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Holding leadership accountable: why and how?

Leadership in the 2020s

According to a report by Challenger, Gray & Christmas, 1640 CEOs left their roles in 2019 – reflecting a 12.9 percent increase from the year before. Of the departed, just 395 leaders retired unremarkably, leaving in good stead. This demonstrates the need for organisational checks and balances to keep CEOs accountable.

The question of who leads the leaders is a pivotal one. The old adage holds true – the fish rots from the head. So, it’s imperative that policies and people are in place to stop the earliest hints of a leader going off track.

For CEOs, these checks pose an equal opportunity for growth. Being accountable should come with continuous feedback, mentorship and a team of trusted peers to turn to. Ultimately, businesses can live and die by the public perception of a company’s CEO. Here are four ways to ensure that a company can keep its leadership accountable and flourishing. 

4 effective ways to hold leaders accountable:

  • Board Engagement

The board is vital in keeping the CEO accountable. Its role has evolved to play a pivotal part in corporate governance, which extends to helping to define company culture. That means boards have more of a say in defining an organisation’s behaviours and norms – including the actions of the CEO. An interesting question that can emerge from this is how much knowledge a board should have of a CEO’s personal life.

Corporate governance expert and Stanford professor, David F. Larcker, sees a direct correlation between divorce and the exit of a CEO. “Most of the divorced CEOs were long-tenured at the time of the divorce. Yet within a year or two after the divorce, they are gone.” 

While a messy divorce shouldn’t necessarily be a board’s concern, Larcker warns that there can be financial implications of a divorce that have a major impact on a company. “The ownership of equity can change (during a divorce). All of this has consequences a board must be attuned to.”  

It can be incredibly important for a board to keep a watchful eye while not overstepping the mark. Larcker insists prevention is better than cure. “The main thing is to have the talk upfront rather than after a difficult situation has emerged.”

  • Peer Management

According to Mckinsey and Company, successful CEOs must learn to operate vertically as well as horizontally.

“Organisation theory suggests that managing upward and sideways is good for both the company and the individual leader’s career: CEOs need the insights and pushback of trusted executives to help sharpen strategy.” 

Allowing the functional leadership to be comfortable to provide criticism without implications will allow lateral feedback that can be constructive and prevent disaster.

Thomas Barta and Patrick Barwise did extensive research for Mckinsey and discovered the profound impact that senior executives make when engaging on a peer level. When these executives work towards mobilising their bosses and functional colleagues the benefits are clear.

“Taken together, these upward and horizontal actions were about 50% more important than managing subordinates for business success (45% versus 30%) and well over twice as important for career success (47% versus 19%),” confirm Barta and Barwise.

Being able to operate vertically for C-suite executives can be as simple as engaging with colleagues in a less formal setting or working together to develop a new strategy. 

To create an open upward operation, the CEO has to initialise this process by ‘leading from the front’ to make it comfortable for others to reciprocate. Barta and Barwise recommend showing a personal touch to bridge the gap.

“Lead from the font with an inspiring story to win the hearts and minds of colleagues, including those who don’t report to you, with a clear action plan to deliver tangible results.”

With their research showing declaring a 10% impact on business and a 20% increase in career success, it undoubtedly benefits CEOs and functional leaders to keep these channels of communication open. 

  • Reflection 

Price Harding, a founding partner of CarterBaldwin Executive Search, believes that the ability for self-governance is the single most important trait of the CEO. A CEO needs to constantly be evaluating what he or she can do to improve individual performance – and that of the company.

This means continuously appraising how one is measuring up to KPIs in every sector of the business – from operations and finances, to people and culture. If a CEO believes he or she is still beneficial to the business by being in the role, then it’s imperative the person keeps retraining to stay relevant and inspired.

This kind of introspection can be hard – especially if the outcome is that a CEO finds that they are not the right fit for the company.

  • Bad behaviour will not be tolerated

The hardest path to traverse for any company is when the CEO does not act in the best interest of the company and there is no opportunity for all other employees to keep their leader in check. Providing a safe place for the entire company to share their concerns can be crucial to keeping everyone – but especially leaders – responsible for their actions.

Building a culture where there is the freedom to report inappropriate behaviour means that CEOs can be held accountable by everyone in the company. Knowing that there are no fallouts for sharing an inappropriate interaction means that no one is above the company rules or laws. 

While the departure of leadership based on harassment claims has been minimal, the #MeToo movement has undoubtedly played a key role in what employees and shareholders will tolerate from the leadership of organisations. 

In order to sustain proper ethical checks and balances, a comprehensive whistle-blower policy needs to be enforced. At SHRM, a membership-based Human Resources portal, this kind of document ensures that anyone who comes forward to report irregular behaviour knows they are doing so in complete confidence with no threat of retaliation.

This kind of trust within a company must be infused into the culture and can never waiver. If one whistle blower steps forward and is subsequently terminated or demoted, this will stand as a warning to anyone wanting to step forward.  

Conclusion

By enrolling in USB-ED’s Executive Development Programme, you will be able to employ adaptive thinking, creative cognitive strategies, and include global trends that are essential in today’s ever-changing landscape. This insight shows the importance of continuous education and upskilling for existing and developing leadership to remain knowledgeable and relevant in their business sectors.

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