Managerial dismissal decisions are a common yet challenging task for CEOs, particularly those joining as new CEOs in organizations characterized by strong values. The purpose of this research is to shift the perspective on such decisions from being a quick rational cost–benefit analysis to being value-based and relational, thus creating an ambiguous and often time-consuming decision situation. We take a sensemaking perspective to understand how new CEOs make sense of potential managerial dismissals and how such sensemaking affects their ultimate dismissal decisions. We investigate this question through a multi-case approach, drawing on evidence from six family firms, which represent an extreme context of value-based organizations. We present a model of how dyadic and prospective sensemaking mechanisms shape whether CEOs are able to overcome their hesitancy to engage in managerial dismissals and, thus, engage in reasoned or rejected dismissals. Our findings extend knowledge on managerial dismissals, provide new insights into how new CEOs build their managerial teams, and explain how CEOs of family firms and other value-based organizations balance non-financial goals in difficult decisions.
Kammerlander et al. (Thu,) studied this question.