Many CEOs that I have the opportunity to meet constantly deal with the pressure of performing. With having to answer to a board, your shareholders, your staff, and even at times your family, the temptation to make the quick fix or shortsighted decision so that you can get yourself out of hot water can be almost too hard to resist. Some CEOs have been hired away from other companies to "sit in" and "save" another company because they were successful in their previous leadership position. In this situation they are hired for the quick fix. The benefits are many including the opportunity to shine but I wish to address one specific issue which almost comes hand in hand. The pressure to perform and show results quickly!
No one will fault a CEO for trying to put his best foot forward and strive to strive for establish a strong economic outlook for your company. On the flip side, your task may be to save your company from financial destitute. Depending on the size of your company, you could be looking at having answer to your board (which I've seen consist of disgruntled family members, stressed out investors, majority shareholders that have little to do with management, etc - all with bias and personal pressures as well), shareholders, the bank and/or others with various interest in the success of the company. When you step into such a role, these pressures can at times come without direction or positive solutions. It's up to "the man in charge" which is you to clear the way and find the light at the end of the tunnel. This is a common occurrence and many executives get derailed in the process.
Here are a few issues/negatives that tend to factor into the decision process:
- The typical 3 year contract: Some CEOs/executives are only on seemingly "short term" contracts at the company they're hired to work for. This can cause executives to think short term as well. They're obligated to show gains and stability during their tenure. Not to leave a legacy for someone else to take over after they're gone. Below is an example of a study done recently that may shock you even as a CEO but these are real numbers.
Most pressing ethical issues facing business today (2010)
- CEO Roundtable - roundtable of 400 executives
- 80% said they would decrease spending on long term things to meet short term targets
- 50% said they would delay new projects to achieve quarterly results even if it would lead to the long term sacrificing of value creation
Jonathan Wellum
CEO, AIC Investment Services, Inc.
Toronto, Ontario, Canada
Toronto, Ontario, Canada
- External Pressures: The college coach compared to the CEO: There is so much pressure to perform. Let's take college football coaches for example. The closer the fans, investors of the athletic program, local papers, NCAA, and board of athletics are to a team, the more visibility there will be for the head coach. In good times, this is great for him, yet, the moment the teams win record slips, the pressure is on for him to rise to the occasion. More and more people will look to him for the "quick fix". Sometimes, the will of the crowd and university board won't even give him an additional season to prove himself regardless of the recruiting efforts going on behind the scenes that can be the building blocks for 2 or 3 years down the road. In the same way, a good CEO is hired for vision and perspective yet in many cases, is not allowed to do their job. It takes strength and boldness in these times to do the right thing. The easy things to do are to look at your career as short, show results "now" regardless of what it will do to the longevity or health of the company after you leave anyway. This falls on the board or shareholders having faith in the leadership as well, not just the CEO "dealing" with them.
- Limited Capital – It’s hard to change direction, stay mobile/flexible, and adapt when issues are discovered. Often times when you are already heavily invested in a process, technology, a well purposed staff, or business process, changing direction towards positive long term goals can be extremely cost intensive with limited immediate upside. When you have board members or business partners that you had to previously convince to allocate money towards “the last change” and now you’re asking them to stay flexible again and move or allocate more funds to a new direction you can run into big unfriendly walls. Sometimes, there are simply no funds available for adaptation. With an unstable market, massive capital flexibility is as unavailable as it is necessary. The only solution I can offer to this is to do your homework, do you best to forecast future opportunities and make sure that you’re seeking counsel outside of your board and possibly outside of your industry to see how others are adapting to change. Leaders tend to be fairly shortsighted. They tend to only seek ideas inside their industry and remain incredibly stressed out when it comes to having to make decisions and quick fixes when finances are limited. Finding more capital often times means, “trimming the fat” from your existing structure. This could mean that you are emotionally holding on to people you shouldn’t. In a conversation with a CEO that just sold her company for over $550M, I asked her what her number 1 regret was in her entire career. Her reply to me was, “Keeping people around for longer than I should have because I cared too much.” Leaders, hear me when I say that if your staff is not doing everything they can to make your company better, it’s your duty to let them go so that they can find something that will suit them better and where their talents can shine. It is not up to a business leader to coddle a staff member’s personal and professional life. This is very different from having compassion, rewarding effort and caring about the wellbeing, health and success of a staff member so please do not get me wrong here. The CEO mentioned above is one of the most compassionate people I’ve ever met in a leadership position so I was quite shocked that this point was her number one regret. I and everyone I get to work really closely with will tell you that without their staff and those that believe in them and their company are not only valued to the fullest, they know it as well. This is just to say that getting creative and in looking at your business from a high level, there are lots of areas that one can usually trim away excess spending. Your staff doesn’t always have to be the last option since depending on the size of your company, it’s highly likely you’re carrying a lot of excess baggage. Reducing spend may be as easy as reducing redundancy or increasing protocols or
Additional Things that provide Pressure and Or Shortsightedness
- Home Life – Many executives pride themselves on their ability to compartmentalize, although, when it becomes too difficult to do and the problems at home seep into your productivity at work, everyone suffers. Try remembering that family comes first. I’m a strong believer that you should invest first in your family and then your business. That way if the “stuff” really hits the fan and you have to lose one or the other, family will still be there for you and they know you’ll be there equally for them. It’s a simple perspective of sustainability.
- Financial Struggle (second view) – Often times if your home life and expectations aren’t in line at home, this can affect your business as well. Financial pressures can be spurred from home life but usually from our experience, this starts as a business issue that leads its way home, not the other way around. If it has started with your business, transparency at home is tough but necessary practice. But how do you communicate issues that your family may not understand or be as compassionate as you may want them to be. Often times what is needed by a business leader at home comes more in the form of support than understanding. Continuous communication and an effective partnership at home of love and honesty helps accomplish this. It’s hard work but very rewarding.
- Medical Issues – These issues are at times created by a lack of balance and stability in the work and home life but often come with uncertainty, are uncontrollable and without warning. They are heart wrenching, time consuming, expensive and a support system is more needed in these times than they’d ever like to admit. These issues can be very personal and eye opening to the person directly affected as well as those around them. How many times have you had trouble creating 5 year projections for your company? Try doing that when a family member doesn’t have 1 year left. In these moments, the necessity to step back and regain perspective is very important. If it’s you that is experiencing health issues, it’s the same. You have to step back and evaluate your involvement, the time you spend on business as opposed to the other important things in your life as well as how good you are at delegating responsibilities. Delegation is a problem for any leader of any business.
Positive Practices
Let me explain a little bit about myself so that I may add context around these ideas as well show you why I’m not blowing positive smoke like a cheerleader for a losing team. For years I've worked alongside some of the greatest and successful business minds in the US. Working within a private organization made up CEOs, Political types, Ven Cap and Board Execs who all work together to assist each other in day to day business decisions lead me to some conclusions and a number of principles we lead by;
Integrity, More Than A Virtue - We can only do our best to act with integrity. At the end of the day, are you proud of the decisions that you’ve made, the person you’ve become, the Leader that you are? Do they continue to allow you to wake up with a clear conscience and smile on your face and support at home and in the work place. I’ve seen businesses act out a complete remake of the Titanic but because of the leadership, the staff , the board, and their family at home, everyone still supports their efforts and values their leadership standing behind them 100%. I’ve been absolutely floored by the resurrection of businesses or department teams I thought were going to crash like the Hindenburg, rise from the ashes simply because everyone believed in the leader. They trusted the CEO to save things and therefore everyone banded together, took their lumps and moved forward.
Keep Your Head Up - Leading is tough and when it gets hard, seek outside help and serve yourself first and foremost. Only then can you serve your company. It’s easy for a leader to just want to “get rid” of the problems through quick fixes, to get people off your back and to get ahead of the curve. When the solution doesn’t seem so obvious, stepping back and taking back your life a little bit can be the only way to get through it. I recently spoke with a CEO that broke down at the dinner table at his house in front of his entire family. His company, a real estate and investment firm that transacted over a billion dollars in business per year, was heading into the recent recession. With no clear solution in sight, he believed that this could in fact be the preverbal straw that broke the camel’s back for his business. He quickly realized that not only had he taken too much of the burden on himself and had become tired of being the positive CEO in everyone’s eyes, he had become too close to the problem and it was swallowing him up. He stepped away from the problem a bit, leaned on his top producers, his executive staff and brought in outside perspective as well. By doing this he was able to take the weight off, act more positively and focus on a good life balance once again. This in turn makes people more productive as well.
Sound Investments - Invest in that which will outlast shortsightedness and the quick fix unless absolutely necessary. This can come down to whether or not you sleep soundly at night. “The best investments we can make in life are those that will outlast our lives.” This is something I tell myself on a regular basis and something that I “try” my best to apply to every part of my life. It’s also another, easier said than done principle. Business does not always allow us to make long term goals our highest priority.
Other Leaders Can Be Your Best Allies - All you have to do is ask. Keeping others that we respect in point of view, station in life and career will serve you tenfold. It’s amazing how much people are willing to help when we just ask. It’s also incredible to see how close the solution can be to us but we can’t see it until we have others look at the problem from different points of view. The resources are out there. Just search for the right ones. I can send you a list of different types of groups, external boards and advisors that can help you accomplish your goals, whatever they may be.
Pride, The Death Of Us All - Often times pride is the quickest way to failure as a leader. Remember this, if you’ve run a successful company, you didn’t get there by being the best at everything, you had others that filled in the gaps of that which you could not. It’s the same way with good strategic hires as well as other leaders. The group that I’m part of is made up of all very successful people that thrive off of this interaction. “We will never live long enough to make all of the mistakes ourselves.” ~unknown
Be Deliberate - Once a decision is made and we have leaned on others to help formulate a plan, execute that plan deliberately and stick to your principals. It’s doable and at the end of the day the decisions that come out of it as well as the direction of your company will be better off for it. Besides, if you’ve had help coming up with this new found direction or plan and you don’t execute, the willingness others showed you before to help will go away.
This is not me being idealistic. These are just a couple realized business practices put to use daily within a strong group of execs across the nation. There are a number of other principles we choose to live by and practice in our daily lives, but these are a few that pertain to this particular discussion topic of being a bit short sighted and losing track of the bigger picture.
I'd love to jump deeper into the above points if anyone is interested. These are just a few that I wanted to share with you from conversations in the board room and with C Level executives around the nation. There are many other details we can get into if anyone has any questions. Feel free to connect with me on @barretn via twitter or email me if you have any comments, additions or feedback that you'd like me to add in. I appreciate your interest and time in reading Executive Decisions.
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