Keeping it in the family

 

Paul zahra, megan galeIt is generally accepted that it is a good thing to promote from within the organisation. It is good for morale. It gives people something to strive for.

The flip side of this is that you need new blood. Someone from outside who is not carrying years of “that’s how we do it around here” baggage.

In this column in March 2012 – about 18 months ago – I commented on the disastrous results of David Jones and specifically Paul Zahra’s comments blaming Mark McInnes who had left the company (in pretty good shape) when he departed in June 2010 – almost two years previously! That column was headed ‘DJ’s chief on a slippery slope’.

The problem from the outset was that Paul had been with DJs too long and was underdone for the job. He had been there over 13 years joining aged 31 and had spent a large part of his grown up years at the same company. His appointment was incestuous. New blood was needed.

I was also critical at the time of the ‘corrective action strategy plan’. It was announced that DJs planned to open six new stores despite its woes at the time. It was going to focus on omni-channel to increase online sales from five per cent to 10 per cent (five per cent or 10 per cent of very little is very little) and the company employed 200 people to do this, and signed some big deals with IBM to assist.

In keeping with its inward incestuous style, the department store used its internal strategy team to formulate this brilliant strategy, taking it down a path it needn’t, and shouldn’t, have pursued.

At the time of writing, DJ shares have dropped significantly in the wake of Zahra’s resignation “for personal reasons” which coincidentally came a couple of days after a pay restructure was announced levelling or cutting packages for senior executives and directors.

I wonder whose ‘fault’ all this is. The shareholders were clearly not happy with the share price since Zahra took over. They are looking for reasons. One nonsensical comment I heard was that the share price had suffered as a result of the internet. I doubt whether the vast majority of David Jones customers are rabid internet buyers, if at all. The shareholders are also clearly not happy with Zahra’s resignation (for personal reasons) at the end of October leading into Christmas.

Since the board clearly approves of this preoccupation with doing things internally, perhaps the board is where the shareholders should be looking for explanations.

Is it possible that Zahra was a victim of the board of directors wrong direction?

Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at stuart@impactretailing.com.au or 0414 631 702

 

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