The Irony of Poor Leadership Choices and How They Affect Everything Else
A CEO’s stock in trade is his decision making. As the sayings go, “the CEO is the bottom line,” and “the buck stops with them.”
If a CEO needs to know how to do anything, it is to make a difficult decision and drive it toward a successful conclusion. High level decision making is complex — it requires years of experience and a lifetime of learning. The fact of the matter is that even the most storied companies make egregious decision errors. If the most prominent of American businesses get it wrong often, is there any hope for companies and CEOs in more modest circumstances? There is. William F. Mueller, an Attorney in the Fort Lauderdale office of Kelley Kronenberg, discusses with CEO Today.
One of the most important decisions that companies and CEOs make involves leadership choices. Board of Directors choose their CEOs, but CEOs and other senior managers choose the leadership team that is at work, day after day, driving business goals toward conclusion. Choosing leadership positions is crucial to company performance and investor returns.
Board of Directors choose their CEOs, but CEOs and other senior managers choose the leadership team that is at work, day after day, driving business goals toward conclusion.
Regardless of the type of organization, one of the recurring decision errors I consistently see involves leadership choices. This is a difficult error to detect because there are often compelling reasons to select a person for a leadership position. Advancing to the next rung of leadership is typically the dream of any intelligent and modestly successful business person. Hence, there is usually a great amount of drive and zeal in the candidate. However, the unexamined assumption is that since a candidate is intelligent and successful in one area of business, and is highly motivated for that next position, it is assumed the candidate is ready for the role. It simply doesn’t work that way. While previous success is necessary for a leadership choice, it isn’t sufficient. The key question that decision makers need to answer is, does the candidate’s core competencies correlate to the tasks, goals and vision of the position?
The challenge transcends the CEO’s office in that a Board of Directors is not immune to this decision error either—especially when a company is under immense pressure from investors to produce results. General Electric fired John Flannery, its former CEO, and veteran executive of the company, after 14 months on the job and a loss of market value of $175 billion. He was subsequently awarded a $4 million severance and will retain and receive his pension of $23.6 million (accumulated over 30 years). How many pensioners are groaning over that decision? How did this occur? No doubt General Electric had deepening problems that occurred over many years (it lost $500 billion in market value over 18 years), but nevertheless, this was a serious misstep by one of our nation’s most prominent industrial companies that resulted in a major impact to its investors.
Recent news of Comcast Corporation/NBC News’ removal of Megyn Kelly from her daytime “Megyn Kelly Today” show throws into sharp relief the importance of core competencies when evaluating a candidate. Megyn Kelly was a star on Fox News before deciding to join NBC. She is a phenomenally gifted lawyer, interviewer and probably one of the best questioners I have ever seen. Makes sense, she was an attorney in a top law firm for almost a decade prior to changing careers. I used to watch her show on Fox News regularly, and although I didn’t agree with all of her positions, I certainly noted her significant talent. After announcing her change to NBC, I recall thinking to myself that her decision to change from a hard hitting, hard nose primetime interviewer to a cheerful morning host didn’t make much sense. Why? Because her core competencies and strengths are asking hard nose, hard hitting interview questions, and not being afraid to mix it up with the most powerful people in America. I couldn’t reconcile her core competencies with hosting a daytime talk show discussing cooking, hobbies and social issues, which, in the end, finally entangled Ms. Kelly in putative racial insensitivity allegation.
The decision to remove Ms. Kelly resulted in serious embarrassment for NBC and a loss of tens of millions of dollars paying her the remainder of her contract. Was it possible for NBC to detect racial insensitivity in Ms. Kelly during their interview process? Highly doubtful. However, they should have objectively looked at her strengths and asked whether Ms. Kelly’s superior ability as an interviewer was really going to lead to success in a daytime show that dealt with different types of softer issues.
Decision makers are not assessing the specific skills that will be needed in the specific leadership position clearly— not all leadership positions are created equal.
While working with companies across different industries, I’ve observed these same errors and think there are two major contributors. First, decision makers are not assessing the specific skills that will be needed in the specific leadership position clearly— not all leadership positions are created equal. A Vice President of Finance requires different skills than a Chief Marketing Officer, and different again to a Director of Human Resources. These differences need to be accounted for in a rational and near scientific way. The approach should be to ask what goals and initiatives the leader will be responsible for achieving, then critically assessing those skills during the interview process. Second, decision makers need to be able to exhibit leadership qualities in the decision process, meaning, the motives for a candidate choice need to be honestly and courageously confronted. If a candidate does not meet objective criteria, matters like investor pressure to fill the position (General Electric) or expected ratings boost (Megyn Kelly), although relevant, shouldn’t force a premature decision. That’s the irony of it all. Choosing leaders requires leadership. No doubt the maxim of “past performance is the leading index of future performance” remains accurate, but only if an objective assessment of comparable skills is made. If we’re conscious of what is required in the decision, we will be better able to steel our nerves and sharpen our wits in making the best decision.