This recommendation is well-presented, but not thoroughly well-reasoned. By making a direct link between profit loss and the leadership of the president Pat Salvo, the argument for appointing a new president in order to increase profit would hold water.
However, the manager fails to provide any evidence whatsoever to support the bold assumption blaming the profit loss on the president. Basically, there are so many alternatives for a company to lose profit that run out of the president’s control. For example, poor performance of another company could affect this company due to their business contact. When a company bankrupt, similarly, other companies may even bankrupt as well. Also, the manager should better count in the whole global economic situation. What if the company is undergoing the financial crisis in 2008? Likewise, what if the company is a local enterprise in Greece, which is trapped in the European debt crisis? Then the president is free from the blame on his leadership---no one can make it.
Even assuming the profit loss was actually due to the president, there is a big flaw when the manager jumps to the conclusion that the president should resign. If the president is in fact trying to reform certain aspects of the company, profit loss in a short period could boost huge profit in the long run, just like what the leaders of China have been doing now. Therefore 3 quarters is not an adequate time frame to judge a resignation of a president, and the company will probably drive back on the track afterwards.
At the end of his recommendation, hopefully yet unfoundedly, the manager believes that things will become good as long as a new president comes. While not too risky of the new president’s adaptation to another company, this replacement may nevertheless cause larger profit lose instead of any increase. This candidate has run a jewelry company well but toys are not jewelry. Chances are that she has never deal with toys. In this case, the company has to pay a lot for her final yet uncertain and small success in a distant future.
Overall, the reasoning behind replacing the president with a new one seems logical since the manager is acting in the company’s best interests and hopes to increase profit. However, before any final decisions are made about the position replacement, the HR manager and the board of Fancy Toy Company might as well evaluate all possible causes for the profit falling and the rationality of the personnel change.