Hung P Nguyen
Al Dunlap at Sunbeam – An Unethical Leader
Under the management in Sunbeam, Al Dunlap had done some of the achievements
which are an increase in profit and an acquisition of three appliance companies. However, he
had made several mistakes during the time of managing Sunbeam which led to being fired by
the board of directors.
First of all, he just wanted to focus on making money for shareholders, and he is one of
them when he spent his own money to buy Sunbeam stocks and earned several stocks through
his management. Following the case, he was described as a manager who is not a “fan of the
stakeholder model of corporate governance” which means other constituencies, such as
employees or community. To be an effective leader, Dunlap should set his employees to the
first. By empowering and motivating employees, they would able to engage to the company and
help the company increase the productivity. However, it seems Dunlap only see shareholders
are the only stakeholder in the company, and he just focused on the profit of Sunbeam.
In addition, Al Dunlap has an aggressive leadership style. In order to increasing the profit
and doubling the sales, in the first month of restructuring, he planned to cut off half of the
company’s employees, close 18 factories, and reduce product lines by 87%. An effective
strategic leader is the one who understands how his decisions affect the internal systems. I
could say Dunlap is an ineffective leader at this point because his decisions had made a huge
negative impact on the company in general and on the employees in specific. This decision
could bring Sunbeam benefits in the short-term which is increasing the profit. However, in the
long-term, it would able to affect the sustainability of the company.
Moreover, Al Dunlap had troubles in relation with the media. He had received several
criticisms by focusing on his managerial style but he just listened to himself and put others’
comments aside. If he wants to make his company grow, he should pay attention to the media
because it could change the way how customers see the company value. The reason for this
problem here is, I think, he has a big ego so he does not want to accept any criticisms. It was
reflected by how he showed his wealth and considered himself as a superstar in his field.
Furthermore, his nicknames, “Chainsaw Al” and “Rambo in Pinstripes”, came up by the media
after his aggressive managerial style in previous companies.
In my opinion, the board of directors was made a right decision to fire Al Dunlap after
the fallen of the stock. If the board gave him more time to turn the company around, he would
not only won’t make it but also brings the company to the brink of bankruptcy. His acquisition
of three companies made the company face the difficulty in cash flow or finance, and then, this
led to the accounting frauds of Al Dunlap and the CFO Russ Kersh. Combining with all of the
mistakes I listed above, he could just able to increase the profit of Sunbeam in a short-term but
could not turn the company around since he had made huge negative changes in the operations
and financing.
References
Executive Summary
