CEOs And Boards Are Locked In A Spiral Of Doom
The relationship between boards of director and CEOs are vital to the well-being of any company. Many boards and CEOs misunderstand that relationship and so are locked into a “spiral of doom.” The author describes the spiral and ways to stop it.
By Brent Filson - 2005
American CEOs are dropping like flies. Boards, armed with new federal
rules and stock exchange requirements coming in the wake of the
corporate scandals of the past few years, are getting rid of
underperforming CEOs at record rates. This trend is all the more
notable because it’s happening during an improving economy and stock
market.
However, the real reasons for the CEO bloodbath are being ignored.
Analysts pin the bloodbath on the CEOs. But it’s not just the CEOs who
are failing. Boards are failing too. Working with thousands of leaders
worldwide for more than twenty years, I’ve learned that there is a
“spiral of doom” in the relationship between many corporate boards and
their CEOs. Most boards are clueless as to what leadership skills are
needed for CEOs to succeed. So they hire clueless CEOs. Clueless
boards hiring clueless CEOs -- it’s the classic spiral of doom.
The reason boards and CEOs misunderstand leadership is that recently
there has been a tectonic shift in leadership skills CEOs need to
succeed. In the 80s and 90s, the autocratic CEO reigned supreme. Many
companies were like slow-moving ocean liners with autocratic captains
giving orders to mates and mates giving orders to the crew. But today
the combination of globalization and new, differently-manageable
generations coming into the workforce is creating the need for new
kinds of leadership. CEO leadership is no longer like piloting an
ocean liner but like white water canoeing that calls for flattened
organizations that can change rapidly and accurately, decentralized
decision-making, motivated employees, and inspiring relationships.
The era of the autocratic leader is over. Yet most boards know no other way of leadership but autocracy.
Here are three things boards and CEOs can do together to stop the spiral of doom.
(1) Be aware of the crucial differences between autocratic leadership
and the new leadership. It’s easy to spot autocratic leaders. They
come with a “my-way-or-the-highway” attitude. They’re long on
order-giving and short on listening, great at micro-managing and poor
at motivation, great at caring for the company’s results and poor at
promoting the welfare of the people who must achieve those results.
The new leaders, on the other hand, ask a lot of questions. They
consult with people rather than command them. They have a passion not
only for achieving results but for promoting the well-being of the
people who must achieve the results. They listen well. They have the
courage to allow others to fail. They challenge people to be better
than they think they can be. They are continually enhancing the
leadership skills of others. And they understand that rewards and
punishments are the lowest forms of leadership.
(2) By all means, don’t hire autocrats. Select CEOs who are skilled in
the new leadership. This means taking great pains in the interview
process to have candidates talk about their leadership philosophy, ways
they have manifested that philosophy, and ways they intend to manifest
it as a CEO.
(3) Continually monitor and evaluate CEOs on how they’re carrying out
the new leadership activities. Boards and CEOs must put into place
comprehensive and systematic leadership processes. They must hold
themselves accountable for those processes. Board meetings must be
consistently devoted to leadership issues. When CEOs report to boards
on the state of the company, they must also report on the “state of
leadership” -- showing how leadership is getting results and how the
leadership capabilities and responsibilities of their senior leaders,
middle managers and small-unit leaders are being constantly upgraded.
Autocratic CEOs are maestros at getting the wrong results or the right
results in the wrong ways. Boards who bring them on buy a ticket to
ride on the spiral of doom.
The time is now for boards and CEOs to get off the ride and bring in
CEOs who recognize that the best leadership is not about what leaders
do to people but what they do with people.
2005© The Filson Leadership Group, Inc. All rights reserved.
The author of 23 books, Brent Filson's recent books are, THE LEADERSHIP TALK: THE GREATEST LEADERSHIP TOOL and 101 WAYS TO GIVE GREAT LEADERSHIP TALKS. He is founder and president of The Filson Leadership Group, Inc. – Celebrating 25 years of helping leaders of top companies worldwide achieve outstanding results every day. Sign up for his free leadership e-zine and get his FREE report "7 Steps To Leadership Mastery"