Watch That Next Step (CEO Problems) (Ed Batista)

Ladder

Most of my coaching clients are CEOs, and while almost all of them have previous leadership experience, for some of them it's their first time at the very top of an org chart. As they've grown into more senior roles over the course of their career, they've come to expect that things will be different at the next level up--but they can still be surprised by how different the role of CEO can be from other leadership positions. Even my clients who've had experience as a #2--as COO, for example--often discover that leadership at the next level brings unexpected challenges.

What should first-time CEOs anticipate? And how can they be better prepared for the demands they're likely to face? Three dynamics that show up repeatedly in my practice are More Scrutiny, Less Feedback, and Very Little Empathy:

1. More Scrutiny

It’s not surprising that being a CEO results in more scrutiny—most leaders are used to operating under a spotlight that’s become more intense as they’ve grown more senior. But what can be surprising is that the spotlight blazing on a CEO almost never turns off. Leaders expect to be observed and assessed during key performances—giving a big speech, or running a critical meeting. But CEOs find that nearly every single interaction is now a key performance, and the people on the other side of the exchange will be carefully scrutinizing all aspects of their communication, from word choice to facial expressions.

This has less to do with the individual who holds the job, and more to do with the symbolic function that the job serves in business culture. Even as organizations have grown flatter and concepts such as “servant leadership” have gained currency, the role of CEO continues to loom large in the collective imagination. This can be particularly surprising to first-time CEOs who feel that their own behavior hasn’t changed, but the behavior of those around them has. It’s important for CEOs to bear in mind that people aren’t merely responding to them as an individual—they’re responding as much, if not more, to the role.

The heightened scrutiny CEOs encounter is also a function of several psychological dynamics. When we encounter someone we perceive as higher status or more socially distant from us, we’re more likely to experience a threat response, commonly called a "fight, flight, or freeze" response. [1] In these situations our brains and body react just as if we’re facing a literal threat to our physical safety. We feel a heightened sense of vigilance and scan the environment seeking clues to help us determine the degree of danger. We also tend to be distressed whenever we don’t fully understand another person’s behavior, so we rapidly construct a narrative to explain it. [2] Our brains are essentially making a bet that having some sort of explanation, even one based on the scantiest of evidence, is preferable to having no explanation at all. As a result, most of the people a CEO encounters will be constantly assessing them, seeking to determine whether or not they pose a threat and trying to make sense of their behavior.

There are several consequences of this process that CEOs need to be mindful of and can take steps to address. First, recognize that every interaction, formal and informal, is likely to feel significant to the other party and that they will invest it with meaning. Successfully navigating an endless series of such interactions requires being attuned to others’ perceptions and responding in a way that is both authentic and sustainable--a difficult balance to maintain. Adopting a patently insincere persona is no solution, but some degree of self-monitoring is necessary, both to connect effectively with others and to manage the expenditure of energy that such connection requires. [3]

CEOs should anticipate that many of the people they encounter will be more likely to feel intimidated, anxious and even distressed in their presence. This isn’t necessarily counterproductive—most leaders will experience situations when the ability to evoke such feelings is a useful skill. But it’s never desirable to do so inadvertently, and CEOs need to realize there’s often a large gap between the intentions behind their actions and the impact on others. Insuring alignment between intentions and impact requires an increased sensitivity to others’ emotional responses and the ability to finely regulate one’s own behavior.

Also, expect that people will seize on scraps of information about the CEO’s preferences and will immediately create an explanatory narrative to dispel any uncertainties regarding the CEO’s behavior. This can easily result in gross distortions and misunderstandings that would be comical if they didn’t have such serious consequences. It’s incumbent on CEOs to be aware of the resulting potential for miscommunication and the likelihood that subtleties and nuances will often be lost in translation. [4] This isn’t to say that CEOs should always be clear and explicit—there is often strategic value in ambiguity—but any vagueness in communication should be intentional, not accidental.

Finally, because CEOs are the objects of constant scrutiny they need to construct some sheltered spaces--both literal and psychological--in which they can interact, reflect, and simply be themselves without being under the spotlight. [5] It’s worth noting how difficult this can be in a culture of open offices and visible calendars. While the transparency supported by these conditions has its advantages, it can also have significant drawbacks for leaders. Claiming a personal office or making one’s calendar inaccessible may feel too counter-cultural, particularly if the organization prides itself on its openness, but CEOs should anticipate a need for increased privacy at times, and it may be necessary to create some alternative options within the culture to meet this need.

2. Less Feedback

After earning my MBA I was hired to head up a new organization, and the best advice I got came from a member of my board of directors: “Don’t expect the board to be responsible for your development. We’re not your managers.” My board was supportive, but the nature of the relationship was fundamentally different than that which I’d had with leaders in the past when I’d been a #2, and the biggest change was the absence of feedback.

This isn’t to say that CEOs receive no feedback at all from board members or investors, but it’s shaped by the nature of the relationship. These stakeholders may care more about the success of the venture—appropriately so—than they do about the success of the individual CEO, so their feedback has to be viewed through that lens. And there are simply fewer opportunities to deliver such feedback, so it’s often provided in rushed conversations with little context.

CEOs do receive a significant amount of indirect feedback from external sources—there are many sources of data that serve as indicators of their performance. Effectiveness in raising capital, closing large customers, and hiring top candidates for senior roles are some of the metrics my clients use to assess how they’re doing as leaders. But a CEO will rarely get any direct feedback on their performance from these sources, particularly when things go badly. Investors who take a pass, customers who choose a competitor, and candidates who decline an offer are great sources of developmental feedback for a CEO in theory, but there are minimal incentives for them to actually deliver such feedback in practice.

This leaves employees, and here CEOs face the dilemma of how to encourage people to speak candidly to someone who has the power to fire them. CEOs can look to hire strong execs who are willing to be direct, but even the most forthright individuals will be highly influenced by the environment, so it’s essential to build a feedback-rich culture. [6] The most effective, yet often most daunting, step in this process for a CEO is simply to ask their exec team for feedback. Sometimes these conversations are best had one-on-one, but in those settings the power differential will often limit the other person’s candor. If a CEO wants to hear the feedback that will likely be most useful for their continued development, they have to establish a culture among the exec team that will allow them to have this conversation as a group.

This is very difficult to accomplish, and I’m not suggesting otherwise. Companies frequently respond to this difficulty by undertaking a 360-degree review for the CEO and holding confidential interviews with the members of the exec team. This process generates candid feedback for the CEO, but it's also fraught with problems. [7] Such reviews often serve to absolve the exec team of responsibility for the problems they face and treat the CEO as if he or she could act unilaterally to solve them, which is rarely the case. I no longer conduct 360 reviews for my clients and instead focus on working with them to develop the interpersonal skills and cultural environment necessary to have more candid conversations, both one-on-one and with their entire team. (My colleague Dan Oestreich has some excellent advice on how to make 360 reviews for leaders more effective.) [8]

3. Very Little Empathy

Nobody cares about a CEO’s problems. That’s not entirely true, but it’s often how it feels. Board members and investors want to be helpful, but even when these relationships are relatively open and trusting, CEOs are understandably reluctant to share personal challenges too candidly, creating a barrier to real empathy. Friends and family members care deeply, but they may lack the expertise to be truly helpful thought partners—and at times they can get tired of listening before the CEO is ready to stop talking about work.

Execs and employees are well-informed about the business and usually happy to talk at great length with their CEO. But people are generally unreceptive to hearing about the difficulties faced by those in positions of power over them because it's so hard to empathize up. [9] So although CEOs need to establish more open dialogues with execs and employees to obtain candid feedback, as discussed above, they also need to be cautious about expressing personal frustrations in these conversations. Yielding to this temptation can create a sense of interpersonal distance, as the employee may feel obligated to agree with the CEO’s grievances without truly empathizing with them, and what had been an increasingly frank relationship becomes a ritual performance. I’m not suggesting that leaders should fake a stoic or cheerful attitude, but expectations of empathy from employees must be tempered.

Yet empathy is a deeply human need, and no leader is immune. Of great relevance here is the work of Brené Brown, a professor at the University of Houston whose research is focused on the topics of shame, empathy, and vulnerability. [10] We often experience some form of shame at work as a result of setbacks and mistakes, ranging from mild embarrassment to much deeper, more difficult feelings, and CEOs are no exception. Empathy from others is critically important in allowing us to work through these emotions and move ahead productively—Brown describes empathy as the antidote to shame.

The essential factor that triggers empathy is an expression of vulnerability. Leaders wrestle with feelings of vulnerability constantly, but they’ve been conditioned to hide these feelings for fear of being perceived as weak. There is justification for this response—as Stanford professors Jeff Pfeffer and Bob Sutton have noted, "When leaders talk and act as if they are in control…changes are attributed to the leaders. The leaders believe they actually helped shape these changes, which gives them added confidence to…talk and act even more persuasively. Confidence thus becomes self-fulfilling, setting in motion behaviors that in fact make things better, whereby the leaders’ confidence is justified." [11]

So what’s the solution? First, CEOs need to develop the difficult skill of expressing vulnerability strategically. If this sounds paradoxical, it’s because we misunderstand the nature of vulnerability. We assume that it’s an all-or-nothing proposition, or we associate it with extreme forms of emotional expression, such as uncontrollable tears. In actuality, vulnerability is highly relative and can be expressed through a vast range of well-regulated behaviors. For example, with a board member or an investor it may be sufficient for a CEO to simply express a degree of uncertainty in a slightly more emotionally expressive tone; there’s no need (nor would it be helpful) to share every single doubt or their deepest anxieties.

CEOs also have to cultivate a set of relationships that are free from the inherent conflicts described above. They need people in their lives who care about their personal success and fulfillment without being attached to any particular outcome--and note that board members, investors, family and employees may all have diverging interests in this regard. One way I describe this to clients is to construct a "coaching team"--a network of people whose interests are aligned with theirs, who are readily accessible when needed, and who are capable of having a coaching conversation (as opposed to simply dispensing advice). I can certainly play a role as a member of that team, but other relationships will likely be needed. In some cases these are more formal arrangements--a group of fellow CEOs that meets regularly, for example—but that’s not necessary. The key is recognizing that past sources of support and empathy are likely to be insufficient and a more proactive approach is now required.