Most of us understand what it looks like when a company decides to lay off a few 1000 people. But what does it look like when the CEO is being shown the door?
When 1000's are laid off, companies put the PR and Investor Relations teams in motion. Their job is to mitigate the negative impact that could possibly result from the pain which the company is inflicting on literally thousands of families. Couched in terms of cost-reductions and restructuring, lay-offs are sold as being good for the company and often times, lay-offs are good for the management team making this "difficult decision".
When the CEO gets fired, things look different. Invariably, it is not presented as a firing. And kind words of gratitude for past service, perhaps less than sincere, along with a handful of well-wishing, are heaped on the out-going company leader. Take a look at the recent departure of Avi Reichental at 3D Systems.
"Over the past 12 years, Avi has helped build 3D Systems into a global leader in 3D design and digital fabrication and we thank him for his many contributions," were the kind words from the Board of Director's Chairman - by very definition, the people doing the firing. Added to that comes the well-wishing for the former CEO's "future endeavors", which clearly won't involve this management team any longer. In this case, co-founder and company director, Charles Hull was quoted as saying "We are profoundly grateful for the visionary leadership Avi has provided to our business and to our industry, and we wish him well in his future endeavors,"
3D Systems included the almost obligatory departure-by-mutual-agreement statement at the top of their press release. Somewhat jaded business observers could ask themselves how many zeros are in such a "mutual agreement". Certainly, the firing of a CEO is typically done with much more largesse on the part of the company than they might provide in your average 10% head-count reduction - at least at American companies.
Whatever the final, and usually obscured, financial details are, the firing company puts a perfunctory "it's not a firing, just a mutually agreed to business decision" label on the dismissal. Oh yes, and it is never a "dismissal", but rather a "departure". Ah, ... bon voyage!
This is the feigned consensus that marks a CEO firing. The fairytale must state that everyone agrees that this is best for the company, that all the parties are moving off to better futures, and that, of course, there are no hard feelings. This management-kumbaya is a ritual to disguise the company in-fighting which led to the ouster of the Chief Executive.
This fairytale is another stark difference between layoffs and firing a CEO: the former is often a case of employees paying the price for a series of poor management decisions. The latter is essentially nothing more than political manuveuring among a small circle of managers. In the case of 3D Systems, the firing of the CEO and layoffs may be going hand in hand.
PW has never met the now-former-CEO of 3D Systems. Maybe this firing is justified, and maybe this CEO is just on the losing side of an insiders' fight. But our past encounters with the company left us with little sympathy for the plight of 3D Systems in general. In fact, past encounters left us with a rather rancid taste in our mouths after encountering an arrogant and cocky company - in particular from the company's unimaginably abbrasive Chief Marketing Officer. A few inquiries showed that PW was not alone in this experience with 3D Systems, and we swore off any level of interaction with the company until they demonstrably changed for the better.
Will this CEO-firing be a first step in changing the company culture for the better? Given our experience with 3D Systems, PW doesn't care enough to venture a guess. But the massive growth of 3D Systems was based on a strategy of aggressive acquisition under the "leadership" of Mr. Reichental. At PW, we recognize the strategic importance which acquisitions can play, however we place relatively more value on the hard work of organic growth. If this company cleans house throughout it's top management levels, changes it's outward arrogance, and focuses on fundamental business, then this may well be a first step in the right direction. If not, then it's just another CEO getting the short end of the Board-of-Director's-firing-stick.
