Few corporate decisions in recent American history have drawn more cheers than the Sunbeam Corp.’s firing of chairman and chief executive officer Albert Dunlap. That’s because no executive in America is more despised. He was known as “Chainsaw Al” for his brutal layoffs and cost-cutting–and Dunlap not only didn’t mind the nickname, he embraced it. So a lot of people he canned took great pleasure in seeing him get the same unsentimental treatment.
After being brought in to turn around Lily Tulip Corp. and Scott Paper, Dunlap gained a reputation as the last hope of a company in trouble. He was, therefore, a natural candidate to take over at Sunbeam, which when he took over in 1996 was headed for bankruptcy. Under his merciless management, the stock price rose from $12 a share to a high of $53.
But the success didn’t last–apparently because the turnaround expert had no particular talent for running a company once the crisis had been overcome. A deal to get the American Medical Association’s endorsement for Sunbeam products blew up in his face. Earnings deteriorated. Dunlap was accused of using accounting gimmicks to conceal poor performance. By the time the company’s board of directors gave him the ax Monday, the stock price was down below $16.
Many of the steps Dunlap took were necessary and useful. Even the new chairman installed by the board says Sunbeam is “fundamentally better” than it was when Chainsaw Al took over. And most people understand the necessity of paring the fat at uncompetitive companies.
What made Dunlap the object of popular contempt was the glee he apparently took in doing so. Layoffs cause a great deal of hardship and heartache, and executives who order them ought to do so in a way that shows respect for the resulting pain. That wasn’t the style of the relentlessly self-promoting Dunlap, who used the opportunity to pose as Rambo for a newspaper photographer.
As Dunlap said, it makes no sense to blame the surgeon for cutting a patient open to save a life. At the same time, no one would want a doctor who gets a sadistic thrill doing it.
