How 'the suits' destroyed a company

New executives need to communicate before changing business practices

In the early 1990s I landed a job with "Strat-a-Gee," a hugely successful VAR (value-added reseller). Our growth was enormous. By Y2K we had gone from 100 employees to more than 1,600 -- and nearly a billion dollars in sales. We carried tens of thousands of SKUs, and employed 1000+ sales professionals in my office alone. Along the way, we became experts in the service arena too, which gave us an edge on the competition.

Just then, the owners handed Strat-a-Gee over to "Sam," a new Chief Operating Officer. Without any attempt to communicate his vision for the company (whatever it might have been) to the rest of us, Sam brought in a group of five executives we immediately dubbed "the suits." They looked good in their Armanis, but they spent money like railroad millionaires. They seemed perfectly happy flying in favored VPs from Philadelphia and Dallas to conduct everyday business operations -- putting them up at the trendiest hotels and chartering buses for drunken weekend excursions to the Indy 500.

Within a couple of months, the suits had fired almost 20 percent of the staff. The worst part was that the firings seemed to be almost random. As far as I could tell, Sam's only agenda was to reduce staffing costs. Nothing wrong with that if we had been in the red, but Strat-a-Gee was raking in the money.

My consulting team alone was generating US$3.3m in annual revenues, so I felt reasonably secure, until one of the suits became my personal manager. His approach was brutal. He fired some people while they were 100 percent billable; others came back from vacation to find pink slips waiting. It made no sense whatsoever.

The suits were some hard-partying dudes too. They began insisting that department heads join them for drinks after work, not just once in a while but several nights a week. Not long after that, the organization began hearing complaints about these guys' inappropriate behavior with clients.

The atmosphere at the office became so uncomfortable that I began finding it difficult to report to work in the morning. The good ol' boys appeared to have something up their sleeves, but no one would say what it was.

Then, one fine morning, the suits' plan was revealed. Or do I mean "exposed"? At a company-wide meeting, Sam announced that Strat-a-Gee was being sold to an organization from Hong Kong. The COO's vision had been all about boosting the company's on-paper value. The way I see it, he was enhancing his personal stock options rather than maintaining a well-run business or rewarding loyal employees.

As the sell-out moved forward, my department was severely cut back, then eliminated altogether. Turns out the parent company in Hong Kong already had a well-staffed consulting department. I felt betrayed; I had put in over a decade of my life building the business, and now....

What happened next was predictable. With its staff decimated and morale at an all-time low, Strat-a-Gee's business revenues declined by nearly 50 percent. The new owners were left asking, "What happened here?" Or however you say "What happened here?" in Cantonese. One by one, the suits were canned as the parent company became aware of their shortcomings. Finally Sam got the boot too. The suits had devastated hundreds of peoples' lives and destroyed a hugely successful company.

"What goes around comes around" doesn't even come close.

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