Performance Standards for high Profile Executives

In today’s world, with a financial crisis still in our economy, executives have a smaller margin for failure than ever, and with such high expectations and standards for quality, we see a lot of them resign or being fired.

A couple of days ago, the CEO and President of Ferrari, Luca Cordero di Montezemolo, resigned from his position in light of the recent result that the Ferrari Formula One team achieved.

Ferrari is the longest lasting Formula One team in existence, being uninterruptedly participating in this sport since its debut in 1950, with 882 start and 221 race victories, it is considered the best team in the history of F1.

Because F1 has always been the pinnacle of automotive engineering, it is expected that the cars perform as good as technology allows.

Another factor is that F1 changes its rules and Regulation each year to incentivize teams to invest in R&D to improve in automotive fields. For example in the 2014 season, for the first time, they introduce smaller V6 engines with the aid of and electronic engine connected to a kinetic energy recovery system (KERS).

These regulations are put in place because often the advances made in F1 then allow car manufacturers to build on that technology and pass it down to the everyday cars we drive nowadays. Since electric cars are becoming more popular and a viable alternative to gas-powered vehicles, F1 decided to introduce electric motor to incentivize research on that subject.

Because of these drastic changes, companies entering the F1 championship had to invest a massive amount of money into R&D to develop new engines capable to perform their best under the new regulations.

Because Ferrari’s CEO never believed in Electric powered vehicles, he never had any interest in investing that kind of money for the vehicles they where producing regularly, so Ferrari had to start from scratch.

Ferrari didn’t have the best season this year because of this enormous set back in their R&D investment, and as a result is mostly in the middle of the chart.

Because of these poor results Montezemolo decided to resign and leave the command of the team to FIAT Chrysler president Sergio Marchionne.

Montezemolo was at Ferrari since 1974 was a pillar in the company and, since his he was in charge, Ferrari had a streak of wins with driver Micheal Schumacher.

Sadly, because of missteps in the investment, Montezemolo felt that he was no longer capable of bringing Ferrari back to its former glory.

This just shows how demanding some firms are, mostly firms that compete on an international level. 

He was not able to maintain the standards that were set forth by the company over the years and as the team won more and more in the early 2000’s, the standard for excellence and success in the racing team rose higher and higher, to the point where he could no longer keep up with it.

We have seen similar occurrences like this happen over he years, because these high level managers couldn’t keep up with the performance that was expected of them they were let go to leave space for someone that will. We see it very often in the Football (Soccer) world, where managers are often fired because the team isn’t winning or is not performing at the standard that is expected. For example Internazionale Milano has had 5 managers in the last 4 years because none could achieve the standards that the owners set forth for the team.

This just shows just how performance standards are so highly regarded in the competitive sports industry and how vital it is to conform to those standards to maintain a current position.

http://www.corriere.it/economia/14_settembre_10/ferrari-montezemolo-lascia-marchionne-nuovo-presidente-8ec82492-38b5-11e4-ba01-a3638c813bce.shtml
http://www.bbc.com/sport/0/formula1/29138322
http://edition.cnn.com/2014/09/10/sport/motorsport/luca-di-montezemolo-steps-down-ferrari/index.html?hpt=isp_c2