I am not talking about the person who has led a division for 30 years and retires. I mean resigns. Replacements happen through forced resignation (firing) when a division of a privately held midsized company hasn’t been hitting its numbers. However, unless a serious health issue is involved, resignation of a division head is rare…and is a warning.
Changing positions at that level is not done casually. Division heads often have an equity stake in the business, and their pensions and/or 401Ks can be adversely impacted if they resign. At that career level, few people resign before securing better positions elsewhere…which means that the growth and leadership decisions have been stagnating in the division for some time.
If the products/services of the division have solid growth potential, the resignation of the division head was probably prompted by a power struggle. Maybe the CEO wouldn’t delegate authority to the division head. Good people resign when they are held responsible for achieving results but are not acknowledged or compensated for doing it or when their budgets get raided to support other divisions that aren’t carrying their weight. Division heads expect to fully lead their divisions and not be micromanaged or second guessed.
When a division head resigns, it is not business as usual. Pause. Open up. Don’t make a hasty decision. Promoting a follower from within the division does not address what caused a competent division head to resign. Negotiating with entrepreneurial leader(s) of competing companies can be the wake-up call the CEO needs. When a business is acquired, the due diligence process invites everyone involved to take a fresh look at goals, strategic direction, the logic behind compensation and equity, budgets and delegation of authority.
Remember it? Directed by Robert Redford, the movie was based on Steven Pressfield’s 1995 book with the same name. The actors include luminaries Jack Lemmon, Will Smith, Charlize Theron and Matt Damon. This was Lemmon’s final movie which makes it even more important to many people.
In 1931 (during the depths of the Great Depression), the City of Savannah, GA sponsors an exhibition golf tournament with great golfers Bobby Jones, Walter Hagan and the town’s golf prodigy and hero, Rannulph Junuh.
As he caddies, wise Bagger Vance (played by Will Smith) provides sage advice to help Junuh recapture his “authentic swing.” They talked very little about the fairway, sand traps or greens. They talked about post-traumatic stress, the meaning of life, guilt, regret, a broken heart, giving up, accepting responsibility and hiding. You know…light conversation (lol).
As many golfers of today can tell you, finding one’s authentic swing in golf is not just a matter of repetition. Golf is a mental game as much as it is a physical one. When a golfer’s muscles are tight from being angry at work, his/her slice or hook returns on the golf course. When a golfer’s optimism or confidence is compromised, the short game on the green becomes another nightmare. An executive’s capacity to make great strategic decisions is another version of one’s authentic swing.
Presidents of privately held mid-sized companies often don’t have time to play golf or have another similar outlet that offers feedback on whether the president is still centered. It is impossible to maintain your authentic swing when you aren’t centered. Often the all-important feedback comes in the form of poor business results. The president’s loss of his/her authentic swing is taken out on the business.
Sometimes executives just keep showing up when he/she knows he/she is “just not right with the world”. Continuing to show up is important, but just going through the motions can solidify bad decisions (a hook or a slice). Finding what keeps you centered is worth the effort. An executive coach could be your Bagger Vance.
What happens from here forward regarding Donald Sterling’s ownership of the Los Angeles Clippers has the potential to change the definition of business “ownership.” In my opinion (in addition to all of the lawyers), NBA Commissioner Adam Silver should consult with the National Association of Corporate Boards (NACD). I’ll bet they could provide insight and expanded options.
“The market” knows how to punish a disgraced business owner. Employees and customers who do not respect the owner(s) of an enterprise can hit owners where it hurts the most…their pocketbooks. Products can be boycotted. Lawsuits can be opened.
In this instance, millions of people hope Sterling feels pain swiftly. The sooner the better!
There are numerous examples in the world of professional services where a disgraced owner has lost everything when a new competing enterprise has been established, and the top talent from the previous team was “cherry picked.”
Can’t well connected people like Oprah Winfrey and Magic Johnson start a new team? I would buy some shares of a business owned by Winfrey and Johnson. Why pay Sterling a dime?! Could player contracts be broken? Could the NBA support the new entity?
If/when the NBA forces Sterling to sell his business, a statement of disgust will have been expressed by the employees, the fans and the NBA. But his racist beliefs will not have been changed. If the NBA can legally force Sterling to sell, he will end up with a multi-million dollar windfall (gain) and a precedent will be established that could have an adverse impact the rights of all business owners from here forward.
What constitutes business ownership?