When an executive defects

The news that one of the company's senior managers is leaving comes as a complete surprise to Paul Simmonds, CEO of Kinsington Textiles, Inc. Ned Carpenter, KTI's vice president of operations for three years, writes in his resignation letter than he is leaving for a better opportunity. Simmonds soon learns that Carpenter's new job is at Daltex, one of KTI's main rivals in the intensely competitive carpet industry. Hiring Carpenter had helped Simmonds establish his reputation as a topnotch manager. Carpenter came to KTI with lots of ideas and put his enthusiasm to good use. Three years into a five-year change program, Carpenter had turned KTI's operations from one of the worst in the industry to one of the best. He also had helped develop and plan the upcoming launch of a new fiber coating--KTI's first breakthrough in years. In this fictitious case study, Simmonds, along with the company's counsel and vice president of human resources, must figure out how much and what sort of damage control they need. What are they going to tell the company's employees and the media? Should they immediately replace Carpenter with John Brady, the second-in-command of operations? What if Carpenter is taking KTI employees--and strategic information--with him to Daltex? Should Simmonds ask all his managers to sign noncompete agreements-something Carpenter was never asked to do? Should KTI sue Carpenter? Five experts offer advice about communicating with KTI's employees, the media, and Carpenter himself, and about protecting the company's confidential information.     

TOP MANAGEMENT TURNOVER AND CEO SUCCESSION: AN INVESTIGATION OF THE EFFECTS OF TURNOVER ON PERFORMANCE

One strategic action which is often taken by firms in need of a turnaround is to bring in a new chief executive officer (CEO). Many observers argue, however, that having done this the new CEO must replace large numbers of top managers in order to effect a change in the firm's interactions and subsequent performance. Critics of this perspective insist that just the opposite is true. Substantial levels of turnover may only serve to further disrupt the organization decreasing performance still more. This controversy is addressed in the following study using a sample of 84 firms all of which experienced CEO succession during the year 1980. Analyses rely on a three-year-period pre-succession and three-year period post-succession. Three hypotheses are proposed. First, poor performance prior to CEO succession leads to greater turnover afterward. Second, that turnover is curvilinearly related to performance after the succession. And, finally, that successor type (i.e. whether the CEO was an inside or outside candidate) is related to the level of turnover in upper level management positions in the post-succession period. the results from tests of these hypotheses are presented, and the implications of these findings are discussed.     

Leadership development: perk or priority?

Karen Barton, Zendal Pharmaceuticals' senior vice president of human resources, was livid when COO Dave Palmer slashed her executive education budget by 75%. It must have been a mistake. Without funding there could be no in-house leadership development program, which was to be the first step toward a full-blown Zendal University. But it wasn't a mistake. Not that Palmer was against bold initiatives, but, as he patiently told Barton, sales were down 26%, and there was that $300 million debt Zendal took on when it acquired Premier Pharmaceuticals. As a result, Barton's budget wasn't the only one being cut. Palmer added that it wasn't clear what the return on investment of her proposed program--or any of her current ones for that matter--would be. Barton's analysis had been woefully short on quantitative benefits. Figuring ROI for people isn't the same as calculating the payback from a machine, Barton complained to friend and ally Carlos Freitas, head of the medical devices division. But Freitas disagreed: "If you want dollars, you have to show how you fit in with [management's] plans. You must be willing to fight for resources with the rest of us." Barton bristled: "Don't you see that my department is connected to all the others? Every division benefits from the HR budget." But she knew Freitas was right. She needed to make the case that doubling her budget was a smart move even in tough times. The question was, How? Four commentators--Susan Burnett, an HR executive at Hewlett-Packard; Mike Morrison, dean of the University of Toyota; Noel M. Tichy, professor at the University of Michigan Business School; and David Owens, vice president of Bausch & Lomb's corporate university--offer advice in this fictional case study.     

When consultants and clients clash

This fictitious case study explores the issues that surround the relationships between consultants and their clients, as well as the dynamics of a newly merged organization. Susan Barlow, a senior consultant with the Statler Group, dreaded her upcoming status meeting. She had thought it a lucky break when she got assigned to the Kellogg-Champion project. Royce Kellogg, the CEO of the newly merged firm, had engaged the Statler Group for what seemed a simple project: to reconcile the policies and practices of the two former firms now that they had become one. But once on the job, Barlow realized that the issues were much more complex than they had seemed. The new firm needed help badly-but not the kind of help that the client had led Barlow to believe it needed. What would she and Jim Roussos, her partner on the assignment, tell Kellogg at the meeting? Kellogg, for his part, was not looking forward to the status meeting, either. From his point of view, the consultants had caused more problems than they had solved. What's more, he wasn't even dealing with the consultants he had hired. Where was George Gray, the senior partner he had met with originally? Maybe Barlow and Roussos were just too young and inexperienced. Kellogg felt he was getting a raw deal. How would he approach them in the morning? Should he fire them or make an attempt at damage control? Two experts advise the consultants and two advise the client on how to handle the status meeting.     

On the dynamics of corporate size and illegal activity: An empirical assessment

This research, relying on companies continuously listed on the Fortune 500 over a five-year period (n=384), provides an empirical assessment of two hypotheses. Based on 334 violations over the period the results indicate: (1) gross differences in illegal activity based on corporate size, and (2) similar differences in corporate recidivism also based on size. Discussion includes a number of size related dynamics which may account in part for such results. Dan R. Dalton is an Associate Professor of Management and Director of Doctoral Programs, Graduate School of Business, Indiana University. Formerly with General Telephone & Electronics(GT&E) for thirteen years, he received his Ph.D. from the University of California. Widely published in business and psychology, his articles have appeared in the Academy of Management Journal, Academy of Management Review, Journal of Applied Psychology, Strategic Management Journal, Journal of Business Strategy, Behavioral Science, and Human Relations, as well as many others. He is the co-author of Case Problems in Management, Applied Readings in Personnel and Human Resource Management, and the forthcoming Absenteeism, Transfer, Turnover: An Interdependent Perspective. Professor Dalton is also co-principal investigator working on a five year grant provided by the General Motors Foundation in the general area of personnel policy.Idalene F. Kesner received her Ph.D. degree from the Graduate School of Business, Indiana University. She is currently an assistant professor of business policy and environment in the School of Business Administration, the University of North Carolina at Chapel Hill. She is continuing her research in the area of corporate boards and is also working in the areas of CEO succession and corporate takeovers