Why Complacent Organizational CEOs May Have Reason to be Worried

By Mwangi Wanjumbi – Newtimes B. S. CEO & Chief Consultant/Trainer

Corporate CEO s and Parastatal heads may now need to be very worried. Indeed, worried more than ever before. It is no longer about acquiring or being rewarded with lucrative jobs anymore. This is so because  two noteworthy precedents have recently been set. The board of an organization has given matching orders, to a renowned Chief Executive for reasons of under performance. Never mind that the executive was well connected with the famous and powerful house on the hill. In any case, that is how he got the job.

Another executive had equally been ejected from office by the concerned board, again for under performance. That is despite being under a friendly minister who was bold enough to defy the same board, therefore re-appointing the CEO. Under the circumstances, the executive turned to the courts, to help him secure continuity, but to no avail. The courts still ruled in favour of the board.

In the corporate world, the respective boards are expected to continually gear towards working gallantly in favor of shareholder interests. That explains why the capital markets authority has acquired sharper eyes of monitoring the on goings in the various boards. Compliance with governance regulations is no longer a choice or about personal connections.

Without venturing into details, it is common knowledge that company shares have been suspended from trading in the stock market, as a result of squabbles in some boards. Obviously, when there are challenges in leadership, the same trickle down to employee productivity and inevitably the overall organizational performance.  Why?

Performance can only be achieved when the environment is conducive. Quarrelsome boards elicit stress within the affected organizations. An element of uncertainty is aggravated. Customers are not sure of business continuity and will therefore start looking for alternatives. Suppliers are equally attracted towards considering new options, besides unfavorably varying their terms. Above all, they keep wondering whether they will be paid in time for their deliveries.  The attention of other creditors like banks will equally be aroused. They will want to know whether their funds are properly secured in a continuity challenged organization.

An even worse scenario pertains to the employees. Are their jobs secured any more? Are their long term considerations such as pensions and gratuities still safe? Obviously, the same keep many employees engaged to the organization. So, an aura of uncertainty always prevails in the minds of the various stakeholders, during turbulent periods of any organization. Inevitably, all these lead to dented corporate images as well as uncertainty on the going concern concept that is more synonymous with those  familiar with this accounting terminology.

Meanwhile, it may be of interest to know that the CEOs, who have been edged out, may not have been solely responsible for under performance that they have been accused of. It is more of an organization-wide challenge. Nonetheless, it is their responsibility to ensure that the right performance culture is cultivated and maintained in their respective organizations. In the event of challenges, which lead to poor performance, they have nobody else to blame. In any case, the cliche that ‘fish rots from the head,’ continues to hold in many organizational situations.

In this era of performance management and contracting, it is important to realize that every aspect of an organization contributes to productivity one way or the other. In any case, an organization is just like any of us. The only difference is that we are natural persons whereas; the former is an unnatural person. Evidently, it is we the natural persons who chart the conduct of the legally recognized persons. So, when our own behaviors are challenged, the same must essentially be transmitted to the legal persons that our organizations are supposed to be.

In that light, when the attitudes, values and work ethics of the leadership are wanting, there is reason to fear for the affected organizations. Author Stephen R Covey narrates a situation where there were major challenges of an organization that he was consulting for. He turned everything upside down, trying to unravel the unique challenge. He interviewed numerous employees before getting to the root of the challenge.

Eventually, it turned out that the employees had lost trust in the organizational leader. He was not trustworthy anymore.  The reasons were well known by the employees. Upon confronting the leader with the naked truth, he accepted his errors of judgment. Soon after, he apologized to the employees and his family too. Thereafter, the organization was back on course.

Further, while having a consultative discussion with a human resource manager recently, I drew a chart representing the various components of their own organizational set up and the likely challenges.  She, like many others, saw the bigger organizational picture. Finally, she volunteered that indeed, there are numerous challenges in their organization. Regarding the likely source of the challenges, she did not hesitate to point out the compartment carrying the weight of the same – leadership.

Gentlemen and lady CEOs, beware that you are the light of organizations. Your values, attitudes, work ethics, character and other performance attributes count to a large degree on what becomes of the organizations that you lead. It does not matter the size of the organization, especially in a dynamic and now globally competitive environment.

Mind you, the realities of a changed nation that is still finding its place in a global village, are still taking shape. Actually, occurrences in the Kenyan judiciary that is one of the 3 arms, of national management system, provide clear case studies of a changing nation. Are you and your organization changing with the times?

Nevertheless, there need not be any course for alarm. We will promptly help you to fast-track the existing situation to desirable globally oriented organizational culture that leads to unleashing of the organizational performance potential, like we have continually been doing for others. For now, kindly enjoy a change inspired week, will you?