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A fascinating drama of corporate intrigue is unfolding in Delaware Chancery court as I write this. This case will be studied in graduate business schools as an example of how not to bring an outside, upper-level executive into a company.

A shareholder lawsuit over former Walt Disney Co. president Michael Ovitzs controversial hiring, firing and $140 million exit package illustrates what can go wrong when an outsider is inserted into a firmly entrenched bureaucratic management.

Michael Ovitz, a highly regarded and successful talent agent, was hired by his 25-year friend, CEO Michael Eisner, as his second-in-command and probable successor soon after Disney had announced its $19 billion acquisition of Capital Cities/ABC. But only a year later, Eisner fired Ovitz, who took a full severance package as part of his no-fault termination.

Ovitz should have seen it coming. At a pre-employment meeting in Eisners home, two senior Disney executives told Ovitz flatly how they felt. The corporations chief financial officer greeted him with, Hello, Im not reporting to you. Whereupon Disneys general counsel chimed in, Im not either. Eisner later reassured Ovitz by saying, Well be the bosses and it will be OK.

As one of his first tasks, Ovitz was supposed to deal with Robert Iger, considered the only internal candidate who might eventually replace Eisner as CEO. I dont know why, Ovitz told the court, but Eisner had a problem with Mr. Iger and wanted me to deal with that. Iger was not dealt with, to no ones great surprise, and took Ovitzs position as president after his termination.

Disney court testimony alleged that Ovitz seemed to have no understanding at all of his basic responsibilities. He did not achieve his goals, failed to lighten Michael Eisners burden and neglected to establish himself as a worthy successor. Other accusations included offending theme-park workers, not meshing with the companys culture, not getting along with other executives, and habitual lying. The situation became so tense, one director said, that the only way to stop the infighting and refocus Disneys top executives was to fire Ovitz.

Michael Ovitz, in his defense, said that he had presented many creative ideas and acquisition suggestions, only to have them vetoed by Eisner or undermined by senior colleagues. He described himself as a competent executive who couldnt get smart ideas through the Disney bureaucracy.

This case demonstrates the problems which a high-level manager can experience if he or she is inserted into another organization with an inflexible culture and fixed ideas. Such a manager may have been hired from outside, brought in as the result of a merger or acquisition, or transferred from another company unit – its all the same. He becomes a thorn in the side of the organizational body, which tries to reject it, sometimes successfully.

Although this situation cant be totally prevented, management can reduce its impact in these ways:

1. Let the other managers know that underground efforts to discredit the new employee will not be tolerated, and that the manner in which they aid his or her assimilation will have a bearing on their own performance evaluations.

2. Make sure the new person is included both socially and in the work environment, and not receiving the mushroom treatment from coworkers.

3. Express confidence in the new manager in front of other workers and managers.

4. Do not belittle, criticize or drop negative hints about him or her.

5. Support the new managers decisions and assign additional important work, making him an essential cog in the organization.

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