Friday, November 24, 2020

Sick Bosses Create Sick Businesses

Dr. Robert Kuhn writing in Chief Executive, lists “12 CEO Diseases” that afflict organizations and the people in them. I don’t think these diseases are exclusive to CEOs. In my experience, they afflict many managers at all levels, but their effect is more strongly felt if the person suffering from them holds a position with considerable power.

I won’t list all twelve diseases, or the “cures” that Dr. Kuhn prescribes. You should read his article for that information. What I will do is pick out certain diseases that are, in my view, especially prevalent. Many are major symptoms of Hamburger Management.

Here’s the second of Dr. Kuhn’s diseases:
Goals Too Aggressive. Unrealistic goals “demotivate,” especially when compensation is involved. One CEO expected his plastics company to continue its 30 percent annual growth rate, not appreciating that with a larger base and a mature market their era of high growth had to end; the result discouraged managers.
The obsession with short-term goals is ruining many organizations. It’s part of “managing by numbers,” which is a common symptom of Hamburger Management. To produce “good” results, numbers must always rise. That is, of course, nonsense, but it’s an extremely prevalent idea. No notice is taken of the context, or the fact that 10% annual growth for a small start-up might be very slow, while a similar percentage growth rate for a vast multi-national would be so rapid as to be unsustainable.
Power Building Trumps Wealth Building. CEOs tend to make decisions that enhance their scope and influence, even at the expense of increasing shareholder value—and this can be paradoxically true even when the CEO is a large shareholder. Sometimes, for effect, I put it this way: “I want a CEO whose greed exceeds his ego.” Sure, greed and ego are both unpleasant traits that are impolite to laud in public, but by privileging greed over ego I make the point that good CEOs should be motivated more by amassing wealth for their shareholders than by accreting empires for themselves.
Here I must part company with Dr. Kuhn. Both greed and ego are bad for the business. Is ego worse? Maybe, maybe not. Dr. Kuhn is clearly of the opinion that shareholder value equates with immediate profits. This is, in my opinion, a bad error. Value is value, not merely monetary value. In the long-term, value must mean a business that continues to prosper in its markets. The only way to secure that is through building a strong and contented customer base, maintaining high levels of service and quality, continuing to produce innovative ways of pleasing your customers (and adding new ones), and keeping the finances of the organization stable and strong. Grabbing as much money as possible now, especially if that means doing things likely to jeopardize the future, is bad business and bad management.
Not Respecting or Recognizing the Ideas of Others. In general, CEOs are egotistical. Highly successful almost by definition, many CEOs would seem to have every right to be self-impressed. However, when you hold the top spot, puffing yourself up at the expense of subordinates pollutes the organization. You benefit when your people are encouraged and empowered to generate novel ideas.
I’ve written before that the best source of innovative ideas is the ranks of middle managers of any organization. They aren’t committed to the status quo in the way they those nearer the top often are; and they have enough experience to be able to discriminate between a practical innovation and one that is off the wall. Best of all, they would love—truly love—to contribute their creativity to help the organization. Sadly, they are usually ignored.
Seeing Only Summaries. A CEO should perceive the world as it truly is; if cluttered and chaotic, so be it. When information is always “high level,” predigested by staffers, a CEO may be perceiving an artificial world, a virtual reality as it were, of cleanly manicured lawns.
This is a part of “managing by numbers:” that insane process of ignoring the reality of the business in favor of numbers on a spreadsheet, produced by accountants and others afflicted with “audit mentality.” It’s fatal to forget that statistics are not reality. At best, they are a very partial and limited window on a part of reality: the part that fits with the assumptions on which the statistics are based. Besides, statistical illiteracy is another CEO disease: one that Dr. Kuhn fails to mention.
Generalizations. CEOs like to spot trends, finding deep principles to predict and affect business. But beware of averages, which can deceive. . . .
This is managing by numbers again. The media love to produce sweeping generalizations, because they make for easy headlines. Corporate PR types share the same outlook. Sadly, too many executives fall prey to believing their own corporate PR. The search for simple, eternal business principles is mostly a search for panaceas. If they existed, they would have been found by now.
Falling for Current Trends. It’s easy to be sucked into the vortex of current trends, whether macroscopic movements or management theories. . . . Falling for Contemporary Tricks. Every few years, it seems, there is some new fad with which CEOs must contend. . . .
I have put these two CEO diseases together, because, for me, they are aspects of the same thing: the Hamburger Management obsession with imitation and jumping onto every temporary bandwagon. Whether it’s following “industry best practice” or the fads and fashions peddled by consultants, it comes to the same thing: an incomprehensible belief that you can gain competitive advantage by copying everyone else; and that playing catch-up is the way to get ahead. The only sense I can make of it is that, like teenagers, some corporate bosses feel the way to show your individuality is to act and dress like all your friends. At least teenagers have the excuse that they are rebelling against their parents. Corporate executives don’t have corporate parents to rebel against. Or maybe it is simply the herd instinct, coupled with a belief that there is safety in numbers and you won’t be criticized for doing what everyone else did first. Whatever the reasons, they have to be bad ones.

As I said at the start of this piece, these diseases aren’t confined to CEOs. They are part of a general trend towards debased, short-term, mindless kinds of leadership. They are contributing to uncivilized workplaces and excessive pressures on the people who work there. It’s high time that they were exposed and stamped out.

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