So there you are, sitting back and enjoying a cold one after a long shift with your team. Your team has spent weeks delivering on a high-level objective as a directive with specific goals and milestones. It was a long haul but you’re proud of your work and further, proud of your team. You deserve a break to reflect on the immense progress you just made for the company for which you work. This goal has been on the mission-critical list since last quarter and now it’s finally finished. You and your team can focus on the next objective to move you closer to the total company goal. All is good; all is well. Lots of good things are on the horizon. Everyone’s happy.
The CEOs name is Phil. He’s a founding member and has been involved in the day-to-day since day one, which was a little over 12 years ago. He’s ultra passionate about the category of the company, which is a medium-sized technology company that provides database migration and consolidation services for large publically traded companies. All clients are large and have been in business for at least 20 years. Phil believes that all large companies should have effective working consolidated databases for all of their website applications. To summarize the mission and vision:
- The Company provides database migration and consolidation services for large publically traded companies. -Company Mission
- Phil believes that all large companies should have effective working consolidated databases for all of their website applications. – Company Vision
Phil leads his team by delegating responsibilities according to the specific skills each team member has from Lead Architect to Receptionist. For example, in passing one morning, he asked the receptionist, Tony, what he does on the weekends or in his off hours. Tony’s 19 years old and has just finished his first year of college. Tony indicated that he likes to blog about his skateboarding adventures and misadventures.
Phil then thought it would be nice for the company’s website to feature updates, stories and news on what’s happening at the firm or in the industry. He thought this would be a great way to build traction online (which it is), and build credibility (which it does). Phil then immediately thought of Tony and invited him in for a chat. Phil asked and Tony agreed with great enthusiasm. Phil believes in developing in-house talent by utilizing the skills his team already has. This is just one reason why Phil is such an effective leader. His team likes him; his team trusts him. His team appreciates him because he appreciates his team. This is a construct that’s contagious. Because of this, his team always feels bad when they make a mistake. They truly believe in the product; it is more like a family to them.
The next morning, you settle into your office and check your email and discover a company-wide email sent from Phil, the CEO, indicating that he’s accepted an invitation to fill the role of Executive Chairman for a fortune 50 company. You experience a slight touch of immediate panic. A quick role of heat storms through your body and you suddenly wonder what this means for the company’s future. You then wonder if this was a strategic move by Phil. Did he deliberately wait until we finished this massive project before dropping the news?
Quickly, you meet with a fellow team member to discuss the future of the firm. Both of you are curious to see what’s going to happen. With uncertainty in that area, you fear there will be a change both in the team dynamic and company morale.
The New CEO:
Weeks pass and a new CEO is hired, Ron. Ron was hired from the outside and has an extensive background in business consulting with a variety of companies over the course of his 24-year career. He believes his role is to act as a change agent to make companies better than before he becomes part of them. He’s all about big risks that make sense, service diversification, and lean process efficiency. Ron is eager to leave his mark, his legacy with the firm.
On weeks 1 and 2, he makes his rounds and introduces himself to each employee and in doing so gets to know what each person does for the company. What he’s doing is learning who does what. For employees, this generally means relocations and firings are on the horizon. Sometimes this works, other times it’s morale crippling especially for effective working teams.
Over the next two months, Ron lays off 15% of the team, relocates another 10% and then proceeds to invent ways to diversify the total services the firm offers to include computer hardware sales and repairs. Ron believes that this service diversification will lead to a stronger bottom line (which it can… if the new services are aligned with the company’s mission and vision.)
Here’s the problem, the team is made up primarily of Database Engineers, Lead Architects, and one Blogger (who doubles as the receptionist). All of whom got on board with the firm because they believed in the value the firm provides for the community.
Now they have to sell and repair computer products???
A few entry-level salespeople are hired on to manage the new direction. This means that the company’s overhead grew and margins thinned at least until the new sales arm begins to profit. A new marketing campaign is created with a new tone for the brand identity to build awareness of the new service. Here’s what immediately follows:
- Calls start coming in, all of which need to be fielded, with computer part availability and repair inquiries.
- On the database side, current clients call in for reassurance that the firm can still handle DB maintenance requests. These calls also need to be fielded.
- Tony, the receptionist and blogger has been told that the blog project is no longer going to be needed because the company is going in another direction. Tony is now, again, just a receptionist. Tony then begins losing interest in his day-to-day work because it’s no longer interesting or challenging.
- Team members are now spending more time in communications with prospective and existing clients and less time working on current projects, which leads to missing deadlines and unhappy customers.
- The team is now working about 15-20 more hours a week, which drives the overhead up and member morale down.
- The team is frustrated with the haphazard way the new CEO just threw this new initiative into the mix.
- Everyone’s exhausted and you’re working way more than you should, which means you’re spending less time on your own life.
With a now muddied brand identity, the CEO does the unthinkable and decides to downsize the already overworked staff. His claim is that lower overhead will increase company margins. It’s at that moment that everyone remaining on your team decides to look for new jobs, including you. Work is no longer enjoyable and company morale is in the toilet.
All progress made the week before Phil left was scrapped because Ron wants you and your team to put all efforts toward developing the new sales arm. Effectively, this discounts your skills and halts all progress your team has made.
All this because some new hot shot celebrity CEO, Ron, thinks he needs to leave his mark by expanding the business into new ventures.
In his book, Good to Great: Why Some Companies Make the Leap and Others Don’t, Jim Collins talks about what he calls the Flywheel. This is when momentum is built from great effort but continues to grow with lesser effort required over time until the system is automated and works like a well-oiled machine. The only way this can happen is if progress continues over time and everyone is working on keeping progress going. Unknowingly, you and your team have been working the Flywheel all this time and Ron comes in and stops it and has you guys work on something else. Here’s the interesting part – The likelihood of continuation of Ron’s legacy is minimal with whomever takes Ron’s place as CEO later because said person may want to create their own legacy. And around again we go. Jim Collins calls this the Doom Loop, which is a circular downward spiral of starting and stopping progression whereby not making any meaningful progress on any one thing over the course of any amount of leadership turnover. Doing this causes companies to remain ok, sometimes good, but certainly never great.
For some reason a lot of CEOs feel they need to leave their legacy in some grandstanding way. The thing is, that can be done quite easily without disrupting the progress that’s already been made prior to the new CEO’s tenure. Sadly, what’s often the case is that, as when new initiatives are out of alignment with the company’s mission and/or vision, the new CEO’s legacy initiative can cripple or greatly hindle company progress. So how can a company avoid this Legacy dilemma?
How your company can avoid the Legacy Dilemma:
When hiring, place significantly more emphasis on personality over trade skill. Just the fact that you’re interested in a new leader says they have the experience required to fill the role. Interview all prior clients that have worked with the prospect and ask them questions about that person. Ask them if the company was better after tenure or before. Better is a subject term but what you want to know is if team morale improved, company profits increased, and if project progress was impacted positively or negatively. Here are some questions to ask and answers to look for:
- Did this person help improve company morale, and if so, how?
- Look for answers that showed an interest in getting to know, at a person level, each of the team members.
- Pay little attention to examples of team-building exercises as they’re generally considered a waste of time and funds.
- Did this person help grow profits, and if so, how?
- This is of obvious importance. Answers should indicate, specifically, how this person helped drive company profits.
- Did this person embrace current project progress, and if so, how?
- Look for answers that indicated that progress was embraced, and team members were trusted and given autonomy.
- What did this person’s work ethic look like?
- Look for answers that indicate more emphasis on work objectives and less emphasis on time. We should be hired to do the work we love, not watch the clock.
- How did this person treat entry-level workers?
- Look for answers that show an interest in developing in-house talent at all levels.
- Tony appreciated the way Phil acknowledged his talent for blogging. There is hidden talent in each person at every level. If it’s stated that this person spent very little to no time with entry-level workers, you’ll want to know about it. Developing in-house talent can be mission-critical to company performance, morale, and longevity.
- How accessible was this person?
- Look for answers that indicate that this person was at least accessible when they needed to be.
- Some managers and executives are accessible and friendly, others aren’t. You’ll want to know about this.
Hiring a new CEO can be one of those Make or Break kind of decisions. If done right, it can help the company maintain momentum and keep the team members motivated, happy, and progressive. If done wrong, it can cripple company morale, alienate team members and invite them to find work elsewhere, hinder progress, and muddy the brand identity. Pay close attention to personality styles. Leaving a legacy doesn’t have to mean hurting the process. Leaving a legacy should be done with an emphasis on keeping the car moving forward, not ditching the car and hitching a ride in another direction.
Have you dealt with something similar in your work experience? Share your story in the comments area.