Leadership Excellence magazine published my article: “Mastering Leadership – Seven lessons from a turnaround CEO”<\/i><\/p>\n
By Robert F. Amter<\/p>\n
There are many theories about what it takes to be an effective Chief Executive Officer.\u00a0 Most are based on observation and research.\u00a0 They lack the hands-on, in the trenches experience of what it really takes to lead a company \u2013 especially one that is experiencing bad times.<\/p>\n
When I enter a company that is severely distressed and losing money I find that the previous CEO whom is usually a decent, hard working executive, has failed because he or she simply did not know how to be a leader.<\/p>\n
Having worked 22 years as a turnaround CEO, I\u2019ve learned seven key practices that have worked for me in restructuring distressed companies.<\/p>\n
1. Understand the True Meaning of CEO<\/b><\/p>\n
Naturally born leaders are very rare.\u00a0 It takes hard work to learn how to lead effectively. \u00a0You must be a serious, passionate, and accessible student, to develop into a capable CEO.<\/p>\n
Focusing on the true definition of the Chief Executive Officer is central to illustrating the basis for sound leadership.\u00a0 Common dictionary descriptions may be simplistic, but they accurately define the position:<\/p>\n
Chief:<\/i> The person with the most authority, who ultimately controls or commands all the others.<\/p>\n
Executive:<\/i>\u00a0 A person having administrative or supervisory authority in an organization with the power to put plans into effect. To execute.<\/em><\/p>\n Officer:<\/i>\u00a0 One who holds an office of trust, authority, or command.<\/p>\n Yes, the Chief<\/i> is the highest in rank; however, the ability to execute<\/i> is key. Anyone can write a plan, but few can execute it – implement it. Having a team carry out a focused plan is vital.\u00a0 To guide all to remain disciplined in the executing a strategy can be difficult.\u00a0 Providing clear-cut direction only grows more problematic, while facing competing forces, considerable distractions, and intense challenges.<\/p>\n The word Officer <\/i>is also significant. A person appointed to this elevated position is held in trust<\/i> with genuine fiduciary accountability. They are entrusted <\/i>with the management of the property, with the power to act on behalf of the owners. Fiduciary<\/i> is a solemn responsibility <\/i>\u2013 take it seriously.<\/p>\n 2. Learn To Whisper\u00a0 <\/b><\/p>\n A CEO\u2019s primary focus<\/i> is people.\u00a0 A CEO gets the job done by working through others<\/i>.\u00a0 People greatly appreciate a CEO who can command authority without condescension.\u00a0 Moreover, there is no room for hubris.<\/p>\n Some leaders believe a tormenting style can motivate, but the mistreatment of people eventually leads to loss for all.\u00a0 At no time should a CEO bully employees.\u00a0 If an officer yells at an employee, the news will spread and reduce the CEO\u2019s effectiveness.\u00a0 Even high-ranking officers, will become timid, wary, fearful, and suspicious.\u00a0 Many will wonder if they will be next to receive ugly treatment.\u00a0 Trust is lost, eroding confidence and efficiency.<\/p>\n When I joined General Electric, this training precept was passed on to me:\u00a0 \u201cWhen you become a CEO remember that people<\/i> are your most important resource. \u00a0Successful leaders motivate.\u00a0 They do not intimidate.\u00a0 They whisper to get results and remain calm.\u00a0 They are viewed as having high integrity <\/i>and being distinctly competent<\/i>.\u00a0 Leadership is learned.\u00a0 Respect is earned.\u201d<\/p>\n 3. Interact With Employees at All Levels<\/b><\/p>\n Whether newly appointed or a 10-year veteran, a CEO only knows 10 percent of what is actually going on in the company \u2013 particularly the key issues and problems.\u00a0 To be successful, CEOs must submerge themselves into all levels to learn the status of the company\u2019s vital issues \u2013 to get the facts.<\/p>\n Effective Chief Executive Officers are not office bound, nor isolated from employees. They are seen walking the halls, the floors of the manufacturing plants and distribution facilities.\u00a0 People are curious about you.\u00a0 I\u2019ve had employees touch me and remark in an excited voice \u201cI\u2019ve never touched a CEO\u201d. That\u2019s a humbling experience.\u00a0 Remember how much influence you can have on people.<\/p>\n When walking around, be approachable<\/i>.\u00a0 Today, many company dress codes are business casual. If there is a formal dress code, do not wear a suit coat \u2013 be more informal. Interact with people. Stop to answer questions and ask what the employee is working on. Do not be aloof. You are the ultimate boss and people will be nervous around you. Display a likeable personality, a sense of humor \u2013 don\u2019t be judged a stiff. Do not answer requests for improvements in work rules, bonuses or wages by saying \u201cI\u2019ll check and get back to you.\u201d Be decisive and say no \u2013 if the ultimate answer is no \u2013 but explain why the answer is no.<\/p>\n 4. Demand Excellence <\/b><\/p>\n It is perfectly acceptable for a CEO to demand excellent performance<\/i>.\u00a0 Expectations for above average results can motivate a team.\u00a0 Intense encouragement for quality will inspire all to work harder.<\/p>\n This winning style can grow capabilities.\u00a0 People will stretch and can reach higher performance. Success foments self-confidence.\u00a0 It builds a gung ho <\/i>team \u2013 the enthusiastic and dedicated attitude of working together<\/i>.<\/p>\n Always use a constructive tone.\u00a0 Never intimidate anyone with bullying.\u00a0 Again, instead of raising your voice, remember to whisper in a productive manner.<\/p>\n 5. Consider Failure <\/b><\/p>\n Managers often require that rigorous, in-depth and detailed analyses be completed prior to implementing priorities, initiatives and capital investments. Management wants to know what positive incremental profitability and free cash flow will result from executing the project or making an acquisition.\u00a0 But the analysis should also analyze the impact on the company if the initiative fails.<\/i> What will the effect of the capital expenditure be on the capital structure and the cash flow?\u00a0 If it\u2019s a new product introduction, what will the reaction be in the channel segment, with customers and competitors?\u00a0 If an acquisition, are we ready to handle integrating the new operation into existing operations?\u00a0 Does management have the time for an acquisition, or will they be overwhelmed with other priorities?\u00a0 What are the short and long-term consequences on the businesses that may result by an overwhelmed management?<\/p>\n Once a management team decides on its priorities, a project tends to get a life of its own, to not be killed once work has started on it.\u00a0 Still you need to periodically judge its viability.<\/p>\n 6. Foster Communication <\/b><\/p>\n Well-run companies have candid cross-functional communication.\u00a0 It is essential for the new CEO to maintain open exchanges of information.\u00a0 Meetings should include everyone involved with the initiative, issue, or problem including those from the third and fourth tiers of the company.\u00a0 For example, do not invite only the VP of sales and his team, while investigating a problem with sales.\u00a0 Include marketing, manufacturing, supply chain, product and accounting in the meeting, since each of these functions affect sales.<\/p>\n Cross-functional communication is almost always lacking in distressed companies, because it takes the direction, energy, and patience of management to maintain it. Silo management with top-down decision making<\/i> is easier but always results in a failing business.\u00a0 Mistakes are easily hidden and multiply when information isn\u2019t shared.\u00a0 When internal functions do not discuss vital issues, a business becomes uncoordinated<\/i> and produces negative surprises<\/i>.<\/p>\n I encourage leaders to meet face-to-face.\u00a0 Avoid depending on email, telephones or video conferencing. Judging performance and initiatives is best evaluated first hand, in the same room with the people orchestrating the endeavor.\u00a0 Seeing body language, facial expressions, and sensing a person\u2019s passion, provides signals often missed when using various technologies.<\/p>\n 7. Empower The Team <\/b><\/p>\n Ownership of the strategic plan to fix or run a company must be held by the people on all the levels who contribute to creating the plan and are crucial to its being implemented.\u00a0 It cannot be only the CEO\u2019s action plan.\u00a0 It will never get implemented.\u00a0 Do not legislate the strategies and tactics.\u00a0 Do not dominate the process.\u00a0 Persuade your subordinates and remember to listen to their input.<\/p>\n While it\u2019s important to have consensus and ownership<\/i> of decisions by the officers and managers, in the end the CEO is the final decision maker.\u00a0 Don\u2019t abdicate the role or decide based on since we all agree<\/i>.\u00a0 If, as CEO you do not agree, don\u2019t approve a group decision.\u00a0 You may decide on an alternative solution and not implement the consensus solution.<\/p>\n As the CEO, you have fiduciary responsibilities<\/i>.\u00a0 Take them seriously.<\/p>\n