Three Mistakes Even The Smartest CEOs Make  

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A chief executive’s unchecked vulnerability can have dire consequences on organizational performance, employee engagement and talent retention, not to mention his or her reputation.

CEOs are often sharp intellects who demonstrate relentless drive, mental toughness and a high tolerance for risk, but when it comes to people management, they can have blind-spots just like the rest of us. The difference is that a chief executive’s unchecked vulnerability can have dire consequences on organizational performance, employee engagement and talent retention, not to mention his or her reputation.

Leaders need to be intentional—even obsessive—about assessing and managing the interpersonal and cultural elements that allow employees to thrive and contribute their best efforts and ideas in a psychologically safe and rewarding environment.  

Below I share three common and completely avoidable mistakes I’ve seen chief executives make in my practice as executive coach to Fortune 500 leaders:

1. Ignoring favoritism

The CEO of a thriving SaaS business that provides proprietary software to Fortune 100 companies had high expectations of his senior leadership team in terms of the inclusive culture he wanted them to co-create and role-model throughout the organization. In staff meetings he would often reiterate his vison for a fair work environmentthat would attract top talent and make the business a contender for “best places to work” rankings.

But when it came to light that one of the senior executives on his staff routinely steered new accounts to one particular sales rep who’d end up earning lucrative commissions and meeting his annual sales quota long before his peers hit theirs, the CEO delegated the matter to an HR partner with the suggestion to “have a chat” with the executive, instead of addressing the issue head-on himself out of concern over potentially damaging his relationship with this senior member of his staff whom he valued as a strategic partner. 

When other sales reps repeatedly raised their frustrations about this continual favoritism with their manager, she shared in confidence that the HR partner did ask the senior leader to refrain from funneling customers to his friend and instead forward them to the sales manager but that he’d brushed her off, responding that it was “his prerogative” to do so.

This “prerogative” came at a steep cost to the organization’s performance and culture, destroying morale and motivation, as evidenced by several talented sales professionals and managers who eventually jumped ship in disgust, venting their frustrations on, a website where current and former employees anonymously review companies.   

Those employees who stayed on likely experienced what neuroscience research has explained as a “threat response” in the brain, a neural impulse as powerful as a physical blow to the head. This response to perceived unfairness can impair analytic thinking, creative insight and problem-solving abilities, making it difficult for employees to focus on the work at hand and contribute meaningfully to the business. Over time, informal narratives about how people feel they’re treated by management can lead to deep-seating feelings of mistrust and resentment that continue to spread throughout the organization, leading to further attrition and decline in performance.

While the CEO had good intentions of instilling a culture of fairness and inclusivity in the organization, his failure to hold people accountable for upholding such standards put his own commitment in question and taught him that clear expectations must be followed up with constant measurement, clear feedback, and a willingness to draw consequences if necessary.     

2. Undervaluing gratitude

In a twist on standard procedure, I once asked a hi-tech start-up CEO I was coaching to get observer feedback on her communication- and leadership style herself, as opposed to me interviewing staff and employees to gather the data for her.

Her company had experienced explosive growth over the previous year, and she felt increasingly removed and disconnected from the people who did “the real work” as she called it. She had also become aware of increased attrition among her talented workforce and wanted to get to the bottom of why people were leaving a rapidly growing company that offered ample opportunities for career advancement. So, in a first step to help her rebuild this important emotional connection, I wanted her to engage directly with employees in various roles and from different levels throughout the organization, to get their perspectives on her as a leader. I coached her on how to ask thoughtful questions in a way that conveyed humility, genuine curiosity, and that made it psychologically safe for people to be honest with her and provide helpful insights.     

One of the more profound insights this personalized 360 feedback process generated, was that she didn’t seem to be grateful for all the hard work her employees had put in and the many accomplishments they’d achieved over a relatively short amount of time, and that she should praise people more for their efforts. 

The CEO acknowledged in our debrief that she often didn’t think to publicly thank people for their efforts because she herself disliked whenever her boss had praised her publicly in a former role, making her feel embarrassed and uncomfortable, because in her view she was just doing her job. As a consequence, she didn’t share her gratitude with her employees as a first-time CEO, assuming that great jobs and salaries and interesting projects to work on would be enough for people to stay engaged and thrive.     

What she didn’t realize was that the organizational impact of showing gratitude to employees had long been established, and that it directly leads to increased employee engagement and effort and positively affects business outcomes. In one study shared by professors Adam Grant of Wharton School of Business and Francesca Gino of Harvard Business School, a manager went to a call center to simply thank employees for their efforts, resulting in a spike of more than 50 percent in calls made over the following week.  

This CEO learned that in spite of all the opportunities the company offered to talented employees, a simple thank you for a job well done can make all the difference between an engaged and motivated workforce, and one that is purely transactional, trading its time for money, eventually seeking opportunities elsewhere for lack of feeling appreciated and valued.    

3. Failing to coach and inspire

The most common fatal flaw among all leaders, according to Zenger Folkman, a global leadership assessment firm that analyzed 360 feedback data on 87,000 leaders, is “Inspiring and Motivating People to High Performance.”

It’s not enough to make sure the right people are on the bus and in the right seat on the bus, as Jim Collins enlightened us in his book “Good to Great”. Great leaders understand that even the best players on their team need coaching and inspiration.

What’s the impact of uninspiring leaders?

Reduced overall leadership effectiveness, low engagement of direct reports, a high number of direct reports who think of quitting, and increased turnover.

One CEO of a global manufacturer for children’s products I’d started coaching shared with me how frustrated he’d get when he didn’t get the results he expected from his senior leadership team that was mostly comprised of presidents of the global regions where the company was active.

He would tell people things like, “If I need to tell you how to play on my team, then you can’t be on my team,” and “You’re an executive, and I shouldn’t be babysitting you and telling you how to get to the outcome that we both expect.”

From 360-degree feedback interviews I conducted with his leadership team, he learned that this was the wrong approach, and that he couldn’t just set direction and sit back and wait for people to deliver and lash out when they didn’t.

He learned that in order to drive performance and get the results he wanted, he needed to demonstrate his interest in each individual as a human being and better understand their unique challenges in their respective regions and then brainstorm solutions on how he might best support them to achieve important outcomes together.

People are inspired when a leader reduces uncertainty by being crystal clear in his or her expectations, gets everyone aligned on what constitutes success, helps them focus on the right priorities that deliver the right outcomes, and provides regular feedback on progress, helping people get back on track when they go off course.

This CEO learned to become a coaching leader who’d challenge people by saying “I understand why you’re doing it that way, but have you considered this other approach?” He encouraged productive disagreement as a basis for conversations about the merits of different approaches and provided his insights to help figure out the best outcome together.

Even small improvements in awareness, behavior and communication can help CEOs and other senior leaders become vastly more effective in influencing outcomes throughout their organization and increase the engagement and emotional well-being of their employees.  

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