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Management Buzz 04/02

Firing your CEO and the latest ADA Supreme Court ruling

Head Case

CEO turnover surged in 2001, with 929 CEOs leaving their posts, according to outplacement firm Challenger, Gray & Christmas. Firing CEOs is almost trendy these days as a way for companies to show investors and clients that they're intent on making a turnaround. If you think it's time to show your chief executive the door, ask yourself these questions: Is this CEO the right leader for your company at this time and in this economy? Is the company's performance the CEO's fault, or is it the result of bad direction or information from you? Does the CEO recognize the problem, and does he or she have a credible plan for changing it? If not, and "if you're under-performing your competitors for four quarters in a row, the CEO needs to go," says Gary Sutton, author of The Six Month Fix: Adventures in Rescuing Failing Companies (John Wiley & Sons). "When earnings are down, you can almost automatically assume it's the CEO unless you see competitors in the same boat."

Once you decide the CEO's tenure is up, it's important to move quickly to get your company back on track. "It may sound brutal, but it needs to be," Sutton says. "CEOs are well-rewarded for good profits. So the downside needs to be just as painful as the upside is euphoric."

Pain Relief

In a victory for business owners, the Supreme Court limited the scope of the Americans With Disabilities Act (ADA) on January 8. The court's ruling in Toyota v. Williams said an employee's carpal tunnel syndrome had to significantly affect her "major life activities," which the court declared included such daily activities as brushing your teeth in addition to work. Sticking closely to established precedent and the written law, the justices ruled that work itself does not constitute the sum of major life activities.

But don't interpret the ruling to say carpal tunnel is not a problem. "I think employers dodged a bullet on this one," says Michael D. Karpeles, head of the labor and employment group at Chicago law firm Goldberg Kohn. "Another carpal tunnel syndrome case might come out the other way."

The ruling, however, represents a power shift that should help entrepreneurs, says employment law specialist Byrona J. Maule at Oklahoma City law firm Phillips McFall. It places the Supreme Court squarely on the side of Congress' written intent rather than the law's interpretation by the Equal Employment Opportunity Commission, which administers the ADA. Still, nothing in the ruling changes the need to judge every ADA claim on a case-by-case basis. "When somebody requests a reasonable [ADA] accommodation, get some professional human resources or legal advice on how you should respond," says Karpeles. "And document your actions."

Business writer Chris Sandlund (csandlund@entrepreneur.com) works out of Cold Spring, New York.

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This article was originally published in the April 2002 print edition of Entrepreneur with the headline: Management Buzz 04/02.

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