The pitfalls that confront CEOs

Friday, 6 March 2015 00:00 -     - {{hitsCtrl.values.hits}}

The expectations placed on the shoulders of the modern Chief Executive Officer (CEO) have never been greater. Company boards, shareholders and customers all look to the CEO to perform exceptional accomplishments. Whether it’s turning around a sick company, revitalising the share price, undertaking a merger or acquisition or redefining the business strategy, the CEO is under immense and continuous pressure to perform. CEOs are required to perform these achievements while dealing with all of the routine tasks involved in the day-to-day running of a business. They are increasingly the target of shareholder involvement, as well as the force of accusations that they are overpaid and underperforming. Business leaders are under pressure across the globe. As the economy gradually emerges from the deepest global recession in a generation, the role of the CEO is coming under renewed and a complex focus. CEOs who have been able to perform spectacularly in one business setting are presumed to be able to do the same in another setting. The “turnaround CEO” as some business tycoons have become known as must be able to perform almost super human accomplishments. But is it reasonable? Being appointed CEO is a privileged and honoured position in the business landscape, but one which is getting tougher, more unforgiving, with higher expectations, and less time to succeed. Being the CEO of an organisation is one of the most difficult challenges a person can face in a career. But it is not a complicated one. In fact, when it comes right down to it, there are only five really important things a CEO has to do in order to optimise his or her success. Accordingly, a CEO has to avoid the pitfalls that will lead to their failure eventually.   Pitfall #1: Status Not very long ago, CEOs enjoyed an elevated status in their organisations. Formality and structure governed interactions between the CEO and the broader management team, who tended to focus on saying the right things and avoiding mistakes when interacting with the CEO. Status was considered more important over results. Unsuspecting and under-informed CEOs who now try to bask in the glory of the title will soon be engulfed in this trap and his limitations will throw up among his subordinates. Hence, CEOs should drive hard for results through the constant inspiring and motivating his people, not forgetting to ‘walk-the-talk’.   Pitfall #2: Popularity With the status of the CEO, some individuals find it hard to understand the minds and thought of the employees. Therefore, they turn towards a few tell-tale managers/employees to do their dirty work. They choose popularity over Accountability. Gone are the days when a CEO will make every effort to be seen as the ‘good guy’ and, as a result, become popular among the staff. This profile would better fit the movies instead of a business organisation. The only strategy to overcome this pitfall, meet direct reports immediately about behaviour and performance and clarify expectations up front to make discussions with direct reports easier. Every CEO should hold people accountable, and, above all, he/she too must be accountable to all stakeholders. It is sad to note that, in a some companies the CEO measures his/her success from the ‘smile’ and ‘love’ per capita, i.e., how many of the employees give a warm smile to greet the CEO and how many ‘show’ that they love him/her.   Pitfall #3: Certainty CEOs who resist the temptation to protect their status or to be popular with their direct reports may still fail – because even if they are willing to hold them accountable they are often reluctant to do so because they have not made it clear what they are responsible for. This is usually because they are highly analytical and want to ensure that their decision are correct – but this is impossible in a world of imperfect information and uncertainly. They end up postponing decisions and fail to make it clear what people are accountable for. They give vague and hesitant direction to their direct reports and hope that they figure out the right answers along the way. The resolution for this temptation is to make more clarity than certainty. CEOs can set public deadlines for making key decisions and practice making decisions without complete information around less risky issues to overcome this temptation.   Temptation #4: Harmony CEOs of this nature do not feel comfortable with the decisions they take because they have not benefited from the best source of information available to that – their direct reports. This is because they have given in to the desire for harmony believing that it is better for people to agree and get along than to disagree and have conflict with each other. Without conflict decisions are often sub optimal. When all available knowledge and input is considered the chances of optimal decisions are greater. In order to overcome these situations, CEOs must encourage your direct reports to air their conceptual differences and with passion. Chaotic meetings are often signs of progress. Tame ones are often signs of leaving important issues off the table. Guard against personal attacks, but not to the point of stifling the interchanges of ideas.   Temptation #5: Invulnerability While these leaders may resist the temptation to protect their status, to be popular with their direct reports, to make correct decisions, and to create harmony, they may still fail - because their people are not willing to cultivate productive conflict. This is because the CEO has given in to the final temptation: the desire for invulnerability. CEOs are usually powerful people who don’t feel comfortable being vulnerable with their peers and reports and they mistakenly believe they lose credibility if their people feel too comfortable challenging their ideas. So even if they encourage conflict, they do not achieve it because their people do not feel safe doing so. Their reports tend to position themselves around the opinions of the CEO and conflict with each other only when it is expedient to do so. As a CEO, this is the greatest level of trust that you can give. They will return it with respect and honesty, and with a desire to be vulnerable among their peers. Actively encourage your people to challenge your ideas, Trust them with your reputation and your ego. Further you should acknowledge your own weaknesses and mistakes and allow direct reports to see your human side. The legendary business theorist and management scholar Peter Drucker made some telling observations about the role of the CEO in an unfinished draft shortly before his death in 2005. In it he posed the simple question: “What is the work of the CEO?” His ensuing thoughts condensed a lifetime’s observation into a tidy insight. He observed that the CEO is the link between the inside, represented by the organisation and the outside, and made up of the society, the economy, technology, markets, and customers. Inside, he said, there are only costs. Results can only occur on the outside.   [Dr. Nalin Jayasuriya, DBA, MBA, BBA, FIMS (UK), FITD, FCPM, MIPM, MMA (USA), is Chairman of McQuire Rens Group of Companies. He is a much sought-after Business & Management Consultant. He is also a Management trainer with International repute.]

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