Why a CEO without followers is worthless

There has to be an end to the mantra that quality CEOs are scarce and therefore have to be paid extraordinary amounts of money. It is simply a joke. It beggars belief that in a workforce of 11.5 million people it is difficult to find quality CEOs.

Two simple facts demand attention in this discussion. The first is that a CEO without followers is like a hospital without patients: completely useless.

The second is that when a CEO has followers, they will develop into outstanding people with leadership abilities if given the opportunity, but they will be less than effective if not given the opportunities critical to their development.

A good CEO with devoted followers will have a plethora of successors. Indeed, a good CEO should always have in mind what I call “the run over by the bus” test. The CEO should ensure that their organisation will successfully continue if he or she is hit by a bus.

Western business establishments have built this belief that a CEO is central to the success of a business. That is complete baloney. The extent to which people are willingly engaged in the enterprise with a huge desire for it to succeed, while achieving personal satisfaction, determines the extent of the success of a business.

In a recent survey by Ernst Young it emerged that many people in management failed to secure that environment, with an enormous loss to industry and the economy. In fact, this preoccupation with the magical qualities of a CEO associated with incentive payments results in people filling management positions who disconnect from their followers and cause serious damage while chalking up short-term brownie points for themselves.

In my turnaround consultancies I have interviewed thousands of people in distressed companies. The common theme has been frustration at management’s interference which prevents decent people from working at their best. I have also found that there are quite a few people in such organisations who have the ability to stand up and take over senior management roles including that of the CEO. People like this are out there by the tens of thousands.

Indeed, if CEOs are in such short supply as to command obscene remuneration, it is a reflection on their own incompetence because one of the principal roles of a CEO is to bring on the people within the organisation so that many, rather than a few, can step up to leadership. The sad fact is that there are many people in the workforce who have the ability to step up to senior managerial positions and to assume the role of a CEO, but are denied that opportunity because of the failure of the CEO to create an enabling environment.

Accordingly, the argument that there is a shortage of CEO material is a damning indictment of many current CEOs and the fact that they are paid unseemly amounts of money is a fraud on the public.

At the moment, our national carrier, which has been a famous Australian icon, is in trouble and the CEO is being paid millions. He might have achieved some outcomes that satisfy bean counters but it is obvious that he has estranged the rank and file of the company. What did I say about a CEO who has no followers?

What often gets overlooked is that people spend most of their waking hours at work. Accordingly, it is at work that people want to achieve fulfilment because that is where they spend most of their time. If they find themselves in conflict with their employers, as is the case with many Qantas staff, there is a failure of leadership. The dispute at Qantas has been characterised as one between bloody-minded employees who don’t share the aims of management on the one hand, and on the other hand, a bloody-minded management that simply wants to alter the cost base of the company, no matter how it affects the employees.

There is probably an element of truth in both statements but the sad thing is that it has reached this stage. CEOs are happy to take the credit when things are going well and should be prepared to take the stick when things aren’t going well. Alan Joyce is drawing $5 million-plus and he has a huge fight on his hands with his own staff. He can blame his employees for being bloody-minded but in the end he is the CEO and if he has a huge HR problem on his hands, he must put his hand up and say “I have messed up”.

It is also a sad reflection on the management of Qantas that they had to go outside to recruit a CEO. You can’t tell me that in a population of 32,500 employees, there is not one person who could step up to lead the company. That must be an insult to loyal employees and a reflection on the incompetence of previous management in failing to build that leadership capacity.

This myth that there is a scarcity of CEO material in Australia has to be blown open by shareholders who can insist that from here on in, one of the principal roles of CEOs is to build succession from within. There are tens of thousands of CEOs out there in the workforce just waiting for the opportunity.

Both sadly and happily I am talking from experience. In my initial experiences as a turnaround CEO I made the mistakes mentioned in this article and quite a few more. However, happily, people in the organisations were prepared to give me feedback and it was then that I started to learn about how to be an effective CEO. Whether I ever was is another question.