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Tips to become a good CEO
Shyamal Majumdar | December 14, 2006
A senior VP of a leading consumer electronics firm had everything going for him: a fast-track career and an attractive compensation package. What went wrong?
The executive, who is now on his own, says the CEO was particularly fond of calling sudden "important" meetings on Sundays. When the CEO called him for one such meeting, the executive said he would be unable to attend it this time as he had to go to Pune for a family wedding.
The CEO's remarks, however, helped him to make up his mind to quit: "As far as I know, the office has given you two cars. Ask your family to take one of them to Pune. You can surely come to office in the other car."
The executive says he didn't mind the Sunday meeting as senior executives were anyway supposed to be on the job 24x7, but he simply couldn't take the CEO's sheer lack of concern for colleagues. "It's as if he was talking to a machine. I refused to work with a bully like him who sees everything from his own perspective," he says.
Though there are many like him who resent the CEO's autocratic style of functioning and have quit, the consumer durables company is doing quite well, maintaining its leadership in the marketplace. Which raises the dilemma that companies are facing: do they go for a democratic style of leadership or one that centralises leadership too much but delivers results.
Supporters of the latter kind of leadership model say what matters ultimately is whether the company is delivering value to its shareholders. These kinds of leaders stretch people and ask for a lot. So while weak performers usually wish these bosses would go away, people who want to win seek them out.
Supporters of a more relaxed kind of leadership, however, say modern companies have no option but to go for what Peter Drucker wrote decades ago - that the days of bosses standing over the backs of factory workers is over and that workers must be given autonomy. They are not to be bossed but conducted like orchestras.
There is no denying that autocratic leaders get results, often great results. But things work only till something goes wrong. Corporate history is replete with such examples.
Take HP's Carly Fiorina, for instance. When she took the helm of HP in 1999, the company held the 10th spot on Fortune's annual survey of top corporate cultures.
After that, HP started slipping down the list every year with the worst setback coming in 2004 when it failed to make the cut at all. A consultant appointed by the company to find out what went wrong came up with a one-line answer: "Fear loves this place."
Something must have gone horribly wrong for a company that was once celebrated for the "HP Way" - creating an open workspace broken up by small cubicles to encourage communication between workers, and pioneering the concept of profit sharing.
The reason, say experts, was that Fiorina tried to make it too much of a one-woman show.
The self-confidence that helped take her to the top of the corporate world also got in the way of her taking advice and suggestions. As a result, when she was asked to go, Fiorina left behind a weak senior management and no obvious internal successor.
Or, take the resignation of Morgan Stanley's CEO, the high profile Phillip Purcell. Even his formidable track record couldn't save him as his regime saw an exodus of top people who felt Purcell was intolerant of dissent and had little time for his frontline staff.
Purcell's style of heavily centralised leadership was a culture shock for Morgan, which was used to an environment where anybody could walk into the boss's office and disagree with a decision.
Robert Crandall of American Airlines is another example of the so-called tough boss. Crandall who had a huge temper was tolerated as long as the going was good. But when things started turning bad, the workers took their revenge and called an indefinite strike that crippled the airline and exposed the weakness of what is now known as "remote leadership" - leaders who have no tolerance for dissent or even argument, who like to be surrounded with only yes men and women and who have little contact with the rank and file.
The biggest problem is that purely autocratic leaders ultimately become bottlenecks because people learn that the best survival skill is to ask the boss first before making a decision. People learn to wait for directives from the boss, or worse, they become terrified about making the wrong decision.
But HR experts say this should not mean that leadership is some kind of popularity contest and a distinction must be made between autocratic bosses and tough bosses.
While autocratic bosses live in splendid isolation, tough bosses like GE's Jack Welch didn't. They set clear, challenging goals and connect those goals with specific expectations.More importantly, they are also relentlessly candid, letting everyone know where they stand and how the business is doing. Which means a democratic boss can be a tough boss too.