AMEX was not spared by the effects of the global economic credit crunch of 2007 and 2008. Although the change in management occurred in 2001 the effects of the crisis were relatively adverse for every company operating in more than one country and dealing in the credit card and travel services. The current CEO Kenneth Chenault was optimistic that although the losses were inevitable, he ensured that precaution was being taken as the crisis persisted. His position as former Chairman gave him a better understanding of the operations and challenge like higher customer defaults that AMEX faced.
According to Maxwell (2005) leading down involves a number of technical decisions such as downsizing. However necessary the decision might be, the act of firing employees cannot be justified; a sacrifice would be the right term. A sacrifice in such a case is associated with the benefit that is anticipated. For instance a job of 4000 employees would be equated to a profit of $175 million returns.
Further, reduction in the marketing and business development areas would raise the savings by $500; which is lucrative to the shareholders and the future of company. Although the two sections have been the most invested in sectors by AMEX, the decision to reduce the number of employees was an important decision. Consequently, the company’s change from charge-card business to offering credit to all customers was a decision made when there was a boom in the operations of AMEX. Therefore, the losses incurred would require additional finding without which its operation would be affected.
Similarly, the option of writing off 8.5% of its loans acts as a strategy by the CEO to portray stability of the company’s operations. This ability to transmit a vision downwards in the various levels of the company affects the perception of all the employees. This alternatively serves as a value-addition tool to the company as viewed other competitors in the same industry; but to AMEX it is ground for them to take competitive advantage of opportunities as the economy begins to rebound.
The CEO exhibited an aspect of problem solving and risk-taking according Maxwell’s criteria of tomorrow’s leadership characteristics. When new opportunities appear in the economy, a need arises for a leader who is multi-directional in exercising leadership skills, able to adapt easily, embracing change and one who can be relied on.
Last but not least, decisions that are risky in nature ought to be employed. The effort to portray AMEX as a strong player in the credit card industry paid of sooner than later. The NY stock exchange prices of AMEX exhibited that the ability to take on risky ventures by CEOs irrespective of the time, results in favorable returns. The requirements of AMEX and other banks undergoing the compulsory stress tests exposed that it was able to counter the effects of recession that others failed.
Further the $3.4 billion repayment package shows that the leadership was committed to ensuring the company remained a favorite of credit card customers as it was. In an effort to alternatively fund its recovery strategies AMEX decided to sell certificates of deposits to the clients directly. These strategies ensured that the company was in a rather direct contact with its clients, different from the way they used brokers to get to them. Eventually, the customers feel a part of the company and thus strengthening the relationships further.
The CEO, Kenneth Chenault, made decisions that although it affected the success or failure of the company were at the same time acceptable by other company employees. This ability to discern what will be appropriate for both the stakeholders and company owners is an ability that Maxwell desires for all future 360-degree leaders.
References
Maxwell, J. C, (2005). The 360-Degree Leader: Developing Your Influence from Anywhere in the Organization, Thomas Nelson, Inc.
Ex Targets $800 Million in Cost Cuts,(2009). Web.