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CEO LEADERSHIP GAPS
in Troubled Companies
BY MICHAEL J. MUSSO, MANAGING DIRECTOR, CONWAY MACKENZIE INC.
return on investment (risk), why the
company does the work that it does
(core purpose), and the company’s
financial returns (stakeholder value).
The CEO ultimately defines the
trajectory of a company. It is
very difficult for a company to
overcome the long-term impact of
an underperforming CEO. Given
the stakes attached to this critically
defining leadership position, how
does one recognize the warning
signs of a leadership gap?
It’s actually easier than it might
seem, and the answers are not to be
found on the balance sheet or cash
flow statement. Rather, it boils down
to the simple word “trust.” Does the
CEO have effective engagement from
and relationships with employees?
Do these relationships instill
the trust that ultimately enables
the CEO and his or her team to
influence and inspire? If this sounds
parental, that’s because in many
ways there is a definite and distinct
correlation. Teenagers don’t listen to
parents for very long if they have a
broken or nonexistent relationship.
Employees tune out their leaders
for the exact same reasons.
So, what are the warning signs of
an ineffective CEO? Here are a few.
Turnover. Is the company
experiencing a revolving door of
employees coming and going?
While hiring is never an exact
science, ongoing turnover can be
tied directly to gaps in culture and,
ultimately, leadership. The CEO
sparks engagement and sets the
tone. Employees need to see that
they fit into a culture that they value
and trust. Compensation is always
important, but effective leadership
leads to workforce stability even
when compensation may not.
Communication Gaps. Is the
message of what is expected of
employees and how everyone gets
there as a team being communicated
One consistent theme can be found playing out in virtually every troubled
and underperforming company:
a sustained gap in effective
leadership by the CEO.
Throughout the life cycle of a
business, normal ebbs and flows of
both prosperity and challenges are
natural. Businesses are continually
impacted by internal and external
forces, and many may be out of
management’s control. But the
difference between successful
and not so successful navigation
of these waters lies in the hands
of the company’s leadership—
particularly those of the CEO.
Why is a CEO so important to an
organization? Simply put, he or she
determines what the organization
works on (strategy), who is selected
to do the work and how it is rewarded
(talent and reward/recognition),
the environment in which the work
is done (culture), what bets the
company makes and at what target