THE DITHERING CEO AND THE UNFAIR DECISION

Mark Price, former MD of Waitrose, shares his workplace fables – true stories from the business front line that can teach us lessons about career success

Once a month, the CEO of global media group Tellso brought together his 20 company MDS for a briefing. Lately, these briefings had become less rosy as global media sales fell and profits at Tellso followed suit. But the picture across Tellso’s businesses was varied. Some were young and growing quickly, others had great leadership and were weathering the storm, and a few were in new, fast-developing markets. So while the new CEO talked about costcutting, he didn’t act and neither did the businesses in the group, who were facing falling sales.

“It’s a short-term blip – we wouldn’t want to lose our best people with cuts,” said one.

“By holding on to our staff, we can get a lead on the market while our competitors cut their numbers,” said another.

“Let’s give it another quarter and see what happens,” said another of the MDS with falling sales.

At the end of a year, there had been no improvement in the market and Tellso group sales had fallen by a third. The board began to pressurise the CEO to cut costs to protect profits.

At the next meeting with the company heads, the CEO was unequivocal in what he required. “We now have more than a year of falling profit. We have to stop the decline. I need each business to cut budgeted cost to make sure they hit or exceed their profit target. I also have decided that we will delay this year’s pay review for all from March to September.”

“But it can’t be fair that all our employees suffer because of our inability to tackle costs soon enough,” said one MD, “and it certainly isn’t fair on the staff in the half of our businesses that have beaten budget. How much will this initiative save?”

“I calculate we will save £50,000 – but it’s the gesture that’s important,” replied the CEO.

“That’s peanuts compared to our billions in sales. This move will alienate all our employees and in particular those in successful businesses. Morale will fall and the best will leave because of your gesture,” said the MD.

And he was right.

Moral of the tale:

Punishing the whole for the failure of the part is ill-advised.