New rule: Hire a courageous CEO who can Balance Ethics & Corporate Profit
Old rule: Hire a charismatic CEO who can Close Deals
Our research has shown that a CEO is more vulnerable to being fired and replaced if the stock price of the company continues to lag behind the S&P 500 by an average of 2 percent once occupying the top job.
This ominous reality – that of doing what ever it takes to increase the value of the company’s stock price – is foremost in the mind of every CEO. How they respond or react to this reality is the difference between an outstanding CEO and all the rest.
Back in the 80s and 90s, a charismatic, celebrity CEO was the way to go if you wanted to grow a successful business. From a long term view, the stock market was strong and the focus was on growth – get big and grab as much market share as you can, as fast as you can.
The problem was that several (but not all) of these charismatic, super star CEO’s used their influence and ego’s to either engage in ethically questionable business practices, stubbornly ignore obvious warning signs of trouble or focused too heavily on short-term up-ticks in share price with little focus on long term, organic growth.
These corporate emperors could do no wrong. Or so we thought.
As 2000 came and the stock market went, everyone started to sober up, ask questions and began to look very closely at company financial statements (once again). What did they find? They soon discovered that several companies had been fudging, twisting, obscuring, tweaking and in some cases, out right lying about the numbers.
Some of these charismatic, super star CEO’s have been fired and a few of them are in jail. As a result, courage and ethics have returned to their rightful place as the preeminent qualities of leadership.
Brave New World
What concerns do today’s CEO and senior executives need to summon bravery for to face in today’s market place? Here is a brief, incomplete list:
Organic growth – our research highlights the fact that 90 percent of 940 executives questioned, said that organic growth was essential to their company’s future success.
Problem – Organic growth is not a quick fix; it often happens very slowly.
Environment & corporate social responsibility – we’re reached a point in the history of the Industrial Revolution that can’t be ignored by anyone: the way we practice business today is damaging to the Earth, which in turn threatens our very existence.
Problem – Most corporate leaders want to be Earth friendly and being “green” is now becoming a huge competitive advantage, but starting such initiatives can be intimidating and costly.
Shareholders & Securities Analysts – people invest in companies to make money and investors want to see results, or they’ll take their money elsewhere. However, the performance assessment of the CEO is very much tied to the current share price.
Problem – How can the CEO balance the often conflicting priorities of reaching for short-term results while achieving more substantial long-term goals and not get fired?
Globalization – to expand market share, many companies are going global. If this done without an ethical compass, small business owners, indigenous communities and entire cultures can be uprooted and in some cases destroyed.
Problem – How can a business expand in a way that supports and not destroys indigenous cultures and local communities?
Employees – people are not assets, they are people, so treat them like people and not like assets.
Problem – How do you demand the highest level of performance from your people, but not burn them out?
These are but a few of the of issues facing the CEO and top management, and these issues require a courageous leader to humbly face them and work to prevail, turning them into opportunities to innovate and profit.
Negotiating these daunting realties demand courage and a strong ethical core. Sarbanes-Oxley, lost confidence in the stock market and increased levels of cynicism directed towards business is the net effect we all endure when courage and passion are lacking in today’s corporate leaders.
Here are some words of wisdom to contemplate, on the subject of courage:
“Brave men are all vertebrates; they have their softness on the surface and their toughness in the middle.”
-G. K. Chesterton“Nothing in life is to be feared, it is only to be understood. Now is the time to understand more, so that we may fear less.”
-Marie Curie“Creativity requires the courage to let go of certainties.”
- Erich Fromm“Courage without conscience is a wild beast.”
- Robert G. Ingersoll“To go against the dominant thinking of your friends and peers, your teachers, of most of the people you see every day, is perhaps the most difficult act of heroism you can perform.”
- Theodore H. White
Copyright 2006 Christopher A. Gayle & Capital Genesis LLC ©. All Rights Reserved.
