head of one of the regional units. He has been successfully running the unit for the past 13 years and the unit has been doing quite well under his leadership. Of course, there is no dearth of people who can’t stand this manager. There are talks of his being parochial, dictatorial and ruthless. Whispered rumors about him being partial to a particular community, and therefore discriminatory in hiring and appraisal policies are doing the rounds. Yet nothing has been proved against him in this regard, and the results on the ground speak for themselves about his effectiveness.
Who would you like to vote for as the CEO?
We might have liked to put our money on the new intern. Take a risk and hope for a radical change in the way the company does business. He has all the markings of being a game changer, may be with the potential to take the company to new heights. We would have done that if the company was at a point where it had the luxury of being able to take such a risk. If the growth had been steady, profits stable, and the balance sheet healthy. But then, in such a situation there would probably be no reason to change the management.
Common sense dictates that We go with the experienced regional manager, who is the best bet we have right now. And this choice may not be out of any personal likes or dislikes for individuals, but what is the best alternative available to the company today.
As shareholders, we would also like to move the company from being a family owned ‘lala company’ towards a professionally managed organization. And we would like credible succession planning. For that to happen, it would be ideal if the young intern stuck to his territory and gained experience in all aspects of running a successful business besides his obvious expertise in sales. Thus, a few years down the line, he would be a viable alternative CEO whenever the need arises.