When companies’ fortunes are looking up, business is booming and positivity is in the air, leaders have a lot less pressure on them than they do when things aren’t going as swimmingly.
Indeed, wrote Judith E. Glaser, CEO of Benchmark Communications and the chairman of The Creating WE Institute, in a recent piece for the Harvard Business Review Blog Network, “Leaders face enormous public and employee scrutiny when their companies are failing. Many have to measure their success in terms of stock price and market share, and when those slip, everyone sees it happening, reads about it in the business pages, watches it on CNBC.”
Be a Rometty, not an Armstrong
The way CEOs respond to adversity sets the tone for the entire workforce and has the power to either galvanize employees into action or strike fear and uncertainty into their hearts. Glaser compared two CEOs’ approaches to their companies’ recent less-than-stellar performances, opining that IBM CEO Virginia “Ginni” Rometty’s video address to her entire company – which is composed of 434,000 employees in 170 countries – was much more effective than AOL CEO Tim Armstrong’s meeting and call with the 1,100 employees of AOL’s Patch unit.
As The Wall Street Journal explained following the delivery of Rometty’s speech earlier this year, IBM reported disappointing third-quarter revenue last October and a further drop in revenue and profits in April. The April announcement caused the company’s shares to plummet by 8 percent.
In her video address, which was posted on IBM’s internal portal for employees to review, Rometty urged employees to move more quickly and be more responsive to customers. Specifically, she blamed the failure of a software pitch to a major retail player on IBM being “too slow to understand the value and then engage on the approval and the sign-off process.” In a bid to speed things up, she instated a new policy of responding to clients within 24 hours, encouraging workers to ask for assistance from their superiors if anything cropped up to hinder that goal.
“Rometty’s clear, direct, provocative language was intended to activate her employees, to make them acutely aware of the issues at stake and to direct their full attention on working together, fast,” wrote Glaser.
In contrast, Glaser called out AOL’s Armstrong for a speech she characterized as an attempt at tough love that “came across decidedly more threatening than energizing” – especially when Armstrong fired his creative director on the spot, an act Glaser said served only to fuel the fires of uncertainty and distrust already burning among the workforce.
Foster inspiration, not fear
Companies in virtually every industry have seen some tough times over the past few years, and this may result in management recruiters paying particular attention to how prospective executives conduct themselves during times of adversity.
“Great leaders understand that rallying the troops is not about scaring employees into working harder with threats and blame but inspiring them to want to ‘do battle’ together, unified in purpose and determined to succeed,” Glaser maintained, offering a three-pronged approach toward doing just that.
Specifically, she advised clearly explaining required changes and encouraging workers to think about how they can help make these goals a reality, being clear and direct without apportioning blame or getting overly emotional (and encouraging workers to do the same) and focusing on the future by fostering a culture of collaboration and innovation in which employees aren’t afraid to speak up and add their own contributions.
About Caldwell Partners
Caldwell Partners is a leading international provider of executive search and has been for more than 40 years. As one of the world’s most trusted advisors in executive search, the firm has a sterling reputation built on successful searches for boards, chief and senior executives, and selected functional experts. With offices and partners across North America and in London, the firm takes pride in delivering an unmatched level of service and expertise to its clients.