Michael1942's Blog

All of the latest and near latest company problems plaguing the country has prompted me to think back over my experience with company’s whose leadership had no idea as to how the company worked.Going back a number of years when I was in the flooring industry, there was a company called Color Tile. this company had been in business for many years. A major manufacturer of auto parts and carpet padding purchased the company with the proviso that the profits could not be drained off to support any of his other holdings. With that in place, he decided to increase the selling prices to the detriment of sales. The idea I think was to make enough profit to make available  some cash as profits. In manufacturing one can increase the price to the wholesalers by a few cents (so to speak) and increase profits but in retail that increase has to  grow quite a bit more as the expenses are greater. Currently there are several CEO’s of major companies that are struggling who have no experience in running a corporation but have backgrounds in other industries but not retail. Retail management takes a person with the knowledge of retail stores and their customers. If a CEO takes the position of a customer and actually went into the stores without an entourage, they could actually learn something of value. There is a  TV program called Under Cover Boss that does just that but since it is TV , its considered entertainment instead of fact.  Apparently the Boards of these companies never received the memos that covered the point of  hiring a person from another industry at a high price with a golden parachute in case of failure. Each industry has its specific needs and someone from another one does not necessarily know these needs so cannot address them.  Along with outsourcing and cutbacks many company’s have lost credibility along with customers.  There was a time long ago when the norm was to promote from within and train future leaders of that industry This practice has stopped.This also applies to our Congress.