Even as we enjoy the last days of summer, we head into Fall knowing the end of the year is around the corner. And then, in December, we’ll start seeing those lists of executives who have come and gone that year. One of the annual lists CEOs don’t want to see their names on is “CEOs who departed or were fired.” In 2016, the list included the CEOs of Macys, Wells Fargo, McDonalds, Alibaba, and Mattel, to name a few. In 2017, the disruptive, career-ending forces are at work again. There are tempests brewing in many companies. It’s a safe bet that by the end of this calendar year, the list will be longer than last year’s.
What is likely to upend a CEO's career? I was recently interviewed on this topic and thought I’d share those thoughts with you.
Trend #1: Activist investors have the megaphone
They are ratcheting up the pressure and driving a negative narrative about the CEO and management’s strategy. The media is listening, and access to social media makes it easy to to reach the public with their view like never-before. These public dust-ups plant seeds of doubt about CEOs and their management teams. This in turn paralyzes the actions they need to take and delays their plans. Marcato Capital Management’s Mick McGuire has sparred for months with Buffalo Wild Wings CEO Sally Smith and is now calling for her ouster. Similar internecine corporate battles are playing out everywhere. Making matters more complicated, CEOs judge (appropriately) that they must hold their public fire, or the mudslinging will make matters worse.
Trend #2: The pace cars are setting a faster speed on the racetrack
If you imagine the CEO as the race car driver, you can say many are getting lapped by competitors with bigger, better engines. They need to get into the pit and tune things up, to keep pace with industry trends. Don Thompson at McDonalds was sent packing last year for failing to turn around years of weak sales. Mark Fields was replaced at Ford by Jim Hackett, an outsider known for innovation and change. CEOs who underestimate the speed of changing consumer demands will find their companies lagging. They need to foster innovation and empower people to get closer to customers, spot trends, and make faster decisions.
Trend #3: CEOs need to turn the ship faster
Target CEO Brian Cornell came in after the company fell behind, with a mandate to redesign the company for the future. Though he warned it would take time, doubts set in early, and he recently took a pay cut. Much is written about whether it is fair to judge CEOs by quarterly performance. Stock analysts, shareholders and even their own boards drop their compensation or put them on notice if they miss near-term goals. Yet if you look at the best-performing companies over time, companies like Amazon, they have strong leaders with a vision to steer their companies safely through rapidly changing business conditions. The sustainable path to growth is always paved by a CEO with an inspiring vision and the skills to bring it alive so people are aligned, inspired and want to go the distance with their leader.
Trend #4: CEOs need to be brand ambassadors
CEOs simply don’t pay enough attention to making sure people know what they stand for. There’s a growing body of literature on the connection between CEO brand and company performance, profit and stock return, as well as non-financial benefits such as reputation and trust. In one study by Weber Shandwick, 66% of consumers said their beliefs about a company’s top leader affect their opinions of the company. CEOs get the connection between corporate reputation and valuation, but they don’t always factor in how they could boost it further by burnishing their own reputations. The way to build and leverage a brand is to share stories that humanize you and connect people to your corporate values. Double down on that advice when you’re trying to attracting Millennial talent – young people want to work for a company with purpose as well as profit.
Trend #5: CEOs need to communicate their “true north”
Upholding the company values has always mattered and not doing so has led to many a CEO’s fall from grace. Wells Fargo CEO John Stumpf retired immediately after the company’s improper sales tactics (opening phony bank accounts) was made public. In one months’ time this year, United Airlines CEO Oscar Munoz got the nod as U.S. Communicator of the year by PR Week Magazine, and then was raked over the coals globally for his response to dragging a passenger from one of United’s flights. When you factor in the power of social media and the crazy fast news cycle that exists today, you see it’s impossible to manage reputation after the fact. The only way CEOs can protect their companies now is with a disciplined rigor around communication corporate values.Do you want to be the CEO someday? Are you in succession for a top job? Download our Leadership Readiness Guide; What Nobody’s Told you about Becoming CEO