Wednesday, August 26, 2015

The Management Analog

Yesterday we wrote about voters taking a chance on a change agent when things have gone wrong. As a now-retired management professor, we many times lectured on the analogous behavior in large corporations.

Successful firms facing a CEO succession tend to promote from within, insuring continuity. Their motto is "It isn't broken, let's not fix it."

A firm whose directors conclude its performance is sub-optimal are very likely to hire an outsider as the new CEO, to shake things up. Does it always work? No. However, promoting from within under adverse circumstances would be considered akin to malpractice. Their motto: "We're in a hole, let's stop digging."