Are CEOs Ousted More During Downturns?

There’s a new piece of research by Dirk Jenter, Assistant Professor of Finance at the Stanford Graduate School of Business, on whether or not CEOs are ousted because their companies perform poorly, unrelated to their individual performance.  You can read the paper here.  From the abstract:

This paper examines whether CEOs are fired after bad firm performance caused by factors beyond their control. Standard economic theory predicts that corporate boards filter out exogenous industry and market shocks from firm performance before deciding on CEO retention. Using a new hand-collected sample of 1,627 CEO turnovers from 1993 to 2001, we document that CEOs are significantly more likely to be dismissed from their jobs after bad industry or bad market performance. A decline in the industry component of firm performance from its 75th to its 25th percentile increases the probability of a forced CEO turnover by approximately 50 percent. This result is at odds with the prior empirical literature, which showed that corporate boards filter exogenous shocks from CEO dismissal decisions in samples from the 1970s and 1980s. Our findings suggest that the standard CEO turnover model is too simple to capture the empirical relation between performance and forced CEO turnovers, and we evaluate several extensions to the standard model.

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Business @ Work

I’ve been enjoying looking through the newest issue of BusinessWeek, where readers have collaborated with the editors and writers to contribute to the magazine’s special report “Business @ Work”.  Using LinkedIn, an online poll called YouGov, and a pollster firm, the magazine created an interesting section that culls the collective wisdom.  As the report shows, work-life balance and happiness at work are two of the greatest workplace issues that need to be tackled.   Other interesting articles are throughout, such as ones on Gen X & Gen Y in the workplace, time management, and GTD (Getting Things Done).

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Where Will They Lead?

Because of our recent graduation ceremony at the SOM, I was determined to find something to post that was graduate-related today, and the Aspen Institute didn’t let me down. They recently published a survey, “Where Will They Lead?”, which gages current MBA student’s attitude on the intersection between business and society. You can download the executive summary for free, or purchase the full report. Here’s the executive highlights:

• Business students in 2007 are thinking more broadly about the primary responsibilities of a company. In addition to citing shareholder maximization and satisfying customer needs, more students are also saying “creating value for the communities in which they operate” is a primary business responsibility.
• MBA students are expressing more interest in finding work that offers the potential
  of making a contribution to society. (26% of respondents in 2007 say this is an
  important factor in their job selection compared with 15% in 2002.)
• That said, business schools and companies have not convinced them that
  environmental and social responsibility contribute to corporate financial success.
• Although more students in 2007 than in 2002 believe it is very likely that they will
  face values conflicts on the job, the further they progress through their MBA program
  the less confident they feel that their business school training is preparing them to
  manage those conflicts.

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Nelson Mandela’s 8 Lessons of Leadership

Time has a wonderfully concise article on Nelson Mandela’s lessons of leadership.  Written by Richard Stengel, the co-writer of Mandela’s autobiography Long Walk to Freedom, these lessons are drawn from Stengel’s time spent learning from Mandela as they prepared to tell Mandela’s astounding life story.  Highly suggested for fans of Mandela as well as those looking to learn leadership from one of its most savvy practitioners.

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Featured Item of the Week

Come to the library and check out The Wall Street Journal’s special Small Business Report. Read about small businesses struggles with rising energy prices, the downfall of Cold Stone Creamery, and other articles helpful to the small business entrepreneur. You can also read it online at the Wall Street Journal’s Small Business section of their website.

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IBM CEO Survey – The Rise of New Consumer Bases

Sunday’s Boston Globe featured a quote from Sylvia Maxfield on the rise of CSR, which tied in with their article on the IBM/Economist Intelligence Unit’s 2007/08 global survey of CEOs.  The survey defined two emerging customer bases, the Information Omnivore and the Socially-Minded Customer, who will be driving companies’ efforts for the future.  The Information Omnivore is defined as a consumer who creates content about companies and their products (think YouTube videos about products they like) while demanding greater input on the end-product.  The Socially-Minded Customer has increasing expectations for the enterprise to be concerned about societal issues, such as ethical treatment of workers and sustainable products.  While the CEOs surveyed stated that they would be focusing greater effort on serving the needs of these consumers, the report observed a 22 percent drop in CEO confidence in effecting change in their company.  To read more about the report, IBM has a press release on their website.  You can also obtain the full report by registering on the IBM website, which will then be delivered to you shortly after it’s released (the site says its due in May, but the exact date isn’t mentioned).

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The Boston Globe 100: Best of Massachusetts Business

If you didn’t read this past Monday’s Boston Globe, then you probably didn’t see their wonderful 20th anniversary issue of the Globe 100, a publication where they profile the 100 Best companies in Massachusetts.  Included in this magazine-length section are articles about five local companies that survived downturns and have experienced consistent success, a CEO survey on the economic outlook, Q&A’s with local leaders, rankings of local companies across sectors and different qualities, and profiles of these top companies.  Read the entire special publication online at the Boston Globe website.

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Bold Ideas for Work and National Employer Survey

The 2008 National Employer Survey by the Families and Work Institute is due out tomorrow.  Advance word is that not much has changed since 1998, meaning that benefits and options for managing the work-life balance have not seen increased use to American companies.  The differences from the 1998 report are in the decrease of companies offering pensions and the increase in co-pays for healthcare.

If that has you down in the dumps, I’d suggest reading another report by the Families and Work Institute, their 2008 Guide to Bold New Ideas for Making Work Work.  I’ve read parts of it and have found some very interesting and innovative methods companies use to motivate and retain employees.  It’ll hopefully give you some new ideas to encourage or engender change in your environment.

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The Ethics of Time Off From Work

Have you ever worked for a boss who expected you to stick around for a regular 9-5 shift but they seemed to have a very flexible schedule? And would they expect you to explain why it was you needed time off, but would offer no explanation of why they were gone? A recent Deloitte survey addresses this issue and reports that a more transparent and flexible schedule for both leadership and employees would have a positive impact on the work environment. I know it may sound like common sense to some, but it’s a pretty interesting report to read. See the summary of the report at Kiplinger, and read the full report here.  Thanks to Linda Schuller Wolf for hearing a blurb about the report on the radio!

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Forbes Magazine’s 100 Most Powerful Women (and a fun link!)

If you haven’t seen this already (it’s from August 2007), then now’s the time to check out Forbes Magazine’s wonderful report on The World’s 100 Most Powerful Women, available here.

I came across this while looking at the other lists that Forbes has online, which I was browsing thanks to April Dubrow, student worker in the SOM Library.  April forwarded me another of their list, the Forbes Fictional 15, a list lampooning Forbes’ compilation lists.  The Fictional 15 is a compilation of the top fictitious characters.  Check it out here, as well as their list of 25 Largest Fictional Companies, available here.

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