Question

In: Operations Management

Read the Chapter 12 Mini-Case: A Change at the Top at Procter & Gamble: An Indication...

Read the Chapter 12 Mini-Case: A Change at the Top at Procter & Gamble: An Indication of How Much the CEO Matters?

Respond to question 2: How Is it a good practice to rehire a former CEO who has retired? Please explain the potential advantages and disadvantages of doing so.

Solutions

Expert Solution

Yes, it is good to hire a former CEO who has been retired from the job if he has contributed a lot and know the company very well. Although, a retired CEO cannot be a given a CEO position again but can join as a president of the company who can advise and consult on important issues to again get back to the same position.

The advantages of this are that the CEO already know the company and have deeper knowledge of the company. It is better than a new person who will take the time to learn about the company’s environment.

Some other advantages are-

  • Past experience to guide new innovations.
  • There would be minimal handholding and adjustment required.
  • If the former CEO has a made his goodwill in the previous tenure as CEO, he/she will be able to cash on it further.

Some disadvantage can be that he might be sometimes overconfident and takes decisions basis on his past experience which may not be suitable in the current scenario.

Some other disadvantages are-

  • Others might be demotivated of not getting a chance, especially the other top management.
  • There would be a lack of fresh ideas.
  • The tenure of a former CEO would be limited as the age factor would play a role.

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