The Executive Stiletto

Last Fall, Daniel Lewis, assistant head of an Eastern insurance firm's finance department, received a nasty shock soon after reporting to work one Monday morning. Lewis, who helped oversee the company's investments, was unexpectedly called in by his boss and told that the corporate powers were so delighted with his work that they wanted to let him try his hand at selling as well. Furthermore, the department head stated, he was to begin his new assignment within a week. The brief meeting ended with the supervisor's handing over a list of prospective clients.

Returning to his desk, Lewis quickly went over the roster. Some opportunity: All the companies mentioned had proved beyond any reasonable doubt---over a period of many years---that they were not even slightly interested in purchasing the firm's insurance. Lewis (not his real name) then computed his travel time; he'd be on the road for at least ten months of the year, which would mean that someone else would soon be hired to take over his office duties. Lewis could not deny his worst suspicions: that his boss considered him a threat and that his opportunity was, in reality, an almost sure-fire way to induce him to resign. In short, Lewis was---in the sophisticated style of the Sixties---being canned.

The number of U. S. executives who each year find themselves in Dan Lewis' predicament is uncertifiable, since the end product is almost always a "voluntary" resignation, as opposed to a formal sacking. At the very least, however, evidence indicates that of America's nearly 2,250,000 executives earning more than $15,000 per annum, approximately 100,000 men will leave their corporate positions with the aid of a subtle but unmistakable push from any one of a number of directions. Only a tiny number of executives are ever actually fired, for outright firing has become an anachronism in the business world. Although it once took only the amount of time required to stuff a pink slip into an executive's pay envelope, firing today has evolved into a lengthy and often labyrinthine process that may take from three months to three years. Even the word "firing" is rapidly disappearing from the American scene. Instead, euphemisms such as "dehiring" and "disemploying" have come into vogue. The ordeal these words describe is a gradual, cumulative series of minor slights and harassments directed toward the outward-bound executive until he is motivated to look for, and find, another job. The executive world deems this a most civilized approach to the traumatic business of being bounced and, as long as corporate profits remain high, it can afford the luxury of keeping a man on the payroll long after he ceases to be of value to the company. Currently, more than 75 percent of major U. S. corporations employ such dehiring techniques; and that percentage will increase before the year is out. The major cause of this is high-level corporate insecurity: Top executives---most of whom don't enjoy the slender security of a contract---want to be sure they, too, will be carried on the company ledgers for several months, should they ever be asked to pack up.

If that unhappy moment comes to pass for them, the reasons for their downfall will fit into one of two broad categories. The first might be termed an act of industry, in which the executive himself is personally blameless. Thus, when Martin Ackerman, ex-president of money-losing Curtis Publishing, fired 5000 employees earlier this year, or when Lynn Townsend dumped 7000 white-collar men upon assuming the presidency of woe-beset Chrysler in 1961, all the out-of-work executives were able to apply for jobs without the handicap of having been found personally unsuitable.

The second firing category deals with situations in which an executive is held personally responsible for his being sacked. These range from personality clashes (the most common cause of executive departure) to on-the-job incompetence. While almost all U. S. corporations have highly structured policies regarding hiring practices, more than 80 percent of 168 top American firms queried not long ago by Business Management magazine admitted they have never formulated procedures for firing. The most likely reason for this is industry's distaste for all aspects of the firing process. (It should be noted that, since formal firings have become almost rare, when a swift separation does take place, the morale and productivity of the canned man's colleagues plunge disastrously---which is yet another reason management avoids firing.)

In most companies, a department head has the last word on separations, and, should the employee incur his boss' disfavor, he'll be let loose without recourse. But this is beginning to change. More and more corporations are now emulating paternalistic IBM, which has always been noted for high employee morale, much of it due to its "open-door policy": A fired or downgraded executive can challenge his supervisor's decision by confronting the superior's boss. In this way, IBM takes pains to weed out budding executive ogres from within its ranks. But even these gentlemen will be eased out instead of summarily super-annuated (another favorite firing euphemism). Since contemporary cashierings stretch over a period of time, logic would indicate that the sooner the executive realizes he's a marked man, the sooner he can begin looking for another job. If he is able to decipher his corporation's early-warning signals that he's destined for termination, he may gain as many as three to six months in his search for new employment. And a very valuable period these months are: Personnel experts agree that it usually takes at least three months for the $15,000--$25,000-a-year exec to find another job, and twice that long if his salary is $50,000 or more. Obviously, the executive's future may well hinge on his ability to sense his impending fate as quickly as possible; too many careers that seemed certain to end in a president's chair have been short-circuited because the executive realized too late that he was being fired and, in panic, leaped at the first half-decent opportunity that presented itself. No such future awaits the man who can detect the telltale signs that indicate management has decided to unsheathe the executive stiletto.

American industry has been as inventive in its firing methods as it has in product innovation. The single most obvious way to encourage an executive to quit, as men like Stephen Block have discovered, is to assign him to self-effacing, meaningless tasks. Block, hired by Prentice-Hall as a methods analyst---industry jargon for efficiency expert---was part of a division responsible for setting yearly work quotas in many departments of the giant corporation. One of the division's most intriguing sources of income was its annual bonuses. These were computed by giving the time-study group a percentage of the money it saved the company by setting higher work quotas for other divisions (and thereby cutting down on the amount of bonus pay due those divisions). Block found himself in basic disagreement with this type of cost accounting. He believed that a continual lifting of work levels would only result in dissatisfied workers, and he made his views known. Several months later, Block was assigned the task of analyzing Prentice-Hall's waste-disposal procedures. He went at it thoroughly and his numerous recommendations on the subject were well received by his superiors---but not acted upon. Four months after Block began his one-man garbage crusade, with still no action taken, he got the message and resigned.

More bizarre instances of executives who abruptly find themselves doing menial work often involve men who sign long-term contracts, incur management's disfavor early in the life of their written agreement and are then subjected to unusual pressures. (This is not, however, a rule, even if it is a fairly common exception. In most big corporations---such as United Merchants & Manufacturers---executives on contract are told, months before their agreements are up for renewal, if they're not being rehired.) One outstanding example of contractual pressure occurred in Hollywood several years ago, when 20th Century-Fox tried to buy out a screenwriter's lucrative seven year agreement---which had more than six years to run. The writer, however, obstinately refused to settle for anything less than what the contract called for. Hoping to invite his resignation, the studio assigned him to lead guided tours around the sound stages---and required him to wear a uniform. Almost a year later, one of the studio's bankers came to visit his investment. He was taken on a guided tour by our screenwriter, who performed the function admirably. In fact, the money man was so impressed with the tour guide that he decided to give him the benefit of his advice. "Tell me," he asked, "how can a man as intelligent as yourself be content to hold such a meaningless job?"

"Oh, I don't mind leading these tours at all," answered the writer. "I like people. And, besides, the salary is pretty good."

"Really?" came the reply. "How much do they pay you?"

"Three thousand dollars a week," answered the writer.

Next day, he was back working on scripts.

Closely allied to the tactic of assigning an executive to degrading duties is the strategy of simply removing all his responsibilities, soon after which, it is hoped, he will voluntarily remove himself. But this doesn't always come to pass. Not long ago, the oft-absent second man in charge of a division of Fawcett Publications didn't seem to notice when, each month, his responsibilities were slowly and systematically taken away from him. When he refused to quit---or even complain---his frustrated supervisor remarked, "What's the matter with the man? He doesn't have a thing to do here anymore and he knows it. Doesn't he have any self-respect?" Several weeks later, the boss overcame his revulsion at having to fire someone and got rid of him.

Another intimidating approach involving an executive's job duties, as was true in the case of Daniel Lewis, is to keep a man constantly traveling (in which case he must choose between his job and his family)---or to transfer him to an undesirably located branch of the firm. One former Olin Mathieson employee reports the reason he left that corporation was that he was ordered to its plant in Doe Run, Kentucky. "It was presented to me as some kind of achievement," he says, "but when my boss gave me three months to think about it, and after checking with colleagues, I understood that those three months were being given to me to look for another job." Even (continued on page 158) The Executive Stiletto (continued from page 102) if a transfer represents a legitimate promotion, incidentally, should the exec turn it down, he'll soon be down-and-out. Says a young former Bell Telephone lawyer, who left the corporation in 1968, "Bell attorneys are expected to spend from three to six years working in New York, or else they don't advance in the company. I didn't want to live in New York City, but I did want to advance; so I had to resign."

Spin-offs of undesirable job duties have been created by industry to deal with top-level executives who have given meritorious service to the corporation over the years but have nothing further to contribute. One example is the "empty title" approach, in which a man is given a high-sounding title that, when functionally translated, means absolutely nothing. Reports the president of a national trading-stamp company, "Right now, appointing a man 'chief of the executive committee' is often a way to get rid of a high-salaried, useless executive. In point of fact, the executive committee probably does not exist, nor has it ever, nor will it in the future." Further titles of little or no significance often include anything dealing with "new products" or "future products." One of the more appealing ways in which corporations occasionally rid themselves of day-today dealings with high-ranking executives is to actually create new divisions for them. Time Incorporated and Humble Oil & Refining Company have been among the pioneers in this unique form of corporate diversification; insiders at both corporations report that special publications were created specifically to take care of superfluous executives.

Even if a man's job responsibilities and title are subject to change only by edict from the very top of the company hierarchy, there are still dozens of ways to make him uncomfortable enough to quit. A time-honored approach is the office assigned to an executive, which is usually a barometer of his success within the company. If he is abruptly moved from executive row to the boondocks usually reserved for executives in training, his future is bleak. But this rather obvious tactic has been refined through the years. Says a Los Angeles management consultant, "One of the most effective ways I've seen of getting an executive to leave is to enter him in a game of musical desks. It usually takes a man's staff about two weeks to relate to their boss effectively after a move. When his office is again moved---each time farther away from the action---everybody grows more upset. After the third time his office is moved in a period of less than three months, he's no longer able to get any work done---partly because he's now out looking for another job."

A further finessing of office upmanship is to reserve a section of a particular floor for men who, once there, know that their next move will find them out on the street. An outstanding example of this is a certain floor of Chicago's Prudential Building, part of the headquarters of the Leo Burnett ad agency that Burnett employees have nicknamed "Death Row" and "The Bone Yard."

Conferences are another medium through which the executive gets the message that he's no longer wanted. The simplest method used consists of never asking an ill-fated administrator to attend. Simple, but a little too familiar by now. A much more effective way of doing the deed was practiced on a former Continental National American Insurance executive. This gentleman was asked to attend every conference that went on in C. N. A.'s Chicago divisions. Since all his time was spent in meetings, the executive was unable to get any work done; the executive stiletto claimed another victim within eight weeks.

Far more popular than conference games as a means of covertly conveying disheartening news is the interoffice memorandum, which has now become a standard dehiring tool. There are a number of ways in which memos are utilized toward this end. Some of the more popular: advising the outward-bound executive to address future memos to a man who, until that moment, had been his subordinate; never responding to memos written by the executive ticketed for departure or specifically requesting the executive to write long memorandums that are then never acknowledged. The most basic of all memo maneuvers is to simply remove an executive's name from the memo route. Like most interoffice slights, omission of the man's name is noticed immediately not only by the executive (whose in box suddenly resembles an empty cocktail tray) but also by his colleagues, who react by keeping their distance. And by not having access to information contained in various memos, the executive will naturally find himself laboring under a handicap. Case in point: A former McCann-Erickson account executive was summoned to meet with other agency people and client representatives. As far as he knew, the purpose of the meeting was to select one of several campaigns proposed several weeks before. Since he'd been excluded from memo lists, he had no idea that the choice had already been made. When he gave his own recommendations at the meeting's outset---none of which had been chosen---he was made to look and feel incompetent. He left the agency a few weeks later.

As far as rapid disemployment goes, one of the fastest methods currently operative in American business is to give a top-rated executive an assistant who is actually his successor. After several weeks, the assistant, presumably by dint of hard work, is given authority equal to or exceeding that of the man he's going to replace. At this point, the former boss usually begins to compile a high record of absenteeism, which ends when he finds another job. This is fairly pedestrian stuff, however. A more sophisticated method that was recently used in a division of General Electric shows how quickly firing styles are changing. A sales executive who'd been tapped for termination suddenly began to receive a great deal of solicitous help. He was visited by representatives from accounting, who wanted to go over his expense accounts; from personnel, who thought his department was overstaffed, since it produced so little for the company; a sociologist, who chatted with him about the need for more coordinated supervisory planning; the budget director, who felt it was necessary to reduce his department's budget and suggested several possible directions in which to move. Before an engineer from product design paid him a friendly visit, the sales manager had decided on what that direction should be---out.

The time of corporate officers, however, may be too valuable to waste on visitations primarily concerned with getting an executive to quit. If it's too cumbersome to conduct a grand conspiracy by undercutting the executive through his staff or any of the tactics examined thus far, there are several options still open to management that require little in the way of effort, yet prove highly effective in acquiring resignations.

During the past two decades, high tax brackets have forced corporations to find other ways to compensate well-salaried employees; hence, a tempting list of job perquisites has been offered to top executives. Among the most prevalent of these substantial fringe benefits: lucrative performance and Christmas bonuses, profit-sharing funds, deferred-compensation plans, unmarked company cars, memberships in exclusive athletic and country clubs, free medical checkups, company-paid insurance, homes partially (or fully) purchased by the company, virtually unlimited expense accounts and favorable stock options, to name just a few. Since acquisition of these intracompany status symbols is highly conspicuous, denial of them is doubly so. When the prestige trappings are withdrawn, a painful loss of status is the result. When this is programed correctly, the executive in question will begin making plans to leave. A prototypal example of this happened to a former RCA engineer who'd been tipped to a supervisory capacity and whose lack of administrative skills surfaced just a few months after his promotion. Upon returning from vacation, the executive discovered that his spot in the company parking lot had been assigned to another man; his office had been redesigned into a cozy nook for three vending machines; he was no longer on the list for the executive dining room; his name had been stricken from the posted company chain of command. Someone was trying to tell him something.

Even though the status-demotion method is an efficient way to solicit a man's resignation, it has its drawbacks. The most noticeable of these is that other executives are able to see the glint of the executive stiletto and become uptight (and, therefore, less productive) for at least as long as the dehired administrator hangs on. And in the case of a top corporate officer being asked to exit, the shock waves travel upward. As Louis B. Mayer once ruefully remarked to Judy Garland---after MGM's board of directors had ruled against helping out the star who'd made them a fortune---"If they can do it to you, honey, they can do it to me."

To ward off executive anxiety, management has lately hit upon an excellent way to dispatch unwanted veteran administrators: medical phase-out. Says a Chicago management consultant, "In several firms that I know of, the company physician is the individual who does the actual firing of aging executives. When these guys come in for their annual checkups, the doctor can always find something wrong with their health. He'll then advise management that it's all right to offer the man early retirement."

The executive asked to accept early retirement, of course, has no real choice in the matter. Although medical phase-out is often used as only one weapon in the arsenal of exit-expediting devices that is turned on the unsuspecting executive, it's not unusual to find early retirement alone practiced as a firing strategy. In 1957, Standard Oil proved itself a leader in this turnover technique by lowering optional early retirement age to 50, which allows the firm the freedom to offer "selected" executives a lucrative way out. Often, the difference between many years' worth of severance pay and early retirement funds won't compensate the company for the morale problems an instantaneous dismissal could cause.

But of all the ways executives are unloaded, the very best is the put-up-job stratagem, in which an exec's boss actually tells him about another---and better ---job and hopes like hell he'll be hired. And that brings us, finally, back to Daniel Lewis. As you remember, Lewis was assigned by his boss in the insurance company's finance department to travel throughout America, trying to sell insurance to companies that consistently refused to buy in the past. Lewis' supervisor had mapped out this gem of office infighting with the intention of replacing him several months after he began his traveling assignment, should he not show the good taste to resign. But Lewis could see the strategy well before he took to the road. And as soon as his travels started, he began heavily complimenting his boss to every company manager he visited. Within six weeks, one of the firms got back to him to say that there was an opening in the corporation that required more experience than Lewis had, but which seemed perfect for the man he had talked up. Did he think his boss could handle the position? Lewis listened as the man described the job; he thought his boss was capable of getting the job but not of holding onto it. So he replied, "I think he's the ideal man for the job." A few weeks later, Lewis' department head left the insurance firm for his new job and, with no other experienced executive left in the finance department, the vacated supervisor's position was given to Lewis. Additionally, Lewis wound up with one more last laugh, for several months later---just after Dan was named president of the corporation---his judgment proved correct: His former boss had mucked up an entire corporate division at his new job and---having placed himself beyond the slow-moving shaft of the executive stiletto---was summarily dismissed.