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Eisner and the Disney Company

The Disney company is among the most profitable and successful actors in the industry nowadays. Such state of the art was achieved because of due diligence and policy that the top management has been applying for many years. However, there was a period when the corporation faced a plethora of challenges, given contradictions and conflicts in the Board of Directors. The mentioned situation is related to Michael Eisner and his managerial approach. During these issues, he had to figure out the best solution for himself and the company, and he made one. Below, Eisner’s case will be presented, evaluating his management style and final decision from the management perspective.

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In 2003, Roy Disney, Stanley Hold, and Michael Eisner were on the Board of directors of Disney. Roy was the son of Walt Disney’s older brother and co-founder of the corporation. When he was twenty-four, he started to be the assistant editor of a successful movie at the company. Roy was serving on the Board since 1967, and by 1984, he became Vice-Chairmen. Gold started to be a member of a law firm in LA in 1968. Now, he is President, as well as CEO, of Shamrock Holdings, and he has been serving on the Board of Disney for about fifteen years. Eisner began their carrier at NBS; then, Barry Diller contacted him and suggested joining the ABC team. He worked there for two years – from 1966 to 1968. With Eisner’s effort, work, and significance, ABC became number one in the industry during his period as Assistant to the National Programming Director. After this, he was hired by Paramount, and in 1984, he accepted the offer of the Disney Company to become Chairman and CEO (Downes et al., 2007).

When the issues intensified, the Board of Directors was facing a number of challenges and hardships. They met a great degree of criticism for insider domination, as well as for the insignificant extent of independence. Eisner was trying to regain the company’s reputation, and in 2002, he met many important investors and shareholders (Downes et al., 2007). He had an aggressive management approach and had tension in relationships with several board members. It seems reasonable to state that such a state of affairs resulted in his decline. It began with the resignation of Roy Disney from the Board. He noted the following reasons for this: adverse performance of ABC programming, the management policy of Eisner, as well as his – Eisner’s – focus on short-term results rather than long-standing goals, and the absence of a concise and coherent success plan.

Then, Stanley Gold decided to resign the following day, supporting and adhering to the position of Roy Disney. They claimed that Eisner’s reign led to various problems and that he – but not Roy and Stanley – should resign or retire. Their primary reason was the management style of Eisner. Moreover, they pointed out the inappropriate – in their opinion – Eisner’s bonus of $5 million in Disney shares when the company demonstrated substandard performance. It was also noted that Michael implemented the election process, which implied unfair relations with other members of the Board. Finally, it should be noticed that Eisner assisted his close ones in achieving success and profits in the company, which was considered inappropriate as well. At this point, it seems rational to turn to the evaluation of Eisner’s management approach.

Eisner tended to follow the autocratic leadership style as he centralized powers in his hands and ruled the company according to his vision (Vitez, 2019; Caillier, 2020). He precepted himself as an irreplaceable manager, which is evident from his bonuses and compensations through the years – there always were considerable sums. Nevertheless, it should be admitted that with Eisner’s governance, Disney’s revenues and net incomes were almost always increasing, excluding the downfall in 2001 when net income was 158 million – he got no bonuses then (Downes et al., 2007). The autocratic approach obviously brought its fruits in financial terms, but the atmosphere within the company escalated, especially after Roy and Stanley resigned.

It might be assumed that Eisner finally admitted the necessity of changes within the managerial scope. Nevertheless, his experience was fully based on autocratic leadership, and in order to save the company, he accepted the separation of roles of CEO and Chairman and made a decision to resign. Such an assumption is grounded on the fact that Eisner worked well with Mitchell but not for long – sharing duties and responsibilities did not align with his style (Puni et al., 2016).

It seems that after Eisner decided to resign in 2004, it was initially believed that Iger would follow his strategy of centralized management. In contrast, Eisner’s cronies started to quit or were fired. Iger began his own managerial policy that did not align with one of his predecessors. He adheres to the decentralized decision-making policy, according to which many authorities are delegated to individual business units. Shareholders could perceive Iger as a reconciler, given the fact that the Disney Company’s relations with Pixar were restored, which – in the aftermath – resulted in Disney’s acquisition of it.

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Then, it should be emphasized that Roy Disney and Stanley Gold criticized Eisner for the absence of a concrete succession plan. The corporate governance guidelines implied that the CEO should discuss with the Board of Directors a potential successor at least one time a year. It is also stated that the CEO had to provide in writing a succession plan that could ensure a coherent transition of duties in case of resigning, retirement, or departure. Iger took into account this issue and addressed it – his succession plan was developed and presented (Sonnenfeld, 2020). Unfortunately, this plan is not in the public domain; thus, it would not be appropriate to determine or guess its particular and exact provisions. However, it is apparent that Iger follows a low-key management style, which means that he is not inclined toward power and control, as well as does not aspire to individual incomes and accolades (Bedford, 2018). Iger has led the company to success through continuous dialogue with colleagues, creative solutions founded on trust in employees, and sharing responsibilities (Sonnenfeld, 2020), which differs from the leadership approach followed by Eisner.

To conclude, Eisner’s management style during his reign and his solution to resign, as well as the performance of his successor, were discussed. It was found that during the governance of Eisner at the Disney company, this corporation was prospering financially year by year. However, his autocratic leadership started to cause tension within the firm, which could lead to an inevitable downfall. Given this, it was suggested that he recognized the necessity of changes. Iger followed the opposite managerial policy that is founded on the distribution of responsibility and power. The final assumption is that although autocratic leadership was efficient in the 20th century for huge companies, today, more liberalistic styles are appropriate, given Iger’s success and attainments.

References

Al Khajeh, E. H. (2018). Impact of leadership styles on organizational performance. Journal of Human Resources Management Research. Web.

Bedford, J. (2018). Guest blog: In praise of the low-key leader. CTI. Web.

Caillier, J. G. (2020). Testing the influence of autocratic leadership, democratic leadership, and public service motivation on citizen ratings of an agency head’s performance. Public Performance & Management Review, 43(4), 918–941.

Downes, M., Russ, G. S., & Ryan, P. A. (2007). Michael Eisner and his reign at Disney. Journal of the International Academy for Case Studies, 13(3), 71–81.

Puni, A., Agyemang, C. B., & Asamoah, E. S. (2016). Leadership styles, employee turnover intentions and counterproductive work behaviours. International Journal of Innovative Research & Development, 5(1), 1–7.

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Sonnenfeld, J. (2020). Bob Iger on his transition plan at Disney – and why it will succeed. Chief Executive. Web.

Vitez, O. (2019). Centralized vs. decentralized organizational structure. Chron. Web.

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