When the going is good, every CEO is a great CEO.
The market may be hot. Demand is high. Your company is going strong on the wave of a huge momentum. Revenues are good, profits are good.
Everyone is happy.
Employees are rewarded well. Investors are thrilled. The Board has no complaints. The CEO is also rewarded well. And in a way, he seems to have a Midas touch. Like nothing could go wrong.
But like in any relationship, the true test of the strength is when things are NOT going so well. Or when there is a crisis. Whether it is friends or family, whether it is a couple, or whether it is a case of a CEO, the real test of strength happens when we hit rough waters.
And to extend the analogy of relationships, finally the role of the CEO also boils down to the management of relationships – be it with his team (employees), investors of the company, partners and customers, the Board, his leadership team, etc. Managing these relationships right, on way to achieve best results for the organization is what essentially makes a great CEO.
Recent times are as big a crisis that any CEO would expect to see.
And while he basked in the sun, when the going was good, he has to now take the burden on his head, as times get tough.
Before we discuss what makes a great CEO under these circumstances, it is useful to appreciate two kinds of CEOs, who can be “successful”.
The first are the CEOs who run quarter-to-quarter, somehow getting the numbers, pleasing the board, keeping the investors happy. They may NOT necessarily keep the employees happy, they may not even have great relationships with partners, and they might see a constant churn on their customers, as they could easily aim to cut corners, to make the financials look good. They are probably driven by incentives for themselves, which they get, just to keep meeting quarterly numbers.
These are CEOs with relatively shorter vision on the business, and they want to ensure their own fortunes are assured. They are successful in the short run, but not investing in the core fundamentals of the business, chances are that they may not create a lasting impact on the organization.
The other type of CEOs, who are also successful, are the ones who are clearly focused on creating legacies out of the organizations they lead. And if you had to ask anyone to name who they think of as the greatest CEOs, the names that are most likely to come, are those types of CEOs who had long runs with companies and created significant and lasting impact. These are the CEOs who are invested into a long-term future of the company, and who will ensure that all stakeholders and all aspects of the business are thought through, when taking difficult decisions.
So, when speaking of what makes a great CEO, we will look at this latter type, the kind that are invested into the long-term value creation for the business.
For such CEOs, during crisis like the present times, the challenges are many. There is a need to keep the business afloat, at a time when perhaps factories are closed, maybe stores are not operational, offices are running at low capacity, people are not stepping out of homes, etc. So, there may be revenue challenges, HR challenges, market challenges, and while at the same time, there is a need to handle all of the different stakeholders of the business.
Tough decisions become the need of the hour, e.g. salary cuts or maybe reduction of team size, or maybe renegotiating contracts at different terms, with long running clients, or perhaps skipping dividends to conserve cash, and disappointing investors. But these need to be done. At the same time, there is a need to keep a reasonably positive mood with the stakeholders. The last thing that a company or a CEO needs is to have a pensive and worrisome mood across the organization. There is a simultaneous need to support employees and maybe clients, who are going through a rough patch, or even a vendor or an agency partner, who may be in more trouble.
What it boils down in terms of a number one requirement of the CEO, is the idea of “balance”.
- Balance between empathy and toughness, as one grapples the employees’ situation. The CEO needs to think about the best interests of the employees and support as best as he can, but at the same time, if there are hard calls to be taken, in order to survive for the longer run, those need to be taken as well,
- Balance between maintaining optimism and yet being a realist, in regard to the challenges on hand. It would not be right to present an overly rosy picture to any stakeholders, when the future is clearly hazy still. And yet, painting too much of a depressive picture can cause excessive anxiety and impact performance from people. Finding and communicating the right balance is essential.
- Balance between conserving cash and investing into desired areas, even during a crisis. If one gets excessively defensive, and only cuts costs across the board, chances are that you leave yourself with no opportunities to dig out of the ground. So, while times do demand a sharp view on minimizing costs, however, there needs to continue to be the relevant, result-oriented certain investments done, that can deliver results and help in bringing the business back to a steady keel.
- Balance between over-communicating and not communicating at all. As the business maneuvers over months of tough period, the various stakeholders, be it employees, clients, investors, your Board, all of them want to be aware of how the business is coping with things, and what impact is being created. So, communication is essential. To all your stakeholders. But a CEO cannot also be over-communicating and must find the right balance here as well.
- Balance between thinking out of the box and staying on familiar course. A challenge of unprecedented proportions would need new solutions. Perhaps unconventional ones. And a CEO may want to think out-of-the-box to reach there. However, those kinds of efforts also come with their due levels of risks, and which could impact the health of the business. The need for the CEO is again to find the right balance between thinking out of the box, while ensuring that those thoughts are not exposing the business to very sharp risks, in the event of those ideas not working out well enough.
These are few examples of what a great CEO needs to do, especially at a time of deep challenge, as current pandemic period is. This is a time when the CEO is fully tested for all his knowledge, all of his experience, all of his soft skills, his IQ and his EQ, all of his MBA learnings or whatever else that he is trained for. And with all that ammunition, he is still straddling the thin rope walk across two skyscrapers, with potentially no safety-net below. Great balance on approach, as much as a balanced head that he will always need to keep, will see him make the distance. And come out on top.
And that is what makes a great CEO.