In each of the past two decades, 30 percent of Fortune 500 chief executives lasted less than three years. Top executive failure rates overall are even worse—rarely under 30 percent, and sometimes as high as 75 percent.
According to the Center for Creative Leadership, 38 percent of chief executives fail in their first 18 months!
How many millions in lost profit does this problem create each year?
The research also shows that the major reasons for failure have little to do with job knowledge, experience, or even competence.
Research by Sidney Finkelstein, author of Why Smart Executives Fail, shows that almost all the reasons have to do with people stuff, like ego out of check, lack of emotional intelligence, and lack of critical thinking skills.
So when an MIT study shows that we now spend $50 billion in leadership and development training, why are leaders failing at such a spectacular rate? What is missing in executives who are not massive contributors to the success of their teams?
And with so many of the executives of banks nearing retirement, how will banks achieve the seemingly impossible task of having their next leadership team ready?
Just as important, is their CURRENT executive team really hitting on all cylinders?
Here are the clear, research-based differentiators that keep so many executives and their teams from creating masterful results.
Inauthentic communication is by far the biggest issue.
Most executives believe they tell the truth. What they miss are the gradients of the truth. Focused results are at the core when teams achieve the highest level of authentic communication.
Most executives have had little development in how to deliver and manage the authenticity of communication – both among the members of their executive team and between the team and their people.
Here are the most common “normal and accepted” inauthentic communication approaches and the ensuing mess each creates:
“We don’t really call each other out on things…because we all just want to get along.”
That is really code for, “We don’t hold each other to expectations because we are afraid that others will call us out on our lack of performance when that happens.” This is a surefire path to poor results and not hitting numbers.
And let’s face it – numbers are what our stakeholders need us to hit for the organization to stay intact, so this is a behemoth issue.
If you said, “Oops, I forgot to cut payroll checks this week. I was really busy. I had other things to do. I’ll ‘do my best’ to get that caught up in a few weeks” – well, people would be alarmed. That’s UNACCEPTABLE!
So why do we let everybody else off the hook for all the other important business functions?
When you, as executives, create an acceptance of stories and excuses instead of a clear expectation that deadlines and outcomes are to be hit, you’ll quickly see the cascading effect as you hear managers and front line people making the comment that is a nail in the coffin for performance – “Management doesn’t listen to me.”
“We have meetings outside of meetings.”
This is near the top of destructive behaviors that executives and managers normalize to the peril of their organizations.
When people don’t publicly challenge an idea in the meeting, nobody benefits from the little muttering huddles that gather to privately challenge it afterwards.
Executives at every level must fully understand and be fully understood. And when a decision is made, even if it’s not unanimous, they have to buy in and make it happen—fast.
But a far worse result of meetings outside of meetings is the way it undercuts trust. When they take their “I’m smarter than they are and I don’t get why they won’t listen to me” story to colleagues and direct reports outside of the meeting, it creates a dysfunctional destruction of trust and respect for leadership. Team members don’t know who to follow. They get the idea that they don’t have to do the work either. They can just complain if they don’t agree with it instead of going through a systematic, organizational, productive approach to challenging things they don’t agree with.
Worst of all, this kind of active undercutting of decisions is the ultimate “victim archetypal” move. Their rationale is, “As long as I can stay in the blame game, I don’t have to be responsible.” So that’s the problem. An executive IS supposed to be responsible, and so are their people. That’s kinda sorta the point, isn’t it?
Lack of Transparent and “Deep Truth” Reporting
As an executive, your board expects you to deliver on the completion of your key initiatives and hit all your KPIs.
Now how does that work if you have a lack of authentic reporting on missed deadlines, outcomes, people problems, and other information that should be rolled up?
Let’s face it: There needs to be a no-surprises environment whereby any deadline that stands a chance of being missed is communicated early and with enough time to fix it, along with the leader’s plan for correcting the situation before there is a problem.
An executive who has to cajole and beg their direct reports to get them to report on their numbers weekly, and what is being done to meet and exceed those numbers, has a big problem. The non-performance of that executive is imminent.
A core understanding of high-functioning executives is that if you are asked to do something or to hit some number, it is imperative for you to be wildly transparent if anything is not hitting the mark. That’s exception-based reporting.
Know that when someone asks you to do something and you don’t reject it, or if there is a Job Performance Progress Plan that lists a critical driver or a key role, task or responsibility, or any other assignment, what you have is an implied contract.
Unless you renegotiate, it is assumed you can be counted on to hit that outcome. Anything other than hitting that outcome is a violation of the trust of the relationship.
Walking into a meeting without authentically sharing that there is an issue or what is being done about the issue kills trust.
One of my mentors was one of the “rich dads” referred to by Robert Kiyosaki in his book Rich Dad Poor Dad, a man who shaped the author’s thinking about money. That same man taught me this: Whenever a manager says, “Back off – I have it handled,” that is code for, “Get all over this – you have a non-performer who is covering up!”
I wish I would have received that advice earlier. There is a time for micromanagement. This is one of them, and it should often be followed quickly with an invitation off the bus.
Not telling ALL the truth about missed outcomes or deadlines and not providing massive corrective action plans – not OK.
Not doing everything as planned and then not bringing it up hoping “nobody will see” – not OK!
One of the things I’ve heard repeatedly from banks that have crazy great numbers over the years – like ROAs of 1.75 and above – is that they have a “fact and concept bloodbath” where they challenge every idea…but they know how to have that level of authentic challenge and still hold hands and sing Kumbaya when they walk out.
When it comes to authentic communication, even one person on the exec team who is political and plays games will destroy the ability of that team to function at a high level.
Traditional “training” – superficial fixes of what appear to be the problems, such as listening skills and conflict resolution skills – don’t go far enough. Most of these are rearranging the deck chairs on a sinking ship.
Does that executive “trigger” and get angry at inappropriate times, hang on to it too long, and bring resentment and theatrics to the team as a result?
Or does she lack the mental toughness for what is a core responsibility of leaders – solving one tough problem after another, understanding that is the game?
Or is there an underlying anger that comes from core Mommy/Daddy issues that cause defensiveness every time you suggest a necessary change?
Even one person on an executive team who lacks awareness of his issues and triggers causes a stifled communication pattern that doesn’t allow for excellent behavior.
Lack of Understanding of How to Mentor, Coach, and Develop Their Teams
Isn’t it fascinating how we think that current leaders and HR heads are automatically skilled to teach leadership? This is like saying you are an educational expert because you once went to school.
Knowing how to develop a team is a learned skill, and although there are many ways to do it, having a depth of understanding of neuroscience, organizational behavior, emotional intelligence coaching, and accountability process distinctions is essential for developing executives.