Dawn of a New Decade -- Rise of the Hero CEO
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Last year saw an exorbitant number of CEOs leave their posts -- some by choice, others were simply shown the door. In fact, more than 1600 CEOs left their c-suite position, according to executive coaching firm, Challenger, Gray & Christmas. The executive turnover was 8 percent higher from November to December 2019 alone, making it the second-highest monthly total since 2002.
According to the report, the government and non-profit sectors led the CEO turnover rates with 339, an increase of 25 percent compared to 2018. The technology sector followed with 216 CEOs changing positions, up 42 percent from the previous year. Financial companies and energy companies also saw an increase in departures, whereas hospitals actually saw a decrease -- a 13 percent drop from the year prior.
To what can we attribute the exodus? A number of factors, actually.
The era of #MeToo
With the rise of #MeToo, more people are taking notice of bad behavior and are not willing to sweep it under the rug anymore. Companies are looking at being more transparent, but are we doing enough? It doesn’t seem to be the case. A survey by Have Her Back Consulting revealed that 42 percent of women reported nothing had been done to address harassment in the workplace.
While these numbers aren’t wowing anyone, change has to start somewhere. The public has become more vocal about what’s acceptable and what’s not. Companies are talking the talk, but not fully walking the walk …yet. The implementation of preventive measures has been slower than expected and, in order to foster a culture of equality and fairness, executive leaders need to speed up the process and set the tone. The HHB survey found that 53 percent agree with the following statement: “my company/employer has talked the talk since #MeToo, but I don’t see them walking the walk.”
Everyone from CEOs to stakeholders is aware of the impact a potential boycott can have on their bottom line, so that fear is very much present in their day-to-day operations. A study published by the Administrative Science Quarterly examines the effect boycotts can have on a company. The study found that instead of distancing themselves from the controversy, companies tend to become more involved in social or political messaging.
That’s definitely a change from years past when companies avoided getting political at all costs.
Awareness of change
While many can agree that the shift isn’t happening fast enough, it is important that we remember that Rome wasn’t built in a day.
Last year, 15 CEOs were shown the door after allegations of professional misconduct, including the former CEO of McDonald’s, Steve Easterbrook. Twenty left their posts for financial wrongdoing or other legal issues, and 24 saw their positions eliminated. The movement also showed the door to long-time executives such as CBS’s Les Moonves, casino magnate Steve Wynn, and Intel’s chief Brian Krzanich.
After the chaos, comes the cleanup.
In the case of McDonald’s, their new CEO Chris Kempczinski has been working to restore a more professional culture throughout the company. He rolled up his sleeves and started meeting with his executive peers, stakeholders, and employees at every level to gather feedback on how he could help restore the company’s reputation. More than 1,000 employees gave their feedback, which helped him forge the plan for the coming year. Read the letter he sent to the “McGlobal Family.”
Let’s hear it for a leader who is willing to take the licks, acknowledge the mistakes of the past, and set to work to shift gears and right the ship. That’s what hero leadership is -- it’s about creating a place where people enjoy coming to work every day. It’s about putting the people who make your business run first, and it’s about empowering those same people to come to their leadership when something is broken. The culture of fear and c-suite isolation needs to end.
I don’t know if Kempczinki’s tenure as the CEO of a multi-global company will be a long one, but I know he’s doing the right thing to turn things around.
Fear of recession
Despite the economy being seemingly robust right now, fears of a recession aren't far from the minds of many c-suite executives. In fact, a recession is the top concern executives have, according to a survey from the business research group Conference Board. The trade uncertainties, political instability, and more intense competition from disruptive technologies contribute to the CEO exodus.
Last year, the GDP went down .7 percent, from 3 percent, and everyone is feeling the pressure to continue to deliver. However, the current strong economy is also creating a level of optimism that is permeating straight through the c-suite. Other studies suggest a strong correlation between GDP and CEO turnover; however, the majority of the turnover has been voluntary.
CEOs have a different perspective on the economy based on their position alone. As a result, many feel comfortable enough to retire on a high note, not just financially, but professionally fulfilled as well.
While top of mind, a recession isn’t an immediate detractor for CEOs to seek greener pastures.
Corporate boards are more vigilant of executive behavior
The era of permissiveness and aloofness seems to be over. Consumers are very clear about not hesitating to ditch a brand if they stray from the values they seem to publicly espouse. The word “boycott” still has the power to send shockwaves through corporate America, especially if it garners enough media attention. Some experts argue that while boycotts don’t make a big dent on the bottom line, it can cause stock prices to go down, especially when it’s a public company that gets considerable amounts of media attention and scrutiny. Do companies want to take that chance?
Stakeholders have taken on a bigger, more active role in keeping track of what their executives are doing. Their primary responsibility is to protect the shareholders’ assets, ensure they receive a decent return on their investment and make fiduciary decisions on behalf of shareholders. As a result, anything that can affect their bottom line is something they will be actively interested in.
But, what can leaders do to turn the corner?
You have to be very clear where you stand. Standing up for what you truly value is what hero leadership is all about. It’s steering the ship full steam ahead. Hero leaders live up to their values, hold themselves responsible and accountable to those same values every single day, create a culture that reflects those values, and are willing to learn from others without thinking that new knowledge undermines what they already believe.
Great leaders aren’t afraid to pivot when something isn’t working. You, as a leader, have to empower your employees to come to you with any discrepancy or deviation of company norms that threatens your values. There has to be an open-door policy in place if you want employees to help you build a culture of acceptance, equality, and prosperity.
Have the courage to stand for your values while maintaining a firm stance of what’s right, what’s decent, and what’s best for your business. Sweeping bad behavior under the rug only heightens the scrutiny once it all comes out in the open. In the end, it always comes out! Don’t be a follower, be a leader! Be a HERO leader.