Small Business Digest Header Icon   •    •    •    •    •    •    •  
Small Business Digest


When Hero Business Leaders Faill, Companies Need To Prepare Fof Change

Parallels exist between LiveStrong and Penn State in the aftermath of the  Lance Armstrong and Sandusky scandal that tarnished Joe Paterno’s reputation, forcing the resignation of university president Graham Spanier.  

Although different circumstances existed, core issues were similar: shattered perceptions of “hero” figures combined with the betrayal of the trust and honor given to leaders who failed to do the right thing.  

Dr. Ray Benedetto argues, “Becoming enthralled with “heroes” based on celebrity, position, wealth, or athletic prowess creates a foundation for mental distress because people are human and will make mistakes.”

Leaders of well-run organizations understand the disruptions such mistakes can have on mental stability, and put leadership systems in place to counteract the negative effects of such events.

Change Is Inevitable: Many people associate strong leaders with the success of an organization, but regardless of its size or purpose, an organization succeeds through the efforts of many people rather than the reputation of any single person.  

Studies by Booz and Company about CEO succession and longevity within large publicly-held companies show CEOs have a median tenure of about five years, while a quarter of CEOs from 2,500 reporting companies have eight or more years in that role. CEO tenure in privately-held companies is longer, many times because the CEO is also the founder, owner, or primary stockholder.  

Regardless of organizational size, CEOs are responsible for company performance, including growth and sustainability.
Leadership shakeups rarely occur when leaders are doing the right things and objectives are being met or exceeded.  

Shakeups invariably occur when a leader betrays a trust or stakeholders lose confidence in that person’s ability to lead, guide, and influence others effectively.  Leaders who break or betray a trust lose credibility, and with it, the ability to lead.  Armstrong and Spanier are simply two very visible examples of many more that exist.
Poor leadership and company performance do not occur overnight.  Poor performance stems from several factors that build and contribute to a company’s demise.

Employees can usually spot the early warning signs of failure: lack of a well-defined vision, high turnover rates, cuts in training programs and core business operations, an exodus of top talent, and a series of “quick fixes” by managers fighting a losing battle.  

Company crises occur as the result of poor leadership at the top, a failure to put a well-defined leadership system into place.

Three Critical Anchors for Surviving Change: The following “anchors” underpin organizations doing the right things and planning for eventual changes in leadership.  These anchors are also good for surviving unexpected changes and evaluating existing leadership.  Surviving any type of leadership change begins long before the event occurs. If the anchors are not in place, preparing for a new job with a better employer might be in order.

  • Reemphasize organizational purpose, especially the core values, vision, and mission, as the anchors that keep everyone steady and underpin the organization’s culture.  Culture is “the social glue” that keeps everyone together.  Reinforcing the values, vision, and mission helps   others see beyond themselves and any other person.
  • Regain trust by pursuing moral and ethical “high ground.” Re-examining practices based on core values is essential for stabilizing the organization after major leadership changes.  The military services constantly emphasize compliance with core principles and values, which helps align everyone—regardless of rank, position, or responsibilities—on the vision and mission on a daily basis despite leadership changes.
  • Communicate openly and regularly with employees to regain trust. Employees at all levels need and want to know what is going on.  They need to be respected for the value each person brings to the organization.  Lack of regular communication gives rise to rumor, speculation, and distrust, which work against the leaders who remain and continue to carry responsibilities for company performance.  

Core Elements of Effective Leadership Systems: When compared to civilian organizations, the military services match or exceed Fortune 100 companies in size, infrastructure, and resources.  The military services are well-known for executing their missions.  They do so despite thousands of promotions, retirements, job rotations, and replacements each year. How do they do it?  

Rather than personality or charisma, the military services have well-defined leadership systems that meld individual character, emotional intelligence, critical thinking, and business knowledge with collective commitment to high ideals, teamwork, and service to others. We found similar characteristics in the high-performing small to mid-sized companies we studied. P

eople who share core values and develop positive relationships around those values within the organizational setting are more likely to be committed to their work, especially when leaders set the right example. Leaders develop trust with those they serve by being authentic, honest, and forthright rather than setting themselves apart from others.

High-performing organizations avoid leadership “shakeups” through effective planning and leadership development throughout the organization.  By modeling the way and teaching others how to lead at all organizational levels—strategic, operational, and grassroots—senior leaders develop the talent that will sustain the organization despite external changes and potential disruptors.  Effective leaders put several anchors in place to help everyone “survive” the changes in leadership that are expected to occur through natural evolution.

Dr. Ray Benedetto, DM, co-author of It’s My Company Too! How Entangled Companies Move Beyond Employee Engagement For Remarkable Results

© 2018, Information Strategies, Inc.
P.O. Box 315, Ridgefield, NJ 07657