Knowing When to Resign

By Beau Egert

Background

It has been a bumpy start, but overall things are settling down in your new job. You have joined an upstart biodiesel company as the vice president of operations. The company is owned by a private equity firm where the strategy is to grow quick and then sell in two years or less. Quite an ambitious agenda and just the type of opportunity you were looking for. You were recruited by a good friend who is currently serving as the COO and the opportunity is surely living up to the hype.

However, what has been a bit troubling so far are the actions of the CEO. Two weeks into the job, he tried to back out on a provision in your offer letter, and when you spoke to the COO, you learned that these incidences were becoming all too common. Your friend promised to address the issue with the CEO and you made clear that you wouldnt move your family to a new city until the situation was resolved. Maybe you were taking too hard of a line. The actual provision wasnt really that big of a deal, but you reasoned that if the CEO was willing to back out on things in writing, it was not a good sign. To your relief, your friend reports a few days later that everything has been resolved and he apologizes for the misunderstanding.

Now you are ninety days in and things are going pretty well. The strategy seems to be working as the company is growing very quickly; you are also learning a ton and really enjoying it. You have sensed from your friend that he continues to have problems with the CEO, but you are largely isolated from it. From your experience, nothing seems too abnormal about executives not getting along.

The Dilemma

Leaving work late one night, you catch your friend in his office looking pretty down. You ask whats wrong and he mentions continuing problems with the CEO. The most recent issue surrounded a bonus to an employee. Your friend says the metric was agreed upon in advance by everyone, including the CEO, and now at the end of the year, the CEO wanted to change the metric because he said the employee was getting paid too much. The employee was obviously irate and threatening to sue. Your friend said all the battles with the CEO were wearing on him and he was losing credibility with staff trying to carry out the CEOs directives. You tried to encourage him, but didnt know just what to say.

A few days later, the CEO asks you to take a day trip with him. It seemed a bit abnormal, but you were not in a position to refuse. On the trip he reveals to you that he plans to demote your friend as COO and offers you the job. When you ask for his reasoning, he says that your friend doesnt represent him well and feels you would do a better job. He asks for your answer in two days and says that everything must of course remain strictly confidential. The CEO says he is willing to bring someone else in from the outside, but would prefer to have you fill it internally. What do you do?

Write a one-page position paper answering the following questions:

1) What decision would you make in their circumstance?

2) Why would you make that decision?

3) What cost or downside could be associated with this decision and why would you be willing to pay it?