Business owners and CEO’s know all too well that they are often totally alone in understanding all aspects of the problems that they face. Spouses and other family members cannot possibly comprehend the full extent and the complexities of the issues that consume the attention of the CEO of an organization, unless they are deeply involved in the business at a strategic level themselves.
As executive recruiters based in Toronto, Kathbern Management helps companies find the executives and senior managers who not only have the experience and credentials to fulfill their responsibilities but also have the emotional and “fit” requirements that will enable them to be successful in a particular environment. We simplify the process and, through our deep research, are able to bring more and better candidates forward than would ever be possible through a do-it-yourself passive advertising campaign.
Here’s an example (using an actual situation – all names altered) of the pressures that a CEO must face alone:
No Shortage of Issues
Gerry Adamson was the new CEO of Challenger, a publicly-traded company with multiple local operations across North America. He reported to a Board of Directors comprised of representatives of key shareholders, banks and industry specialists. The company was under significant financial stress due to a recent financial crisis which had left the company with a very large ($100 million) debt load which was beyond the comfort level of the company’s lenders. The Chairman of the Board was the past CEO who had been pushed aside due to his inability to deal with the financial and operational issues facing the company. He was retained by the Board on account of his deep understanding of the industry and the history of the company.
Meeting monthly lender covenant targets was a challenge and required extreme vigilance. Payables were strung out beyond 90 days and many suppliers were threatening to withhold their services, some of which were absolutely critical to the ongoing operation of the company.
In several of the local operations, there were minority shareholders which were very large public utilities and which demanded attention for the particular operation that they were involved in without any regard for the remainder of the company.
To gain efficiency, Gerry knew that he would have to consolidate several of his divisions and eliminate management as a cost-saving move. In some cases, centralization of certain corporate operations would be necessary but would be resisted by local management.
In order to reduce the debt load and edge the ratio of debt to cash flow to a more reasonable level, the sale of some non-core assets would be required. Some of these assets were in close proximity to a similar operation owned by Brian Johnson who sat on the Challenger Board as an industry advisor, and was respected and relied upon by other Board members for his technical expertise on industry matters. He operated his own company in exactly the same industry, but, was not a direct competitor due to each company’s focus on their own geographic communities. When a nearby Challenger property was deemed non-core, Brian felt that as a long-serving Board member he should have the inside track to acquire it, at an attractive price.
As the CEO of a public company, Gerry was obligated to serve the interests of shareholders in getting the highest value for any asset disposals and so was required to conduct an open auction process for all non-core assets to be disposed of and, as a result, the particular property that was of interest to Brian Johnson was, in fact, sold to another party who bid more than Brian did. As a result, Brian felt that he had been treated unfairly and resigned from the Board. Some Board members, supporters of Brian due to his invaluable technical expertise, felt that Gerry had mishandled the situation and should have done more to not offend Brian.
Parallel to this drama, the Chairman (ex-CEO) and Brian had a very strong, long-standing relationship and had business interests together outside of and unrelated to Challenger. The Chairman did what he could to undermine Gerry’s position with other Board members.
Where to Turn?
This was a stressful time for Gerry (to say the least). Who could he share this story with at any point during its development?
His family? – Too complicated.
His senior managers? – To some extent, but this would risk harming morale down the line.
Board members? – Difficult, as some supported Brian and others had limited time to devote to what they saw as a Challenger political problem.
The point of this story is not to get to an answer, but to illustrate how lonely it can be at the top. There may be this person or that person who can appreciate part of the situation, but virtually no one can appreciate all of it from the viewpoint of the owner/CEO.
Listeners are Invaluable
Probably the best prescription for this situation is to engage a dedicated listener. They are hard to find because, in order to be effective, the listener has to have a knowledgeable awareness of the complex situation being shared or they will not be up to the task. It is a fact that most people really don’t want advice. They want to be listened to, at length and in detail. By being listened to fully and completely, many people find that they come to see their situation with a new perspective and can often find the beginnings of a solution. This with very little involvement from the listener.
Even without an immediate solution, having a good listener can be cathartic and part of processing the problem in a healthy way.
One of the best sources of great listening by people who understand most of what an owner/CEO would need to relate on issues that they feel strongly about would be CEO peer groups like TEC (The Executive Committee – called Vistage in the U.S.). TEC brings owners/CEO’s together in groups of up to 16 unrelated businesses, led by a professional Chairperson. These groups act as sounding boards for each other with absolute confidentiality and, other than having detailed knowledge of each other’s industries, meet most of the criteria for being able to understand the complex business issues which any member would need to relate.
Temperament is Key
For owners or boards looking to hire a CEO or senior leader, a key consideration in selecting the ideal candidate should be their ability to cope with the challenge of being “at the top”. Do they have the temperament? Can they manage the various internal and external communities without forsaking one group for another? Can they manage the balancing act necessary for success?
It is difficult, but that is what is required.
Kathbern Management is a Toronto-based executive recruiter focused on working with organizations who are seeking to find and hire the key people who are critical for their success.
Contact us today for a free consultation about your key person search.