Sunbeam and "Chainsaw Al"
Al’s First Move
In July of 1996, Michael Price and Michael Steinhardt hired Dunlap as the CEO and chairman of the board for Sunbeam Corporation. As two of the original investors who bought Sunbeam from bankrupt Allegheny International, Price and Steinhardt together own 42 percent of its stock. Prior to hiring Dunlap they had tried, unsuccessfully, to sell Sunbeam. The failure to sell made them decide to see if Dunlap could save Sunbeam and halt the declining stock and profits. Dunlap followed his four simple rules in trying to turn around the Sunbeam Corporation.
By hiring "Chainsaw Al," Price and Steinhardt knew full well that his reputation and operating theory would mean huge cuts in all areas of the company as well as massive layoffs. They believed that he was the one person who could turn the company around and increase stock prices and profits. The increase in stock prices did occur, almost instantly. The turnaround took just fifteen months. On July 19, 1996, the day Dunlap was named chairman and CEO of Sunbeam, the stock jumped 49 percent. The jump increased the share price from 12 ½ to 18 5/8, adding $500 million to Sunbeam’s market value. The stock continued to increase and reached a record high of $52 per share in March 1998.
Dunlap’s reputation and acceptance of the position at Sunbeam are what caused the initial stock increase. Although the increase was a great ego-booster, Dunlap realized that he needed to start the process of turning Sunbeam around. The champion move he made was to work on the first step of his four simple rules of business: get the right management team.
His very first hire was Russ Kersh, a former employee. A contract was written over a weekend so Kersh could start the same day as Dunlap. He started in the position as executive vice president of finance and administration. In his book Mean Business, Dunlap called the right management team his "Dream Team for Sunbeam." Only one senior executive was kept from the old management team at Sunbeam. The new management team created for the Sunbeam turnaround included Kersh and twenty-five people whom had previously worked for him at various companies. Dunlap saw logic in hiring these people because they had all worked with him and had been successful in past turnarounds. Once the first step had been accomplished, Dunlap and the Dream Team for Sunbeam quickly went into action implementing the second rule.