Nestlé Can’t Risk Playing It Safe
(Bloomberg Opinion) – This is the nightmares of the Board of Directors.
Nestlé SA fired CEO Laurent Freixe on Monday after an internal investigation revealed a romantic relationship that was not directly explained by an sub -subordinate. In Nestlé, about forty years later, it lasted only one year in the highest job.
This way he had to go: Freixe was intended to return to former Nestlé. His predecessor Mark Schneider mixed the feathers in his giant insusular and conservative consumer giant with his direct leadership style. Freixe told Financial Times earlier this year that only the second foreign CEO – Schneider in the history of the company “weakened the texture of the organization”.
Freixe, as RBC analysts say, was marketed as a safe bet that will restore the company’s slightly boring predictability ”.
Instead, he created a crisis that Nestlé tried to resist by showing that the board of directors was above governance and succession planning. As many companies did after a sudden CEO departure, Nestlé has touched Philipp Navratil for a long time instead of assigning a temporary chef. The Board probably kept in mind Navratil as the final CEO candidate who elected him to the executive committee last October.
Movement is to publish that everything in Nestlé remains as usual; In a press release, Navratil said: orum I am completely embracing the action plan to increase the strategic aspect of the company and Nestlé’s performance. ”
However, more is not a safe bet for Nestlé. In a company that has lost almost one -third of its value in the last five years, there is a major risk that protects the status quo; Almost half of the fall came to Freixe’s watch. Continuity is great when the times are good, but as it is far from the situation in Nestlé, it claims by slowing down.
Navratil, the right person for business and surprise investors who are willing to shake something can be very good. However, this is not the message that Nestlé sent by the election of the board, but not the license he gave his new CEO.
Nestlé is clear why a risk-free CEO wants in the middle of chaos-Freixe reminds us in a suitable way. The Board first received a wind from its relationship with a subordinate through an internal company aid line. Freixe initially rejected the relationship, according to Reuters, and proved that the first investigation of the Board was fruitless. However, the allegations did not die and a second investigation with an external lawyer confirmed them.
The board had no choice but to expel him. This is not about the idea that Semafor tags “corporate cautiousness ve, or that companies are extremely grinding about CEOs with employees -based relationships. Freixe broke the company policy and then tried to mislead the board. Since I have written a number of CEO’s CEO CEO for bad behaviors, the panels are more and more thinking about what these ethical tours say about other rules that a manager may be willing to bend.
New Haven Nicole Baker, Professor of Psychology, said, “We know that the committees see such relations as signs of the operation of the organization, especially the operation of the organization,” Norfolk Southern Corp last year. “This is not necessarily about values. This is a signal that there may be other problems for the Board.” The Board did the right thing to overthrow Freixe in a decisive way. But he didn’t learn the bigger lesson: the safe choice is not always what you think is. And in a hurry to return to the “boring predictability of Nestlé’s past, he missed the chance to search for a surprise that was welcomed instead. More than the Bloomberg view:
This column reflects the author’s personal views and does not reflect the opinion of the Editorial Board or Bloomberg LP and owners.
Beth Kowitt is a Bloomberg vision columnist covering Corporate America. He was a senior writer and editor at Fortune Magazine.
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