Wednesday, November 19, 2008
Pragmatic
Here is an unusual situation. A CEO who realizes he is not up to the job and steps down. Usually it is the other way around. The board fires the CEO. This might, in fact, be the case with Jerry Yang, but if so, the news has been presented to look like a voluntary action and one in which Yang realizes he doesn't have the skills to save the company.
The real reason for a CEO's departure rarely makes it to a press release. One hears rumors but the board is careful to protect a departing CEO's name. There is little to be gained in besmirching a departing CEO unless there has been illegal activity associated with the CEO's tenure. An incoming CEO will be wary of a board that has handled a departure badly, and it damages the trust relationship needed between a CEO and board. So, press releases tend to be vague and use terms like "stepped down" rather than "fired." This is a case in which "PR speak" is a benefit. Starting a war with a departed CEO, as is happening with AIG, distracts a board from governing and the sitting CEO from work needed to be done.
The real reason for a CEO's departure rarely makes it to a press release. One hears rumors but the board is careful to protect a departing CEO's name. There is little to be gained in besmirching a departing CEO unless there has been illegal activity associated with the CEO's tenure. An incoming CEO will be wary of a board that has handled a departure badly, and it damages the trust relationship needed between a CEO and board. So, press releases tend to be vague and use terms like "stepped down" rather than "fired." This is a case in which "PR speak" is a benefit. Starting a war with a departed CEO, as is happening with AIG, distracts a board from governing and the sitting CEO from work needed to be done.
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