Topics: Corporate governance, Management, Chief executive officer Pages: 5 (1500 words) Published: October 24, 2010
Cerner Corporation Analysis
This case analysis is based on the events that occurred on March 13, 2001 and the days that followed at Cerner Corporation. On that day the Chief Executive Officer of Cerner Corporation, Neal Patterson, sent a memo to the company’s managers via e-mail. In the message he advised the managers of his disgust with their disregard of punctuality and work ethic which he felt was as a result of the managers’ lack of leadership skills. The e-mail message was later obtainable for viewing on the Yahoo website to the public, including existing and potential investors and stock market analysts.

Cerner Corporation felt the short-term effects in the stock market and public opinion after the message was posted on Yahoo’s website. Some viewed the message from Neal Patterson as being too harsh and should have been communicated through a different medium. Others felt the message was exaggerated and could have been communicated in softer tones. Neal Patterson was then faced with the issues of restoring confidence in the eyes of his staff members and investors of the company. Mr. Patterson was then faced with the task of restoring confidence amongst staff because they felt the e-mail was too callous and resulting in a negative impression of him to the public.

Due to the negative publicity of Cerner Corporation the stock price and value of the firm declined. However, it was suggested by analysts that the state of the market which was ‘bearish’ also contributed to decline.

Statement of the Problem
The memo sent via e-mail by Neal Patterson which was perceived as harsh, arrogant, and unnecessary resulted in the staff taking offense and investors selling their shares held in the company. The problem in this case is the crisis of confidence in the Chief Executive Officer because of the tone and content of the e-mail. The issue of confidence is important and if not resolved staff will become more and more unhappy and uncertain about their future while investors will continue to dispose of their shares at reduced prices which lowers the value of the company. It is also possible that Mr. Patterson could be perceived as inconsiderate and uncaring which will de-motivate staff if the problem is not resolved.

The problem stems from Mr. Patterson’s observation of the parking lot being sparsely populated at 8 a.m. and 5 p.m. when he perceives it should be full. He interprets this to mean that members of staff are not putting in a full day’s work and thus not producing as much as they ought to. This results from the managers not performing effectively. It was at this point the Chief Executive Officer sent the harsh memo.

The effects of the problem at hand can be both short-term and long-term. The first short-term effect on Cerner Corporation as a consequence of the Neal Patterson’s email is the decline in the value of company’s shares evidenced by the fall on the stock market. This was followed by the loss of investor confidence. A fall in staff morale, damage to the company’s reputation, and loss of confidence in the Chief Executive Officer were also effects that followed as a result of Mr. Patterson’s conduct.

The long-term effects faced by Cerner Corporation are a fall in productivity and profitability because of a fall in the attitude of the company’s managers. Another long-term effect is the difficulty in raising capital as the company may be perceived as having weak management.

Possible solutions to the problem of lack of confidence in the CEO due to his conduct on the job are: 1.Development of a communication strategy that encompasses how management relates to staff, investors, and other stakeholders. 2.Improvement of communication and attitude from CEO to the staff and staff to their jobs. 3.Replacing the CEO

Mr. Neal Patterson is now faced with decisions because of his conduct on the job. At the age of 51 it is unlikely that he can change his attitude and method of...
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