CEOs need style and substance

The recent departures of Australian Rugby League Commission CEO David Gallop and Boral CEO Mark Selway were attributed to the organisations involved needing a different leadership style to take them forward.

After 10 successful years as the head of rugby league's national body, the NRL, Gallop was appointed CEO of the Australian Rugby League Commission following its formation in February. Four months into his four-year contract, the board says it came to mutual agreement with Gallop "that the game needs a different style of leadership detached from the past for the next stage of its development”.

In the Boral situation, by all accounts (including the Board's), during his two years in the job Selway successfully restructured and re-energised the business and applied the Lean management philosophy to its manufacturing processes. However, the company says it is now seeking a CEO "with a leadership style suited to harmonising the changes that have occurred over the last two years”.

To me, these situations reflect the delicate balance between CEO style and substance.

After 14 years as an executive coach and mentor, I see leaders as people who can:

– Articulate a vision and inspire others to participate;

– Work cooperatively with their team and take an interest in their development;

– Take command when the going gets tough;

– Manage ambiguity to sustain morale and productivity during times of change;

– Make decisions; and

– Achieve results.

Since leadership is all about influencing, enabling and energising a business, people skills should be equally as important as financial performance – if not more – when it comes to evaluating a CEO's performance or suitability for a role.

Boards should hire and evaluate CEOs based on a range of criteria including leadership competencies, business acumen and performance.

While it is true that some CEOs prefer or are more suited to transformation, turnaround or high-growth situations, a CEO's leadership style should never be a surprise to a board that has done its due diligence and recruited for both people skills and financial and operational management skills.

CEOs and their boards often come unstuck when there is a lack of alignment between a strategy presented by management and the views of the board. The board is then faced with a decision to either ask for the strategy to be revised – which can be a challenge – or replace the CEO if they believe the CEO is unable or unwilling to deliver the strategy required.

If this lack of alignment comes as a shock to the board, it brings into serious question the very nature of the relationship between the board and CEO up to that point.

Appropriate interventions need to be put in place by a board if their chosen (or inherited) CEO does not have the people skills, leadership competencies, or strategic abilities they require.

This could mean implementing an ‘on-boarding' program, putting time and support into the "how” of doing the role to enhance the CEO's success. For example, providing support to develop a critical business plan for the first 100 days, or helping the CEO deal with people issues and creating the right organisational culture.

A professional, external mentor could also be engaged by the board to work with the CEO on areas for improvement.

Such initiatives should be coupled with a 360-degree review process to ensure objective and regular feedback is provided to the CEO. Boards may also consider a series of integrated individual and team development initiatives designed, for example, to develop awareness of self and others, build deep and authentic relationships, and enhance communication.

Together, these initiatives can form a highly-effective human capital risk management platform – and all at an infinitesimally lower cost to an organisation – and individuals involved – of replacing a CEO.

Boards have an important role to play, not just in supporting and evaluating the CEO's performance, but also staying close to all levels of management to monitor a CEO's people management strengths and weaknesses and their impact on organisational culture – both of which are instrumental to organisational performance. This is particularly important where you have a passionate, head-strong CEO – attributes common to many CEOs.

The tone of an organisation is set from board-level down, so boards should request regular reviews of the CEO and executive team. They should also consider dotted line quarterly reporting on direct reports to the CEO and top team, based on appropriate people and culture metrics such as career and talent development strategies and progress, engagement metrics and culture scores.

To assist in this monitoring process, divisional heads should be part of a regular 360 feedback process and take part in mentoring or coaching programs. Feedback on leadership and management competencies should be provided to key stakeholders and relevant board members. Many organisations today have a head of HR who has a direct reporting line to the CEO and a dotted line to the board.

These checks and balances provide an early warning system to boards, particularly on people and cultural issues that may not have yet impacted the bottom line – but will likely do so should they continue.

When it comes to deciding what leadership style is right for an organisation, I would say that a leader's primary job is to lead others to a destination. The critical success factor, therefore, is whether others will follow.

Virginia Mansell is executive director of the Stephenson Mansell Group, a pre-eminent Australian leadership development firm. She holds a BA in Psychology and Statistics, a Postgraduate Degree in Counselling Psychology, and has been a registered psychologist for 18 years. In 2009, Virginia published her first book, The Focused Executive: Leadership & Management Skills in Challenging Times. www.smgrp.com.au