Case Incident 1

MOVING FROM COLLEAGUE TO SUPERVISOR

Cheryl Kahn, Rob Carstons, and Linda McGee have something in common. They all were
promoted within their organizations into management positions. And each found the
transition a challenge.
Cheryl Kahn was promoted to director of catering for the Glazier Group of restaurants
in New York City. With the promotion, she realized that things would never be the same
again. No longer would she be able to participate in water-cooler gossip or shrug off an
employees chronic lateness. She says she found her new role to be daunting. At first I was
like a bulldozer knocking everyone over, and that was not well received. I was saying, Its
my way or the highway. And was forgetting that my friends were also in transition. She
admits that this style alienated just about everyone with whom she worked.
Rob Carstons, a technical manager at IBM in California, talks about the uncertainty he
felt after being promoted to a manager from a junior programmer. It was a little bit
challenging to be suddenly giving directives to peers, when just the day before you were one
of them. You try to be careful not to offend anyone. Its strange walking into a room and the
whole conversation changes. People dont want to be as open with you when you become
the boss.
Linda McGee is now president of Medex Insurance Services in Baltimore, Maryland.
She started as a customer service representative with the company, then leapfrogged over
colleagues in a series of promotions. Her fast rise created problems. Colleagues would say,
Oh, here comes the big cheese now. God only knows what they talked about behind my
back.

Questions

1. A lot of new managers err in selecting the right leadership style when they move into
management. Why do you think this happens?
2. What does this say about leadership and leadership training?
3. Which leadership theories, if any, could help new leaders deal with this transition?
4. Do you think its easier or harder to be promoted internally into a formal leadership
position than to come into it as an outsider? Explain.
Source: Based on D. Koeppel, A Tough Transition: Friend to Supervisor, The New York Times, March
16, 2003, p. BU12.

Case Incident 2
LEADERSHIP FACTORIES
Companies differ markedly in their ability to produce future leaders, as several recent
analyses of the 1,187 largest publicly-traded U.S. companies revealed. Among the CEOs in
one study, a remarkable total of 26 once worked at General Electric (GE).
But as the table below shows, on a per-employee basis that earns GE only tenth place in
terms of the likelihood of a current or former employees becoming CEO of a large company.
Top on the list is management consulting firm McKinsey & Company. Amazingly, if we
extrapolate into the future from the current stock of McKinsey alums who are CEOs, of every
690 McKinsey employees, one will become CEO of a Fortune 1000 company.
Company

Size (employees)

CEOs produced

Odds

McKinsey & Co.

11,000

16

690:1

Deloitte & Touche

17,170

2,150:1

Baxter International

48,000

11

4,365:1

PricewaterhouseCoopers

47,750

10

4,775:1

103,000

12

8,585:1

Merrill Lynch

62,200

8,885:1

Motorola

66,000

9,430:1

Intel

88,100

11,010:1

Proctor & Gamble (P&G)

138,000

12

11,500:1

General Electric (GE)

300,000

26

11,540:1

Ernst & Young

Some companies did not fare nearly as well, such as Citigroup (odds: 30,180:1), AT&T
(odds: 23,220:1), and Johnson & Johnson (odds: 15,275:1).
While some might dismiss the results, not surprisingly, the companies at the top of the list
do not. We are a leadership engine and a talent machine, said retiring P&G CEO A. G.
Lafley.
Questions
1. Management consulting firms did very well on a per-employee basis, partly because they
are mostly comprised of managers (as opposed to blue-collar or entry-level workers).
How big a factor do you think composition of the workforce is in likelihood of producing a
CEO?
2. Do you think so-called leadership factories are also better places for non-leaders to
work? Why or why not?
3.

Assume you had job offers from two companies that differed only in how often they
produced CEOs. Would this difference affect your decision?

4.

Do these data give any credence to the value of leader selection and leader
development? Why or why not?

Based on D. McCarthy, The 2008 Best Companies for Leaders, Great Leadership (February 17,
2009), http://www.greatleadershipbydan.com/2009/; F. Hansen, Building Better LeadersFaster,
Workforce Management (June 9, 2008), pp. 25-28; D. Jones, Some Firms Fertile Soil Grows Crop of
Future CEOs, USA Today (January 9, 2008), pp. 1B, 2B.

Ethical Dilemma
WHOLE FOODS RAHODEB
Whole Foods, a fast-growing chain of upscale grocery stores, has long been a Wall Street
favorite. It regularly appears on Fortunes list of 100 Best Companies to Work For (it was
#22 in 2008) and has spawned its share of competitors, including Fresh Market, Trader Joes,
and Wild Oats.
Given that most industry analysts see a bright future for upscale organic markets like
Whole Foods, its no surprise they have attracted their share of investor blogs. One
prominent blogger, Rahodeb, consistently extolled the virtues of Whole Foods stock and
derided Wild Oats. Rahodeb predicted Wild Oats would eventually be forced into bankruptcy
and Whole Foods stock price would grow at an annual rate of 18 percent. Rahodebs Yahoo!
Finance blog entries were widely read because he seemed to have special insights into the
industry and into Whole Foods in particular.
Would it surprise you to learn that in 2007, Rahodeb was exposed as Whole Foods cofounder and CEO John Mackey? (Rahodeb is an anagram of Deborah, the name of
Mackeys wife.) Whats more, while Rahodeb was talking down Wild Oats stock, Whole Foods
was in the process of acquiring Wild Oats, and deriding the target may have made the
acquisition easier and cheaper. Because the companies often have stores in the same cities,
the Federal Trade Commission (FTC) attempted to block the acquisition and was responsible
for outing Mackey. In March 2009, Whole Foods agreed to disgorge 31 of the Wild Oats
stores it had acquired, drop use of the Wild Oats name, and undertake other actions that
nullified the benefits of the acquisition.
Mackey lamented the debaclenot his secret blogging, but the Wild Oats acquisition. He
said, We would be better off today if we hadn't done this deal taking on all this debt right
before the economy collapsed. By 2008, Mackey was blogging again, under his real name.
His posts are neither as frequent nor as interesting as Rahodebs.
Do you think it is unethical for a company leader like Mackey to pose as an investor,
talking up his or her companys stock price while talking down his competitors? Would
Mackeys behavior affect your willingness to work for or invest in Whole Foods?
:Based on T. W. Martin, Whole Foods to Sell 31 Stores in FTC Deal, Wall Street Journal (March 7, 2009), p. B5; M.
Fraser and S. Dutta, Yes, CEOs Should Facebook And Twitter, Forbes (March 11, 2009), http://www.forbes.com/; D.
Kesmodel and J. R. Wilke, Whole Foods Is Hot, Wild Oats a DudSo Said Rahodeb, Wall Street Journal, July 12,
2007, pp. A1, A10; and G. Farrell and P. Davidson, Whole Foods CEO Was Busy Guy Online, USA Today, July 13,
2007, p. 4B.

1.
2.

Do you think it is unethical for a company leader like Mackey to pose as an investor,
talking up his or her companys stock price while talking down his competitors?
Would Mackeys behavior affect your willingness to work for or invest in Whole Foods?