Frank became chief financial officer and a member of the Executive Committee of a mediumQuestionFrank became chief financial officer and a member of the Executive Committee of a medium-sized successful family-owned medical device business six months ago. The first nonfamily member to hold such a po...
Frank became chief financial officer and a member of the Executive Committee
of a medium-sized successful family-owned medical device business six months
ago. The first nonfamily member to hold such a position and to be included in
the Executive Committee, he took the job despite a lunch-time remark by the
company's CEO that some members of the family were concerned about Frank's
"fit with the company culture." But the CEO (who is married to the daughter of
the founder of the company) said he was willing to "take a chance" on Frank.
Soon after Frank started, the company decided for the first time to "right-size"
(a euphemism for downsize) to respond to rapid changes in its business. Frank,
who had been through this before when he was a senior manager in his previous
company, agreed this was good for the long-term health of the 20-year-old
company. He decided not to worry that family members seemed more
concerned about their own short-term financial interests.
Besides, the CEO was relying on Frank to help him determine how to downsize
in an ethical manner; the CEO said he trusted Frank more on this than he did the
head of his personnel department, who had "been around a little too long."
, On Frank's recommendation, the company decided to make its lay-off decisions
based on the annual performance appraisal scores of the employees. Each
department manager would submit a list of employees ranked by the average
score of their last three appraisals.
If the employee had been with the company less than three years, if the score for
two employees was identical, or if there was some extraordinary circumstance,
the manager would note it and make a decision about where to rank the person.
At some point, Frank and the Executive Committee would draw a line, and
those below the line would be laid off.
As Frank was reviewing the evaluations, he was puzzled to find three
departments in which the employee at the bottom of the list had "N/A" where
the evaluation score should have been written. When he asked the managers to
explain, they told him these employees had been with the company almost since
the beginning. When performance appraisals had been instituted six years
earlier, the CEO agreed to the longtime employees' request that they keep
receiving informal evaluations "as they always had."
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