In my career as a Chief Human Resources Officer and owner of a human capital consultancy specializing in M&A management, I’ve worked with many CEOs who were accomplished, motivated and super smart.
However, CEOs who were rock stars in a wide variety of settings can fail in the unique challenge of a turnaround. Selecting the right CEO will impact careers and profits, with the potential for market positions to soar. When a CEO fails, quite the opposite occurs. The stakes are high!
As investors, board members, and human capital executives here are 3 vital traits to look for in the ideal CEO in a turnaround initiative:
Accelerating technology is not only growing transparency throughout our companies, it is creating an expectation of open, authentic and honest cultures that provide clarity of strategic direction and expectations.
The CEO must paint a clear picture of what winning will look like and be comfortable with calling balls and strikes against that picture.
After making critical business leadership moves or during times of crisis, people across the organization are often unclear and apprehensive about what the future holds. A strategic misstep occurs when a CEO hides their strategy or reasons for their decisions.
There isn’t a human capital executive capable of being a substitute for a CEO who takes charge of their culture and is strategically clear in how to message the truth and use it as a motivator, especially one that meets the needs and expectations of the workforce.
Workforce stability improves execution, without which the turnaround will take longer, and the business thesis will become at risk.
Even when transparency is difficult, as it can be in layoff situations, CEOs who own the messaging and tie the decisions to a larger purpose separate themselves from their peers. In the absence of transparency, the workforce creates their own narratives around leaderships’ decisions. Often, the boogie-men employees create in their imagination are much worse than the reality of the situation.
Being transparent might feel hard and often it is. However, turnaround CEOs know that it creates better alignment and execution. Creative and adaptive talent, today’s most vital ingredient for turnarounds, always have options. They require transparency to commit.
This may appear self-evident, as most CEOs have used the phrase “fail fast and cheap.” I’ve never once heard a CEO proclaim “let’s overanalyze and create organizational inertia.” In practice, however, many create environments where every mid-level decision must secure broad alignment including CEO involvement. This inevitably will slow down decisions and progress.
Successful turnaround CEOs also drive decision speed when building out their senior team. Significant research supports the idea that the go-forward C-suite should be in place within six months after the CEO gets hired.
Once critical talent enhancements have been made, there must be the confidence to delegate decision rights. Given the assumption of having the right surrounding talent, a CEO can spend less time managing the details and more time charting the course and ensuring the organization is aligned. This impact is multiplied when combined with transparency.
Along with speed, turnarounds usually require big changes to big things. I’ve found many CEOs are hesitant to take the needed risk.
CEOs in turnaround environments are under enormous pressure. The business would not be a turnaround if thing were mildly broken.
The world’s most successful turnaround CEOs set the tone and seize on it. They take difficult change initiatives and come out on top by framing a transformation that directly impacts the commitment of top talent. They address change within the context of reaction to external sources, building upon past successes, and seizing new market opportunities. When they make connections between the work to be done with the larger purpose, their team will follow.
This is one of those areas where a human capital executive can provide transformational coaching to their CEO. Why? Staying objective, balanced and positive is more than a fulltime effort, it requires a team.
Many CEOs are Socratic inquisitors, digging deep into the details through probing questions to determine the perceived strategy, define the truth, clarify an individual’s capacity, and compare expectations (a core to all conflict). But, if the tone of a conversation assumes negative intent of any kind, disengagement will occur immediately.
Pulling this all together, most CEOs are in their roles due to significant skills, experiences and successes throughout their careers. Their ability to thrive in turnaround situations will be enhanced by focusing on transparency, decision speed, and assuming the positive intent of their team.
What competencies would you replace any of these three with and why?
Please send me your thoughts and comments. I’m always looking for ways in which we can become better together.
Brought to you by Jackson Lynch, President – 90 Consulting
P: (832) 930-7449 / E: jackson@90Consulting.com
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