“Mr. Dennison, the board asked if you would please rejoin the meeting,” Joan whispered to Doug across his massive desk.
“Hey, Matt, can you hold on for five seconds?” Doug Dennison put his hand over the mouthpiece and said, “Thank you, Joan, let me get off the phone with the analyst from IBD, and I’ll be right over.”
He continued his conversation: “Yes, Matt, as I mentioned on the earnings call two days ago, it looks like we will beat analysts’ projections for revenue and earnings for the fourth quarter. I know in June we estimated mid-fifties per share, but it’s likely going to come in around the low sixties. We had a couple of very good deals over the last sixty days with great margins. We’ll say more about next year’s outlook on the call in a few weeks. I’ll try to give everyone some guidance then. Preliminarily, the outlook is good. Got to run back to the board meeting. Bye.”
Doug walked down the mahogany wainscoted hallway, glancing at the stern portraits of Charigan Holdings’ previous CEOs, who seemed like an empanelled jury of his peers. Why did his predecessors all seem so stoic? We’ve had a great year, and next year looks better, he thought. Leaving the boardroom during executive sessions of the quarterly board meetings always made Doug nervous, and some of the questions during the full session conveyed concerns on the part of some board members. At the beginning of the meeting three hours ago there were muted greetings, not the usual joking about one another’s golf scores. But they had had a killer year on revenues and profits.
Then Doug pushed open one of the massive French doors of the boardroom. Several board members looked up, while others peered over their gold-rimmed reading glasses at spreadsheets. Charigan’s Board Chairman, Hal Barchans, greeted Doug and motioned him to the seat on his right.
“Doug, during executive session, the board reached consensus that we need to make a change. We appreciate the financial results achieved this fiscal year, but the strategy to centralize all functions in New York is simply not working. There is an air of rebellion everywhere in the company. While the idea had great merit in theory and helped the bottom line this year, you did not win over the people most affected by the restructuring. You needed to get people with you on these decisions, and it just didn’t happen. Many of our people know that senior management did not really support you on moving forward with implementation. You could have shown courage to reverse course when it was obvious you didn’t have people with you, but you didn’t. I think people’s respect for you would have grown because it would have shown that you were listening. A lot of our best people are thinking about jumping ship.
“Your public hanging of Carl for opposing you on the changes created tremendous resentment in the field. Firing him was not the right answer. It seemed arrogant, petty, and mean-spirited to many, like you only wanted yes-men around you. When you were chosen to be the new CEO, the board had considered Carl and knew he could not do your job; however, the sales force loved him, and he got great results. There was an important role for him in our organization if you could have just worked out your differences. We think you should have figured out a way to win him over to your team.
“When we made you CEO, we talked about the values of Charigan. We affirmed how critical it was to live out the values so ingrained in our culture. We particularly stressed integrity in all our dealings and respect in how we treat our people. You enthusiastically endorsed them and promised to model them and to lead the company to follow them. While our values only identify the plumb line to which we all aspire, Charigan’s corporate values were not exemplified in your behavior. Even though you achieved some impressive financial results for the company, we feel our great culture took a big step back since you took the helm. The board could not endorse your continuing as CEO.
“We’re asking for your resignation, effective immediately. Joe Evans, our vice chair, will run things in the interim while we work out a succession strategy. You’ll, of course, need a few days to get everything in order, and we want you to meet with a couple of us on Monday to work out the details of your departure. An announcement will go out this afternoon,” Hal said with finality.
Doug looked around the room for a sign that someone might throw him a lifeline. “It sounds like there’s no room to try to work this out,” he said, absent his usual bravado.
Hal shot back, “Doug, this is a made decision. We appreciate your service to Charigan and wish you well going forward. The meeting is adjourned.”
AN ALL TOO FAMILIAR TALE
Although this story is fictional, its narrative regrettably gets played out far too often in many organizations. When Doug assumed leadership two years before, he hoped he would make an impact. He really wanted to guide the company to new levels of prosperity and significance. Everyone from the chairman of the board to the guy in the mailroom had high hopes for Doug. The company needed a strong person at the helm who would lead Charigan into the future while preserving its rich seventy-five-year-old culture of taking great care of its people.
His departure will be noted in a short news item on Fox Business and in an article on page ten of the Wall Street Journal—nothing earth-shattering. After a year or two, Doug will likely land somewhere else as CEO. Charigan will survive the years of lost productivity and erosion of morale. What is hard to measure, however, is the impact to the collective psyche of the people of Charigan. The people who made Charigan a perennial member of American’s Favorite Places to Work list just became cynical. They lost some of that edge of confidence that fueled competitive advantage in so many head-to-head battles with their marketplace rivals. Charigan forfeited some of the great people like Carl who led with joy and infectious exuberance. Some who did not leave physically checked out emotionally.
Doug achieved some short-term financial results, but he damaged the organization that made it all work. His arrogance and abuse of power undermined his credibility and effectiveness as the leader. Could this have been prevented? Could there have been a different outcome? How great it would be to for this to be a redemptive story. Let’s hold that thought. . . .