Question Description

*4 - Full Pages Min

****Instructions:

•Read and analyze the above case.

•Answer the below questions.

•Prepare response in APA format entitled Theme-Weekly Case - CEO RESIGNS by April 18th prior to 11:59pm (midnight) Central Standard Time (CST). Submission of assignment after this time and date will activate the penalty clause of late assignments (zero points) as addressed in the syllabus. 

•Minimum of four pages - but no maximum limitations on page content. An Appendix is a Mandatory requirement and as you can see from the Rubric Case has a very high value in points by its inclusion.  Responses must be ample text to directly answer the questions. No PowerPoint or Bullet dots - must be sentence structure and within paragraphs.

Situation:

You have just arrived on Monday morning in the office.  Your administrative assistant informs you the President (James - your know one another as Jim and Lloyd) of the company has called and requested you to return the call ASAP.  Although you sense the importance of returning the call you decide you must have a cup of office to prepare you for whatever the urgency may be.  You know, from your annual physical, that you are "addicted" to caffeine (as well as your work) [but thank God, these are your only addictions and as far as you know they are legal addictions] and the doctor has recommended that you cut back on your coffee drinking to one cup a day.  In order to comply with his recommendation, you only drink a cup of coffee each day (but it is the largest cup that you can find) and you drink it in the morning to stimulate your senses before any "serious business."  On a personal note, your wife, jokingly has said many times that "he is a grouchy bear before he has his cup of coffee."

Background information.  You are the Corporate Senior Vice President of an operational entity that is currently experiencing 1 Billion dollars in revenue.  Accordingly, per the Operational "ORG" chart you are a Group P&L Manager.  You have signatory authority for $5 million dollars.  Your relationship with the President goes back a few years when you reported to him as a Group Controller and he was the Group V. P.  He is the one that "carried your flag" to the Board and ensured that you were elected a Corporate Officer of the Company.  When you were his Group Controller, he always placed you in charge of the Group when he was out of pocket (vacation, surgery, personal business, travel, etc.)  He has a high regard for your advise, counsel and decision making.  As each of you progressed within the Company you have remained in frequent contact and discussed many issues both company wise and otherwise.  Without ever acknowledging the word, he is your mentor and counselor.  As such he has, on many occasions shared with you very "highly confidential" information, knowing from the many years together back in time, that the information will be kept confidential. 

Issue:

You return the call and Jim informs you the CEO (Nathan) announced to the Board of Directors late Friday his resignation.  He will be joining another company in another industry.  It goes without saying the package is very financially beneficial and if he is successful within the next few years and achieves the objectives that his new Board has given him; he will retire as a very wealthy man.  Also, the age old element of ego and pride were part of the reason.  Although he had been the CEO with membership on the Board, he had never been given the title of Chairman of the Board, due to the 9% ownership of the company by a certain individual retaining that position and title.  With his new responsibilities he will be both CEO and Chairman of the Board. In addition, his pay package, particularly related to stock options could prove very beneficial and would activate quicker than his current options.  He had been secretly recruited by a very prestigious Executive Search firm and the recruiter had a reputation for only participating in CEO searches.

Nathan has been a very respective CEO.  His guidance and direction while being the President of the Company and later as the CEO has hugely contributed to the explosive growth of the Company and particularly with the expansion into foreign markets.  He is a strong advocate for foreign investment (for instance, building plants in foreign countries).  In addition, you had a dotted line reporting responsibility to him when you were a Divisional General Manager when you had responsibility for South American for a certain product line.  He had been the one that ensured that you received Board approval for a exceptional high cost of living enhancement due to fact that the company wanted you to have presence in West Palm Beach while managing South America.  However, to a large extent that actually came about as your wife did not want to live in Brazil as per her statement - "we have done our Corporate responsibility in Overseas assignments twice."  Nathan's attempts to persuade the wife with the benefits of Brazil were not successful but living in West Palm Beach were.  In summary, both the President and you, as well as many others (when they will learn in a matter of hours that he has resigned ) will be both shocked, surprised, and saddened by the fact that he will be leaving.  He was a "people person" and always had his people's interest at heart as well as the Company. 

Jim shares with you that the Board will be announcing later today that he will be the new CEO.  This energizes and excites you as you recall those years when you reported to him and know that the direction of the Company will continue.  Also, you know the role of the CEO is primarily one of being the image of the Company but partially maintaining a good relationship with Wall Street.  You know based on Jim, his demeanor and acumen, that he will have a positive impact on Wall Street and this (selfishly, will benefit you as well due to your incentive package which is heavily tied to stock performance).  But of the immediate and particularly sensitive situation to you is due to next week you are scheduled to present your strategic plan for your entity to the Board.  The core thrust of this strategic plan is built around the aggressive expansion into China, the Middle East, Old Russia and what use to be called Eastern Europe.  In fact, if the strategy plan is achieved it will result in your entity growing by a factor of over 20% and the bulk of this growth is due to international activities.  You already know that Jim will support this strategic plan.  But, approval of your strategic plan by the Board, is one thing, but the next challenge, which is always stressful and requires a lot of debate, salesmanship, rationalization and justification as well as being economically and financially achievable is obtaining the approval of the President and his Operational Committee of your next year's operating plan, which includes the marketing, financial, capital and budget plan with supplementary plans for people and resources.  Historically, Jim has been very supportive but also very detail in his review of these operational plans.  The tentative target date for these operating plan reviews will begin in about 6 weeks so the NEW President taking Jim place as he transitions into the CEO position could have a major "bearing" and impact on your next year's operational plan. 

Jim indicates that he and the Board over the weekend have narrowed the candidates for the NEW President down to two internal candidates.  One is your current sector's (organizational structure with over $5 billion in revenue) Executive V.P. (Robert - know as Bob) who you have reported to for the past two years and the other is the Executive V.P. of another sector and different product lines (Gary) who you reported to prior to your reporting to Bob.  Jim wants you to think about both over the next 24 hours and give him your recommendation as to who would you think would make a better President.  Jim states that when you call him back to give him the reasons why you are recommending this person; that if it is for your personal preference, then, please be honest and state so.  If it is for the benefit of the Company, again, please state so.  If it is for both yours and the Company's benefit, then again please state so.  But in addition to giving him the name of either Bob or Gary, he wants your rationalization and to some degree justification as to why you have recommended the person.  You know Jim well enough that he has or will be calling other selective individuals and he will be also challenging them will be same question.  You also know that you must complete this "assignment" in a vacuum without discussing with anyone else.

Bob, your current boss is the most demanding and challenging boss you have ever had.  He constantly keeps you on "your toes.'  He is very well educated,  as a matter of fact has a doctorate in "Rocket projection" and began his corporate life as a staff person in the IT department, eventfully becoming the Director of IT for the company until he was given this particular product line to "take to market."  Over the last 5 years he and his organization has grown this product line to the point it is the largest contributor of revenue to the company and contributes over 50% of the operational profit of the company.  This achievement has been realized in just 6 years since this particularly product line was introduced into the market plan.  He has charism, an over bearing leadership style, very strong confrontation and combative acumen and most individuals that are not in his organization believe and say that they would not be able to work for him.  He is very demanding of the Board to approve his organization's plans and request.  He is constantly presenting ideas to the Board which makes them "earned their keep."  We, in his organizations, love the fact that we have a "General Patton" for a boss but it goes without saying that his peers are very jealous and envious of his power and position as being the "privilege son" of the Company.  Those of us in his organization that enjoy the "game" of the career; love the spirit of change and constant drive and have great respect for his leadership.  Most people in the Company view him as a "work and forever taskmaster" and do not believe that he has any feelings for his employees.  You have been rewarded quite well for your achievements while in his organization and reporting to him, (as a matter of fact, so well, you know now that when you retire "your don't have anything to worry about" but your performance review was not written but comments made on the corporate jet which in summary were "Lloyd, you are a keeper"  (Sounds like you might be a fish does it not?)  However, you have been in his presence when you have seen his emotional side.  One, was when he announced that his Director of Marketing had died from cancer.  The other was when he received a call that his daughter has just made him a grandfather.  Another situation which is very personal to you, is that this past winter while attending an operational review, you were ask to come outside the room and take a call (which Bob very much dislikes his meetings being interrupted) as your son had been skiing in Colorado and had just been in an accident and was in route to the hospital.  Bob, comes out of the meeting and you explain the reason for the interruption.  Bob immediately calls his pilot for his corporate jet and instructs him to immediately file a flight plan to the local airport for this ski resort as you will be at the hanger within 15 minutes.  (Personal use of one of the corporate jet is allowed but you have to pay the same as the price of a first class ticket to the company - net, it is your personal expense).  At a later date you mention to Bob that you have not received the invoice from the Company for the personal use of the plane, which is assigned to him - his administrative assistant would be responsible for preparing the invoice.  Bob responded, that he will call Jan (his administration assistant) and remind her to invoice me.  Months later when you have still not received the invoice you contact Jan and ask where is the invoice and you are informed that Bob "took care of it."  You confront Bob and his reply is simply "next time the dinner and drinks are on you."  [Corporate policy is that the higher ranking individuals at the table picks up the tab for the dinner when other employees are present; therefore, making it "policy wise, impossible for me to pick up the tab if Bob is present and for that matter more than likely it would be a dinner for business purposes anyway].  In summary, Bob has personally pick up this expense and even until your day of his and your retirement, he has never asked for repayment nor has he allowed you to reimburse him.  You dislike his vulgar language, but if you overlook this, you believe that he is a true transformational leader.  it is sometimes embarrassing to be in same room when he takes a peer and/or employee to task.  Within the last few months, you have realized that he wants you to challenge his ideas and "argue " with him as this provides him another source of thought to weigh before he finalizes his decision. He once presented a staff opportunity to you and indicated that he would ensure that you would receive the job if you wanted it.  You responded with a statement, Bob, I am hurt as this leaves me to believe that you are not happy with my performance.  His response, was an extension of a hand shake, a smile and the following statement; "let's get back to work."

Gary was your boss two years ago and just before beginning your reporting to Bob.  Gary is currently the Executive V.P for the product line that used to be the "torch bearer" of the company.  However, due to the mature stage within the product life cycle, the product is beginning to decline.  In addition, from an industry standpoint the product line was never consider a leader in the industry and the highest ranking was number six; however that ranking is currently at number eleven.  Gary is very "laid back" and his management style is strong on delegating.  When you reported to him, you knew that you were the one responsible for the decision and as well the one accountable for that decision.  Gary had been a strong advocate of you and was definitely in your "corner.'  Your two performance reviews with him had been two of the best that you had ever received and he had recommended you for additional responsibility which resulted in your promotion to a Senior V. P.  He was somewhat "hurt" by your decision to join Bob and his team with the new product line as he advised you that the opportunity was very risky and might have negative impact on your future promotions and/or future career within the Company.  In addition, he had strong objectives to Bob management acumen and had on one occasion used the term as a tyrant when describing Bob.  Gary was very sensitive to the fact that Bob had chosen Gary's competitor's product to go into Bob's product line (the Company is very vertically intergraded as Bob had gone on record with the Board indicating that Gary's organization's product did not have quality and it's R&D was "useless" as their existing products were not on the "cutting edge.")  This had resulted in the Board approving Bob the leverage and "green light" to "go outside the Company" for the selection of his "pieceparts" to go into Bob products.  This was the first time that ever such an approval had been given to an Executive V.P. as the Company policy had always been that the only time that another organization could go outside the Company for selection of "pieceparts" was if no other organization in the Company manufactured and/or produce them.  Gary is a very strong "people person" and is well like both within his own organization as well as within the Company.  Gary's strategy is to build and grow revenue growth for "sales" within the Company as his "pieceparts" go into almost all of the hardware within the Company.  The strategy for growth within the U.S. is through direct sales and his strategy international is to sale through distributors.  Although Gary presents himself as "laid back" you have been in his presence when he has been very aggressive and assertive with strong convictions as to his position and the direction and strategy of his organizations.  If one was to classify Gary management style and acumen, it would probably be transactional.  On a personal note, your wife and Gary's wife, when you lived in the same city, were very good friends and you have socialize with Gary and his family on many occasions.  You are very strong in your spiritual faith as is Gary so this allowed for some common ground in both your personal relationships as well as your business relationship. 

Question:  Who are you going to recommend and why?  Give justifications and reasons for your choice.  And as Jim instructed you; if it is for the benefit of yourself, say so and why; if for benefit of the company, say so and why; or if for the benefit of both the company and you, say so and why.