At Full-Velocity: Executive Effectiveness in a Transitory C-Suite
In a series of frank, enlightening, and actionable conversations held between June and August 2013, Merryck & Co. explored the subject of executive effectiveness at the current velocity of business with CEOs, Chairmen and Lead Directors, and CHROs. Over and above broad themes, we sought insight into ways that CEOs can extend not only their own effectiveness and longevity, but also that of those who report to them.
The following five headlines emerged:
1. Know why the board hired you
The truth is simple: CEOs tend to lose their jobs because of their relationships with the board. While financial performance is a key metric, CEOs get fired over their relationships with the board far more often than because of the numbers.
Every board has a unique personality, just as every director has a different reason for being on your board. We heard from directors who wanted to be on customer visits, from directors who rarely speak but want to be heard when they do, and from directors who want the CEO to call them at home on the weekend to chat.
Every board has different expectations for measuring the health of its relationship with the CEO. Know yours.
Getting clear up front about your board’s informal metrics is every bit as – if not more – important as understanding the formal ones for measuring your success.
2. “CEOs get the boards they deserve”
As vital as it is for the CEO to understand the board’s metrics, the most successful CEOs set equally clear expectations for their directors’ contributions. Thus, as one Chairman told us, “CEOs get the boards they deserve.” While it can be tempting to keep a board at arm’s length, we heard several variations on the following equation:
1. How many days a year do I spend prepping for board meetings?
2. How many days do I spend in one-on-one meetings with my chairman, lead director, or other directors?
3. How many days a year do I spend in actual board meetings?
For most CEOs that total number of days (estimates ranged from 15-25) is too large to allow it to be anything less than a valuable use of the CEO’s time. That simple calculus, in turn, makes the CEO a facilitator whose role is to help directors contribute most effectively to the organization.
It is crucial to remember that a CEO is competing for each director’s share of mind. They’re doing many different things – running companies, sitting on other boards, fishing in Nepal. Directors don’t always remember everything from one meeting to the next – nor do they want to be embarrassed about that. A successful CEO must frame and re-frame context for the board around everything he or she presents, bringing everyone to the same page prior to each discussion.
As importantly, many directors told us that a CEO needs to excite the imaginations of the board. One successful CEO makes a point during meetings to walk away from the podium, stand at the end of the table and speak from the heart about why what she wants to do is the right thing to do. “Think in-person,” she advises, “don’t be distant – let them see your passion.”
3. Get beyond first-year vision, strategy and operational thinking
No CEO is hired to preserve the status quo. As one successful CEO and board member puts it, “Running the company operationally is table stakes, and if that’s all I’m doing maybe they’ve got the wrong guy.”
We asked every CEO and former CEO we spoke with what advice they would give themselves back when they were new to the job. They responded in many different ways, but had this in common:
1. Don’t wait to take the long view. Ask yourself right up front who are the people on your team who aren’t likely to perform to your standards, and challenge yourself with what you are going to do about that. Equally, be honest about which two or three business units likely shouldn’t exist five years from now, and what you are doing to address that.
2. Determine right away what leadership culture you are going to create. One CEO told us that, in his first year on the job, he hated the word culture and spent most of his time on sales capability and R&D. “If I could have that first year back,” he said, “I’d spend 50% of my time on culture.” While meeting goals is crucial, equally valuable is the way that a leader thinks about the business, communicates those ideas, instills the values he or she has and effectively puts into action the cultural expectations he or she has for themselves and the people around them. A leader’s first year is the best time to instill that message most clearly – otherwise, culture “happens” to you and becomes yours by accretion rather than intention.
3. Get an objective sounding board, quickly. For some, this was a Lead Director or Chairman. Others had informal networks with former peers who’d gone on to be CEOs at other companies. For others, it was a coach or mentor. But top jobs, and especially the role of Chief Executive, are immediately isolating. That simply comes with the territory. You are going to be making decisions that impact thousands of people and billions of dollars, not to mention your own job. Make sure you’ve had an empathetic but knowledgeable, challenging mind play devil’s advocate.
4. Be both decisive and deliberate about talent
Leaders in the engineering field know that the analytical nature of their engineers compels them to make a stay or go decision at the end of every major project. In today’s business climate, every single employee – especially high potential executives – evaluates whether he or she should stay or leave on a regular basis. In a world of velocity, a CEO must embrace that change and use it as a lever for re-engagement, not as a potential talent drain.
This is vital to success, because talent defines not just today’s success but the CEO’s legacy after his or her departure.
Based on our conversations, it’s evident that good leaders hire talent that is smarter and better than they are, and give them the scope and responsibility to thrive.
In the “you don’t own, you rent” world, ongoing development of top talent doesn’t happen by accident – it either happens intentionally at your organization, or it happens with your best talent at the next place they go to work.
5. “Better than ever” is not good enough
Velocity is real, which means the pressure on leaders to excel is real: we hear it from CEOs who had a great first year, then hit the financial crisis; CEOs whose companies nearly collapsed in their first year due to external market factors; directors who’d interrupted docile board meetings to say, “We’re bottom quartile. I’ve never been bottom quartile in anything in my life, and this is not acceptable.”
Part of a leader’s role is to never rest, but another part of that role is to not exhaust the people in the organization. The best leaders develop the ability to be something of a chameleon – rewarding their people, celebrating their successes, keeping their boards engaged, but never being satisfied within
themselves that they’ve “solved” the future.
When you get tired of doing that, it’s time to do something else. Most multiple-stint CEOs have developed a strong sense of, “When this isn’t fun anymore, I’ll stop”– because they know the toll the job takes as well as the discipline required to not merely hold the office, but to propel an organization into the future.
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