The Wall Street Journal-20080122-Tough Choice- Leave Sinking Firm or Try for Rescue- Managers Face Risk With Either Decision- Worry About -A Stigma-
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Tough Choice: Leave Sinking Firm or Try for Rescue; Managers Face Risk With Either Decision; Worry About 'A Stigma'
[Focus on Recruitment, Pay and Getting Ahead]
As his employer struggled, manufacturing executive Wes Hodges faced a difficult decision: Should he stay and help, or abandon the sinking ship before it took him down with it?
With the economy stumbling, other managers may face Mr. Hodges's dilemma this year. Career coaches say the decision must be navigated carefully and that there are pros and cons to each choice. "You've got to make some pretty good decisions about risk," says Karen Armon, an executive coach in Golden, Colo.
A manager who stays may get a chance to take on more responsibility as others bail. Experience handling such crises may be valuable to future employers. Plus, some executives feel a moral obligation to try to save the company and help employees.
But staying also can carry big risks. If the executive ultimately loses his post, being associated with a failed or troubled company can carry a stigma in the job market.
Indeed, a recent study indicated that top executives who jumped before a business failed suffered less career damage than peers who stayed to the end. The study, conducted by professors at Indiana University, Texas A&M University and Tulane University, examined career consequences for executives at banks that failed during the 1980s financial bust in Texas. It found that 54% of senior executives who stayed had to take lower-ranking jobs at their next employer, compared with 41% who bailed. Similarly, 77% of executives who stayed had to change cities for their next job, compared with 23% of jumpers.
Mr. Hodges, now 36 years old, was the No. 2 executive at a Virginia manufacturing plant for a big technology company that was suffering at the hands of nimbler competitors. During the early years of this decade, the plant underwent several rounds of cost-cutting. By 2003, Mr. Hodges realized it would be shut down.
He mulled whether to stay or leave. He was worried that if the plant closed, competition for senior-level positions in the area would become fierce. In addition, being associated with a high-profile failure might hurt him.
But Mr. Hodges felt a strong loyalty to his employer. He had started working there shortly after college and had won multiple promotions. The company had paid for his M.B.A., and his bosses had granted him flexibility after his twins were born prematurely and had to be hospitalized for several months. "I felt like it would have been wrong to the company that had been so good to me," he says. He didn't want to leave his employees in the lurch, either.
He decided to stay. In 2004, the plant shut down, and the company outsourced manufacturing. Mr. Hodges knew he would have a job for about nine more months to help with the transition. He started looking for another job a few months before that deadline.
The experience of some of his colleagues offered reassurance. At the time, a big bank was recruiting manufacturing executives to apply their operations discipline to customer service. "I do have enough value in the marketplace" to get a comparable job, Mr. Hodges realized.
He thought carefully about where he wanted to work next and targeted one company. It was another manufacturer with a plant in Virginia, but it also operated a range of other manufacturing businesses. He figured he would be in a more diversified company, and he might get a chance to move into broader strategy roles.
Mr. Hodges interviewed for a plant-management job that offered comparable compensation. His interviewers were wary of his association with the failed plant. "There was definitely a stigma," he says.
He needed to make a strong case that the plant closing wasn't his fault but was instead the result of larger problems with corporate strategy. He created a presentation that was loaded with statistics and examples demonstrating his cost-cutting and managerial prowess. He printed the slides, created a flip chart and discussed his role with his interviewers. The presentation didn't only help him persuade the interviewers that the failings weren't his fault, he says. It also "showed the amount of preparation and thought that I had put into the application process."
He got the plant-management job. He has since been promoted twice and is now running one of the company's businesses. Even though he faced hurdles in landing a new job, he's glad he stayed with the old plant to the end.
"It was the right thing to do for the company that had taken good care of me and taught me so much over seven years," he says. Plus, not jumping in panic let him deliberate more about where he wanted to work next. "I had more time to think," he says.
