FOR months we have advocated the need for Telstra to demonstrate to the market that it was clear about the need for management change.The market believed management entered deals and arrangements that were not the most opportune for Telstra.The market viewed Solution 6, which has cost Telstra almost $50 million so far, and other similar deals as less than brilliant deals. So the shakeout was necessary. Telstra chief Ziggy Switkowski needed to do something fairly drastic.It appears that he has finally started the process. On the eve of the deadline for the last payment on Telstra Instalment Receipts, Mr Switkowski announced the appointment of a number of senior management positions and the departure of others.The appointments include a high profile former employee of the Premier’s Department of the former Kennett Government as well as people from Mr Switkowski’s previous employer, Kodak.But the market will need to assess the calibre of people appointed. The market will have to decide whether the appointments will benefit Telstra or if there is a sense of “shifting the deck chairs on the Titanic”.It is extraordinary that so much is made of appointments to boards and the expectations of thousands of shareholders are determined by the perceived influence of board members.Historically, we have seen many examples of the impact of individuals.We only need to look at the recent reported illness of Rupert Murdoch and the impact that had on the share price of News Corporation.A few years ago, the affliction of Kerry Packer was sufficient to send his companys share price spiralling.The appointment of Paul Anderson to the helm of BHP has been an outstanding success with the share price rising from $10.50 to about $20. This has been mirrored a number of times in other companies.The appointment of people perceived to have the ability to turn a company around can have a huge impact on its share price.
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