BLAME SHIFTING

Last week Global Crossing announced a restructuring that includes the elimination of the posts of president and chief operating officer, both held by David Walsh. That's not surprising or unusual. If a company is performing poorly, new people are brought in to help turn things around. What was unusual about Walsh's departure, though, was how blatantly he was made the scapegoat of the company's problems by its new leadership. 

In discussing Walsh's removal, new CEO John Legere said, “people need to be accountable” for poor sales. While accountability in corporate ranks is a good thing, Legere's statement ignores the realities of the current economic environment. Long-haul carriers have been dealt heavy blows, not the least of which is the sooner-than-expected commoditization of their offerings, which has created tremendous downward pricing pressure. Level 3 Communications cut capex — along with a quarter of its work force — and 360networks declared bankruptcy. Of course, the inner workings of Global Crossing are not open for everyone to see. It may be that Walsh simply was not up to the job or that Legere wanted to bring in his own people. Maybe the company's pending Q3 numbers are awful enough to justify pinning the blame on Walsh. But Global Crossing's performance also could be roughly in line with that of its competitors. If so, placing the lion's share of the blame for sales on one executive when they are reflective of a troubled sector is disingenuous and the wrong way for a new CEO to begin his tenure.