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Article from Human Resources, Hong Kong, Oct 2005
Learning Points for the CURRENT Generation of CEOs
The media have been reporting that the tenure of CEOs in corporate America has gotten shorter. One of the reasons is the impatience exhibited by shareholders demanding short-term results and high dividend payments. As a matter of fact, this is potentially one of the reasons why the CEO of Enron Corporation got into trouble, together with some other organizations. When CEOs do not deliver, they are “forced out”. We all know this is an unhealthy vicious cycle – thankfully, however, shareholders and other stakeholders have since re-awoken to this fact and have been, wisely, more medium-to-long-term sighted – giving much more breathing space to CEOs.
CEOs can now heave a sigh of relief, or can they? Well, yes and no. CEOs have for some time already been facing a different kind of challenge – that of talent identification, nurturing, retention and separation – talent being scarce resources and all that. All over the globe, CEOs know they need to have a strong team in place if they want to continue delivering the results required of them.
Besides hiring expensive consultants to tell them how to achieve this, CEOs can take heart that they can also avail themselves to the leadership and management wisdom of Jack Welch, ex-CEO of mighty General Electric. In his latest book, simply titled “Winning”, Jack continues his ‘tell-it-like-it-is” approach in sharing his 20-odd years’ experience heading one of the largest conglomerates in corporate America. Here are five key learning points for CEOs in search of greater management skills.
Back to Basics
Given on-going changes in the global business battle-field, it is imperative that organizations revisit their VMV (Vision: Mission: Values) on a periodic basis. Values may not change too much, but an organization’s mission and vision statements may have to, to keep pace with changes in technology, customer needs and expectations and even competitor actions.
If there is one thing that CEOs cannot afford to delegate, it would be defining their organization’s VMV. The entire top management team must take ownership in creating these and making very sure that they cascade them down to every nook and corner within the organization. After this, CEOs and their leaders need to live and breathe the vision as well as the organization’s values, everyday. Ask any leader who has been around long enough in Johnson & Johnson about the 60+ years old The Credo, and you will know what I mean.
I’m unsure if Mark Hurd, recently appointed Hewlett Packard CEO and President had re-visited HP’s VMV already but I would have thought that he should have done so when he took over the reins of HP. In many cases, newly appointed CEOs try to ‘justify’ their appointments by cutting costs – and the easiest way to achieve this is to cut payroll. Sometimes, this is justifiable and the right thing to do for the business – however, CEOs need pay heed to the possibility of starting on the wrong footing and sending the wrong signals to the remaining employees. Can’t blame them if they do not stick around for long after the blood shed – and we all know that employees not only walk away physically, they also take-away with them intellectual capital as well as useful business contacts. At the end of the day, they have to realize, of course, that it is beyond mere digits – they are dealing with people’s rice bowls.
Secondly, the perennial issue of change. It just won’t go away, will it? Much has been written about change already, and Jack has nothing earth shattering to add on. However, I feel it is important enough for us to continue talking about it, and for CEOs especially to be constantly aware of the need to effectively manage change. For a start, do make sure you change only when you have to change. Sounds fundamental, but still, CEOs make the mistake of invoking their organizational power to institute change, when really there is not much need for changes to happen. CEOs need to accept that sometimes, not doing anything dramatic, is in itself a good management decision. If changes need to take place, the key is communication. And, all good consultants will tell you that you can never over-communicate – the key is communicating the right stuff, and to the right audience. The next thing you need to do besides communication is to ensure you have the right people to drive the changes. Quickly identify these folks and remove the ones that stand ready to obstruct your way.
The 1982 Johnson and Johnson Tylenol Crisis is a great example of effective change management, at a time of a national crisis, no less. I understand it has now become a classic case study used by a great many academic institutions.
Thirdly, CEOs must inspire their team members to take calculated risks, and reward them for doing so. People learn by doing things differently. It is alright for an organization to continue doing the same things – assuming they are alright with losing to competitors and ultimately, being redundant! In this case, many heads are better than one. Employees make great resources only if you tap into their individualism, creativity and experience. CEOs must learn to delegate effectively and to create a culture where people are not afraid to fail – for the right reasons. Failing does not equate to permanent failure. People must be allowed, and even encouraged to fail. For through failure and learning can an organization do things better, and grow in the process.
At the age of 30, Steve Jobs was fired from the organization (Apple Computer) that he co-founded when he was a mere 20 years of age. Then, he could not fathom how such a thing could have happened to him. He had failed – and how devastated he was! For the record, Steve lost his job as the then Apple Board sided with the salaried CEO – his business views and Steve’s did not converge, and at that time, the former’s views made more sense to the Board. I suspect the Board must have made a very tough decision in firing Steve – I mean, the guy literally gave birth to the company in the first place and Steve must surely have had a say in their being brought on to the Board!
Only upon hindsight that Steve realized that being fired freed him from the pressures and demands of being in the limelight of a publicly-listed Apple. He was ‘free again’ to experiment and take risks. He then went on to start two new ventures, NeXT and Pixar.
In Steve’s case, his so-called “failure” actually was a blessing in disguise – giving him a golden opportunity to take more risks, and bringing him to where he is today – back at the helm of Apple!
The fourth point is recognizing the ‘solid citizens’ of your organization, and according them the due respect and care. In a normal bell-shaped distribution curve, the middle 80 per cent of your organization consists of the folks who are there for you, rain or shine. They are not your high achievers who will make things happen, nor the folks at the other end of the spectrum – the ones who watch things happen, and then wonder what happened, after it has happened! Some organizations make the mistake of spending great time and effort on just the two groups of people at the extreme ends. Justifiably so, the fast trackers must be nurtured and groomed as they are the future leaders of tomorrow. However, we sometimes spend too much time managing the ones who are destined to leave the organization, voluntarily or otherwise.
The ‘solid citizens’ form the backbone of the organization, without which, the entire business may just simply collapse. Hence, in working with their HR leaders, CEOs need to pay careful attention to keeping this group of people motivated, happy and adequately rewarded. Rewards can take the form and shape of perquisites and environmental conditions, rather than simply monetary-related. For example, the availability of a child care centre within the organization’s premises has proven to be a major deciding factor for working parents to continue with the same employer. I guess the key learning point for CEOs here is: “never take your solid citizens for granted”.
Last but not least, managing what is perhaps the most difficult decision for CEOs – letting someone go. You go out to headhunt the best, most appropriate talent to help you run the business. Your lieutenants come in, most of them do a great job that make you look very good in-front of your Board. But you have to let someone go – because you made a wrong hiring decision – the chap is not able to deliver. In the meantime, you have come to be acquainted with his family, and know that the other breadwinner in the family has also just been made redundant by his/her employer, and the couple is expecting their first baby.
Not only are such occasions a very emotional affair, it is one that will surely leave you with sweaty palms and sleepless nights. The key to this, according to Jack Welch, is striking a balance between giving people a second chance, whenever possible, and acknowledging that ‘it is time’. In the course of my consultancy work, I’ve coached many a CEOs in preparing themselves for the D-day announcement/meeting. One common thread runs through – regardless of how many times you have fired someone before, each fresh need is a totally new experience altogether. This is understandable as each individual is unique and has his/her own special set of personal circumstances. Two key things though for CEOs is never to say something like: ”I know how you feel” – because simply, you don’t, and to treat each individual with the deepest respect and to minimize humiliation in their departure. You may not receive any thanks for firing someone, but at least, you will not be remembered for handling it incompetently.
The current generation of CEOs has never had so much to content with – but to be fair, no one said being a CEO was a party! Challenges will come, be conquered and put to sleep. But, new ones will inevitably come. For the CEO, the only way to stay afloat is to stay resilient and adopt a mindset to embrace and thrive amidst continuous changes. Or, you can always engage Jack Welch to be your personal coach!
Paul Heng, CMF
NeXT Career Consulting Group, Asia
Founding President, Asian Association of Career Management Professionals
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