Yet, even the most experienced CEOs and their senior executives make mistakes. It’s human nature. However, if we understand the reasons behind why those mistakes happen, we can prevent them.
Here are five costly mistakes that CEOs should watch for both in themselves and in their leadership team.
1. Using attrition to reduce headcount. It feels bad to fire even weak performers. To avoid those bad feelings and keep the peace, your managers will often wait for natural attrition, rationalizing that waiting for employees to leave on their own is best for morale and is less expensive for the company. But this method hurts productivity as poor performers are kept and good performers leave. Work with your team leaders to make the right personnel decisions for your company.
2. Assuming your company is as lean as it can be. Pride makes leaders blind to simple improvements within their control because they are convinced they have not missed any low-hanging fruit or easy fixes. So to improve their areas, they launch big transformational projects that promise big results. Unfortunately, those are the efforts that most often overpromise and underdeliver. Conversely, great leaders know this. They put their pride aside and relentlessly search for easy solutions to blow away the competition.
3. Giving too much credence to others’ reputations. Home plate umpires are certain they are objective when they call strikes and balls. But statistics show that MLB umpires subconsciously give all-star pitchers an advantage 17% of the time. Similarly, managers subconsciously treat opinions as facts from their “all-stars” while dismissing facts that come from people they don’t respect or don’t know. Strong leaders know the difference. They avoid it by questioning everyone’s statements and by reminding their team to do the same.
4. Requiring unanimous agreement from your executive team. Leaders want everyone on their team to feel valued and respected, and there is nothing wrong with that. But effectively giving veto power to any team member who is opposed to a decision goes too far. Many will have opinions that are not based on facts and others may have personal agendas that obscure sound judgment. The best executives make decisions after being sure they have solicited the facts they need from their team, clearly distinguishing those facts from opinions.
5. Automatically going to outside “experts” to fix problems. Mark Twain once joked that “an expert is anyone who comes from more than 60 miles away.” Managers tend to discount the value of the experts they have resident in their company. This problem has been a boon to the generalist consultant who plays on managers’ fears that their team lacks talent. Meanwhile, employees roll their eyes as the consultant repackages ideas from the employees.
Keeping these 5 simple pieces of advice in mind will prevent costly mistakes and ensure that only those that lead to true innovation are made.