leadership

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Should the CEO Be Fired? That Depends

In the wake of multiple problems splashed across headlines worldwide, speculation has run rampant that Uber co-founder and CEO Travis Kalanick may be on his way out. Issues include claims of sexual harassment at the company, massive loss of users and even a widely circulated video of the billionaire getting in a fight with a driver over fares for black cars.

In an article on Mashable, 5 Ways to Save Uber From Itself, the number one suggestion to save the global company is to fire Kalanick. “If you cut off the head, the body can function … at least temporarily,” the writer claims. Other business analysts claim that while he was once the ride-sharing company’s biggest asset, he is now their biggest liability.

But is firing the CEO the best solution? I advise companies that the decision to fire a CEO is never a simple one and should not be done in haste. There are several factors to take into consideration. And firing a CEO can often set the company back, especially in a time of difficulty.

A recent article in Fast Company, “Why Uber Shouldn’t Fire Its Bad Boy CEO,” made the case that Uber may actually benefit from keeping Kalanick in the CEO’s chair.

The article references this article on the Harvard Business Review, “Holes at the Top: Why CEOs Firings Backfire,” which explains why CEOs are often swiftly shown the door when times are bad.

“When companies do well, their CEOs are showered with money, perks, and adulation. When they do poorly, they’re given the blame—and the boot.”

The writer, Margaret Wiersema, is a leader in corporate strategy and CEO replacement and succession. She studied all instances of CEO turnover for a period of two years and found most CEOs were replaced not by the board after careful thought and deliberation, but at the insistence of investors upset over returns.

She compared performance of the companies from two years before a dismissal to two years after, compared performance with industry averages and then compared the performance of companies whose CEOs had retired as opposed to those whose had been fired.

Wiersema came to the same conclusion that I have after decades of working with companies in turmoil. “Most companies perform no better – in terms of earnings or stock-price performance – after they dismiss their CEOs than they did in the years leading up to the dismissals. Worse, the organizational disruption created by rushed firings – particularly the bypassing of normal succession processes – can leave companies with deep and lasting scars. Far from being a silver bullet, the replacement of a CEO often amounts to little more than a self-inflicted wound.”

I’ve seen companies where CEOs were fired for far fewer infractions. For example, perhaps the CEO didn’t make the numbers for a year or two. The business was still profitable, but it was below expectations and not as profitable as projected. Those CEOs often get fired within 3-6 months, rarely leading to the increase in profits that was hoped for. As for Kalanick, while Uber may be in a public relations crisis, and thousands of users have protested conditions at the company by following the instructions on the social media hashtag #deleteuber, the company is still growing. The head of North American operations claimed growth during the first 10 weeks of 2017 was better than the first 10 weeks of 2016. So maybe he is here to stay. At least for now.

Firing a CEO is not an easy or simple decision and shouldn’t be rushed, especially if big changes are being made to turn a company around. Those changes can take time.

Ultimately, it’s up to the board of directors. They have to make the decision based on a number of factors. But more often than not, it pays to keep the CEO because he can be a part of the solution, even if he was originally perceived as part of the problem.

My book “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes,” is now available as an ebook.

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Why Should People Follow Your Lead?

You are a leader. Most likely, leadership is not a position for you, but an attitude and a way of life. People at work, home and in your social circles turn to you for advice. Your wife (or husband) lets you be the spokesperson in confrontational situations. People listen to you. But what was it that got you where you are? Did you work your way up the career ladder? Were you given a great opportunity and took advantage of it? Were you always this way and running your own business crystallized this approach in your life?

No matter what some may tell you, it is unimportant how you became a leader. The essential point is how you use your power to motivate and inspire, to scold and fire, to teach and support others.

You may have been to some leadership seminar and learned the “key principles of leadership.” They told you that by following their 7-step program (or 4-step plan, or whatever it was) that you will be a revered leader.

I want to try something different, though. Rather than offer steps, I want to offer questions. I want you to ask yourself the following three questions, and then I want you to answer them honestly and understand how the answers can make you a more effective and motivational leader.

Question 1: Would you rather be loved or feared?

You may already be familiar with the Machiavellian dilemma of The Prince: is it better to be loved or feared as a leader? This question explores both your preference and abilities. Do you rule with an iron fist or joke around with your colleagues over drinks? Many people work with friends or want to maintain a very cordial working relationship with employees. It is in our DNA to seek approval. But are you capable of confrontation when necessary? Consider this: your good friend (and you are his superior) is underperforming at work and you notice. What do you do? What do you think you should do? Explore the normative and positive aspects of your answer and decide what actions and words would make you the best leader at your company.

Question 2: Do you seek advice or work in isolation?

When you are facing a challenge, you may close your office door and work until you solve the problem. Alternatively, you may write a set of e-mails and schedule some meetings to explore the problems with others. Do you seek the advice of others and hope for their buy-in or do you rely entirely on yourself? In my experience, leaders who openly share their challenges and ask for advice resolve their problems faster and more creatively than their counterparts who do it by themselves. However, there are a few leaders I know who are best at relying solely on themselves. They consider the situation objectively and without any input they devise brilliant solutions. Know how you work best and perhaps consider an alternative method to problem-solving. Ask for advice! It rarely hurts, especially if your team feels that it has your ear and you get buy-in.

Question 3: Do you inspire people to trust your leadership?

There are some leaders who keep their teams focused by frequent and harsh criticism, yelling and threats. Very few of these leaders (though there are some) build a good team with a solid focus that produces good results in the long run. Recently I visited an Atlanta-based online retail company (not a failing one) and arrived early. I go there once every few months and each time people greet me like I am their favorite uncle. It feels strangely good to be there. What do they do differently? – I asked myself. As I made my way to the waiting area I could hear the CEO chatting with the customer service team.

Technically, he did not have to be there (there is a customer service manager after all), yet he was sharing how great the team was doing and the few challenges they needed to work out. He did not go into too much detail, just excitedly elaborated on a few broad themes. He mentioned key priorities for the company over the next few months. He asked anyone who had a problem that they felt needed his attention to come directly to him. I felt like he could send out a memo the next week saying that they were moving the company to Oceania and everyone would follow excitedly. That is how much they trust their leader. Sure, this type of open environment does not work at all companies, but it works for this one. The CEO found a way to inspire and motivate people as the right kind of catalyst for the right kind of team.

As you answer these questions for yourself, I again encourage you to reflect on the consequences of those answers and how they benefit – or not – your business.

What kind of leader are you?

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5 Ways to Find Direction When You Feel Lost

The most powerful businessmen are the least likely to admit when they are lacking direction. You are used to helping others find their way, and it seems unimaginable that, with so much on your plate, you’ve lost focus. But it happens, and it’s nothing of which to be ashamed.

Here are some great ways to gain clarity on your purpose and leadership direction.

1. Rest 

It’s easier said than done, but rest is necessary to function efficiently through your long workdays. Whether sitting down for a proper meal, sleeping in, going to the beach for a weekend or just taking a night off to be with friends, guilt-free downtime is an absolute necessity to offset high intensity days.

2. Discuss challenges with a partner or colleague

Do you ever find yourself in the middle of a sentence, trying to explain a business challenge to others and suddenly realize you have the answer? Sharing with others forces us to synthesize information and clarifies problems (I also recommend the whiteboard). In some cases the person listening may not even need to be informed of the topic, but having to explain it to them requires you to think differently.

3. Find one thing to get back your inertia

Sometimes what we lose is inertia, and we just need to swing ourselves back in motion. Pick just one thing that will contribute to your business – not the most important or best thing. Just pick one easy thing. After completing the task, acknowledge how easy it was to make a small change that will positively benefit your business in the long run.

4. Help someone else

You’re probably not the only one who’s stuck or could use a little help. Find someone who needs to talk things through or even be assigned some mindless task that helps them get their inertia back. You’ll be contributing, taking a look at something you otherwise wouldn’t have that may trigger ideas and getting back your inertia.

5. Go for a walk

Little clears your head like fresh air and moving your body. It doesn’t have to be long – 20 minutes will do it. Just take a walk, preferably outside, though if you have to lap the floor of your office building, that’s fine, too. Just move around and clear your head. Busy with phone calls? Take one of those on a walk with you!

Keep these easy solutions in mind for when you feel you’re losing focus (and perhaps motivation) despite knowing how much there is to do.

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You Are Always Leading by Example

If there is such a thing as good leadership, it is to give a good example.

– Ingvar Kamprad

If you know me or you’ve been reading my blog, you know how much I value this concept.

I’ve seen a poor example be the bad leadership to bring down many a company.

If you take a little extra cash out of the register, your employees will feel okay doing so, too. If you speak negatively about your customers, your employees will do the same. Are you a gossip? Expect your employees to become gossips as well.

It doesn’t matter how many inspiring speeches you give about doing the right thing and the amazingness of your company. Your word means nothing if your actions – which are all examples – are poor.

We all lead by example. Make sure yours is a good one.

Click HERE for another post on leadership.

Do you lead by a good example? How so?

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What Napoleon Can Teach Business Leaders

A leader is a dealer in hope.
– Napoleon Bonaparte

This is a lesson I learned on one of my earliest turnarounds, and though I’ve talked about it before, it’s worth reiterating to emphasize the point.

A very large cheerleading supply company was having huge problems and needed to be brought through a Chapter 11 restructuring. So, they brought me in.

I realized more than anything during this project that nothing pulls a team or company together like having hope, and I hardly think that any company could have taught me this lesson quite like a cheerleading supply company.

When you think about cheerleaders, you realize that they’re cheering hardest when their team is down and needs a big score (or three) to win the game. It’s the cheerleaders job to keep the crowd on its feet and not to let the fans’ silence and dejected feelings infect the team. The worse the situation is, the louder cheerleaders cheer.

So when it was a cheerleading company restructuring through a Chapter 11 bankruptcy, you could imagine that they knew how to cheer for themselves and keep the hope alive.

After 18 months we came out the other side of this restructuring, and at the hearing, I gave everyone pompoms, including the judge.

To this day I still have my pompoms in my office to remind me that no matter how bad things get in a turnaround, as the appointed leader, it’s my job to be a dealer in hope. It’s my job to tell everyone that we will get through it and that we have to work harder than ever to pull us out the other side.

If I don’t do that, I’ve done nothing.

As a business leader, no matter what level of management you’re at, it’s your job to deal out the hope, whether the chips are down or up. No one can fight or work or play if they don’t have hope that what they’re trying to accomplish is possible.

Be a leader who deals in hope.

How do you bring hope to your team or business?

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Not Owning Up to Your Mistakes Is a Huge Mistake

“It is only an error in judgement to make a mistake, but it shows infirmity of character to adhere to it when discovered.”

– Christian Bovee

When was the last time you made a serious mistake? How did you react when you realized the error?

In our success and efficiency-oriented world, people often think of making mistakes as something to be ashamed of, as something to ignore or hide. When realizing their mistakes, many leaders in the business world focus more on burying the error and coming up with an explanation than trying to fix the problem they created.

I am here to tell you: these leaders are wrong.

Of course, the perception of our mistakes as leaders can be wisely managed (it’s called PR). However, we must know that while making mistakes can be harmful to our companies and uncomfortable for us personally, it is also an opportunity for us to exercise true leadership.

Own Up to Your Mistakes

Think of mistakes as an opportunity to show strength during a crisis.

Aside from the practical implications of admitting our mistakes (whether to ourselves, others or both), as people of integrity we know it is the right thing to do. Only when we take responsibility for our mistakes can we start properly fixing them. And, owning up to our mistakes is the only viable long-term solution to correcting them and learning from them.

More often than not, mistakes are discovered. Wouldn’t you rather be seen as an upstanding leader, who acknowledged the flaw in his actions and proactively did something about it, rather than one who is confronted with the mistake, which he initially denies until facts prove he has been lying?

We make decisions every day. We weigh the set of options and opportunities available to us and make what we think is the most optimal choice. These choices are often based on assumptions. Assumptions are often incorrect, and circumstances change – and sometimes we can be wrong. Sometimes we will be wrong.

So, in short, here is my advice:

  1. Accept that we all make mistakes, but don’t be afraid to take wise risks because you are afraid of making mistakes
  2. If you make a mistake, own up to it should it become known by others. Use the opportunity to grow and act like a leader.
  3. Under all conditions, be proactive in finding a solution after you have made a mistake and in avoiding future comparable mistakes.

What have you learned from your past mistakes? Let me know in the comments below