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3 Costly Mistakes CEOs Make When They Fail Their Company Culture Company culture can make (or break) your company — yet, CEOs continue to make these three mistakes that could cost them the ultimate price.

By Ana Reed Edited by Maria Bailey

Opinions expressed by Entrepreneur contributors are their own.

The job of a CEO has never been more difficult. There is an unprecedented amount of pressure on CEOs to navigate their businesses through difficult and uncertain times. For many CEOs, they have reached a breaking point. They have failed to reinvent their companies, they face insurmountable reputation problems, or at worst, they are facing insolvency. Many CEOs succumb to this pressure — losing sight of the priorities that matter most. Company culture is one of those overlooked priorities.

We've all heard the saying, "culture eats strategy for breakfast." For those who haven't, the saying highlights the critical role of organizational culture in achieving business success. It implies that even the best-laid plans and strategies can fail if the organization's culture is not aligned with its goals and values. For CEOs, this saying highlights the need to prioritize and invest in building a strong and positive culture that enables the organization to execute its strategy effectively.

So why do many CEOs not take company culture seriously? Too often, CEOs see culture as a set of initiatives that are overly "soft" and not a business priority next to other important issues such as growth, mergers and acquisition, product development or business performance.

Below, we explore three common ways CEOs fail their company culture and ways they need to overcome them.

Related: 7 Reasons Why Creating the Right Culture Should Be a Leader's Top Priority

They become performative leaders rather than conscious leaders

It's amazing how many CEOs lead their organizations for glory and status only. This type of performative leadership is what can hurt an organization's culture. Performative leadership focuses on the appearance of leadership rather than people and results. It is characterized by a leader who prioritizes their own image and ego over the needs of the organization and its stakeholders. This style of leadership is often criticized for being superficial and lacking substance, and may ultimately be detrimental to the success of the organization.

On the contrary, conscious leadership is an approach to leadership that emphasizes self-awareness, empathy and a commitment to ethical and sustainable business practices. By being a conscious leader, it means the CEO is prioritizing people and values and is striving to create a positive work environment that fosters employee engagement, innovation and collaboration. To be a conscious leader, a CEO needs to be driven by a sense of purpose and seek to create long-term value for all stakeholders, including employees, customers and the broader community. By practicing conscious leadership, CEOs can build trust and loyalty among employees, drive business success and contribute to a more sustainable and just world.

Here are three top tips for being a more conscious leader:

  1. Practice self-reflection and awareness: Awareness is the cornerstone of great leadership. A conscious leader should regularly reflect on their own actions, biases and decision-making processes to identify areas for growth and improvement. This can involve seeking feedback from colleagues, engaging in mindfulness practices or even journalling.
  2. Empathy and emotional intelligence: Leaders can cultivate empathy and emotional intelligence by actively listening to their team members, considering different perspectives and prioritizing the wellbeing of their team. This can involve creating a culture of psychological safety where employees feel comfortable sharing their thoughts and feelings.
  3. Know when to make decisions from the head, heart or gut: CEOs face multiple decisions every day, and too many of these decisions are often head-based, meaning they are analytic or rational. While making rational, head-based decisions is important in business, it is also important for CEOs to know when to make intuitive gut-based decisions, or emotional 'heart-based decisions, even when the logic or rationale doesn't stack up. Moving between the three types of decision-making will ensure a leader is not just making decisions based on results, but also on people and culture.

Related: How to Better Manage Corporate Culture During Times of Transition

2. They think great communication is enough

Some CEOs define great communication as continuously sharing the vision and purpose, being transparent with results and the direction of the company and turning up to town halls, hosting Q&A forums, writing in the monthly newsletter and presenting in panels. While this type of communication is important, as it is visible, great communication goes beyond appearances. It's about being a good human connector.

A CEO must learn to be a good human connector, which means prioritizing building relationships at all levels of the organization. This involves being approachable, empathetic and actively seeking opportunities to connect with others on a human level. And it doesn't stop there — a CEO must be genuine in their connection. They need to show kindness and show that they care. When you know a leader is committed to operating from a set of values based on kindness, they set the tone for the entire organization. In fact, one study demonstrates that leader kindness and generosity are strong predictors of team and organizational effectiveness.

Here are three top tips for being a great human connector:

1. Focus on being present: Too many CEO are transmitters when it comes to communication, constantly sharing information, facts, data or insights. Being present as a CEO means you will have more awareness of when to transmit, when to receive and when to hold space or silence for new possibilities to occur.

2. Complete a stakeholder matrix: CEOs impact 100s, 1000s and even millions of people. Whilst completing a stakeholder matrix is impossible for all these people, it is important for a CEO to understand their direct stakeholders and be able to assess the quality of the relationship and consequently assess the extent of their impact. Communication will fall on deaf ears if a CEO isn't continuously assessing relationships and looking to improve them.

3. Make trust a new business currency: As a CEO, it's important to recognize that performance, profits and focusing on the hard results is not your only form of currency. With a large number of employees currently disengaged in organizations globally, a CEO must now investigate how to use trust as a currency and be diligent about measuring it in their organizations. A leadership trust index is a good tool that many organizations currently use.

3. They prioritize commercial performance over team performance

Too often, CEOs overemphasize their leadership efforts on commercial results. While creating commercial success is the cornerstone of a CEO's role, many CEOs become overly rational and left-brain oriented and often lack the skills or awareness to actually drive team performance. Too often, they think the answer is to hire A+ individuals who collectively, don't actually work well as a team. This can create all sorts of problems, such as siloes, combativeness and team dysfunction.

A recent study from the Kellogg School of Management mentions how teams are not always successful with A+ players and that teams have a collective team intelligence that is separate from the individual intelligence of team members. Building a team's collective intelligence is critical for a CEO to master. This involves being socially skilled and nuanced in understanding personal motives and drives. A CEO who invests in building a talented and diverse team sets the company up for success. The hiring process should be rigorous and focused on finding people who share the company's values and vision. Diversity and inclusivity should also be a priority in hiring, as diverse teams are more innovative and better able to solve complex problems.

Related: How to Create a Culture of Gentle Accountability in 3 Steps

Here are three top tips for prioritizing team performance:

1. Ground out key realities: Too often, CEOs are disconnected from the realities of their team. While one team member may think the business is performing well, another team member may have a different view. It's really important for a CEO to ground our current realities and establish a shared view when it comes to core business targets and metrics. This can be difficult on their own, so using a skilled coach or facilitator can help with this process.

2. Make time to set clear expectations and goals for the teams' performance: A CEO should prioritize team performance by setting clear expectations and goals that prioritize clarity of strategy, execution, collaboration, communication, and interpersonal ways of working. This can involve creating metrics that measure team effectiveness, such as employee satisfaction and engagement, rather than just focusing on revenue or profit.

3. Hire the right team coach: While leaders may have individual coaches, it's really important for a CEO to hire a team coach. Just like sports teams have coaches, so should leadership teams. A team coach should be focused on the team's goals versus individual goals and continuously work with the team to move them toward reaching those goals.

Creating a positive work culture has never been more important for the role of CEO, and it starts from the top. They have a fundamental role in driving a positive culture that will ultimately drive strategy, engagement and performance. Taking accountability for one's leadership is key, and recognizing where they are contributing to the problem. Taking steps towards being a conscious leader, a strong human connector and developing team performance is a good starting point for any CEO looking to turn their culture around.

Ana Reed

CEO of Newmanity

Ana Reed is a top CEO confidant, executive advisor and CEO of Newmanity, a leadership consultancy that helps companies transform by unlocking their human capital. She is also an award-winning leadership entrepreneur and former professional athlete. She writes about CEOs and executive performance

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