By CHRIS CATLIFF
Wednesday, October 10, 2018
LEADERSHIP LAB President and CEO of BlueShore Financial
C EO succession has never been easy for boards, and as more baby boomers are set to retire, it is becoming a big issue.
Few leaders are qualified to run a company and even those handed the reins don't necessarily succeed. According to Harvard Business Review, two in five chief executives fail within their first 18 months of leading an organization. The stakes are high for boards finding the heir apparent. Failure to hire the right CEO matched to the job can result in instability, lower productivity and high employee turnover.
Whether a board selects a promising candidate within company ranks or chooses to recruit from the outside, both risk CEO churn.
The adage goes that if the company is doing great, hire from the inside and if it's doing very badly, change things up with an outsider.
Most companies are somewhere in the middle.
The safest bet seems a choice between existing executives within the organization. Boards often go with the safest bet, but it may not be the wisest choice. Senior executives may have had roles limited to providing financial or operating information, or providing critique without real ownership of the whole bottom line, so their experience leading transformation may be limited. Newly minted CEOs often get distracted from what truly matters in a position that comes with pomp and ceremony.
For CEOs to be successful with all stakeholders, there is nowhere to hide as the buck stops with them.
Having served on more than 30 boards and acted as CEO in the Canadian financial services sector for 20 years, I've come across promising candidates with potential and there are a few ways a rising star can show they have what it takes.
DON'T BE YOUR OWN WORST ENEMY: LEARN HOW TO WORK UNDER PRESSURE CEOs are not born, but forged. A strong leader is someone who has navigated turbulent waters time and again - even failed once or twice. As they say, a ship is safest in port but that's not what ships were made to do. A leader with strong CEO potential is one who has grabbed a startup or turnaround opportunity, and now knows how they react under pressure. There are undesirable styles that emerge when we are stressed. And one thing a CEO has lined up outside their door is stressful situations.
When we feel danger, our reaction is a choice - fight or flight. When faced with conflicting issues, a leader can 1) avoid the subject entirely, 2) capitulate to others' demands or 3) attempt to dominate the situation through confrontation. A fourth compromising style is the preferred approach, but it may not be the most practical one in situations in which multiple parties have established differing and hardened opinions. A fifth and common response of blaming others and using excuses is unavailable to CEOs, as they hold ultimate responsibility.
In stressful situations, therefore, going with the gut is wrong. We all exhibit a particular tendency, based on our personality, when it comes to dealing with conflict and that means instinctual decisions - although they feel right - may ultimately be a disaster. Determining one's weaknesses can be aided by candid commentary from teammates (including one's spouse). Smart leaders will not only know how they react under stress, but they will adapt by analytically and dispassionately assessing which style is needed for any given situation.
Eradicating emotion from crucial decisions takes skill and practice, and it is job No. 1. Explaining it is job No. 2.
UNLOCK SYNERGY ACROSS TEAMS: KNOW WHAT TO STOP DOING, START DOING, DO MORE OF, OR LESS OF A large organization requires complex decisions, and fair and popular decisions can be dangerously short-sighted and ineffectual. Dividing budget resources equally is a recipe for disaster. Businesses have competitive strengths they need to over-invest in, urgent weaknesses they need to eliminate, as well as gaps they need to solve for, whether this is doing more or less of something. The "stop, start, more, less" paradigm is useful for planning budgets that nurture profits. They hasten the transformation needed to avoid the digital disruption sweeping many industries.
From 50,000 feet up, the CEO is determining the strategy and sometimes, managers cannot see the goals of their corporate counterparts.
What Finance may see is Marketing is spending too much, while Marketing counters that Finance simply does not get the value of the brand. Lack of collaboration across different departments kills trust in the CEO. A great CEO gains the broad trust of his troops and ensures honest collaboration and communication between teams so that they see the forest for the trees. Inspiring extra effort, delegating and leveraging all employees together is an art, not a science. You are not a leader, you are a leader of leaders.
BUILD THE A-TEAM: SOLVE THE PEOPLE PROBLEM OF COLLIDING PERSONALITIES It is a universal truth that a mediocre plan executed well is more valuable than the most brilliant strategy stuck on the tarmac.
Strategic planning is one of the most important responsibilities for a CEO to drive their organization to greater heights, but how do you make the intangible tangible, the unseen, seen?
I have realized that everything is built twice.
First, the vision is built in the mind of the CEO.
While the CEO describes the future image, a core team implements the projects, building the vision again for a second time. What we pictured in our heads is different from the final creation. Compromise is built into the very act of creation and it doesn't matter how smart a CEO is - they are not capable of strategic execution if they do not solve people problems.
Every team has distinctive personalities, which require different approaches to reduce conflict. Top-down thinkers passionately start projects, but they don't finalize real results. Favouring top performers by promoting them to the level of their incompetence, or neglecting the disengaged are common situational traps for leaders. It is vital for a CEO to create excitement from the buy-in stage all the way to the end-state, and this could be three, five or 10 years out. This is truly where a CEO proves their mettle. Nirvana is when you have a team with a total "can-do attitude" - that welcomes change.
To be seen as CEO potential, thrive in stressful situations, secure collaboration amongst your peers, paint the picture of your strategy and bulldog your execution. By putting these principles together, innovation can actually become your steady state, and that brass ring may justly be yours.
Executives, educators and human resources experts contribute to the Leadership Lab series.
Find more stories at tgam.ca/careers.