Whether new to the position in their current firm or new to it in another firm, CEO’s are at risk. According to Forbes, “The average tenure of global CEO’s is six years and falling; one-third leave against their own will.”
Great genetics, a fine education, and vast experience notwithstanding, CEO’s face four occupational hazards. First, the organizations they run are much more complex than they themselves. CEO’s can’t possibly know all the juggernauts lurking in the shadows. If ever there was an example of this it is found in all the CEO’s who stood flat-footed on growing bubbles that eventually burst resulting in the ‘Great Recession’.
Second, information received by CEO’s is often heavily filtered. Whether out of defensiveness or opportunism, subordinates spin the boss to work hidden agendas. They engage in profit center shenanigans to create the illusion of magnificence. They gloss over things to protect their lifestyle. They disparage capable colleagues to self-promote. They keep executives off balance to hide incompetence or to preserve the status quo. Henry Miles recounts the story of a colleague who opened the conversation with their brand new CEO by saying, “Congratulations, you’ve just been told the truth for the last time.”
Third, even if a new CEO is able to ‘cut through it’, they often fail to excite their team to significant and sustained action. Poor chemistry need only surround a couple of key relationships within one stakeholder group – the board, the management team, the field, the rank-and-file, a union – to thwart the path forward for a CEO. Bad blood between Douglas Steenland and his employees was one of the factors that brought down Northwest Airlines.
And finally, CEO’s have an almost impossible time accepting that that they are vulnerable to these hazards. Mergers and acquisitions offer a case in point. Fully two-thirds of M&A’s fail and the failure rate has been constant for 100 years. Most scholars believe that executive hubris is at the heart of these dismal statistics. Think about it, for every acquirer crowing about their M&A prowess, there is a seller thinking they got the best of the deal. Two times out of three, the seller is right.
To address these issues, standard management techniques should be supplemented, and a well-conceived strategic assessment process is a good place to start. Strategic assessment identifies issues that are pivotal to the success or failure of an organization. Moreover, when strategic assessment involves all stakeholder groups, it reveals hidden agendas and draws people together thereby helping to ensure the success of the organization and its CEO.