Monday, February 12, 2001
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Posted on: Monday, February 12, 2001

60 Seconds on Business
Company's value tied to leadership

By Dr. Drake Beil
President, Solutions Inc.

The value of a company is often tied directly to the quality of its leadership. That’s clearly the case with the new leadership of Michael O’Neill at Pacific Century Financial Corp. The market’s confidence in him as a leader has significantly improved the financial institution’s stock price and shareholder value in the past few months.

While this is true for big businesses, strong leadership is even more important for small businesses because with fewer resources, each person’s contribution is magnified in terms of bottom-line profitability.

Having executive talent is particularly important to the new business and start-up company. McKinsey Co. recently completed a study of more than 6,400 executives and senior managers and concluded that because of scarcity of real talent, "companies are about to be engaged in a war for senior executives · yet most are ill-prepared, and even the best are vulnerable."

Because the average cost to replace the average employee is about 3.5 times their monthly salary, replacing people can be pretty expensive. When you add in downtime due to their absence, lost time due to orientation and training, and inevitable rookie mistakes, as you might expect, the costs for replacing senior management or executive-level people are even higher.

Dr. Drake Beil can be reached at

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