Why Senior Leaders Fail: And How Training Can Help
By David Brookmire, Ph.D.
What happens to leaders when they ascend to powerful positions and their behaviors that may have been helpful to their rise in power become liabilities causing disastrous results? Business leaders promoted to senior positions have been known to abuse their powers and offices. Legendary examples include Ken Lay, former CEO of Enron, who committed accounting fraud in reporting of company earnings to pump up stock prices and enrich the entire team. Bernie Madoff created one of the largest Ponzi schemes in history, going to prison for his excesses and corruptions. Even Lee Scott, former CEO of Walmart, allegedly oversaw bribes to officials to remove barriers to the company’s growth in Mexico.
Why do senior leaders eventually fail, in part due to their poor decisions and competencies? More importantly, what can be done to prevent these derailments? The costs for CEO failures are devastating. In addition to huge financial costs, these failures often ruin companies’ reputations, shareholder values, families, public images, legacies, and much more. Researchers and authors Nat Stoddard and Claire Wyckoff estimated CEO failures cost the U.S. economy more than $14 billion per year, based on the cash outlays to departing CEOs, inefficiencies, and missed opportunities.
Often, the skills used to help leaders ascend rapidly in their companies eventually become liabilities. These “overused strengths” cause leaders to alienate their followers and even behave illegally.
Micromanagement, Arrogance, and Narcissism
For example, many leaders gain their position through their ability to perform at high levels and control their areas of responsibilities. They know every detail, make every major decision, approve every key investment, etc. As a first- and mid-level manager, this is tolerated by their followers and even expected. Their bosses can call on them to be reliable and get the work done in spite of obstacles and barriers they may encounter. However, when they take the top job and start to lead other vice presidents, this over-controlling behavior becomes micro-management, stunting team member development and dis-empowering followers.
Arrogance also can become a liability as senior leaders rise in their companies. In the early stages of their careers, arrogance may have been rewarded as a strength and positive quality. These leaders may take exception and speak out, portraying a high level of confidence that’s rewarded through promotions up the ranks. Eventually, if this is not toned down, the leader assumes a role where arrogance alienates his or her followers. If teams perceive the CEO to be a “know-it-all,” it often causes them to avoid this leader and not provide him or her with critical information to run the business. The CEO becomes unapproachable and unwilling to listen to others’ points of view and input, especially when counter to his or her own opinions and direction.
Another overused trait is to “over-index” on a leader’s narcissistic personality. These leaders may display a pension for results (especially when achieving these benchmarks benefits them directly). They exude confidence, and dominance. Their dark side comes out when they become overly confident and/or domineering. Narcissistic personalities tend to disregard others’ feedback, and start believing they can break the rules. Martha Stewart is a leader who seemed to be unable to gain control of her narcissism, thinking she was so powerful that she was “above” the law, and spent time in prison as a result.
Research also shows that new leaders, especially those hired from “the outside,” tend to fail within the first 18 months. Some estimates are between 50 percent and 70 percent fail to achieve their role’s expectations. There are a variety of reasons they fail (e.g., hostile leadership team, previous leadership behaviors no longer work in the new culture, they pick the wrong strategy, etc.), and this can be prevented with effective onboarding.
Additionally, most leaders have higher opinions of their effectiveness and the higher they go, the greater the gap between their self-assessment and reality. These blind spots can end up derailing leaders. Essentially, a blind spot is when others know something about you that you don’t know or are unwilling to see. For example, you could be alienating your followers by being too controlling, while at the same time believing you are effective. Until you ask for honest feedback about your leadership, you are not able to make any adjustments and changes. As they say, “Ignorance is bliss.” But for CEOs, ignorance can be your downfall.
Training Can Help
So, what can we do to help prevent these costly failures or at least decrease the failure rates for senior leaders? Training professionals should try the following:
- Improve selection and training practices. Training professionals can work with their HR counterparts in talent acquisition and improve the skills of those who are making selection decisions. Most senior leaders are assumed to be great teambuilders when, in fact, many don’t know how to select and develop great talent. Many leaders can effectively “ace” the interview, looking great on paper and being charming during the interview process. Go beyond these actions, implementing extensive reference checking, psychological assessments, and supplement interviews with external experts as you vet and select future company leaders. Many senior leaders use their often-limited experience and “gut” decision-making when hiring, leading to many selection errors. Put a more effective system in place.
- Implement new leader assimilation process and tools. Proven tools and processes have been shown to help new leaders successfully assimilate into their new roles. Help new leaders use the proven templates for success to create their own 100-day plans to ensure they can successfully assimilate into their new roles. A great resource is George Bradt’s book, “The New Leader’s 100-Day Action Plan: How to Take Charge, Build Your Team, and Get Immediate Results.”
- Use 360-degree surveys combined with coaching. A powerful method to help leaders identify their blind spots is the use of 360-degree surveys. When combined with executive coaching, the results can be more effective than classroom training for certain skills and behaviors. These assessments also can be effective in helping leaders calibrate their self-perceptions in comparison with what their teams and other key stakeholders perceive.
- Improve leader’s execution skills. Recognized as 21st century thought leaders on leadership, Ram Charan and Geoffrey Colvin (1999) outlined why CEOs fail, explaining that the biggest factors were poor execution and people selection and development. These fatal flaws are still relevant today. Many CEOs are terminated due to poor execution and failure to build strong teams (e.g., Carol Bartz, former Yahoo CEO, and Tony Hayward, former BP CEO). Use a variety of tools and skills development to help senior leader improve their effectiveness and get results through improved execution.
The skills that help leaders succeed—strength, confidence, and willingness to take risks—also can be their downfall. In moderation, these characteristics are important to any successful leader. But too much of a good thing can lead to problems. When CEOs become too confident, for instance, they can seem controlling. Trainers can play a key role in helping CEOs maximize their success and avoid—or improve—derailing behaviors. Remember, you can’t be a successful leader if no one will follow you.
David Brookmire, Ph.D., is an executive advisor, researcher, author, and authority in leadership effectiveness. He has successfully coached executives at companies including The Cheesecake Factory, Darden Restaurants, Bekaert, Mckesson, Flowers Foods, ADP, and Frito-Lay. Additionally, he offers strategic direction and proven solutions in building organizational capabilities, merger and acquisition success, and improved leader and team performance. For more information, visit www.cpstrat.com.