by Tim Clouting
I’ve been running Boardroom lunches for the last three years and one of the common themes that has consistently emerged is that the role of the CEO, or Chairman is unique and becoming more challenging.
A recent article I read highlighted that two-thirds of newly appointed CEOs felt under-prepared for the role, the personal transformation required, the accountability, the isolation and the physical or mental demands of the role as the pace and volatility of change quickens.
While it’s clear there are great potential upsides to being a CEO, a high proportion of CEOs commented that the role differed to what they had expected – with one commenting “The major emotions of a CEO are typically frustration, disappointment, irritation, and feeling overwhelmed”. With those comments as the context, we asked our guests whether they agreed and what they found to be the most challenging aspects of the role.
Becoming a CEO
One serial Chairman encapsulated it nicely with a piece of advice he received on assuming his first CEO role – “Perhaps the best day of your life is being made CEO. The second best is when you step down”. This succinctly defines the roller-coaster ride, highs and the lows of the all-encompassing role of being a CEO today.
In a recent article on the psychology of being a CEO, one founder commented, “If you don’t like choosing between horrible and cataclysmic, don’t become CEO”. While he was talking more about being a CEO of a start-up, which places special demands on a founder, it’s insight that broadly applies to all CEOs, no matter the size of the business.
Nobody sets out to be a bad CEO, run a dysfunctional organisation, or create a massive bureaucracy that grinds their company to a screeching halt. Yet no CEO ever has a smooth path to a great company. Along the way, many things will go wrong.
It’s lonely at the top
Otis Redding, while sitting on the dock of the bay, once sang the famous line “And this loneliness won’t leave me alone”. He might have been serenading the modern-day CEO.
As we discussed the loneliness of the role, a guest also felt it important to have some level of remoteness from the team. He talked about the importance of being brave and bold in your strategy, and how early on in his tenure as CEO, he doubted his own judgement as he adjusted to the demands of the role. He soon realised that he was promoted into the role for a reason and had been employed not only for his personality and skill-set but also his judgement. He wished he’d been bolder and braver sooner.
Several guests talked about the need to “make some friends”, people whose judgement you trust and ideally who have previously been through similar situations. Although it was nearly impossible to get high-quality advice on some of the tough decisions that you have to make as the knowledge gap between you was often quite vast, it’s still extremely useful from a psychological perspective to talk to people who have been through similarly challenging decisions. While circumstances prevented always having this dynamic between a Chairman and CEO, there were mentors and close advisors or friends who could help the CEO feel less lonely.
Someone felt that the best way to counter the isolating demands of the role was to build an exceptional team around you by hiring outstanding talent, all better in their respective functional areas then you were. While external, and many internal situations, demanded the CEO give the air of omniscience within the confines of the boardroom it was important that strategic challenges could be openly debated and discussed.
The founder of another organisation talked about how he’d never found the role of CEO especially lonely until recently. Even though his business continued to go from strength to strength, the fact that competitors were falling by the wayside, some going bust or entering CVA’s, made him constantly question his own strategy and whether there were things they should be doing more of or less of, and whether he was blindly walking in to some crisis that he was not yet aware of.
Adjusting to the role
Another theme that came up was about the importance of developing outside interests, to ensure that there was an opportunity for some downtime where you weren’t plugged into the day-job. An attendee spoke of having lived a 24/7/365 existence in the first years of growing his business, his only interests revolved around work and family to the exclusion of everything else. There was no time for hobbies, no time for friends, no social life as the demands of the job were all consuming. While this was necessary at the time to ensure that the business achieved the required momentum to flourish, it was a solitary existence and not one ultimately sustainable in living a long-term, balanced life. He’d recently taken up surfing, something that he could physically throw himself in to, which not only helped with levels of fitness and well-being but also caused his mind to switch off from the office and helped “quieten the noise”. It also allowed him to regain his personal energy and while he sometimes felt he was “bunking off”, he also knew that this small pocket of time was an important aspect of him becoming a better leader, father and husband.
For those of you going through tough and challenging times, the CEO of a FTSE business discussed how the role of CEO didn’t necessarily become easier, but you learned to adjust and enjoy, the demands of the role. While the role of CEO was not always pleasant, it could, however, be enormously satisfying. He’d previously held the reigns when the organisation was going through a perfect storm of challenges. While he wouldn’t want to necessarily repeat the experience, and with the benefit of hindsight, he learned a huge amount during this period – much more so than when the business was performing well. He stuck to the task at hand, persisted through the darkest and bleakest of periods and he lived to tell the tale, becoming a much more capable and rounded CEO because of it. He commented that in periods of success and growth, you rarely pause to reflect and “think”, as you’re on autopilot to some degree. He felt that you learn more about yourself, the team and organisation during periods of adversity, so while not enjoyable, they can be ultimately more rewarding.
Another serial CEO felt that the role did become easier over time, albeit the challenges are coming thicker and faster than ever before, he therefore also preached the importance of stakeholder alignment between the investor, chairman, and CEO. The job of CEO was tough enough as it was, without the distraction of egos to massage or competing agendas to build into the mix.
One guest talked about was the importance of alignment, not only between a CEO and Chairman but between CEO, Chairman, and the investors/shareholders. The board must be aligned between what the organisation wants to achieve and how it is going to go about achieving it. If the investors or shareholders aren’t aligned behind the strategy, goals, and activities, then much-needed energy and focus got sucked into the wrong areas. At different times of an organisation’s journey, the make-up of the board needs to change and the share register needs to adapt as the organisation goes through different phases of growth or change.
One guest talked how in the world of private equity, in an ideal world, the Chairman, CEO and investor will all be completely aligned on the strategy for any potential acquisition, prior to a deal being done. While it didn’t always work in practice, given that CEOs and Chairman sometimes change when new investors come in, it can be value-destroying to have any of that triumvirate disagreeing on direction. Ditto in terms of values, culture or management philosophy. While you didn’t want a board to create an echo-chamber of mutual appreciation or acceptance to ideas, neither did you want competing agendas or different fundamental values.
The importance of creating a strong board dynamic was discussed. If the board is dysfunctional or does not challenge the status quo, if there isn’t an environment where people can be openly challenged, prodded and probed, then it will start to erode performance quickly. The CEO or senior team can start to believe their own hype, ideas are not challenged robustly, innovation starts to weaken, and the business can easily start the slow slip to mediocrity. Chemistry is incredibly important.
One serial Chairman talked about the fact that while the board obviously fulfill an important role in terms of governance and debate, it should also still be fun. He said if his boards don’t collapse in laughter at least three times during the day, the dynamic isn’t right. It doesn’t mean the role of NED or Chairman isn’t stressful or challenging, but it can still be fun.
When asking whether the role of Chairman had become more challenging over the last 10 years, one guest commented that he didn’t think the core role of the Chairman had become any different. Certainly, the increased level of governance, particularly around audit and remco, were discussed in much greater depth albeit those debates remained in their respective committees. He still felt that the core role of the Chairman was to foster the right environment around the board table and achieve a challenging, open dynamic, underpinned by trust – so that CEOs or functional leaders were comfortable to discuss challenges or disasters as they happened, and did not seek to cover them up. As far as possible, he changed the NEDs on his board to suit the different phases and challenges that the organisation came up against, choosing low-ego and talented experts who could add real value in challenging the status quo.
In terms of assuming the CEO role of a listed organisation, one guest commented that you will be never be totally prepared for the demands of the role. Accepting that you will be far out of your comfort zone, have a lot to learn and don’t have the answer to every question, can go some way to easing the transition. You had to accept it was going to be a roller-coaster ride with moments of intense self-doubt and stress.
Whenever I meet a successful CEO, I ask them how they did it. They all say “I didn’t quit.” Sometimes, particularly if there is a disconnect between values, the role of a CEO becomes untenable. Outside of that, while stressful, overwhelming and hugely frustrating at times, the role of CEO was also extremely satisfying and fulfilling. Like parenting, no matter how much you study it, observe it in others, ask for advice, prepare for it or convince yourself you’re ready for it – there is simply no substitute for doing it.
Few of us look for discomfort and the journey of a CEO is always harder than expected. Is it worth it? Same as being a parent. Of course it is, if it’s who you are and what you want to do. Just keep going seems to be the message.