Gazeta Mercantil – Executive Life – Careers
by João Paulo Freitas
Professionals laid off because of financial losses are not always the only ones to take the blame for the situation
October 27, 2008 – By the end of September, during the world financial crisis, Sadia disclosed a loss amounting to R$ 760 million, generated by derivatives operations, a loss greater than the company’s profit in 2007 (R$ 689 million). On the following day, the company’s shares plummeted 35%. Adriano Lima Ferreira, the CFO, and Álvaro Ballejo Fiúza de Castro, the financial manager were fired under the allegation of taking excessive risk without communicating the company’s board of directors. That was just another occasion in which an executive, until then respectable in the market, suddenly found himself discarded because of decisions that were considered mistaken by the company. But after the rupture, what happens to the career of these professionals?
According to some specialists, the situation is less frightening than what it might look like initially. Jeffrey Abrahams, managing partner at Abrahams & Associates, an executive recruitment company, says that in those cases headhunters evaluate the circumstances in which the fired executive made his decisions, and try to understand what happened actually. “Making mistakes is part of the life of executives and capitalism,” he says. “Highly critical decisions are not made by a only one professional.”
About the Sadia case, the headhunter recalls that the crisis was a surprise for several corporations, to the extent that many of them also experienced problems with the same type of financial operation. One of them was Aracruz, with a loss of R$ 1.95 billion. According to Abrahams, only serious ethical misconducts are irreparable. Strategic and execution mistakes are acceptable in the life of an executive.
The specialist still points out that when a decision causes considerable losses to the company, some of the professionals involved will have to pay the price. The decision of who will be the victim, he says, “may be political”. The situation is not as simple as it seems. “Someone has to be the ‘scape goat’, mas it is hard to evaluated the cases cited (Sadia and Aracruz),” he recognizes. “These are experienced, successful and highly specialized companies. It is hard to believe that the decisions that resulted in loss weren’t made by a group of professional.” For Abrahams, it is not easy to know who are the real ones to blame for the losses. It is unlikely that it concerns one person only. That is why headhunters try evaluate the situation in detail. “It is not possible to condemn professionals in advance, unless they have taken a decision contrary to what was defined by the board or recommended by governance,” he says. According to him, executives who were fired were certainly good professionals. “If they were good enough for Sadia, they are outstanding executives,” he highlights. He say that his consultancy is currently looking for three managers for the financial area and that the professionals fired by Sadia would certainly selected, in case their financial requirements met what is expected from these positions. “I doubt these professionals are not excellent,” he says.
The return to corporate life
In the past, other professionals in the market found themselves in much more complicated situations, nevertheless, were able to return to corporate life. Just go back to the end of the parity between the real and the dollar in the beginning of 1999, during Fernando Henrique Cardoso’s second presidential term. Some banks affected by the devaluation of the real appealed to the Central Bank to buy dollars below the market price, such as Marka and FonteCindam. Several people involved in the scandal were condemned. Francisco Lopes, president of the Central Bank at the time, was condemned to 10 years in jail. He is free and is legally contesting the court’s decision. He runs an economic consultancy that renders services for companies. Another director of the Central Bank, Teresa Grossi, was condemned to six years and today is member of the board of directors of Banco Itaú.
Mariá Giuliese, consultant and executive director at Lens & Minarelli, a career advisory and executive outplacement firm, says that in the beginning of this year, one of her clients experienced a compromising situation. Without revealing details, she says the executive in case worked for a multinational in the telecom industry and was fired after carrying out a risky operation in the company. The problem was that he asked his superior about the pertinence of such initiative. But when the headquarters disapproved the measure, the retaliation did not affect the boss and only the executive was fired. “He was able to find a new job opportunity, explaining clearly that the operation was done, why it had to be undone, and what was the risk involved,” she says.
The specialist agrees with the argument that risky decisions are not made by only one manager. “A financial director must have the approval of the president or board. He does not decide by himself,” she asserts. According to her, the market does not close doors to such professionals because they know how these structures work. “In global corporations, financial departments report to the president and to the global financial director. Responsibility does not always belong to a single individual.”
But, even in the cases of lay offs, sometimes action is not taken by the company. Mariá says she witnessed many cases in which financial executives disagreed with their companies about how proceed and decided to quit their jobs.
“Sometimes the company wants to move forward in a risky operation or concerning ethical problems, and the professional quits,” she says. “These are very sensitive discussions in the corporate world. It all melts down to values, morals and ethics of the people involved in the process.”
Fact is, by quitting (or being fired) in a such a situation, the executive need to take some measures to minimize potential impacts on his or her career. Mariá says that the first thing to do is take a break. This must be done while the market and the professional still are impacted by the situation. It is time to evaluate carefully what happened. “Sometimes, in the attempt to reach a goal, he is not aware of the consequences produced by certain attitudes,” she says. “First, he needs to recover, which involves emotional aspects. He might have been carried away by the pressure or have been impulsive.”
Only when the situation is well understood and emotions have settled down should the professional reestablish contact with the market. Approaching the market again should be done first with those who know the work of the executive, spreading out gradually. “It is necessary to create a project, plan where to go,” says Mariá. “Only then he should approach the market. It’s a complex process, but there are ways out,” she concludes.