Spinning Out

Spinning Out

Despite their lofty positions, chief executive officers regularly succumb to human frailties: they grow old, clash with their board, clash with shareholders. They fall ill, they die, go to jail, seek a sea change, are incompetent or just unlucky. They are replaced. Beverley Head looks at how CIOs cope with the CEOs' revolving door

The new Chief Executive Officer arrived swinging a sharp axe. The IT team of 10 was one of the first to feel its cold edge. Within months the 10 were felled to two, one of whom was the IT director.

The 24x7 support was reduced to 8.30am to 5.00pm, five days a week. Outside those hours support was a matter of pure chance. There were still well in excess of 100 users to support, a handful of servers to keep running and many remote users requiring access.

It was not that the CEO was anti-technology - in fact he wanted a new notebook, so the IT director bought a new, highly reliable well-rated machine. Only the IT director was harangued by the new boss because "something or other was in the wrong place". After the notebook debacle the new CEO declared he needed a new PDA, only to dismiss the Bluetooth-enabled device as too bulky and stuck with a much older model.

The IT director admits that the situation is unpleasant, but also recognises that it is not the best time to be out in the market looking for jobs (see "Take This Job and . . . Keep It", ). Two of the IT people made redundant by the new CEO have yet to find work. So the CIO is staying with the company - a household name - at least for the present.

This is one extreme of the sort of changes that a CIO can expect to face when a new CEO arrives. And given that there is every sign that CEO tenure is shrinking rather than extending, CIOs should understand that the relationship they forge with the top executive is only ever likely to be transient.

Chief executives are increasingly pressured by stakeholders to hone their businesses; to grow revenues, cut costs, deliver dividends, expand geographically, merge or acquire, but mostly to make profits. If the CEO is perceived to be slow in delivering, he or she will be replaced. If the company is listed, it often sees a spike in its share price if the newly-named CEO is perceived to be a turnaround merchant, and everyone is happy.

For a while.

The turnaround merchant puts in place cost-cutting strategies and vigorous new business models, but the market moves again and the stakeholders want something more. Witness the rise and fall of Mayne Group's Peter Smedley who was seen as one of the country's best turnaround agents, only to find himself suddenly out of fashion and favour.

So another new CEO is named and the cycle starts afresh.

Sometimes there is a planned succession. For example, Spherion's recent replacement of Peter James with Andrea Galloway as CEO was mapped out well before James announced he was moving to Ainsworth Game Technologies. For IT director Stephen Withnail the change has been very positive, although challenging (see "A Brand New Experience",).

Succession planning, however, is not always smooth - or possible. CEOs may fall ill or even die during their tenure, as St George Bank's CIO John Loebenstein has experienced not once but twice. He now reports to the bank's latest CEO, Gail Kelly, who thankfully seems to enjoy robust good health.

Sometimes the revolving door starts turning again before the new CEO has had time to make a dent in the leather chair, as was recently the case when former NRMA stalwart Eric Dodds was named to head the Moran Health Group. Dodds backed out of the deal with the nursing home behemoth a fortnight later before ever assuming the position proper.

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More about BossEgon ZehnderEgon Zehnder InternationalHISIDC AustraliaIT MattersIT PeopleMAYNE GROUPNRMA GroupSharpSpherionSt George Bank

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