The Number #1 Pain Point for Many CEOs Today is Their Board

This is the first of a new series of blog posts on coaching CEOs to create a high performance board. If things work out as planned, this might become an e book (or even a book). The idea resulted when a friend, George, who is the CEO of a Fortune 100 company, asked me if I would help him create a high performance board.

As I was to discover with George, and other CEOs, the biggest pain point CEOs have is in dealing with their boards. To hear George talk about his dysfunctional board was nothing short of nightmarish.  “I work for the board. They determine my compensation,” George confided in me, “and dealing with them is the biggest single headache I have, perhaps with the exception of the fact that Uncle Sam has moved in next door and he’s staying.”

He then explained, “I am under pressure from the board and Wall Street to grow my business and grow it faster. Yet doing so involves taking risks that are unacceptable to the board.” He pointed out that, given the Sarbanes-Oxley Act, a law passed which said that board members can go to jail for any financial improprieties that happen on their watch, many corporate boards have started to show up like “control freaks.”

The balance between allowing a business genius, like Steven Jobs, to grow the business and governance and good judgment has been lost. Today, many board members act more like IRS auditors looking over one’s shoulder then like business people.

George explained that part of the reason he was bringing me in was my reputation as a coach for helping companies deliver on an Impossible Future and on economic performance. “We need to shift the balance,” he said, “and I think your influence will help.” Another issue he raised was the dysfunctional behavior of the group. The board room narrative tended to be focused on problems vs. possibilities. He also said that board members were not connected in a good way, which led to all kinds of other problems.

To me George had taken a major step in transforming his board just in contacting me…reaching out and asking for help. All groups, even those run by brainy CEOs and smart people, are prone to group dynamics. It’s very difficult for a CEO who is part of the dysfunctional group to change the group dynamics without some kind of outside intervention. We arranged another conversation where I could find out more about what was going on with the board.

Have a story of your interactions with your board? I’d love to hear it. More to come….

The second conclusion was that most senior executives at GE, including Jack Welch, while lauding the competency lists and the usual “check the box” 360 that followed pretty much ignored them thereafter. It just didn’t have the stickiness to matter to anyone. Immelt then followed this up with Noel Tichy, the acclaimed professor from the University of Michigan who told him that he didn’t believe in the leadership competency approach. Tichy said, and I quote, “Despite decades of research, 100’s of books written, and 1000’s of training programs presented, to the cost of untold millions of dollars, there is not a shred of evidence that studying leadership competencies has any impact whatsoever on leadership development.

Yet despite the above, 90% of HR managers in Fortune 500 companies stick to the competency based leadership development model without ever questioning whether it works. You know the routine: 1) spend a year developing the competencies, 2) do a check-the-box-360, and 3) march people off to leadership training programs taught by PhD’s to get these competencies into people’s heads (and with a little coaching or action learning thrown in for good measure).

The curious thing is that most know that it does not work. As one HRD VP of big Pharma confided in me, “We keep using this competency based leadership approach even though deep in our hearts we know that it’s not going to have any impact on leadership behavior.” When I asked the HR leader why he used this approach if he was so convinced rather than trying something different, his response was, “This is what the boss wants, and I still have two kids in college.”
It’s really time to be honest with ourselves and admit that Leadership Development Programs based on these competency lists are one of the dumbest ideas ever invented.

Steve Jobs, Bill Gates, Warren Buffet didn’t develop as leaders because they studied leadership competencies, but because they had a dream that they passionately cared about.

Over the past decade or so I have developed the Masterful Coaching approach to accelerated leadership development, which experience tells me is much more in keeping with both the entrepreneurial icons of the CEOs we all know and admire, as well as how leaders develop naturally in big, medium, and small companies. I have found that coaching dramatically accelerates the whole process. I am talking about coaching the CEO’s and HRD managers who develop these programs, as well as the actual leaders who participate.

Leaders develop as a result of vision, TPOV’s, stories, and emotional energy

Companies that have the best track record of leadership development, like GE, PepsiCo, and Google, are those where senior executives have been directly involved in the leadership development process, rather than delegating it to HR. One of my favorite leadership development heroes was former Pepsi CEO, Roger Enrico, who canned Pepsi’s traditional high potential leadership development program and started one of his own. It involved something he named Roger Enrico’s Special Classroom (a year-long program) where he coached 25 Hipos for a year at his ranch in New Mexico. Enrico would inspire people during the quarterly weekend retreats with his vision, teachable points of view, and emotional stories around the campfire. He also coached each person on a specific leadership breakthrough that was connected to a specific business breakthrough, like increasing Pepsi’s share of the Frito Lay snack business. The program not only produced the next generation of leaders, but amazing bottom-line results.

Leaders develop in the process of producing extraordinary and tangible results

The reason most people don’t develop as leaders is because the bar of excellence in many companies is so low that people are left in their comfort zone, rather than in a learning zone. By contrast, at Google all people at a certain level are asked to spend 25% of their time each quarter working on an Impossible Goal they feel passionate about. Google CEO Larry page says this has proven to be a highly effective way of developing leaders. This is the exact approach we use at Masterful Coaching, except we have some ways of dramatically accelerating the process.

Find an Outside Coach or Mentor
When I started executive and Hipo coaching, there were only a handful of us out there and all were like members of the Knight Templar, very masterful at what we did. Today, everyone and his dog is a coach or mentor, so you have to be discriminating. The Masterful Coaching approach puts results in the front of the boat and leadership development competencies in the back. The idea is to get people connected to an Impossible Future they feel passionate about which then creates a pull for leadership development. Unfortunately, most coaches hired by big companies from within or without tend to become an extension of the prevailing paradigm of leadership development. They put the competencies in the front of the boat, and try to find some connection to results in the back. Easier said than done.

Footnote:
I was talking to a bank manager at Royal Bank Canada last week who told me that the bank, like many companies now, offers internal coaches. “The problem,” he told me, “is that the internal coaches, rather than teach us to act like lions, often teach us to act like sheep.” He then confided, “I wish I could work with a coach from the outside.”

I would love to hear your thoughts. How is the leadership development done at your company?

I told them how it was important to keep the main thing, the main thing. In this case, the main thing wasn’t to see, for example, how the Vice President of Marketing compared to the national average on things like “sets clear goals” or “plays well with others,” or for that matter, what Myers Briggs personality type they had.

The main thing was to help the person rip the blinders off, both in terms of their potential and in terms of one or two counterproductive behaviors that might cause them to never realize it, or miss their targets in their current role.

I said that the MC approach, based on interviews and candid coaching conversations, had proven remarkably effective at this. Besides, I emphasized, most managers respond to your typical 360 instruments or testing with a big SO WHAT? “Who cares if I got a 3.5 on execution and a 3.6 on rewards and recognition.”

The manager had spent months creating a list of corporate leadership competencies, so what I was saying didn’t go down very well, given the investment they had made. They wanted my group to just help people debrief a traditional 360 instrument.

We did that and it went pretty well, until it came to the CEO’s attention how poor the economic performance of the President of the USA Division was, so much that he was considering firing him.  The CEO requested a look at the 360 feedback done several months earlier and was shocked to discover that the manager had nailed the 360. It was as if he had straight A’s on every leadership behavior imaginable.

The CEO asked the Senior VP of HR, “How can you guys be presenting a 360 that emphasizes leadership behavior, with absolutely no connection whatsoever to business results?” The HR Sr VP was taken aback by this tongue lashing, and turned around and fired the HRD guy who was in charge of the 360 for incompetence.

The point is that the interview-based approach that we use at Masterful Coaching probably would have saved the HR manager’s job. It would have allowed us to do a deep dive and ask questions that plumbed the depth of people’s leadership ability and business performance.

Further, it would have given the President of the USA Division time to step back and reflect on what he was doing leadership-wise that would soon get him in trouble business-wise, and vice versa, before the “you know what” hit the fan.

The South African challenge has been to accelerate the capacity of the majority (80%) of its people who were denied access to educational and managerial opportunities. Empowerment practices have been legislated that have made it a national priority to develop people of African origin, previously denied a role in the economy.

This has often been met with resistance from certain quarters, but there is no doubt that it has stimulated the emergence of new talent, where it previously would not have been found. The acceleration of this talent is a national priority.

I recently read a consulting report that caught my eye. According to the report, by the year 2050, 97 percent of the 438 million people who join the global workforce will be from developing (emerging) economies. The workforce in developed countries will have shrunk by 11 million, while emerging economies will have grown by 1.7 billion people!

The implications and challenges for both economies are staggering, but let’s examine this from an emerging economy perspective, particularly the development of talent that will be a talent pool from which to draw globally.

Accelerating the Development of Talent in Emerging Markets
Fundamental to an accelerated leadership development program is the definition of “talent” for that organization. Equally urgent is a process to identify these talented individuals within the organizations.

I have found that the bulk of the development programes in different organizations are run as a one-size fits all, totally isolated from the strategic needs of the organization. For example, people may be chosen to attend an external training program for three months to learn about being a leader or gain new skills. However, this approach provides a low return on investment. People generally don’t as a result of this training, return to the workplace more capable of producing results or being an integral part of the leadership of a company, they return only more educated.

When I am brought into an organization, to ensure that the talent development program is aligned with a company’s strategy, I first work with the company leadership to understand what high performance is for that particular company. It could be specific leadership capabilities or skills, like having a strategic focus or providing outstanding customer service.

Using a 360 feedback tool that I have developed over years of working in the talent development arena, we firstly identify the high potential leaders to be put on a program of accelerated development. Secondly, we determine whether there are people in the organization who already own these technical or managerial skills who could act as mentors. Our method for assessing people enables us to look beyond any inappropriate management practices that may prevent a person from shining.

Coaching, a Significant Accelerator
Once high potentials are identified, we immerse them in a program that is designed to accelerate their development as leaders. The single most profound development approach I have uncovered in the acceleration process is the introduction of a 12-month, high intensity executive coaching programme, customised to the business strategy of the client organisation. This approach has shown significant shifts in both leadership behaviour as well as business performance over the period of their development coaching.

Emerging economies possess a powerful weapon, namely a wealth of potential talent. It is this talent that developed economies will be attracting in the future. It is therefore important that talent in emerging markets be identified and groomed to provide much needed leadership capacity not only in these emerging organisations, but also to create a reservoir of talent for developed economies in the future.

The approach used in an emerging economy for the identification of talent and their accelerated development is a complex, yet rewarding process. It requires an understanding of issues such as current legislation, the relevant organisation’s talent management philosophy and strategy, and involves collaborating with various stakeholders to ensure a truly value adding experience for the client organisation.

Future blogs will elaborate on this approach in greater depth.

(Michael Taylor is CEO of Xponential (Pty) Ltd an organisation consulting to global organisations. He is based in Johannesburg South Africa)

At the meeting, the board did not offer one word of acknowledgement for what had been achieved. The board members spent most of the meeting with grim faces trying to direct and control the CEO, shooting down the team’s proposals (based on scant information), and asking questions that made people feel stupid. The board members seemed to focus on what was wrong.

By the end of the meeting, the CEO and his team, who had been riding high, felt totally deflated by the interaction with the board. Every bit of passion, élan, entrepreneurship, initiative, artistry, valor, nerve, grit, originality, derring-do and hustle had left their once fully engaged minds and tired bodies. The CEO told me that the way these guys managed his team was “God awful” and declared, “I want to lead a revolution!”

Curiously, the members of the board were “good citizens” with sincere and honest intentions. They were simply doing what in their minds good managers do. Yet, they were part of a vast, unconscious, unwitting conspiracy to destroy every bit of aspiration and motivation that the people on this high-performing team had. The board members were unaware, and they were unaware that they were unaware.

Remember the old adage: Just putting a group of intelligent, successful individuals together in a room does not make for a brilliant team.

Masterful Coaching has a powerful coaching program that helps boards to become a high performance team, capable of supporting the CEO and leadership team to create an Impossible Future, while delivering on today’s requirements and demands.

Find out more about Masterful Coaching’s Program for Boards›››