Management Risk

Companies like to talk about how their people are their greatest asset. Generally speaking, that’s probably true, but as we watch our new COO, Toby, bumble through his first few months on the job, we can’t help but wonder if sometimes a company’s people are less asset and more liability. So far, Toby’s managed to halve the productivity of our entire operations division, send three of our best supervisors into the waiting arms of our competitors, and somehow accidentally delete six months’ worth of work orders and accounting documents. The guy’s a walking disaster. Some folks are placing bets on when he’ll “accidentally” wind up lighting the whole building on fire.

In the financial world, Toby is the living, breathing embodiment of the term “management risk,” which refers to the possibility that an organization’s shareholders could lose money due to the actions of someone in upper management. Let’s be real: we’ve all probably had at least one Toby in our lives. And while they’re awful to work for, they can be even more devastating for a company’s financial performance, and the impact is worse the further up the organizational food chain the person is. Hopefully our company will open its eyes and remove Toby from his position before he does any more damage, but in the meantime, the shareholders could end up bearing the financial brunt of his managerial missteps.