Leadership: Astounding Odds Against a CEO and 6 Things To Do About It
In 1997, the average annual CEO turnover was 5%, and the average CEO duration was about 9 years. In 2009, the average annual CEO turnover was 15%, and the average CEO duration was less than 5 years. That is an astounding trend! The primary reason is that as the cycle speeds of everything else – innovation, technology, globalization – have increased, the cycle of leadership has increased in corresponding fashion. Today, a CEO simply has to succeed quickly, or he or she will be replaced. Stakeholders cannot afford to wait. And if the CEO happens to be the primary stakeholder, he or she is not off the hook. While he or she may keep his or her job, the victory may be Pyrrhic in that his or her company will fail in the high velocity, highly complex competitive environment in which it operates.
I coach CEOs across the nation, across industries, and my advice for them is the following:
1. Continuously assess. Build systems for continual information flow from your employees and your customers so that you know precisely – at any given moment – your strengths, weaknesses, opportunities, and threats (“SWOTs)”.
2. Continuously plan. The value is not in the plan anymore, it’s in the planning process that ensures a leader and his or her organization are right on top of their SWOTs at any given moment.
3. Demand accountability. The only organization that survives today is one that (i) clearly articulates expectations down to the last person, (ii) demands that those expectations be met, (iii) accurately measures progress toward meeting those expectations, (iv) fairly rewards those that meet expectations, and (v) quickly addresses situations where an employee is not meeting expectations by, in order, coaching him or her into acceptable performance, transitioning him or her to a position where he or she can meet expectations, or humanely terminating him or her. (The lack of systems and tools to enable this have been lacking historically, but we are aware of at least one system that is phenomenal, and backed by Jack Welch himself.)
4. Manage talent flow intensively. The advice for being “slow to hire and fast to fire” has never been more prescient, but the absolute requirement of firing quickly means there must be much greater emphasis on building an incoming pool of high quality talent. Companies have to use every means possible (e.g., cutting edge culture, highly evolved benefits programs, search firms, social media) to make themselves a magnet for talent.
5. Get the executive team firing on all cylinders immediately. A well functioning executive team is the most powerful competitive advantage an organization can have in the face of a brutal external environment and, yet, it is the one that is most ignored. Don’t do it through non-contextual exercises like ropes courses or softball games, but through a focused, in-context effort. (The Chicago Bulls didn’t build teamwork in an executive board room; executive teams can’t be expected to build it on a basketball court.)
6. Get help. Virtually every successful company is investing in third-party help with executive coaching, strategic planning, strategic execution, executive team building, and talent management. While in generations past, a CEO might feel this this help means he or she is lacking as a leader, today the successful leaders know this is actually their means to success.