Leadership Excellence magazine published my article: "Mastering Leadership - Seven lessons from a turnaround CEO"
By Robert F. Amter
There are many theories about what it takes to be an
effective Chief Executive Officer. Most
are based on observation and research.
They lack the hands-on, in the trenches experience of what it really
takes to lead a company – especially one that is experiencing bad times.
When I enter a company that is severely distressed and
losing money I find that the previous CEO whom is usually a decent, hard
working executive, has failed because he or she simply did not know how to be a
leader.
Having worked 22 years as a turnaround CEO, I’ve learned
seven key practices that have worked for me in restructuring distressed
companies.
1. Understand the
True Meaning of CEO
Naturally born leaders are very rare. It takes hard work to learn how to lead effectively.
You must be a serious, passionate, and
accessible student, to develop into a capable CEO.
Focusing on the true definition of the Chief Executive
Officer is central to illustrating the basis for sound leadership. Common dictionary descriptions may be
simplistic, but they accurately define the position:
Chief: The person
with the most authority, who ultimately controls or commands all the others.
Executive: A person having administrative or supervisory
authority in an organization with the power to put plans into effect. To execute.
Officer: One who holds an office of trust, authority,
or command.
Yes, the Chief is the
highest in rank; however, the ability to execute is
key. Anyone can write a plan, but few can execute it - implement it. Having a team carry out a
focused plan is vital. To guide all to
remain disciplined in the executing a strategy can be difficult. Providing clear-cut direction only grows more
problematic, while facing competing forces, considerable distractions, and
intense challenges.
The word Officer is
also significant. A person appointed to this elevated position is held in trust with genuine fiduciary
accountability. They are entrusted with
the management of the property, with the power to act on behalf of the owners. Fiduciary is a solemn responsibility – take it seriously.
2. Learn To
Whisper
A CEO’s primary focus
is people. A CEO gets the job done by working through others. People greatly appreciate a CEO who can
command authority without condescension.
Moreover, there is no room for hubris.
Some leaders believe a tormenting style can motivate, but
the mistreatment of people eventually leads to loss for all. At no time should a CEO bully employees. If an officer yells at an employee, the news
will spread and reduce the CEO’s effectiveness.
Even high-ranking officers, will become timid, wary, fearful, and
suspicious. Many will wonder if they will
be next to receive ugly treatment. Trust
is lost, eroding confidence and efficiency.
When I joined General Electric, this training precept was
passed on to me: “When you become a CEO
remember that people are your most
important resource. Successful leaders
motivate. They do not intimidate. They whisper to get results and remain calm. They are viewed as having high integrity and being
distinctly competent. Leadership is
learned. Respect is earned.”
3. Interact With
Employees at All Levels
Whether newly appointed or a
10-year veteran, a CEO only knows 10 percent of what is actually going on in
the company – particularly the key issues and problems. To be successful, CEOs must submerge
themselves into all levels to learn the status of the company’s vital issues –
to get the facts.
Effective Chief Executive Officers
are not office bound, nor isolated from employees. They are seen walking the halls,
the floors of the manufacturing plants and distribution facilities. People are curious about you. I’ve had employees touch me and remark in an
excited voice “I’ve never touched a CEO”. That’s a humbling experience. Remember how much influence you can have on
people.
When walking around, be approachable. Today, many company dress codes are business
casual. If there is a formal dress code, do not wear a suit coat – be more
informal. Interact with people. Stop to answer questions and ask what the employee
is working on. Do not be aloof. You are the ultimate boss and people will be
nervous around you. Display a likeable personality, a sense of humor – don’t be
judged a stiff. Do not answer requests for improvements in work rules, bonuses
or wages by saying “I’ll check and get back to you.” Be decisive and say no –
if the ultimate answer is no – but explain why the answer is no.
4. Demand Excellence
It is perfectly acceptable for
a CEO to demand excellent performance. Expectations for above average results can
motivate a team. Intense encouragement
for quality will inspire all to work harder.
This winning style can grow
capabilities. People will stretch and
can reach higher performance. Success foments self-confidence. It builds a gung ho team – the
enthusiastic and dedicated attitude of working together.
Always use a constructive
tone. Never intimidate anyone with
bullying. Again, instead of raising your
voice, remember to whisper in a
productive manner.
5. Consider Failure
Managers often require that rigorous, in-depth and detailed
analyses be completed prior to implementing priorities, initiatives and capital
investments. Management wants to know what positive incremental profitability
and free cash flow will result from executing the project or making an
acquisition. But the analysis should also analyze the impact on the company if the
initiative fails. What will the effect of the capital expenditure be on the
capital structure and the cash flow? If
it’s a new product introduction, what will the reaction be in the channel
segment, with customers and competitors?
If an acquisition, are we ready to handle integrating the new operation
into existing operations? Does
management have the time for an acquisition, or will they be overwhelmed with
other priorities? What are the short and
long-term consequences on the businesses that may result by an overwhelmed
management?
Once a management team decides on its priorities, a project tends
to get a life of its own, to not be killed once work has started on it. Still you need to periodically judge its
viability.
6. Foster
Communication
Well-run companies have candid cross-functional
communication. It is essential for the
new CEO to maintain open exchanges of information. Meetings should include everyone involved
with the initiative, issue, or problem including those from the third and
fourth tiers of the company. For
example, do not invite only the VP of sales and his team, while investigating a
problem with sales. Include marketing,
manufacturing, supply chain, product and accounting in the meeting, since each
of these functions affect sales.
Cross-functional communication is almost always lacking in
distressed companies, because it takes the direction, energy, and patience of management
to maintain it. Silo management with
top-down decision making is easier but always results in a failing
business. Mistakes are easily hidden and
multiply when information isn’t shared.
When internal functions do not discuss vital issues, a business becomes uncoordinated and produces negative surprises.
I encourage leaders to meet face-to-face. Avoid depending on email, telephones or video
conferencing. Judging performance and initiatives is best evaluated first hand,
in the same room with the people orchestrating the endeavor. Seeing body language, facial expressions, and
sensing a person’s passion, provides signals often missed when using various technologies.
7. Empower The Team
Ownership of the strategic plan to fix or run a company must
be held by the people on all the levels who contribute to creating the plan and
are crucial to its being implemented. It
cannot be only the CEO’s action plan. It
will never get implemented. Do not
legislate the strategies and tactics. Do
not dominate the process. Persuade your
subordinates and remember to listen to their input.
While it’s important to have consensus and ownership of decisions by the officers and managers,
in the end the CEO is the final decision maker.
Don’t abdicate the role or decide based on since we all agree. If, as
CEO you do not agree, don’t approve a group decision. You may decide on an alternative solution and
not implement the consensus solution.
As the CEO, you have fiduciary
responsibilities. Take them seriously.
