The Power of Knowledge

Caught your attention? Well I want to relate an experience I had in my business life that centers around the knowledge of your range of responsibility and your fiduciary obligations. I decided to change the names to protect the innocent, but the events are close enough to claim it as the “truth.”

Once upon a time, there was a foreign parent company with a wholly owned distribution unit in the USA. As time passed the Distribution unit became significantly larger than the parent. Of course this set in motion all kinds of corporate events, like, “should we buy our parent company,” or the opposite, “no way we would sell to our employees.”  It created drama in the executive suite.

In an attempt to resolve the issue in the favor of the ownership, the Chairperson summoned “us” to the HQ office in Switzerland. The conversation went like this:

Chairperson: “gents I have asked you to my office to present to you my choice for back up CEO in America.”

US CEO: “that’s interesting, but I have no plans for retirement.”

Chair: “Well you cannot work forever. I thought it would be wise to put someone in place who can be slowly trained up by you to take over when you do decide to retire.”

(As an aside, you can imagine? Our internal cerebral wheels were spinning. We want to buy the Company; we surely don’t want a “spy” from the homeland in our offices…the guy is obviously a “Trojan Horse.”  We want to put in place our own succession team. This is a brilliant strategy on their part.. how can we counter?)

A few minutes ensued. It seemed like an eternity.

US CEO: “hmm, let see if I can understand. This person is hired by you, but reports to me.  I will give him appropriate reviews. I do want to ask you to define my responsibilities. I understand that you will want me to make reasonable efforts to train him up, but if those efforts fail it will be my duty to take appropriate action. For instance, if I find your new candidate deficient, I assume that I will have the full authority to terminate the relationship, and that it is my sole responsibility.

Chair: “yes, that's correct. But I have chosen him for his very excellent background and he is a personal friend as well.”

US CEO: “well that is interesting but I am running a business based on talent alone. You understand that he will be judged on merit, not friendship, and that I will be the sole judge of that?”

Chair: ”Yes, of Course.”

Can you guess what ensued..?

US CEO, “Well, please ask Mr X to meet us at our hotel. Lets get the process going right now. It seems like the perfect time.”

So we went over to this charming little Swiss hotel, met the candidate over lunch and started his first review with an intro to his vc and background. After spending an hour in discussion it turned out he had no experience in our field and actually was hired solely as a “friend of the owner.”

US CEO: “well, Mr. X this has been very informative. We could indeed use some additional hands-on executive assistance in the USA, but to the best of my ability I have been unable to extract any information that would lead me to believe that you have any talent you can bring to bear in our business, other than being a friend of the owner and wanting to relocate to the USA.  As a consequence, I have to say that based on your interview today, you are fired from your position. I know this is a shock, but you are not a good fit, and this will save all the consequences that are so obvious if we continue.”

With that Mr X jumped up and returned to the HQ to report and complain. We too jumped up and headed back to the US with no further communication.

Needless to say, this was not the end of the conversation, but it was the end of Mr X and any further back-up CEO Candidates.

It was also a great strategy lesson for. Affirming the chain of command and understanding the limits of your responsibilities is a very good thing to establish in the beginning. A mutual understanding among the Corporate players can help avoid these very types of conflict. And if they happen, having the presence of mind like the US CEO is a great skill!  It's the power of Business knowledge…get some!

Oh, it takes some courage as well!

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