CEO job security isn’t what it used to be. A rash of high-profile oustings, including Disney’s Bob Chapek, Under Armor’s Patrik Frisk and Gap’s Sonia Syngal, have underlined how top executives are on particularly shaky ground as we emerge from the pandemic and into a looming recession.
When executives get the boot after months or a couple of years in the job, it gives the impression that boards are becoming more short-fused and more willing to hit the panic button at the first sign of investor discontent.
I think there’s something much bigger at play, though – a growing mismatch between the skills CEOs have and the ones they need to succeed in the post-pandemic world of change and ambiguity.
Boards don’t take firing a CEO lightly, but they’re left with little choice when faced with a leader who’s broadly lost the confidence of employees and investors. Today’s CEOs need a range of human skills that corporate cultures haven’t encouraged or taught in the past. They’re still required to drive performance, hit KPIs and meet quarterly financial targets, but they also need additional abilities that are vital to business success in this new paradigm.
Quick to punish
There are no KPIs for empathy, listening, and communication, but executives need to act as if there were. Boards, as well as clients and investors, are quick to punish those who don’t.
Take Bob Chapek, who was fired by the Disney board in November after two years at the helm. He displayed many of the characteristics that enable executives to succeed with old-school challenges, such as using franchising details to turn Disney’s consumer products division into an intellectual property giant. But Chapek was undone by his failure to grasp the creative storytelling side of Disney’s business and by his tone-deafness in relations with fellow executives, customers and investors. The final straw came when he was perceived as sugar-coating a disastrous quarterly earnings performance.
Bob Iger, the legendary former CEO who came back to replace Chapek, was reported as worrying that Disney was “losing its soul” under his protege.
Chapek was partly unfortunate to follow in the footsteps of a leader like Iger, but he certainly won’t be the last CEO to find that the skills they learned on their rise to the top are no longer enough to survive there.
New skills for new world
What are the specific new skills that modern CEOs need to have?
First, they need to be future focused. They should be able to describe a vision of where the world is going to be in 5-7 years and how their organization fits. Sonia Syngal’s departure from Gap came not just because of dismal financial results but because the board and investors struggled to see any long-term vision that would persuade them to be patient. C-suite leaders talk a lot about being future focused but it’s remarkable how few really have a plan beyond the next few quarters.
Second, CEOs need to be able to tap into a greater purpose. They need to tell the story of why their organization is special and why people should love to work there besides driving profits. What are the company’s values? How does the company look when it’s at its best? In the wake of the pandemic, employees and consumers have more choice than ever and they want to be associated with organizations that have a genuine identity and purpose.
Third, and most importantly, few leaders can survive today without showing vulnerability or emotional openness. As the human toll of the pandemic and the racial reckoning over George Floyd’s murder showed, it’s imperative they demonstrate more than just command-and-control skills.
Some might call it “charisma,” but that’s not quite it. When I think about Bob Iger, I don’t just think about how he’s friendly with creatives or how he’s great at talking to Wall Street. Instead, I think about how he builds allies by listening to others. He inspires with his clear-eyed vision for the future of Disney.
This collaborative, emotionally intelligent approach isn’t inherent to Iger. It can be learned.
Where do you start? It means accepting that you don’t have all the answers. It means listening with humility to what others say. It means freely admitting mistakes and wearing your emotions on your sleeve – a trait that’s traditionally been discouraged as a sign of weakness. It’s usually acceptable for senior executives to show anger during adversity. Sadness and uncertainty? Not so much.
Just hire younger CEOs?
Bridging these three skills is unfortunately not as simple as hiring younger CEOs. The implosion of crypto exchange FTX under its 30-year-old leader Sam Bankman-Fried shows that young doesn’t always mean wiser these days.
Boards shouldn’t reach for the trapdoor lever before assessing whether a CEO has a chance to improve through coaching or having different people around them. They should also engage in early-stage succession planning to avoid making rash appointments – a particular danger when the CEO is a charismatic leader who doesn’t want to acknowledge the fact that their tenure will end.
The longer-term answer is for organizations to change systems that reward and promote traditional-style leaders over creative, emotionally smart CEOs. Young executives need to start learning how to lead with vulnerability when they’re in their 20s and be rewarded for doing so. Turning Chapeks into Igers isn’t easy at the best of times. It’s virtually impossible after 40.