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Stivison--Are the Barbarians at the Gates?

April 2000
Several friends were talking recently about the effect executive-level turnover has on morale at the shop-floor level. One industry veteran summed up his feelings: "The Barbarians are really at the Gates now!"

"Heck, they're not at the gates," replied another. "They've been here, they've gone and they're coming back for dessert!" The comment was met with very strained laughter.

As I read through recent copies of Printing Impressions' Top Management News, I became unsettled. Amid the upbeat declarations of new contracts and plant expansions, there seem to be more reports of turmoil in the boardrooms and executive suites of many mid- and giant-size printers. We're seeing turnover among CEOs at an unprecedented rate. And while "golden parachutes" may protect individual CEOs from personal catastrophe, there is often nothing to buffer the folks on the shop floor from the upheaval and uncertainly that follow top-level changes.

"Will we be sold again?" "Will I still have a job?" "What will happen to my pension?" We've all heard these responses and many more like them. And, while much of it is just talk, it diverts too much attention from the issues that really matter: serving our customers.

Why the turmoil in the corner office? One big reason is recent consolidation enabled by stock swaps. Printing firms that once supported a single family or small group of owners now have to satisfy shareholders. Moreover, many of these stockholders are anxious to make an immediate profit on their swap. As a result, they are much more interested in short-term stock prices than in the long-range growth of the firms. They want higher stock prices and they want them now. Period.

This intense pressure for profits gives today's CEOs precious little time to deliver big results. Executives no longer have time to analyze business plans thoroughly, launch them in steps and then make course corrections based on experience.

The pressure today is for CEOs to generate big numbers, quickly, or be replaced by somebody who promises faster results. This inevitably encourages short-term thinking and zig-zags in business direction, at the expense of building long-term strength.

But the quest for short-term profits has not panned out. In fact, the industry's financial numbers have been disappointing. Despite the overall economy's bull market, the printing industry has recently seen a NASDAQ stock delisted, and the PI/Compass 30 Stock Report shows the printing industry significantly underperforming against the Standard & Poor's 500 Composite. Forgetting comparisons with other industries, the vast majority of our leading companies are performing significantly below the levels attained by their stocks last year.
 

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