Getting Past the CEO Blame Game

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Young CEO giving a presentation
Young CEO giving a presentation
Young CEO giving a presentation

Whenever a company hits a rough patch, the first person to take the hit is the CEO. It doesn’t matter whether the CEO has been on the job several years or just got promoted a few quarters ago. The buck has to stop somewhere, and the CEO is often a convenient target. It doesn’t help that most American CEOs make dozens of millions of dollars every single year. There’s a lot of envy, misplaced suspicion, and muted anger directed at these people. After all, a key part of their job is to be the very public face of the company that they’re heading.

There’s been a recent rash of CEOs getting booted. The most visible of course are the CEOs of Mattel (NASDAQ:MAT) and McDonald’s (NYSE:MCD). While certain instances of CEO bashing and CEO blaming are definitely well-deserved, for the most part, I think it’s a waste of time. For the most part, instead of looking for somebody to blame and letting the CEO have it, maybe the whole strategy and philosophy of the company involved needs more scrutiny. Instead of laying everything on to the shoulders of one person, maybe the current direction of the company needs to be revisited. Perhaps this would lead to more fruitful results.

You have to understand that CEOs don’t run the show like dictatorships. Most corporations don’t work like that. If anything, a lot of this recent CEO decapitations, so to speak, are primarily for the emotional catharsis and release purposes. It gives the market some level of assurance that the company involved is doing something drastic to change its fortunes. Sadly, simply kicking somebody out or changing CEOs is not going to do the trick.

Take the case of McDonald’s, McDonald’s is facing a serious identity problem because consumer tastes have changed. The golden age of fast-food is in the past. Consumers are looking for higher quality. They are also looking for more specialization, and their tastes are becoming more exotic. They don’t care as much as a speedy delivery as they do about great food and great environments. This is a change in culture. Simply booting out the CEO is not going to the trick.

Unfortunately, that’s how the market rewards companies. Have you ever noticed that when a CEO gets booted out, sometimes the stock of that CEOs former company spikes up? That’s the market herd mentality in full effect. Sadly, show expulsions are not going to cut it. You need something deeper and more profound.

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