They Just Fired the CEO

“What are we going to do about Nick?”

The Board Members sat around the table, all looking toward Joan, the Board Chair. Randall, who’d asked the question, leaned forward with his elbows on the table, hands outstretched, palms up.

“Aren’t we convinced by now?” Randall asked. “Haven’t we let things go on long enough?”

Joan began to nod her head slowly. The others waited quietly.

“Yes,” Joan began. “Yes, I believe we all agree that the problems with our CEO have gone on long enough. We’ve addressed Nick’s failings with him numerous times over the last year and a half. We’ve done all we can to help him succeed. Unfortunately, it hasn’t helped. Yes, Randall, I am convinced that it’s time to plan for Nick’s termination.”

The sighs and groans around the table had less to do with firing Nick and more to do with the enormity of the task of replacing him. It made the fact of his failure an even more bitter pill.

According to industrialist Henry Ford, “failure is only the opportunity more intelligently to begin again.” A review of statistics about failure rates among CEOs makes it clear that opportunities to learn from failure are being missed. In 2005, Harvard Business Review cited a study showing that two out of five new CEOs fail in their first 18 months in the role. As alarming as that 40% failure rate sounds, a more recent report from top strategy consulting firm Strategy& showed that it’s getting worse. The study indicated that annual turnover among CEOs at the world’s 2,500 largest companies had soared to a record high in 2018. Among those terminations, 20% were involuntary.

Unfortunately, the problems affect more than just CEOs. The rate of failure at the executive level is also extraordinarily high. According to the 2021 Leadership Transitions Report from Development Dimensions International, 35% of executives promoted from within fail in their new role. For executives hired from outside, the rate is 47%. These are unfortunate trends that negatively impacts organizations’ stability, progress, and profitability. Although the data was from large companies, these patterns can impact organizations of any size.

Joan’s meeting with Nick was short; after giving him the news of his termination, she thanked him for his efforts, wished him the best, then stood and left him in the conference room alone.

Nick rubbed his forehead, then sighed and pulled out his phone to text his wife Lexi. “WORST DAY EVER! Can I call you?” he typed, then sent the message. While he waited for Lexi’s reply, Nick scrolled through recent messages, looking for one in particular. It was from Drew, an executive coach he’d met at a conference months ago. He liked Drew a lot better than the coach from the executive recruiting firm that the Board insisted he meet with. That guy had wanted to run Nick through a program with steps that all started with the letter P. Nick hated that kind of thing. “P is for patronizing, penalizing, and pathetic,” he’d told the Board Chair. It felt like the Board was sending him to detention hall, he’d said, and he “wasn’t planning to partake.”

Something about Drew, however, made him easy to talk to, plus he was bright and insightful. At no point in their conversation had Drew described a program. So, at this low moment, Nick thought of Drew. Although they hardly knew each other, Nick felt the urge to reach out for support.

He found Drew’s last message and sent a reply. “Just got canned. Can we talk?” Just then Nick’s phone rang – an incoming call from Lexi. He took a deep breath and pressed the answer button.

___________________________________________

Nick had hired Drew and was paying out of pocket. He and Lexi had come to the conclusion that he was going to need help to recover from his termination, so they made the investment. Over the next few coaching sessions, Drew’s questions helped Nick to deconstruct the 18-month descent from the best moment of his career to the worst. It was a sad story. The honeymoon phase of the first six months was followed by ever increasing challenges over the course of the past year. After digging into it for several more sessions with Drew, Nick finally admitted to himself that as the CEO, he’d had some major blind spots – areas of weakness that everyone could see except himself.

One blind spot that hinders senior leaders is self-doubt. For key decision-makers, the risk of making a bad decision – or even a good one that will have painful consequences for others – can bring feelings of fear that undermine confidence. In those times of self-doubt, a CEO rarely feels free to lean on those above (the Board of Directors) or those below (the Executive Team) for moral support. Doing so would seem to expose weakness and erode the leader’s reputation. As a result, the CEO decides to go it alone. Decisions are too often made without the full benefit of advice from those best equipped to help.

One of Nick’s weaknesses was the way he handled his angst about being a first-time CEO. “In my past positions,” he told Drew, “I was part of a collaborative team. My colleagues helped me, and I helped them. I didn’t think CEOs worked that way.”

As the chief executive, Nick felt like he had to figure things out on his own. It often felt like he was making things up as he went along.

“It was weird. People who had been with the company for decades came to me, asking for decisions about stuff I knew little about, things they’d been dealing with forever. There’s nothing I hate worse than looking stupid, so instead of admitting my ignorance, I tried to answer. I could have asked for their suggestions or proposals, but instead I plowed through and made a decision on my own. Sometimes I got it right, but too often, I missed.”

After telling Drew about several of those misses, Nick admitted something he hadn’t even told Lexi. “Deep down, I felt like a fraud. I dreaded the day that one of my VPs would interrupt me in a meeting and say, “Dude – do you have any idea what you’re doing?””

In contrast to feelings of fear and self-doubt, some senior leaders seem to feel invincible. They tend to respond to the burden of responsibility with an overconfident zeal that can blind the leader to their need for input and advice from their Board or their team. Although there is value in trusting one’s instincts and going with the gut at times, the consequences of a mistake at the executive level are greatly magnified. Going solo can also alienate and offend supporters (including Board members and direct reports). Their valuable input isn’t just ignored, it’s never even requested. 

“Hubris,” Drew said. “Alongside the fear you’ve been talking about, I’m also hearing hubris.” He was responding to a story Nick had told about conflict with his VP of Sales.

“If there’s one thing I’m great at,” Nick had said, “it’s new client acquisition.” Even though it wasn’t his job, Nick liked selling and knew that he was one of the best. When he heard that the sales team was about to land a client he’d worked with at another firm, Nick got on the phone without consulting anyone. He heard the prospect’s objections, offered a concession, and landed the sale. Unfortunately, his Lone Ranger approach led to confusion. The team couldn’t follow through on the concession he’d offered, and they ultimately lost the sale. Nick felt like it was an innocent mistake, not something that should have caused a permanent rift with sales.

“Your intentions were good,” Drew said. “But they didn’t win you any friends. It sounds like you invited yourself into someone else’s process and set yourself up to be a hero. Instead, you killed the sale.”

Nick liked it when Drew “shot straight” with him, but this stung. The worst part is that it was right on target. “I get it,” Nick said. “I got overconfident, and I made a lot of people mad. So I shouldn’t have been surprised or offended when my sales team froze me out. That might actually be why the rest of my VPs started pushing back. I’m not sure. But, yeah – hubris might be the right word. The hubris of an idiot.”

It seems strange that one person would struggle with both self-doubt and overconfidence – and yet it’s common. The challenges of leadership naturally bring out fears and anxieties. These tensions arise from awareness that not only is everyone watching the leader, everyone is also impacted by the decisions the leader makes. Meanwhile, the power inherent in senior leadership roles seems to bring out pride and self-importance. Both blind spots – self-doubt and overconfidence – are eliminated by connection and communication. Leaders who are able to connect with and trust their own leaders and colleagues tend to make wiser, more prudent, and more powerful decisions.

Nick’s story will continue in the next post. Meanwhile, consider these questions from Coach Drew:

  • Who are your trusted advisors?
  • How can those you trust help you see your own blind spots?
  • How hard is it for you to admit your limitations?
  • What kind of environment would allow you to be honest and ask for help?

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