CEOs must be Masters of the Craft of CEO Management

Over the years I have asked hundreds of CEOs to relate their management philosophy. How do they describe their view of the Craft of CEO Management?  Most could not answer the question succinctly or clearly.  Many had "bits" of an answer, but few could describe a comprehensive integrated management process that directs and integrates the work of hundreds or thousands of employees.

For instance the question, "What is the difference between leadership and management?" runs most managers onto the rocks.  They cannot answer and, most revealing, plainly have not considered the difference.  So they tell their management team to be both... but cannot define what this expectation means and as a result garner the predictable disappointing results of under-performance.

I define the mastery of a craft as the lifelong pursuit of proficiency in a chosen profession - the profession in this case being CEO management.  When you take on the management mantle of CEO of a company, you need to be as trained and as confident as a 747 pilot sitting on the runway preparing to take off: that is, somebody who knows the ropes and has trained thoroughly for the job.  CEOs often have not had the hours of training an airline pilot undergoes, nor are forced to learn and inculcate a philosophy, a structure, a set of principles, processes and disciplines and then practice them to an exemplary standard with clear accountability for performance.

But CEOs have the opportunity to choose a management philosophy, a structure, a set of principles, processes and disciplines and then practice using them for the rest of their career.  Unfortunately, most do not and are not held accountable by their Board to do so. 

Here lies such a great opportunity for performance improvement.  CEOs who adopt a craft, reflect on it, learn and integrate all the management work of their company tend to get higher levels of engagement and better results.  Without this locked down, they can behave and be perceived as inconsistent, unfair loose cannons.

Year-end Perspective

To paraphrase (badly) Jane Austen, it is a truth universally acknowledged, that the end of the year brings introspection.

Let's not get into new year's resolutions, which almost always begin with enthusiasm and end in ignominy. But it may be salutary to assess what you have learned from the past year, and celebrate, recalibrate and plan for the following year.

Find some free time and ask yourself these questions - and write down your answers.

The past year:

What were my biggest successes in 2014? What were my biggest setbacks? (Keep both to a maximum of three.)

What are my biggest strengths? How can I leverage these strengths in order to overcome challenges?

What did I learn in 2014?

What did I lose track of in 2014? (These could be relationships or commitments.)

The coming year:

Looking forward for 2015, what will make it a successful year for you? (You need to define success in order to set goals and know when you've arrived.)

What needs to be cleared up?

What relationships require your focus?

Having answered honestly the above questions, you may wish to revisit your answers at least quarterly during the coming year to measure your progress. And remember, success means many things to different people.

Happy holidays!

Why do managers keep making the same mistakes? (Part 2)

In last week's blog, I related the story of my friend who over the last four years, has been bounced around like a Ping-Pong ball due to the actions of his company's executive team.

He went from a full-time employee to being outsourced, then called back into the fold of his original employer. The latest corporate decision, due to a change in CEOs, is that outsourcing is back on.

This all-too-familiar tale has led him to question upper management's strategy (which to be honest, has never been made clear to him).

So let's look at why managers appear to keep on making the same mistakes.

I call this Executive "Whiplash" Leadership. Its first cousin is, "I have a dream", followed by a direct decision bereft of a thought-through management implementation process. The result for employees is to be whiplashed from one extreme to the other, exacerbated by poor communication. This leads to a misunderstanding of why and what is happening to them.

The fundamental mistake made at the executive level is to ignore managerial accountability and process. Only with it can a CEO engage, explain and adjust the plan relative to feedback from their 'greatest asset': the employees.

Perhaps if the above had happened, my friend would be effectively working to help implement his CEO's plan. He would have been aligned, and understanding and accepting of tough decisions made in the interest of the employees' and company's survival and long-term prosperity.

Why do we keep making the same mistakes?

A friend told me this story.

He heads the IT department for the Canadian division of an international telecommunications company that has more than 60,000 employees world-wide. Four years ago, in preparation for a proposed merger, the executive management decided to divest itself of several functions. Accordingly, IT, facilities management and a few other bits and pieces were all outsourced.

My friend found himself working for a company to whom he felt no loyalty, reporting to a invisible and practically unreachable manager at the other end of the globe. His benefits and salary were cut, but in these difficult times, he considered himself lucky to have a job. So he soldiered on.

Two years after the outsourcing move, the telecomm company reconsidered its decision. The merger had gone through, but the anticipated savings had never materialized. Worse still, due to the presence of a middle organization, IT projects proceeded at a glacial pace and duplications of work abounded in a confusing mishmash of divisions and functions. So the telecomm decided to rehire all (well, almost all) of its IT people. Naturally, the clock reset itself for these people in terms of seniority and other benefits.

This month, my friend has just been informed that with a new CEO at the helm, the decision has been made to - surprise! - outsource IT yet again. The message from the top is that this is being done "to promote efficiency".

If my friend still had hair (sorry, mate), he would have torn it out by now. Once again, the employees with the least amount of control over their working environments are having the stuffing kicked out of them.

My friend tells me, "Nick, I'm good at my job. I encourage innovation within my team. I bring projects in on time and on budget, with the resources that are allocated to me. But it often seems I do this despite hindrance from upper management. I know that they will do anything, absolutely anything, to save a buck. They don't care about their employees, even though their website states, 'Our people are our greatest asset'. They are disconnected from the reality of our business, and incapable of communicating with and supporting their employees. It's like working for morons! My resume is up to date and if I can get something elsewhere, I am gone."

Does this sound familiar? I'm sure many of you have heard versions of this sad tale. Maybe you have lived through something like it yourself. And I can't believe, that with all the knowledge that we have, with all the management books that have been written, that the same mistakes keep happening, over and over again.

Next week in Part II: I'll explore some of the reasons (and a different point of view) for this uncomfortable situation.

Where do you place employees on the balance sheet?

"It is easy for us to sit here and take potshots at CEOs who put their stock price and their shareholders before their employees.[...] But that's their fiduciary duty. They have a duty to their shareholders, legally, before almost anyone else, and certainly before the employees. The employees are just assets."

Reading David Berman's recent article, "Greed still works", in the Globe and Mail's Report on Business I was struck by how many CEOs still don't see the relationship they have with their employees as sacred. In the article, Berman interviews Bryan Burrough, the author of Barbarians at the Gate: The Fall of RJR Nabisco, a seminal book that explores the backroom deals that featured so prominently (and infamously) in the late 1980s' leveraged buyouts.

It was a good read when first published, and it's still a great book - pick up a copy if you haven't already - but the above quote made me stop and think. Thirty years on the majority of CEOs still don't appreciate the importance of the relationship they have with their employees. CEOs have a duty to provide an environment where employees can do their best work, which, in turn, helps to deliver value for shareholders.

In my recent conversations with CEOs and senior executives of large companies, all of them were crystal clear in stating that businesses exist to make a profit - no-one disputes that. But perhaps the "greed still works" title of the piece is misleading. What shone forth with every word spoken by the executives I interviewed were the strong links everyone had with their employees. These are critical to the success of any organization.

I'd argue that while many see employees as liabilities on the balance sheet, effective CEOs see them as key to the fulfillment of their fiduciary responsibilities to shareholders. Without productive, well-managed employees it is impossible for the core function of a business to operate.

Each and every executive I spoke with recognizes this. Employees bring value to the business, and the person at the top is accountable for providing a work environment that engages every employee.