Boards can help the C-suite avoid the perils of short-term thinking.
Many board members have seen it all: quality circles, Theory Q, The One Minute Manager, stack ranking, open-space offices and hoteling. Seasoned board members have seen fads bordering on rages sweep through the managerial and executive ranks, and at considerable expense.
Part of a board member’s mandate is to counsel senior leadership and make sure they do not jump wholeheartedly into management practices that may not hold long-term value. Here are several ways boards can help ensure that the executive level avoids wholesale adoption of the current round of faddish phrases and flawed practices.
Fads to avoid
Leaders must always be transparent. No, they must not. In fact, often they shouldn’t be. Practicing transparency means knowing when and when not to be transparent. A leader should not pass on everything he or she thinks, feels or hears. If, for instance, a CEO and the board chair have a difficult meeting, the CEO should not, in the name of transparency, share details of the meeting with the organization. Doing so will only cause distress as word quickly spreads about struggles at the top. Neither should any leader share destructive emotions, such as fear or anxiety, which would undoubtedly race through their reports, infecting many of them with primitive, counterproductive and dangerous responses. As emotional instability increases, functional intelligence declines.
Instead, the leader must process bad news, develop a perspective that helps others to make sense of it and focus his or her attention on what must be done to address or mitigate the problem. The leader’s job includes making sense of the world and communicating that insight, not “transparently” spraying worry around the workplace. Honesty and directness will serve leaders and their reports far better than unbridled transparency. Pause, process and consider the role as leader along with the audience. If the news merits communicating, then do so clearly, honestly and directly.
Jump on the merger bandwagon … and do it now. Think tulips, land rushes and subprime mortgages, and take a deep breath. Maybe two. For years, seemingly everyone has participated in historic levels of merger deals, and perhaps you should, too, before the banks close.
Nonetheless, consider: First, most mergers don’t meet their financial targets and haven’t for decade upon decade.
Second, there are no mergers, only acquisitions. In the end, someone acquired someone else, hand-waving and press releases notwithstanding. That reality and associated decision-making power needs clarifying or much unnecessary blood and treasure will be squandered. That clarification makes for hard work in negotiating any deal and an increased likelihood of walking away from an ultimately defective deal.
Third, the main reason mergers underperform is a failure to manage the people side of implementation. This isn’t an argument against using good lawyers and bankers to craft the deal, but it should lead boards to notice that organizations that succeed in mergers succeed in mergers. Restated, such organizations develop skilled internal competencies in finding and negotiating merger deals as well as in integrating organizations. They identify and implement best practices from project and organization structure to timing to use of integration for executive development. Most importantly, these organizations integrate implementers of the deal and the dealmakers to avoid provoking this kind of quote from a senior executive charged with implementing a merger deal: “I can get you those numbers, but whatever you thought you bought won’t exist when I’m done.”
Fourth, think carefully about organic growth through innovation before acquiring or being acquired.
Let’s get back to the office. Time to head back to the office and get down to business! Easy does it. Do you know where your people are today? How connected do they feel to you and to the organization? A lot has taken place, and leadership may be more than socially distant from its people. Leadership may be dangerously out of touch.
Working remotely has not made trusting leader/follower relationships easier to maintain or to develop. Zoom calls cut down on cues sent and received. Being away from one another’s physical presence regularly means a dearth of body-language messaging, fewer spontaneous or even accidental encounters, and minimal “let me buy you a cup of coffee” moments. Social and economic disparity also means that having children (or grandparents) at home does not amount to a shared experience with workmates. Potential resentment about differential work and personal burdens borne over these past two years, perhaps increased by wealth, gender or race, may mean that teams necessitate rebuilding.
Therefore, boards would do well to advise CEOs to reconnect with their organizations by normalizing a thorough check-in with team members about what they have been through, where they are now and what stock needs taking regarding obligations both personal and professional. Senior leaders should reconnect by discovering and honoring what has happened to their people, and advance based on what has changed.
Employee health should move front and center, as should attention to the employee work environment. Don’t tell people that cramming open offices into the middle of a high-rise floor is for their benefit as part of a new approach to collaboration as senior executives take up residence in large private offices consuming the perimeter and the daylight. Hypocrisy comes in many forms and seldom goes unnoticed, especially in tight labor markets like those faced today. My favorite redesign of departmental space featured a client moving all the employees to the perimeter and the executives to the center in small offices.
Don’t rush to renewal. Plan it out.
Delegation is good. “It empowers people.” Not necessarily. Delegation is passing work on to others. Empowering people is enabling them to succeed. Neither delegation nor so-called empowerment necessarily qualifies as good practice. Senior leaders may need board support in staving off herd pressure to the contrary.
A decision to delegate or not to delegate should include application of well-established criteria:
• Do the leader and their people share a common objective?
• Is there time?
• Will reports accept a unilateral decision? (In other words, will they do what their boss directs them to do?)
• Is there a right answer?
• Do reports have (or can they acquire) the skill necessary to perform the task?
• Is there a developmental agenda?
The checklist for empowerment is a tad bit shorter:
• Do reports have what they need to succeed?
If not, then “empowering” them really means setting them up to fail. Handing someone work to do does not empower them. Taking the time to ensure that she or he has the needed resources constitutes to the hard work of empowerment. Neither thoughtful delegation nor true empowerment ensures success. In combination, however, they should lead the report or reports to feel challenged (but not overwhelmed), supported and appropriately responsible.
Prepare 360-degree feedback surveys for all! Probably not a good idea. I’ve contributed to the development of national 360-degree feedback surveys and supporting material, and, over the years, several organizations have licensed me to use their surveys. I’ve used 360-degree feedback surveys hundreds of times, usually standard, sometimes customized and occasionally totally original. I’ve coached coaches and long ago was asked to help develop coaching licensing standards.
Lots of good executive coaches do lots of good work. However, beware of any technique or approach heralded as useful in and of itself. A standard 360-degree survey and coaching on work relations will likely serve a 55-year-old executive far less than a 35-year-old. Similarly, targeted assessment of a skill or a relationship may prove far more valuable to the deeply experienced executive. In other words, other forms of valuable coaching exist, especially for experienced executives. These alternatives may prove more efficient.
Recall that each executive going through a 360 process may entail 12 or more surveys, each requiring about 45 minutes to complete. Help your CEO avoid overwhelming their organization with a spate of 360 surveys.
Flatten your organizations. Not so fast. Flat organizations rely on more skilled and self-directed workers guided by carefully crafted systems, especially reward, measurement, decision allocation and information systems. Restructuring a company is not merely about the organizational chart and spans of control.
To put it simply, less experienced workers benefit from more supervision (both for oversight and for development). The true total cost of labor includes the cost of unforced errors and squandered human resources (i.e., unnecessarily discharged or resigned, and then replaced). Spans of control and levels of management should reflect the current and anticipated demands on the organization — its systems and its people.
An old adage from the building trades advises “as soon as a carpenter hires a third assistant, he or she must set down his toolbox.” Longstanding research also supports versions of the “rule of 5,” namely that every time an organization grows by a multiple of 5, it should reorganize in order to adjust to the new challenges of growing an organization. Nonetheless, global competition and continued refinement of work processes lead to often formulaic (and oversold) span of control models, such as 7x7.
Again, directors can help the CEO focus on the right approach to the right challenge. Long ago, U.S. auto manufacturers and U.S. government leaders (including then-President Ronald Reagan) waged diplomatic war on the Japanese auto industry, especially on related trade and financial policies. At the time of a visit by American auto leaders to Japan, I ran across a Ford Motor Company executive I knew. I asked him why he wasn’t with his colleagues in Japan. He responded concisely, “Until I can figure out how to move my ratio of management-to-producing employees to something even close to theirs, I have no right to complain about their unrepentant protectionism or anything else.”
Second, what’s the number one reason people leave jobs? Employees most often tell their employers that it’s money — an acceptable answer in America at any time (including during the Great Resignation). What’s the most frequent reason given in third-party, confidential interviews? The person’s boss. Smaller spans of control don’t ensure better supervision, but they do provide the possibility of more time and closer attention to supervisor/report relations and to developing the supervisor’s management and leadership skills.
Third, resilience isn’t just about personal traits. Stretch a supply chain or employees too tight and organizational resilience declines. The absence of slack doesn’t just tire people out; it makes them less able to respond to emergencies, especially longer-running instances, such as pandemics or prolonged market recovery.
All of which brings us back to where we started, namely that multiple factors should guide leaders in establishing how flat to make their companies. Boards can check the rigor of organizational leader thinking on this matter.
Vaccinate your CEO against fads
Boards can support CEOs and their direct reports by helping them to pause any time a faddish idea enters their mind. Doing so can prove as simple as asking the question, “Would you walk us through your thinking on that? Take your time.”
Gregory P. Shea, Ph.D., is adjunct professor of management and senior fellow at the Wharton Center for Leadership and Change Management, and adjunct senior fellow of the Leonard Davis Institute of Health Economics at the Wharton School.