When Companies Suffer From CEOpathy

The antivirus company Symantec seems to have been infected by its own virus — what I call CEOpathy. In March 2014, the security company fired its CEO for the second time in two years. And, it isn’t the only company to become infected.

In fact, CEOpathy has been a scourge of many corporate boardrooms. Just recently, Target CEO Gregg Steinhafel stepped down as a result of the massive customer data breach. I guess someone had to take the fall.

As I noted in my book, “Measure of a Leader,” turnover in the C-suite is the highest of almost any business job category, topping out at more than 50 percent within the past decade. Moreover, getting a new CEO is expensive and time-consuming, impacting production and innovation. In the interim, managerial decisions typically stall since the path of the company under the new CEO is unclear.

Maybe you’ve heard the anecdote attributed to George Odiorne, creator of MBO (management by objectives). Odiorne was asked by a client to evaluate the performance of his marketing vice president, who the president said was not making the grade and nothing he had tried with him had worked. Odiorne then asked the president what he wanted the vice president to do. The president replied, “He will tell you.” Odiorne replied, “To work with him, I need to know.” Even though he protested, the president finally agreed to tell, but with one stipulation: Odiorne would not tell the vice president. His reason, “Anyone who makes the kind of money he does should know what to do.” Odiorne hastily wrote the president’s responses on 3×5 cards.

Odiorne went into the vice president’s office, and the vice president immediately said he knew he was in trouble, but nothing he did satisfied the president. When he asked if Odiorne knew what the president wanted, he said he did, pulled out the cards, looked at them and asked “Where is the men’s room?” as he dropped them on the vice president’s desk. While he was gone, the executive furiously copied the list. Several months later when George returned, the president met him in the lobby and said, “George, I have all the vice presidents in the conference room and I want you to do with them what you did with the marketing vice president, because he has really changed.” So he had to tell him what happened. He said, “I didn’t tell him as you asked, but he did see my list.” The president looked at him and after a pause responded, “I knew that SOB cheated!”

While this may be a business fable, it could absolutely be true. The selection committee rarely sees the candidates in action. They look at resumes which put the person in the best possible light, but since you can’t see behavior in a resume, you are unable to see what role, if any, the candidate played in any results claimed on the resume. Those people who are referenced in the resume are biased, so talking to them is not that helpful. Worse than that, the selection committee usually doesn’t know what behaviors they want either. Don’t pity the board of directors, however. In these executive departures, the board is often at as much fault as the failed CEO. The culprit? Often the board fails to define the important behaviors necessary, as well as provide guidance and support that is needed for success.

I have seen this scenario repeated in universities and churches as well as businesses. As the new leader comes on the job, the board realizes its mistake within weeks, but having searched for many months, is embarrassed to make another change that quickly. In almost all of these cases, the problem begins when the board can’t identify clearly how results should be attained. Results are usually identified, but how they will be accomplished (behaviors) are rarely discussed. It is sad that many times they don’t even think it is their business. Inevitably when the results aren’t realized, investigation uncovers that the leader has made either one or two critical mistakes. He or she has used negative consequences to try to motivate (being tough, no nonsense) rapid change or been involved too little in how things are being done.

Beyond articulating critical behaviors, the board must also determine how the new person would accomplish them. Ask about specific results that need to be accomplished, and particularly ask about details of what would be done. If a priority is innovation, how would he or she increase it? If reducing costs are a priority, what would be the strategy? I would not expect any person new to an organization to give a detailed description of what he or she would do, but the board could get an idea of the behaviors that would be used and evaluate them against the mission, vision and particularly the values of the organization. Would he bring in new people? Would she fire people? Would he start by moving people around? Would she coach and shape the incumbents? Would she listen more than talk before making any changes?

Lastly, it would be highly beneficial to have staff interview the new candidate. I recommend having as many as practical do the interviews, but at minimum have all those who will report directly to the new CEO. Don’t have the candidate interview the staff, but the other way around so that the staff can provide input for the board decision.

No new CEO will be able to turn an organization around by him or herself, although many think they can. That should be a show-stopper. Those with that attitude should be the first to be eliminated from consideration. Remember that in the interview candidates will put their best foot forward. If employees don’t like the best foot, they will be unlikely to like what comes after.

Once the new CEO is on board, I recommend the new leader do the following to get off to a fast start:

  • Spend the majority of time listening to employees, learning what they do and what they think.
  • Observe who is most effective at getting things done. Look at how they do it. Do they give orders? Do they ask for help? Do they coach and provide positive reinforcement for improvement?
  • Frequently say “What do you think we should do?” and ask others at all levels for help. “I need your help. What do you think we should do about …?”

Selecting the right CEO and ensuring the CEO’s success is the difference between successful onboarding and frequent executive turnover. If the board does its homework and identifies critical behaviors as well as results, and provides coaching along the way, the CEO’s success is likely to be assured, and you won’t have to worry about CEOpathy.