Why do companies bow to the Wall Street analyst? The knee-jerk reaction to a quarter that falls short of expectations is a hiring freeze. Obviously, this helps the short-term net income and appeases the analyst who determines the stock price. Unfortunately, it hinders the five year or ten year initiatives. The example is a hiring manager who needs two employees to implement the initiatives his boss is pushing. Those initiatives will be effectively a year later if they are performed at all.
The real problem is new hires are not the cause of the bad quarter. The CEO should focus on the root of problem. For example, Starbucks stated that Frappuccinos' preparation time were the reason same-store sales did not meet expectations. Nonetheless, a hiring freeze is in place.
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