Friday 28 November 2014

Three ways CEOs usually get fired



Today the world of CEOs is dominated by VUCA and an uncontainable media. Long gone is the logic that one could control the information one would like to reach the public. The old system, consisting of simple mass media patterns and defined by performance beating perception, has been breached.  
The clock is constantly ticking for CEOs

Yet many CEOs act as if this former structure was still intact or held any value. It's a highly dangerous attitude. Our study at Roland Berger Strategy Consultants identified three common patterns which lead to top managers’ firings.

1. One-Man Band
CEOs focus primarily on one aspect of 
their tasks and equate themselves with 
their strategic role. This often involves 
unrewarding jobs such as the restructuring of companies. In the outdated system, those managers were judged solely based on their performance and were able to do their jobs in peace, without interference and away from the attention of the media and the public. Nowadays negative headlines can’t be controlled, and they spread with unprecedented speed and rapidly gain a personal quality. Within days one article or one image, shared all over the world, can ruin a reputation that was carefully built over years. The managers are regarded as the main culprit for anything that goes wrong. Even when they do manage to maneuver the company into calm waters, stakeholders are not likely to keep them on board as they don’t see the CEOs fit to handle “normal” tasks.

2. Scandalization
In the past companies would go through great lengths to protect their CEO in times of crisis. Increasingly one can observe the following trend: a business gets embroiled in a scandal, but only the CEO has to leave. Not only the media drive personalization – frequently, it is the company itself that's doing so. To have only one guilty person to blame proves to be advantageous when dealing with prosecution, and also it’s simply easier that way to plead mea culpa in such a way that the company doesn’t receive as much harm.

3. Ignorance
The third pattern involves a lack of sensitivity to the needs and expectations of stakeholders. Some CEOs might feel too powerful, blinded by the might their position holds. Nowadays being unaware of one's environment diminishes the stakeholders and the public’s trust in the manager and seriously hurts his or her perception over time. Take Jürgen Geißinger, for example. He is the former longtime head of Schaeffler KG, one of the world’s biggest suppliers to the automotive industry. He did not pay attention to the changing circumstances and to what the stakeholders and the public were thinking and saying about him and continued to work the way things had “always” been. He infamously was said to manage the company “according to his mood”. Although he successfully globalized the business, Geißinger eventually was regarded as too provincial, unwilling to compromise and unsustainable due to multiple quarrels with the company owners. After long years of disagreement he was let go. Today CEOs must constantly manage the perception influential people have of them – otherwise they will surely be ushered out of the door. In the end, this process also hurts the company as well as it is protracted and more cost-intensive than the other means of ousting.


Read more about the study here.


Image credit: pixabay.com

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