Dennis P. Callahan. Few may remember the name, even fewer what he did.
William Patrick Crowley founded the Crowley Department Store in Detroit in 1912. Two years later a partner joined and became the Crowley, Milner and Company. The company experienced growth throughout its history, but never to the degree of other department store giants like Dayton, Hudson, Macy or Sears. Still the company was strong enough to expend throughout southeastern Michigan and north into Flint.
Controversy and allegations raged in 1986 when Anthony Franco, chairman of the public relations firm representing Crowley, heard they had a deal to sell the company at $50 a share. Franco was able to come up with a more sound deal, but at only $41 per share. The Security Exchange Commission investigated and Franco, in a settlement, was banned from the stock market, never being able to complete the purchase. Because of the circumstances regarding insider trading, the seeds of distrust were planted in the Crowley, Milner and Company organization.
Despite this distrust of the leadership, Crowley, Milner and Company continued to grow and in February, 1997, purchased 14 Steinbach stores in New Jersey. This was the beginning of the end for Crowley as they would learn the weed of distrust had not been removed from the garden.
Ten days shy of two years following the Steinbach purchase, Crowley, Milner and Company filed for bankruptcy. Just as stake holders had felt betrayed by Franco and those that tipped him off to the 1986 sale, creditors and other shareholders felt they had been betrayed due to the short period between purchase and chapter 11. A lawsuit was filed in Detroit saying that Callahan and his chief financial officer had failed in their fiduciary duties.
Interestingly, Callahan was not with the company when the bankruptcy was filed. But there was a strong belief the new leadership had been tainted by the growing weed of distrust from the seeds planted by Franco and Callahan.
The situation has been devastating to Callahan. The Detroit Free Press reported he has had legal expenses in the millions and that Shottenstein reneged on his severance package.
Today Callahan is a Realtor.
According to Callahan, it was the company’s loss of customer focus caused its demise. Those filing the lawsuit apparently felt it was lack of trust in Callahan. They evidently did not consider that Shottenstein may have purchased the chain to merge it into Value City. They did not consider that they mall operator may have fallen victim to the downturn in mall traffic.
They only looked to Callahan.
When distrust enters into any organization it must be dealt with immediately. Failure to do so allows confidence to erode rapidly, which leads to employee dissatisfaction, lost productivity, and weaker earnings.