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By Naming Interim CFO, Bed Bath & Beyond Underscores Need To Respond Quickly To A Crisis
From:
Edward Segal, Crisis Management Expert Edward Segal, Crisis Management Expert
Washington, DC
Tuesday, September 13, 2022

 

Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award- Winning Book "Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies" (Nicholas Brealey)

Two days after confirming the death of chief financial officer Gustavo Arnal, Bed Bath & Beyond named Laura Crossen as interim CFO. The announcement Tuesday morning underscored the importance of moving quickly during a crisis to help provide assurances about the leadership and future operations of companies that are seeking to recover from a corporate emergency.

Crossen, who is the retailer's chief accounting officer, has been with the organization for more than 20 years. "We are grateful for her leadership. She has the full support of the organization, the Board and our outside advisors," the retailer said in a statement. The company did not mention plans to find a permanent successor to Arnal.

A lot is at stake.

"Ms. Crossen will have to restore in­vestor con­fi­dence in the com­pany, and its turn-around strat­egy, which took an­other hit af­ter Bed Bath & Be­yond said it would re­vamp its plans, close about 150 un­der­per­form­ing stores and bring back na­tional brands af­ter fo­cus­ing on pri­vate-la­bel prod­ucts un­der for­mer CEO Mr.[Mark] Trit­ton," the Wall Street Journal observed.

Unexpected Changes Can Be Destabilizing

"Unexpected changes in key executive leadership can be enormously destabilizing, so the company was wise to announce Laura Crossen as interim CFO on the next business day following a holiday weekend," Andrew Merrill, a strategic financial communications expert and partner at Prosek, said in a statement.

"In addition to focusing on supporting employees who are likely reeling from the untimely death, among other recent departures, the company now has to focus on answering questions raised in connection with the pending stock fraud lawsuit, which [is] now all the more front-and-center. The sooner they can name a qualified permanent successor, the better," he advised.

Comprehensive Succession Plan Needed

"To properly manage a transition of this complexity, Bed Bath & Beyond must have a corporate succession plan that includes communication with key stakeholders and supports the company leadership for the appointment of a permanent CFO," Katarina Matic, director of public affairs at Montieth & Company, said via email.

" Given that the company is faced with challenges on multiple fronts, this is an opportunity to help assure internal and external stakeholders…[that] the company is doing everything it can under the circumstances, which is easier said than done," Matic commented.

"Anticipating questions as part of the strategy, even if the company does not have all the answers, can be the key difference between a thoughtful and 'check the box' corporate transition plan," she concluded.

Explanations And Perspectives

"In a situation like the one at Bed Bath and Beyond, it is critical for senior management to meet with the existing finance staff and let them know, as best they can, the game plan," Joe Euteneuer, the former CEO of Mattel, said via email.

"I think placing an interim CFO is a good idea…. They should emphasize the importance of continuing the day-to-day workflow and the absolute importance of communicating upward, downward and sideways during this time.

"From the board's perspective, an interim CFO can provide the runway room needed to assess the company's current situation and thoughtfully identify the attributes of a candidate to fill those needs," Euteneuer concluded.

'In A Very Tough Position'

"Bed Bath and Beyond's board is in very tough position right now, having to replace two high-level executives while also trying to stabilize the company's finances and redirect its strategy at the same time," Yo-Jud Cheng, assistant professor of business administration at the University of Virginia Darden School of Business," said via email.

"In other companies, we've seen the pace of strategic change slow down when interim CEOs are in place because interim executives can be hesitant to implement major changes right before handing over the reins to someone else," she noted.

"When a company is in a crisis situation—like Bed Bath and Beyond—this type of strategic holding pattern can be especially detrimental. Further, [the company's] new CEO might want input over who fills the CFO role permanently, thus delaying the search for a permanent CFO even more.

'A Major Challenge'

"Even in the best of times, many boards do not dedicate nearly enough time to succession planning. For BBB, it's going to be a major challenge for the board to carve out the time to thoughtfully search for and select a new CEO and CFO when there are so many other pressing matters to attend to," Cheng predicted.

Lasting Effects

"It's also important to acknowledge that the effects of CEO and CFO successions don't end when those positions are filled. Leadership disruptions at BBB are likely to continue for the foreseeable future.

"When individuals are promoted into high-level roles, others depart, creating a cascading effect throughout the organization as other roles need to be backfilled. This effect is often magnified when external candidates are brought in, which is typical in turnaround situations," she explained.

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Edward Segal is a crisis management expert, consultant and the bestselling author of the award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). Order the book at https://www.amazon.com/gp/product/B0827JK83Q/ref=dbs_a_def_rwt_bibl_vppi_i0

Segal is a Leadership Strategy Senior Contributor for Forbes.com where he covers crisis-related news, topics and issues. Read his recent articles at https://www.forbes.com/sites/edwardsegal/?sh=3c1da3e568c5.

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