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 toshow investors and clients that they're intent on making aturnaround. If you think it's time to show your chief executivethe door, ask yourself these questions: Is this CEO the rightleader for your company at this time and in this economy? Is thecompany's performance the CEO's fault, or is it the resultof bad direction or information from you? Does the CEO recognizethe problem, and does he or she have a credible plan for changingit? If not, and "if you're under-performing yourcompetitors for four quarters in a row, the CEO needs to go,"says Gary Sutton, author of The Six Month Fix: Adventures in RescuingFailing Companies (John Wiley & Sons). "Whenearnings are down, you can almost automatically assume it's theCEO unless you see competitors in the same boat."

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