Pavlov could train dogs, but CEOs are inherently untrainable



  • I used to work for a certain bullish financial company in New York. A new CEO was appointed. He immediately decreed that the global IT staff of 10,000+ could be cut by 1/3. Rather than just do a mass layoff, the chosen folks were told that they would have 3 months to find another job. Anyone still there would be axed.

    Now if you are going to do a large layoff, you spread the pain around, right? You lay off every third person in the affected departments. This way, there is some continuity of knowledge and familiarity with existing systems. Is that what this guy did? No.

    Instead, he just lopped off the left 1/3 of the org chart. Entire teams and even departments were eliminated. The allotted time passed and most of the folks found new jobs. The few remaining folks were laid off. This pretty much emptied out a good chunk of several very large buildings.

    A few days go by and some log directory filled up. Users called front line support who called back to the developers. Does a ringing phone make a sound if there's nobody in the building to hear it?

    Then some process failed. Again, nobody home.

    After a few weeks, the issues started to cause cascading problems and became so complex that the support folks couldn't fix them. The end users' anger percolated up the tree.

    The CEO exclaims: Wait, you mean all those people were necessary?

    Money was being lost, so the edict was given to hire them all back. The phone calls go out, but everyone had since gotten other jobs, many at increased salaries, and nobody wanted to go back to work under this  lunatic.

    The edict was given to hire consultants to fill the void. More than 3,000 bodies were hired, regardless of qualifications. They are ushered into the building and HR showed them to their desks. But nobody knew anything about the systems they were to support. Or what they were supposed to do. Or on which application servers. Or which DB servers. Or where the source repository was. Or ...

    Most of the business folks wound up abandoning the trading applications, and reverted to paper order tickets in order to satisfy the customer requests, and left the paper nightmare to an army of clerks that had to be hired.

    Did the CEO learn a lesson from all of that? Did anyone discover that people are not drop-in replaceable with other bodies? That domain-specific-knowledge is important? You be the judge....

    A few years later, the CEO was tossed. He got a new CEO gig at a not-for-profit place that manages pension funds for all the teachers in the US. The first thing he did? Decree that we can get rid of 1/3 of the IT staff, then did it, and the cycle repeated.

    Thankfully, this particular CEO has since retired.

     



  • Business people often view IT as more a necessary evil than valuable resource.

    Your CEO probably hated IT (perhaps a bad experience w/ some developers who cared nothing for business issues?) and wanted to believe so badly that a company can be successful without it.

    Or perhaps I'm totally wrong, but I can't think of any other way to rationalize this.




  • @Huf Lungdung: I could see making that mistake once, but twice?



  • @Huf Lungdung: I could see making that mistake once, but twice?

    Then again, this guy was paid several hundred million dollars since then, and I'm still busting my butt for nowhere near that, so who's the idiot?

    Edit: How the F did I manage to post half a response while I was still editing the text?

     



  • @snoofle said:

    How the F did I manage to post half a response while I was still editing the text?
    Through the mystery of Community Server.



  • @snoofle said:

    ... A new CEO was appointed. He immediately decreed that the global IT staff of 10,000+ could be cut by 1/3.

    ...

    Does a ringing phone make a sound if there's nobody in the building to hear it?

    ...

    The CEO exclaims: Wait, you mean all those people were necessary?

    ...

    A few years later, the CEO was tossed.He got a new CEO gig at a ...

     

    Alright, there are some things about the business world I don't understand, but first:

    1.  Who appointed him? Didn't they keep an eye on him? If I'm hired into a position, I'm always watched, and guided to get to know the environment -- I'm not allowed to just do whatever I want. Are you actually saying that at the top no one watches you, no one guides you, and people wonder why businesses are the way they are?

    2. When the phone calls to the development staff went unanswered (because the building was empty), why weren't flags raised immediately? Why weren't people investigating?

    1b: Which gets back to: Didn't anyone raise questions when such large amounts of divisions were removed from the chart?

    2b Which gets back to: Who do you complain to if the CEO breaks something?

    3. Why did it take a few years to toss the CEO? After "You mean those people were needed?", a mess-up of that scale, why wasn't the CEO tossed instantly? If a lead developer made a mistake like that, do you think they would stay around? ... Err, wait, I've read enough WTF's over here. Never mind :-).

    So, it seems: Lead developers, and lead admins, get to ignore mistakes, and the rest of us have to live them.

     

    Hmm. So maybe my trying to bring my manager's errors to the attention of people who could do something about it wasn't the best thing to do.

    4. So he gets a new job. I take it they didn't check references? Just looked at the resume, and trusted it? No one passed on the whole "He made this error, we let it go, then he made that error, and we said "enough""?

     

    Man, how do you become a CEO? That's gotta be the best job ...



  • Many years ago (early nineties) I worked for a small system integrator where one of my jobs was to help out on the technical side of sale presentations (i.e. to keep the sales folks from trying to sell solutions that were completely unrealistic). We were called upon by one of the members of the executive team for a small-to-medium manufacturing company in our area to propose a solution to help the automation of certain processes in their manufacturing facility. After many rounds of talks and presentations the project was killed unceremoniously without any explanation. It was later revealed that the CEO was a strong opponent of the use of computers and when he was presented with the proposal he discarded it like day old sushi. He apparently had a strong distrust of computers and the IT industry in general and insisted that all but the most numerically intensive (i.e. finance) processes be performed manually.


    I recall being completely dumbfounded by this revelation a the time. Even now I shudder to think that someone like that CEO could still be around and driving some poor company into the ground because of their failure to recognize the value of computers.



  • @DeepThought said:

    Many years ago (early nineties) I worked for a small system integrator where one of my jobs was to help out on the technical side of sale presentations (i.e. to keep the sales folks from trying to sell solutions that were completely unrealistic). We were called upon by one of the members of the executive team for a small-to-medium manufacturing company in our area to propose a solution to help the automation of certain processes in their manufacturing facility. After many rounds of talks and presentations the project was killed unceremoniously without any explanation. It was later revealed that the CEO was a strong opponent of the use of computers and when he was presented with the proposal he discarded it like day old sushi. He apparently had a strong distrust of computers and the IT industry in general and insisted that all but the most numerically intensive (i.e. finance) processes be performed manually.

    Back when I lived in the Southern US, there was a grocery store chain near me that I didn't usually go to because the other supermarkets in the area were nicer. One day, for some reason, I decided to go into one to get something from the deli counter. Just before wrapping up my food, the guy behind the deli counter sneezed into his hand, then didn't wash it. I took the package, walked a few aisles, then set it on a shelf because I was so disgusted. I should have yelled at the guy and pointed out his disgusting actions, but I didn't have the energy. When I got to the checkout with a few other (pre-packaged) items, there were no scanners. Since I was working for a checkout/scanner manufacturer at the time, I asked the cashier why they didn't have any scanners. She said the owner of the company didn't believe in them. The store was almost empty, and they didn't seem to be able to attract employees who could keep from sneezing on the food, so needless to say, I never went back. I can't imagine that they've stayed in business, at least without changing how they do business. It was all very bizarre.



  • @Keybounce said:

    Who appointed him?

    CEOs are usually put in position by the board of directors, typically a bunch of CEOs of OTHER companies, who get paid to attend a few meetings a year, but don't actually do anything, unless it really hits the fan. This guy was brought in to increase profits. Drop 3000+ relatively highly paid folks, and all the buildings, and infrastructure that go with them, and you get a very short term bump in the bottom line. Voila! Instant success.

    @Keybounce said:

    When the phone calls to the development staff went unanswered (because the building was empty), why weren't flags raised immediately? [/quote ]

     There was nothing to investigate; the calls were unanswered because everyone was laid off (or left). 

    [quote user="Keybounce"]Didn't anyone raise questions when such large amounts of divisions were removed from the chart?

    Do YOU want to argue with your brand new executive boss?

    @Keybounce said:

    Who do you complain to if the CEO breaks something?
    You gripe loudly at the annual stockholders meeting

    Because the quarterly profits went UP as soon as the payroll and associated expenses went down; he MUST be doing something right!

    @Keybounce said:

    After "You mean those people were needed?", a mess-up of that scale, why wasn't the CEO tossed instantly?
    Annual shareholders meetings only come once a year, so 10-ish months after he was appointed, profits are up (goodie), 22 months later, massive problems show up at the top level, and he's gone

    @Keybounce said:

    new job. I take it they didn't check references?
    No clue how he got that second position, but after having worked at that company too (started there after the layoffs), I found out that it was massively silo'd, and nobody took responsibility for anything. It took a year to string a simple MQ-queue to an offsite vendor (the network team didn't do network connections, they had us pay the vendor to buy a router and install and maintain it in our DMZ). After that, it was pretty clear.

     



  • @snoofle said:

    @Huf Lungdung: I could see making that mistake once, but twice?

    Hopefully, the third time, he learned enough to do that on his way out, so he didn't have to deal with the repercussions.

    It'd be nice if one of these days, board members would realize that just because someone's a nice guy on the golf course doesn't mean they should give one of their companies to his whims for a few years.



  • @snoofle said:

    @Keybounce said:
    After "You mean those people were needed?", a mess-up of that scale, why wasn't the CEO tossed instantly?
    Annual shareholders meetings only come once a year, so 10-ish months after he was appointed, profits are up (goodie), 22 months later, massive problems show up at the top level, and he's gone
     

    Let me guess, the other company's annual board meetings happen earlier in the year than this one?  So, knowing shit was about to hit the fan, he got the new job by showing them out of date information from when he still looked impressive?



  • nice thing I learned a few years ago:

     a medium swiss state bank did a study how much their IT cost (because IT is always just 'cost'...)

     so they summed it all up and got a figure: total IT cost per year and per (business) desk was $15k. next logical thing to do: compare this figure to peers - banks of approx same  size and same markets, also neighbour state banks.

    turns out those just spent $10k per business desk. which in turn got them to the conclusion that their IT was too expensive and has possibly to be cut by 1/3...

     surprisingly they didn't buy the first conclusion and watched a little closer: they calculated another figure: how much did they do with one business desk? they learned they had twice the turn-over and three times the client money handled per desk, compared to the other banks.

    final conclusion: paying 50% more for IT makes us more than 100% more productive in business. they decided to go further on their successful IT strategy...



  • One thing I've learned, if you cry "the sky is falling" while profits are healthy, nobody listens to you. Before the economic collapse, newspapers ran tons of stories about how the housing market was growing unsustainably and various other problems, nobody wanted to read about that when everybody was making money. If the stock is going up, people will buy it. Then the stock goes up because it's going up. It takes months for the bottom to fall out, and by that time, the people who screwed up have taken their bonuses and run -- or you have to pay them their bonuses to get them to leave.


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