Question:
When the board promoted me into the chief executive officer position a year ago, it seemed the culmination to a decade of hard work.
Things unraveled quickly. Two senior executives who’d hoped to earn the CEO promotion quit in my first month, after sending board members stinging critiques of my abilities and actions. This changed how many board members viewed me. They put my decisions and how I worked under a microscope.
I tried not to let this bother me. Instead, I began making sweeping changes to systems that needed improvement. I expected most employees to applaud the changes. Some did; others felt I’d changed too much without consulting the employees charged with implementing the changes. Those who didn’t like the changes exaggerated the problems the changes created. This discontent reached the board chair who asked, “What’s going on? Every day brings me a dump truck of complaints about what you’re doing.”
Like other companies, we lost a lot of personnel, and found ourselves forced to pay higher compensation to hire similar talent. When our continuing employees discovered new hires received higher pay than they did, they looked for new jobs. We raised their pay but not before losing several key team members. The two executives who’d resigned and several departing managers began poaching other employees.
I wound up spending so much time on internal crises I lost contact with important clients who sought new vendors. Because of our lost revenue and increased expenses, we expect a loss rather than a profit in 2022.
Finally, all the parts of my career I formerly enjoyed, from feeling I was successful in what I took on to talking with coworkers about new initiatives and dreams for where our company could go, ended. When my former work friends talk with me, they do so guardedly.
Is my best recourse submitting my resignation before the board fires me or do I have another option?
Answer:
Resigning may bring you short-term relief. But then—what’s your next step? Do you try for another CEO position, offering yourself as someone who’s failed but wiser? Will you try for a lower-level position in a different company and climb a new ladder?
Before you resign, consider the following:
More than half of all executives fail
You tell a familiar story. Research from the Corporate Executive Board (CEB) estimates that 50 to 70% of executives fail within 18 months of being promoted, regardless of whether they were an external hire or promoted from within, https://www.forbes.com/sites/forbescoachescouncil/2020/03/13/why-most-new-executives-fail-and-four-things-companies-can-do-about-it/?sh=4bd9aad37673.
One reason—they’re not prepared to handle their new role. According to a prominent Fortune 500 management consultant, 54% of the promoted executives he interviewed lacked realistic expectations of what an executive role entailed, https://www.linkedin.com/pulse/four-traps-tank-people-after-being-promoted-benjamin-croft/. You gave an example of this when you mentioned missing the free-flowing discussions you once had. You need to realize employees don’t make “small talk” with CEOs—they’re guarded because they fear the CEO’s reaction to what they say.
Here are my questions. What have you learned from what’s happened? What else do you need to learn?
What you need to understand
Some basics—The day you took over as CEO, your job scope and responsibilities increased exponentially. You need to learn to deal with politics at the board level and to achieve strategy and results through effective tactical execution and people. Many CEOs find it difficult to have their decisions constantly evaluated and critiqued by their board and employees—but that’s part of your new role. Until you learn how to function at the CEO level, you’ll make mistakes, such as making sweeping changes without considering the viewpoints of those who then need to implement those changes.
You need to transform into a leader, shifting from your individual ambitions to engaging with employees, and mobilizing them to put forth their best effort toward common goals. You need to be a role model for integrity and commitment. You need to listen to employee concerns, admit mistakes, deal with issues, and not let others’ scrutiny knock your confidence out of you.
The best way out is through
Here’s my suggestion. Learn the truth from everyone and not just the loudest voices. Initiate a confidential 270-degree review that provides your employees and board members an avenue for giving you positive and improvement-oriented information concerning how you communicate and function as a role model and leader, along with their thoughts about your decision-making and judgment calls.
You’ll receive accurate information on where your employees and board see you and where you need to change. Armed with you learn, you can decide—go or stay and do better.
(c) 2022 Lynne Curry
p.s. If you want more answers, please consider Managing for Accountability, https://bit.ly/3T3vww8; it has 23 five-star reviews on Amazon.
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Wow… the stats on CEOs that fail is really interesting because of its cross over to the issues of startups and the startup CEO… where the issues and failures are typically attributed to product market fit, investment run ways etc… but in light of the broader CEO stats… we need to consider the CEO capability and capacity more carefully.
As for this Q&A, a couple things jump out to me. First is the level of communication going from staff to the board. While is sounds like the board is appropriately taking those issues back to the CEO, it seems like the CEO and board chair needs examine why this taking place, and then put some speed bumps in the communication channel.
Second the focus on sweeping changes, loss of focus on key customers etc… suggests to me the CEO in moving from their prior role may not have really shifted out of the line function they had to the leadership role they now have. It sounds like this person came from a more operations based role with focus on product/services, sales/marketing, and cash/systems. In the role of CEO they need to be shifting to a focus on Vision/Strategy, Team/Culture, and Finance/Resources (there is a fun 3×3 matrix to play with from these three complementary areas of focus.). That transition may not have taken place or is perhaps blurred by the how the prior CEO worked in the position or board expectations, and if this is a small organization, where the operations role and ceo role are blended. None the less, the CEO focus and role is unique…
A coach for the new CEO might be an option to consider in this situation who could both assist with the 270review, board role, leadership transition, personnel relationships etc… I’ve used one periodically when in challenging positions to help unravel things.
Lastly, there is a good joke about new managers… I’ll share it sometime… but part of the story is timeless snarky advice that is practical, if not refined – ‘… blame the previous person (ceo) for the problems…’ and move on…. Point being in this case, the board hired a new CEO and choose this one for a reason, and it was likely not to be a clone of the last one…
Great comments, as always, Ky. The caller did ask if I’d coach, and I declined. He reads the blog, and hopefully he’ll reach out to you or another. I believe a 270-degree review prior to coaching would be valuable, and I let him know if he willing to do that I’d be glad to handle a confidential project like that. I think he’s worried about what a document like that might reveal, and so coaching is more likely to be an option he’ll consider.
This has great ideas for recovering from a spectacular failure, and one that, as you say, is common to more than half the people who are promoted into executive positions. It takes courage, but surveying and talking to everyone and asking about what they think about what happened and what they wish were done better and what steps they’d like to see happen would be good, though one’s ego may feel bruised after it. Trying to implement the changes the employees see they’d like to see or would refer would be a good way forward. Also did this person really want this promotion or did they think that they “should” or “had” to take it because it was being offered?
Great comment, Susan, did the individual really want the promotion or simply think they “should” try it.