Lame Duck CEO

Avon Products Inc., the global beauty company, is saddled with a lame duck CEO, i.e. Andrea Jung. Her fortune has indeed changed dramatically as compared to her hugely successful early years. She was made chief executive of this door-to-door cosmetics company in 1999 and in her first five-and-a-half years, Avon's stock nearly tripled and she even won praise as the company aggressively expanded overseas. One of America’s most high-profile bosses, she also sits on the boards of Apple and General Electric

Today, Jung – although still in the CEO job – will surely find her current situation untenable. After all, Avon has already begun an active search for CEO candidates outside the company. Once it settles on one, Jung will step aside and serve as full-time executive chairman. [She is currently chairman and CEO]. Even so, this position is temporary – she is executive chairman for a two-year period – to help with the CEO search and then help the new CEO get acclimated. These decisions are intended "to put the company back on a growth track".

Her impending exit is really not unexpected. Since 2005, things had started to unravel. As profits began to sputter, Avon responded with a restructuring that it promised would boost margins by reducing layers of management, simplifying the product lineup and slashing the number of suppliers. Six years later, the company is still stumbling.

For sure, Avon is knee-deep in messy muck. The company's shares have tumbled 45% so far this year. Already, sales have slumped and the company has admitted that it would fail to meet its sales targets.To rub salt into the wound, the company has been conducting an internal investigation for the past two years into allegations that it spent millions bribing officials in China and Latin America. It is now being formally investigated under the Foreign Corrupt Practices Act. The FCPA makes it illegal for representatives of US firms to bribe foreign officials and legal experts have said the company could be landed with a potentially huge bill if found guilty. The investigation has already cost Avon more than $150 million in legal bills.

Still, it is unusual for a company to announce it wants a new CEO while the current chief executive is still in the job. So, what am I trying to say here?

Chief executives must earn their keep. Otherwise, they will have to face the axe. There is no room for sentiment. If only CEOs of Malaysian companies, including the GLCs are also subjected to this same game rule: Perform or perish! It’s really about accountability.

But with Avon putting itself in this perplexing predicament, it leaves the company in limbo. And for how long, we don't know. Andrea Jung is doing a grave injustice to Avon by staying put! Her leadership is already compromised. Like it or not, she is overstaying. It is best she leaves, and leaves immediately. As I have said, let us not get sentimental!