Question:
Our Board fired our CEO in an emergency meeting three weeks ago, after he made a mistake not even a rookie manager would make, sending us into potential litigation with clients and vendors. Our company may not survive the damage he has created.
He’s leaving behind him a shell-shocked company. He was charismatic, and the employees who looked up to him don’t believe he did anything meriting termination. This group includes many key individuals who’ve lost confidence in our board and have already begun circulating resumes to other employers. Other employees have heard the rapidly spreading rumors and feel betrayed.
Our board has been flooded with questions from managers and employees. They demand answers, but we can’t say anything given the litigation we face. The CEO, however, won’t stop talking. When we reached out to him and asked him to stop, because everything he says made matters worse, he said, “your problems are no longer my problems.” Although it’s hard to believe, he thinks he did nothing wrong. He even said no one would sue us if we’d stood by him.
I keep thinking if I could understand how this happened, why someone at the pinnacle of his career would throw everything away, I could help all of us regroup and move forward.
Answer:
Media, news, entertainment, religious, nonprofit, and entrepreneurial private sector companies fire their CEOs with stunning regularity.
While the situation is often described as a shock; it need not be. The signs always exist.
Dethroned CEOs share certain characteristics. They’re ambitious, confident, charismatic, and have stellar reputations. They know how to put a positive spin on events. Others believe what these smart, articulate individuals say, and don’t look beneath the façade.
CEOs have the power to mete out punishments and benefits. As a result, others don’t challenge them, and these CEO grow to feel superior and entitled. Because they live in a bubble surrounded by those who admire them, they buy their own hype.
Unless they have integrity as an internal compass, they act as if rules don’t apply to them. Lacking accountability, they refuse to admit mistakes, angrily attack those who challenge them, and believe a good cover up makes problems go away.
Here’s how to move forward.
Admit your part
As a board, you fell asleep at the switch. Boards can become rubber stamps to strong CEOs and forget they oversee the CEO. Proactive Boards regularly conduct employee surveys or CEO evaluations to ensure they know what’s going on below the surface in their organizations. Having conducted dozens of these surveys and evaluations, I can tell you they often reveal cracks in the organization’s foundation that have been obvious to employees and managers but unknown to the Board.
Eliminate the vacuum
If you haven’t already, install an interim CEO, either a respected member of your senior management team or one of your Board who steps down to fill that role while you search for a qualified CEO. If you select a member of your senior management team, meet with him or her and develop a quality relationship.
Learn the truth
You need to learn what’s happening in your organization. You can’t fix what you don’t understand. It’s not too late to create a neutral survey aimed at what’s working right and what’s stopped working well. Here’s what you might find. This wasn’t your CEO’s first misstep, it’s just the first one that surfaced.
Connect with your team
Meet with your managers and employees in person, through Zoom conferences or via surveys. Prepare to answer questions. While you can’t say anything that disparages your CEO or puts your organization at risk in potential litigation, you can ensure your employees and managers hear you’re committed to putting things right.
Most importantly, you can listen to and prove you support your continuing employees and managers by organizing to fix the problems they surface.
Legal
You need a reputable law firm, skilled in both corporate and employment law, to guide you. You’re heading into rough waters, but if you act with clarity and wisdom, you can pilot your organization to the shore.
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This story really pulled me in and got me thinking. The best comment for me was the one that this may not have been the CEO’s first mistake, just the first one that surfaced [or that the board was forced to confront]. Talking to employees and working on the problems found through talking and surveys sound like good solutions. It’s going to take a lot of work, but it needs to be done.
Hi, Susan, you’re spot on.
In every case I’ve involved in, there have been problems but ones the Board didn’t know about, because employees were too afraid, understandably so, to risk their jobs.
FYI, I wrote this post two years ago, and held it, because I didn’t want anyone to think it was related to a client (it wasn’t); this like all my other question/answer posts, were responses to calls that came into me.