Summary: The relationship between boards of director and CEOs are vital to
well-being of any company. Many boards and CEOs misunderstand that relationship and so are locked into a "spiral of doom." The author describes 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 wake of corporate scandals of past few years, are getting rid of underperforming CEOs at record rates. This trend is all more notable because it's happening during an improving economy and stock market.
However, real reasons for CEO bloodbath are being overlooked. Analysts pin bloodbath on CEOs. But it's not just 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 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 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 80s and 90s, autocratic CEO reigned supreme. Many companies were like slow-moving ocean liners with autocratic captains giving orders to mates and mates giving orders to crew. But today combination of globalization and new, differently-manageable generations coming into workforce is creating 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 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 spiral of doom.
(1) Be aware of crucial differences between autocratic leadership and 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 company's results and poor at promoting welfare of people who must achieve those results.
