When going gets tough, blame gets assigned
Jeff Linville, Case Goods Writer -- Furniture Today, February 17, 2008
This year's economy is off to a slow start and furniture is no exception. And when things are going bad, people start pointing fingers.
I have a sister who is two years older. Whenever my parents came down hard on us, my sister would blame me. If she still got in trouble, I would pay for it later because I was the only one she could boss around. She wouldn't dare talk back to the folks or risk getting a swat across the backside.
While that isn't an exact analogy, don't be surprised if some upper-management types get the axe this year because owners and boards need someone to blame.
Not that anyone would actually say that a person was fired. Instead the official word is that the executive "parted ways" with the company or "left to pursue new interests." Or my favorite: two companies have merged and one of the presidents will "remain as a consultant." Then two months later, the guy is gone.
Liberum Research said that 2006 was a record year for job turnover at the corporate level for high-profile companies. Turnover was slightly lower in 2007 but still quite high, said Richard Jacovitz, Liberum senior vice president and director of research. In publicly traded companies, Liberum found 27,357 executive job changes, including 2,617 CEOs.
"The first quarter of 2007 recorded dramatic declines from the same quarter in 2006," said Jacovitz. "The last three quarters of 2007, however, trended upward and are expected to continue at a high level into 2008."
In fact, the first two weeks of the new year saw a sharp drop in the stock market (and my 401(k)). At the same time, some CEOs of huge corporations walked out the door, like Bob Ulrich at Target, Jim Donald at Starbucks, and Daryl Brewster of Krispy Kreme Doughnuts.
Brewster took over the CEO position in 2006 to help Krispy Kreme right the ship, but struggles remained. Through the first three quarters of the current fiscal year, the company shut 25 stores.
After Starbucks narrowly missed its profit estimates, founder Howard Schultz returned to the helm and announced the closing of 100 stores to cut costs.
Target's share prices were down 12% in 2007, and some were suggesting that President Gregg Steinhafel was the one with the proper vision to turn things around.
While some blame probably falls on these CEOs' heads, I wonder how much is due to the boards of directors feeling like they had to make a move in order to stabilize stock prices.
And if the furniture industry struggles through the rest of the year, don't be surprised if some more executives "pursue other interests."
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