“Save Fritz Henderson!”

Mad @ Mgmt addresses the concerns of middle market companies, including banking, family & succession issues, turnarounds & performance improvement and economic life in general. Walter Simson is founder and Principal of Ventor Consulting a firm dedicated to middle market companies.

Well, perhaps not literally. An alternate title could be “Save GM from Itself.” But General Motors itself is not news, of course, and that title would miss the lovely phrase “Fritz Henderson.” The guy may be out of a job now, but he can almost certainly find employment if there is ever an opening for a big-band front man. I’m thinking “Fritz Henderson and the Car-Burators” would be cute.

What is wrong with firing Fritz Henderson, the 25-year GM veteran who has been Chairman and CEO for all of 7 months? Three things:

One, by naming Edward E. Whitacre, Jr. the Board Chair, as Interim CEO, the Board has confused governance with management. Boards supervise managers and validate strategy. They are not supposed to sing “Anything You Can Do I Can Do Better.” In addition, they failed to specify any specific failing of Mr. Henderson’s that Whitacre — or anyone else — can improve on. So how will they supervise an interim manager that chairs the board?

Second, they are interrupting the turnaround process. Attacking costs, questioning marketing, dealing with government and financiers…that all now stops as a new brain gets into the details. Turning around a company is a little bit like treating cancer. You can’t see results immediately. Firing the diagnostician may be satisfying, like shouting “Hey, where’s my results?” But when you think of the potential harm to the patient, you tend to maintain your first, well-thought out strategy. The board has metaphorically fired the doctor before all the test results were back.

Third, change agents get used up by definition. There was very little chance that Mr. Fritz Henderson would be a long term CEO, since he is dealing with so many short term structural issues. These can be contentious, and it often works only after the change agent assures people that he is not there for the good of his own career, but for the long term health of the company. The turnaround manager then completes his phase of the job, and hands the baton to the growth manager. The trouble with a second change agent is that he may see himself as the longer-term successor (easy for a chairperson to do) or as the growth manager…which would be a disaster if the turnaround phase is not complete.

Walter Simson is founder of Ventor Consulting, performance-improvement and turnaround specialists for middle market companies. Stay tuned for regular updates from Walter in the coming months.

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