"Japanese-style management" is the latest buzz phrase. We'll adopt "TQM policies," regardless of whether we understand what that means or not. Hiring business consultants is all the rage to boost productivity. We'll send our troops away to weekend retreats, where they can role-play and act out. We'll even bring on staff executives who have no experience in the industry for a fresh perspective -- forget that they might not understand the nuances of your industry.
It was that last fad among corporate giants that recently bit J.C. Penney
Hired away from her position at Capital One Financial
Penney has been directly battling Kohl's
As David Meier recently noted, the retailers have been turning in solid performances lately, with same-store sales ringing up consistent numbers. In particular, while November's comps were below expectations and last year's numbers, September and October had seen same-store sales north of 8%. It hardly seems like the type of performance that would warrant ousting a recently hired executive.
Operations is also an area where it would seem to be easier to make the transition between industries. According to market researchers Korn/Ferry, nearly half of all CFOs hired by the restaurant business (44%) are industry outsiders. In the 1970s, hiring outside executives to the CEO spot accounted for just 15% of the new executive hires. By the 1990s, that had grown to 26%, according to the Wharton School.
Yet it's endemic in all industries and in all ranks. Two years ago, the hotel industry seemed particularly struck by the idea: Starwood, Hilton, and InterContinental all hired executives from outside their industry. Restaurants as well as others have hired from outside the industry to fill marketing, human-resources, and operational positions.
According to Booz Allen Hamilton, two out of every five executives fail within the first 18 months of being hired, but 55% of outsiders hired were forced to resign by their boards, compared with just 34% of the insiders let go.
J.C. Penney was apparently just another corporate lemming in its pursuit of catching the competition. Corporate giants are nothing if not herd animals, and all too often, a corporation doesn't want to be the one that isn't trying to implement the latest fad. In Penney's case, it went with the trend but then asked the COO to resign. She refused -- first, because she apparently thought the kinks of her role could be worked out, but also because by resigning she would not be entitled to a generous severance package. As it is, she will now receive a going-away present said to be worth about $10 million, which ought to assuage some of the ill feelings over having been axed.
The burned hand learns best, they say, but whether the COO position will go to another outsider or will eventually be filled by someone from within remains to be seen.
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