Page 11 - Harvard Business Review (November-December, 2017)

IDEA WATCH WAS THE CEO FIRED OR NOT?

LEADERSHIP ORGANIZATIONS
WAS THE CEO FIRED OR NOT?

Among corporate euphemisms, few are more THE COSTS OF
common than the announcement that an
executive has resigned “to spend more time BUREAUCRACY
with family”—a signal to most observers that the
leader was fired. But it’s often hard to know for
sure. The financial journalist Daniel Schauber Many employees complain that their company is overly bureaucratic,
devised the “push-out score,” a model that gauges which slows decision making. To quantify this problem, researchers
created a “bureaucracy mass index,” or BMI, and surveyed more than
the likelihood that a resignation was voluntary. 7,000 HBR readers about how bureaucracy affects their work. Among
It draws on publicly available data along nine the findings: Larger companies have more bureaucratic drag, and
dimensions, including the form and length of two-thirds of employees say it has become worse in recent years, with
the announcement, the reason given, the age customer-facing functions such as customer service and sales suffering
and tenure of the departing leader, the length some of the biggest impacts. ■
of time between the announcement and the
departure, and the succession plan. Researchers AVERAGE NUMBER OF DAYS NEEDED TO GET A DECISION ABOUT A
subsequently plotted 226 push-out scores for NONBUDGETED EXPENDITURE
resignations occurring over a six-month period, 20
determining that 43 of the CEOs were probably
forced out and that 72 probably left of their 15
own accord. (The rest occupied an ambiguous 10
middle ground.) They then looked at each
company’s stock price returns on the date of the 5
announcement, finding that the higher the push-
out score, the more dramatic investors’ reactions, 0
both positive and negative. By more clearly <100 10O–1,000 1,0O1–5,000 >5,000
identifying situations in which the CEO has been SIZE OF RESPONDENT’S COMPANY (EMPLOYEES)
pushed out, investors can better recognize when PERCENTAGE OF RESPONDENTS WHO SAY THEIR ORGANIZATION HAS
a company’s strategy isn’t working and identify GROWN MORE BUREAUCRATIC IN THE PAST FEW YEARS, BY FUNCTION
investment risks that might not be apparent if a
resignation is presumed to be voluntary. ■ CUSTOMER SERVICE 74
SALES AND ACCOUNT MANAGEMENT 74
ABOUT THE RESEARCH “Retired or Fired: How Can Investors Tell
If a CEO Was Pressured to Leave?” by Ian D. Gow, David F. Larcker, PRODUCTION 73
and Brian Tayan (Stanford Closer Look Series, 2017); “Push-Out Score: LEGAL 71
The Number You Need to Know” (Exechange, 2017)
BUSINESS DEVELOPMENT 69
69
DISTRIBUTION AND LOGISTICS
A PROGRAM TO TEACH INDIAN RESEARCH AND DEVELOPMENT 68
GARMENT WORKERS TIME MANAGEMENT, ADMINISTRATION 63
COMMUNICATION, AND OTHER LIFE GENERAL BUSINESS 62
SKILLS YIELDED A 250% RETURN. NOT INFORMATION TECHNOLOGY 62
62
PURCHASING
ONLY DID THOSE WORKERS BECOME MARKETING AND PR 61
MORE PRODUCTIVE, BUT THE EFFECTS FINANCE AND ACCOUNTING 60
HUMAN RESOURCES
SPILLED OVER TO OTHERS ON THE PRODUCT DEVELOPMENT AND MANAGEMENT 60
60
ASSEMBLY LINE. PROJECT MANAGEMENT 58

STRATEGY AND PLANNING 58
“SOFT SKILLS TO PAY THE BILLS: EVIDENCE FROM FEMALE GARMENT WORKERS,” BY ACHYUTA
ADHVARYU, NAMRATA KALA, AND ANANT NYSHADHAM SOURCE GARY HAMEL AND MICHELE ZANINI
COMPILED BY HBR EDITORS | SOME OF THESE ARTICLES PREVIOUSLY APPEARED IN DIFFERENT FORM ON HBR.ORG.
30 HARVARD BUSINESS REVIEW NOVEMBER–DECEMBER 2017