Should you fire your CEO as part of the company’s next RIF?

It’s the next corporate off-site, the stock price is down, revenue is down, and margins are shrinking. The new CEO has had approximately one to two years in tenure. His recommendation to the board to “save the company and boost stock price” is to rebalance the workforce aka Reduction in Force (RIF). After several years of building up the workforce, capabilities, knowledge, and skills this seems the logical thing to do from his perspective. Lay off workers and get newer, cheaper employees. This is after stating its employees are its most important asset.

But is it? A decade or so ago several Blue-Chip corporations did such. Stock market reacted, as it does quickly with a momentary boost. However, as the years went on, the corporation’s product quality, customer service, and eventually its competitiveness dropped.

Solution? Hire back seasoned professions they laid off. Only problem, those employees when on to competitors, became competition, or now will cost the corporation more to hire back and will likely not have the same loyalty they once had (i.e., it’s now just a job not a career; they’ve learned from millennials all too well).

Given this state of affairs, should stockholders and the board consider laying off the CEO as part of that RIF also? Consider the statement: “Employees are our most important asset”. If so should the CEO be judged rather harshly for losing a large percentage of the corporation’s assets and value?   If intellectual property is really of value as inferred tens of thousands or possibly millions of dollars have walked out the door.   Would an executive at any company still be in place if they allowed a factory to be sold off for pennies less than what could be sold on the open market?

In the declining age of Superstar CEOs maybe a rating/tracking system is needed similar to those in professional sports leagues to see if those CEOs really do add value? Just a thought to ponder as I consider where to invest my retirement funds…

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About briankseitz
I live in PacNW in a small town and work for Microsoft as a Enterprise strategy and architecture SME. I enjoy solving big complex problems, cooking and eating, woodworking and reading. I typically read between 4-8 business and technology books a month.

One Response to Should you fire your CEO as part of the company’s next RIF?

  1. davidwlocke says:

    Research has shown that CEOs don’t have that much impact. History has shown us that even when the CEO did have an impact, that impact was generated via book cooking that left the company in a deep hole.

    The problem is that b-schools teach cash extraction and how to push the numbers up for year or two. Beyond that, the b-school orthodoxy won’t get you much further. The thing that every company needs to do today, is the very thing that it won’t do. We need to innovate discontinuously, not continuously, not disruptively. We need to create the never seen before things that will put our economy back to work after we’ve pushed production in our prior economy offshore. But, we got rid of the idea of research back in the 60’s. We wouldn’t be going back to the 60’s if we re-engaged in basic research, but we would have to evolve a wide range of practices that kept that research from being exploited. The current crop of innovation consultants don’t know how to exploit t now. But, that is how you turn a company around these days. I know that we don’t have any examples to turn to.

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