Xerox - People Problems

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Case Details:

Case Code : HROB015
Case Length : 09 Pages
Period : 1998 - 2001
Pub Date : 2002
Teaching Note : Available
Organization : Xerox Corporation
Industry : Office Automation Products
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Over the years, they've hyped their HR organization, but it ain't a pretty picture."

- Jim W Lundy, former Xerox manager, in August 2001.

Introduction

In August 2000, Paul Allaire (Allaire), chairman of the leading document management company Xerox, fired the company's CEO Rick Thoman (Thoman).

Commenting on his decision, Allaire said, "We are grateful for Rick's contributions in leading the company through a period of major repositioning. However, both Rick and the board felt it best for the company to move forward with an experienced Xerox team that will lead Xerox people and efficiently execute the strategy." The move attracted a lot of media attention with analysts commenting how Allaire had himself persuaded Thoman to leave a top position at IBM in 1998 and join Xerox.

Thoman, who was second only to IBM head Lou Gerstner, had also been the Senior Vice President and General Manager of IBM's Personal Systems Group, one of IBM's most troubled operating units, which he helped turn around. Prior to this, he had also been the President and CEO of Nabisco International, President and CEO of American Express International, and Chairman and co-CEO of American Express Travel Related Services Co.

However, company observers were not very surprised by Allaire's decision, as from the time Thoman had joined Xerox in May 2000, the company had lost around $ 20 billion in market value. Thoman was reportedly made to resign for his apparent failure to arrest this massive decline.

Allaire made Anne M. Mulcahy (Mulcahy) the President and Chief Operating Officer and reinstated himself as the CEO, though he was past the company's mandatory retirement age for executives. Though analysts agreed that Thoman had failed to a certain extent at Xerox, they also argued that he seemed to have been made a scapegoat.

Allaire's return as the CEO sparked off a round of heated debates regarding Thoman being blamed for the company's troubles, while Allaire himself was being blamed for being party to the deterioration of Xerox's work culture over the decades.

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