Coming out of a recession (not the most recent, but another recession), a company had one line of business with flat sales. The company’s other divisions were hitting double-digit growth rates, but this one division had no growth at all.
In the meeting to report my results, I could tell that the CEO doubted the division manager’s ability. I was tempted to sit as far away from that guy as I could, to avoid becoming collateral damage when the CEO fired him. But first I had a story to tell.
I had gone back into every past recession-recovery episode to look at how that market segment performed. It turns out that the problem division was in a part of the economy that always lagged in the recovery. Although other economic sectors would take off early, this one division was in an industry that didn’t get moving until 12 to 24 months after the recession was over. I had my charts. More importantly, I think, I had confidence that I knew what I was talking about.
The CEO accepted my recommendation that they simply wait a while. He didn’t appear fully convinced, but he respected my judgment and decided to wait.
Six months later, the problem division blossomed. Sales shot up and profitability soared. Pretty much right on schedule. I said to the division manager, “Who would have thunk it?” He smiled and pointed at me, and said, “You thunk it.”
One part of the success: the division had stable, mature management in place. If a new division manager had been brought in, he or she would have shaken up the sales team, instituted new programs, and generally disrupted what was really a decent group. The division’s sales were probably several million dollars higher thanks to stable leadership. Sometimes management needs to be changed, no doubt about it. Before firing someone, though, make sure it’s poor performance that is the problem, rather than common economic patterns.