I often lament the state of people management
and leadership in the world today, and note how important it is to the
future of business for executives to be better at leading and managing.
And you may have heard me opine that poor management and leadership are a
key factor in both the exodus of top talent and the failure to build successful companies.
And I often wonder aloud why executives aren’t better managers and leaders, given all the data that shows the connection between engaged employees and great business results.
This morning I got some insight. A post here
on Forbes by Susan Adams discusses a new study, conducted by two groups
at Stanford Graduate School and the Miles Group, a New York-based
consulting company. I was so fascinated by the results that I went to the study itself to investigate further.
The study polled over 160 CEOs and directors of North
American public and private companies, focusing on what they saw as the
CEOs’ strengths and weaknesses, and asking what measures and weighting
the boards used in evaluating the CEOs.
I wasn’t at all surprised by the strengths and weaknesses. Boards
(and the CEOs themselves) say that the CEOs are excellent at
“decision-making” and “planning,” for instance, and not so good at
things like “mentoring and development skills,” “board engagement,”
“listening,” and “conflict management.” Sadly, that’s what I would have
expected.
As I read further, however, I had my ‘ah-ha.’ It turns out that there’s a big gap between what boards are actually requiring of their CEOS, and what they think they’re requiring.
That is, while a large majority of board members believe their
evaluation of their CEO is balanced between financial and non-financial
metrics, it’s simply not true. For example, the survey found
that, on average, a CEO’s performance in the areas of talent development
and succession planning was given only a 5% weighting, and only a 2.5%
weighting was given to employee satisfaction/turnover. The most heavily
weighted metrics were in accounting, operating, and stock price. The
study also found that supposedly important measures like product service
and quality, customer service, workplace safety, and innovation aren’t included in more than 95% of CEO evaluations.
Something I’ve learned over the years about us human beings: if you
want people to behave in certain ways, you have to make them feel those
behaviors are easy, rewarding, and normal.
That is, they have to believe they know how to do the behavior and
nothing will get in the way of them doing it (easy), that it will give
them something they value (rewarding), and that their peers and/or
people they admire do it (normal).
Given this, it makes sense that CEOs don’t focus enough on building a
committed, engaged workforce, on creating great customer service, or on
innovation: their boards are making it not-easy, not-normal, and definitely not-rewarding to do so.
If boards are giving lip service to the importance of leading and managing well – but are actually only holding CEOs accountable for stock price and growth metrics,
then most CEOs will continue to drive financial value for the
short-term, in ways that may not be sustainable. They will read all the
data that shows how employee engagement is a key (perhaps the key) driver of performance – nod sagely and agree…and then continue to behave as they’re being required and rewarded to behave by their boards.
Here’s one thing we can do to change this: if you’re a stockholder in
a public company, write to your board and let them know how you’d like
them to evaluate the CEO: that you’d like that person – and his or her
team – held accountable for both great financial results, and how they
achieve them.
I’d love any other ideas you have about how to change this state of affairs…
________________
Check out Erika Andersen’s latest book, Leading So People Will Follow, and discover how to be a followable leader. Booklist called it “a book to read more than once and to consult many times.”
By Jack and Suzy Welch
If
you've ever sat on a board, chances are you've had to endure an
ineffective or otherwise dysfunctional peer at one point or another.
Not
to slam boards; on the whole, they add real value. But boards
frequently tolerate troublesome performance from one or two of their
own. It's simply too time-consuming or impolitic to eradicate them. And
that is why too many boards, in both the public and private sectors,
don't make the contribution they should.
To be clear, we're not
talking about board behavior that is criminal. With a few famous
exceptions, boards will remove anyone who breaks the law. No, we're
referring to boardroom behaviors that are perfectly legal but perfectly
destructive as well. There are at least five types of dysfunctional
board members that "serve" at many companies by our count:
THE DO-NOTHING.
Some
of these seat-warmers are too busy with their own companies, other
directorships, or their personal lives to care about your board. Some
don't have enough skin in the game to work up a real interest. Others
lie low for job security. At $25,000 to $100,000 a pop, corporate
directors get paid good money. In the private sector, prestige is often
the reward. So Do-Nothings rarely challenge or probe. Nor do they
venture into the field to make sure what they hear in the boardroom
about values and strategy matches what employees feel.
THE WHITE FLAG.
Do-Nothings
are awful but not nearly as dangerous as type two in our taxonomy.
These individuals live in fear of being personally tainted by any kind
of controversy, such as a class action or activist protest. They lack a
key characteristic of any good board member—courage. With every public
or private challenge, they pollute the boardroom by hyperventilating for
a settlement, even if it means selling out on principle just to get out
of the crosshairs. Sure, a board must settle on occasion, but never
before seeing the organization through a discovery of the facts. Such a
process creates a culture of trust between management and the board, and
it is only in such an environment that risks can and will be taken.
THE CABALIST.
The
third type of bad board member is the director who sits quietly in
meetings, often going along with the prevailing side, before taking up
his cause behind the scenes and building constituencies to achieve
another agenda, his own. In many cases, good board members shut down
such practitioners of palace intrigue. But sometimes a board's cabal is
its own executive committee, and the result is a controlling, secretive
board-within-a-board that turns other directors into second-class
citizens. Such a dynamic decommissions the majority of the board's
brains—and what a waste that is—but it also undermines the board's
relationship with management. Executives can't tell if a director is
speaking for himself, the board, or the cabal.
THE MEDDLER.
Good
directors focus on big-picture issues such as succession and strategy.
By contrast, our fourth "offender" likes to butt into management.
Instead of meeting with high-potential talent and discussing industry
dynamics, meddlers get all mucked up in operational details. They seem
oblivious to the fact that board members are there for their wisdom,
sound counsel, and judgment, not the day-to-day running of the business.
THE PONTIFICATOR.
And
finally, there is the self-important bloviator who cannot get enough of
his own voice, especially when it is opining on "matters of state,"
such as world events, social trends, the company's history, or his own
area of expertise. Like Meddlers, Pontificators distract boards from the
business before them and enervate their colleagues in the process.
As
a board member, it is easier to let a couple of Do-Nothings hang on
till retirement or tolerate a few cowering White Flags as other
directors handle each crisis. Or to try to isolate or work around
Cabalists and ignore Meddlers and Pontificators. But imagine how much
better it would be if nominating committees, usually just focused on
vetting potential members, dealt with the hard cases right in front of
them. After all, nothing can keep a board on its best behavior but
itself.
Jack Welch is Founder and Distinguished Professor at the Jack Welch Management Institute at Strayer University. Through its executive education and Welch Way management training programs, the Jack Welch Management Institute
provides students and organizations with the proven methodologies,
immediately actionable practices, and respected credentials needed to
win in the most demanding global business environments.
Suzy
Welch is a best-selling author, popular television commentator, and
noted business journalist. Her New York Times bestselling book, 10-10-10: A Life Transforming Idea,
presents a powerful decision-making strategy for success at work and in
parenting, love and friendship. Together with her husband Jack Welch,
Suzy is also co-author of the #1 international bestseller Winning, and its companion volume, Winning: The Answers. Since 2005, they have written business columns for several publications, including Business Week magazine, Thomson Reuters digital platforms, Fortune magazine, and the New York Times syndicate.
