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Clueless in the C-Suite

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Tuesday, February 01, 2011

By Tom Cox

CEOs — and others in the C-Suite — can find themselves in a bubble, an alternate reality, detached from what’s really happening in the business.

Here is how you can figure out if you’re in a bubble like that, and how you can get out. And if you’re not a CEO, here’s what you can learn from this phenomenon.

Jill is the CEO of a firm staffed with health care professionals. She prided herself on the firm’s positive culture, the zero-tolerance policy toward workplace misbehavior, and the happiness of her employees.

Unfortunately it was all an illusion. She found that out by accidentally uncovering one supervisor’s racket of extorting prescription drugs from his staff and intimidating them into keeping quiet — something he’d been doing for over a year. None of the dozen people who knew about the racket had ever reported it or complained. None of Jill’s beloved culture really existed outside her “CEO bubble.”  (Worse, her employees assumed she knew of and condoned the bad behavior.)

She had everything you would want a CEO to have: empathy; intelligence; an “open door” policy. She just didn’t realize that people constantly tell the CEO what they think the CEO wants to hear — and CEOs (and others in the C-Suite) absolutely must create a system for methodically challenging their assumptions and beliefs, and breaking out of their bubble.
rose colored glasses

CEOs seem to unwittingly get fitted with rose colored glasses

CEOs are almost always overly optimistic — reliably two to four times as much as their own employees who are closer to the underlying reality.  It’s as if the C-Suite comes with mandatory rose-colored glasses.

Think you’re special — you don’t have this problem?

Think again.  For example, the survey “Re-engaging with engagement” by The Economist Intelligence Unit (EIU) found C-Suite executives consistently out of touch with what others in the firm experienced — biased in an overly positive direction (emphasis added):

The C-suite displays a consistently “rose-tinted” view of engagement that is not shared lower down the ranks. One important revelation from our survey is the huge disparity between the views of many in the C-suite and those of less senior directors, including just a single rung below board level. For example, 47% of C-suite executives believe that they themselves have determined levels of employee engagement, a view shared by only 16% of senior directors outside the C-suite. More than one in five in the C-suite believe that employees are “much more engaged” than those in rival firms, compared with only 7% of respondents outside the C-suite.

Even if you are that special CEO who isn’t out-of-step, it’ll cost you almost nothing to set up a system for correcting your perceptions.

This system will help you get the other C-suite executives better grounded, and will keep your eventual successor out of trouble:

1. Collect anonymous data on a regular schedule – build into your management calendar a regular set of anonymous surveys of clients, prospects, employees, suppliers, and other stakeholders, no less than annually.  This is what Shakespeare’s Henry V does just before his famous “Band of Brothers” speech — walks through his own camp disguised as a common soldier, to understand their true concerns
2. Whenever things look good, look twice – ask yourself and your team where your plans have built in assumptions, especially positive ones.  Then at your next management offsite, ‘war game’ with them using what-if scenarios.  It’s a great way to build both teamwork and the mental flexibility you’ll need when the unexpected does happen
3. Don’t treat warning signs as loyalty tests. Coors’ leadership famously dismissed customer dissatisfaction of a redesigned beer can with “we have the best beer in the world and we’re confident people will figure out how to get to it.”  Sales plummeted while everyone outside the bubble was afraid to bring bad news.  Build a dashboard or balanced scorecard with leading indicators — by the time sales fall, it’s too late to do more than react.
4. Get a professional 360-degree evaluation of yourself and everyone else in top management at least every two years — and act on the findings.

Finally, when you do suddenly learn the bad news, keep your head on straight.  My client David sent out an employee survey, and emailed me the results with a cover note reading “I want to quit and open a solo practice.”  The “new” bad news has probably been around a while, so this may not be a crisis.  And people are testing you to see how you handle what they’ve told you — because often they’re holding back even worse news, waiting to see if they can trust you to honestly address what they’ve already shared.

Treat every revelation of bad news as a gift.  Would you rather know, or not know?  Reward the bringer of bad news, praise them, and act without ego to fix the problem.

That’s good advice for all of us, in the C-Suite or not.

Contributing blogger Thomas B. Cox runs Cox Business Consulting, Inc. and is creator of the blog and web radio show Tom on Leadership, aimed at CEOs and business owners. He has worked with IBM, Oracle, Tektronix, ODOT, Intel and others.



Bob Lieberman
+1 #1 I have a story tooBob Lieberman 2011-02-01 19:44:27
Couldn't agree more, Tom, and I have a personal story about this.

About fifteen years ago, I had just joined the group of direct reports to the CEO of an ambitious ERP software manufacturer. He had a reputation of screaming at people and not wanting to hear bad news, so of course my peers had all learned to stop giving any to him.

After several weekly meetings among those peers (and without the CEO), I realized that we were playing a game of hot potato. Each week there was some major responsibility that couldn't be discharged because its owner didn't have the bandwidth. One of his peers graciously offered to be responsible for it that week. Then, sure enough, next week THAT person had a (different) responsibility they couldn't discharge, and so on. It was as if there were eight heavy buckets, and seven pairs of hands. The only reason nothing was dropped only because one of the buckets was always on the move.

Did I say the company was in trouble? It was having serious problems meeting customer commitments. I put two and two together — this seemed like a no-brainer to me, so I asked for a meeting with the CEO. I wanted to alert him to the charade. I was sure nobody else was telling him and I thought he needed to know because only he could make the hard prioritizing decisions necessary.

The meeting time came, and in that meeting I told him that we were systematically short-changing some key work, by sleight of hand, and we would be paying the piper pretty soon if nothing was done about it.

The result? He screamed so loud at me in the closed room that my hair stood on end. I kept calm and etc. But afterwards, his several assistants came to me to make sure I was ok. They had heard the screaming. During the meeting he had told me, in a very loud voice, "I don't want you to bring me problems without solutions!" I had to calm him down before he tried to kill me!

I have since found that other C-people share this one peculiar conceit: that their job is to CHOOSE among solutions offered by staff rather than participate in developing those solutions. Somehow, a key part of their job description has been forgotten. Unfortunately, it may be the part of their job that keeps them grounded.

Too many C-people "don't have time for" problem-solving , and they make it clear they don't want to engage in any. So if a developing problem doesn't have an obvious solution, they don't hear about it until someone's hair is on fire.

They have stopped getting their hands dirty, and there are serious consequences.

Back to my personal story... A couple of weeks after the unforgettable meeting, I was part of a 15% RIF. Not that much of a surprise if you think about the CEO's demonstrated opinion of me. More surprisingly, six months after the RIF the company's IP was sold and they went out of business.

Just sayin'
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B Hadley
+1 #2 The message doesn't always make itB Hadley 2011-02-02 10:18:47
Great story, Bob - full of lessons for all of us.

What's unfortunate is that the people who most need to hear/read Tom's blog and Bob's post are the ones least likely to believe it applies to them. They are operating on ego and unable to conceive that a small helping of humble pie would accomplish great things.
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