Ceos And Boards Are Locked In A Spiral Of Doom

Summary: 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.

CEOs And Boards Are Locked In A Spiral Of Doom

by Brent Filson

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 overlooked. 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 company 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.