14 Dec 2020
Eight Things Every First-Time CEO Should Hear
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If you’re reading this, chances are you’ve encountered articles telling you that a good CEO needs to be a decisive, results-oriented leader who can simultaneously articulate a strategic vision for the company, embody its culture and values, and represent it to outside entities—all while driving growth.
You probably also know that CEOs walk a tightrope between the often-contradictory imperatives of their job. They must be optimistic, capable of seeing opportunities wherever they look; but at the same time they must be capable of assessing the risks that lie beneath those opportunities. They must be great listeners and team-builders, able to synthesize information and opinions from a great variety of sources; but they must also be decisive, willing to make decisions without consensus in moments of information uncertainty.
When I first became a CEO in 2003, I knew these things too. I’d spent the previous ten years as a regional manager for an IT Services firm, overseeing hundreds of employees, running a P&L, and working closely with the CEO and board. But although my previous roles had helped me acquire the necessary skills to lead a P&L, I was nonetheless surprised by the psychological and emotional complexities of the CEO position.
In my subsequent career as an executive coach and search consultant, I’ve learned that my experience as a first-time CEO was not unusual: knowing what a CEO does and knowing how being a CEO feels are very different and making the leap to the lead executive chair is one of the single most challenging job change of most CEOs’ careers.
Here are eight things I wish I’d known when I made the transition.
1. Being boss-less isn’t all fun and games
Most first-time CEOs (basically everyone who isn’t a college-age entrepreneur) come to the role after decades of hard work—decades during which they had peers with whom they could informally trade feedback and superiors to whom they could refer certain hard-to-make decisions. The fact that CEOs have neither bosses nor peers within the company constitutes a real and drastic change, one that requires adjustment and often drives the social isolation, lack of feedback, and fear of decisiveness that first-time CEOs frequently experience.
2. Responsibility can be isolating and painful
Almost by definition, when you’ve got a boss, you’ve got someone else to whom you can defer responsibility for the most consequential or challenging decisions. But when you’re the CEO, you are that boss. For many executives, this is something they’ve longed for: the moment when they get to give orders without having to run them by someone else. But with this authority comes an intense emotional burden: all of a sudden you are the person making decisions—often based on limited information—that can have serious ramifications for the company’s health and the quality of your people’s lives. Indeed, at times you’ll have to choose between those exact things. Even experienced CEOs can find the weight of authority incredibly taxing, especially in times of crisis.
3. People will treat you differently
CEOs hold an almost reverential position in many companies. There are a number of explanations for this fact, but one of them is that it’s the simple consequence of power disparity. If you’re an employee, the CEO of your company is not just in charge of what you do at your job everyday, they’re in charge of whether you have your job at all. And this fact understandably influences the ways in which employees interpret and behave around their CEO.
I experienced this firsthand. When I became a CEO, I expected members of the pre-existing management team to behave circumspectly around me; I expected to have to earn their trust. What I did not expect was for my friends in the company—former coworkers I’d brought in—to behave differently toward me simply because I was now in charge. Just like the rest of the management team, however, they proved hesitant to disagree with me, hesitant to offer negative feedback about my actions, shy about delivering bad news, and unwilling to share the juicier aspects of company gossip that often provides crucial insights into morale and culture.
4. People will do what you say
One byproduct of your authority as a CEO is that what you say—and how you look when you say it—matters more than it did earlier in your career. For this reason experienced CEOs are often quite careful when they speak; they know that even a spur-of-the-moment idea or opinion can, if voiced, have lasting impacts on the company’s culture, behavior, and reputation. As a new CEO, you can’t bounce ideas off just anyone. You can’t have emotional reactions around just anyone. You must calculate the potential interpretations and ramifications of every idea and opinion before you voice them.
5. People will act as you act
As the CEO, you embody—whether you intend to or not—the culture you want to see in your company. The way you speak, the way you comport yourself, the kinds of financial decisions you make on and off the job—all of these things send a message to the people who work for you. You may be astonished to learn, as a new CEO, that your employees talk about the model of car you drive and how much you paid for your house. But they will; and they’ll infer things about you and your values from that information.
Culturally speaking, CEOs need to understand (and leverage) the fact that their behavior has a symbolic dimension. Getting rid of corporate jets, for example, may have a tiny impact on the bottom line in the greater scheme of things, but it can go a long way in revising the tone of the company’s culture. Similarly, the CEO who spends their bonus money on a Ferrari sends a very different message about why they’re working than the CEO who puts that bonus into savings or uses it to endow their local land trust.
6. You are the external face of the company
Your own employees aren’t the only ones hanging on your every word and deed. As most first-time CEOs know, chief executives spend a significant amount of time and energy representing the company to the public—that is, to the media, to investors, and to stakeholder communities. But it is important to note that as the CEO, you are always serving in this capacity. It’s a 24/7 job. Your life is now a symbol for something larger, and there are certain penalties that come with being a symbol. You give up a significant amount of anonymity, for example, and you give up certain freedoms that come with that anonymity. For some new CEOs and their families, this takes some getting used to.
7. You’re overseeing something that pre-exists you
If you’re coming into the company as a CEO, you’re inheriting years, even decades, of relationships, precedents, expectations, and practices—many of which will never be described to you. In my case, I was ready to invest significant time and energy into building a fluid working relationship with my board, but it took far longer than I expected for me to really understand the complex and not uniformly affable relationships between the board members, relationships that pre-existed me but nonetheless dictated the tenor of board discussions.
8. You will not have total control over your success and failure
I was the CEO of a construction services company in the early 2000s—a period when the construction industry saw massive growth. While the company rode that growth, I was widely applauded by our stakeholders, who ascribed much of the success to my leadership. I was on top of the world, enjoying doubling and tripling EBITDA numbers every other year. Then in 2008 we were hit by the housing crisis, which almost overnight sent the company into a major financial crisis. All of a sudden people (myself included) were wondering why we hadn’t seen the downturn coming.
The fact is our culture tends to credit an organization’s successes and failures to the person in charge. If the company performs well, the CEO is applauded. If it stumbles, the CEO is blamed. But factors beyond the CEO’s control can dictate both successes and failures. As a CEO, you will be blamed for things that you feel like you had no control over, things you feel like you inherited, just as you’ll be applauded for successes that may not be directly linked to your actions. Either way, you must understand that the core responsibility of your job is to focus on creating value in the space between these extremes.
Three Recommendations for Emerging CEOs:
1. Work with a coach
Executive coaches are an excellent resource for first-time CEOs. I did not have a coach during my term as CEO and knowing the impact a coach can have, this is one of my biggest regrets. As neutral third party observers, coaches provide the kind of constructive feedback and skills training that CEOs, as bosses, often struggle to get from their team members. They also help CEOs improve their skills in conflict management, responsibility delegation, time management, and listening—all of which are necessary for new CEOs to successfully adapt to the role.
Even today, Coaching is occasionally stereotyped as remedial or punitive—something CEOs don’t need if they’re doing a good job. But that’s an old fashioned mindset. Most people now recognize that the purpose of executive coaching is to increase performance by improving emotional intelligence, which leads to a more empathic and self-aware leader. Even the best CEOs can get better at their jobs. Some of the most influential CEOs in the last decades—Microsoft’s Bill Gates and Alphabet’s Eric Schmidt among them—have benefited tremendously from executive coaching.
As Schmidt told Fortune in an interview, “Every famous actor, every famous performer, has somebody who’s a coach, somebody who can watch what they’re doing and say, ‘Is that what you really meant?’ ‘Did you really do that thing?’ and give them perspective. The one thing people are never good at is seeing themselves as other people see them. A coach really, really helps.”
2. Build, develop and lead through your leadership team
Building their leadership team has always been an important part of the CEO job; but the composition and purpose of this team is changing as businesses themselves take on a wider understanding of their purpose.
Traditionally a CEO’s goal was to develop what I call a “high performing team,” in which each member was responsible for a different function that created value for investors and customers. But thanks to a growing emphasis on ESG considerations, today’s leadership team must now serve a wider caste of stakeholders than its predecessors. Employees, for example, are now considered primary and equal stakeholders to investors and customers. Similarly, many investors are now evaluating companies based on their social and environmental relationships with the communities in which they operate.
As a result, modern CEOs need to build what I call “high value creating” teams, in which success is measured by the team’s ability to create simultaneous value for a broad array of stakeholders. A side effect of this widened imperative is that success is no longer measured by looking at how individual members of the leadership team execute their individual functions. Instead, a successful leadership team has to work interactively, across functions, to ensure that it represent the interests of (and creates value for) all stakeholders.
For first-time or new CEOs, building a value-creating leadership team—and making sure that you get the right people on it—is crucial to your ability to focus broadly across the needs of the organization and to increase value by steering company purpose and culture. But it’s not easy to do. A Systemic Leadership Team coach can be invaluable in helping the CEO build, lead and motivate the perfect team.
3. Build informal relationships with individual board members
The board can be an excellent source of guidance for CEOs, and newly appointed CEOs should go out of their way to build informal relationships with individual board members who can provide the advice, feedback, and support that CEOs often fail to receive from other members of their organizations.
But building these relationships can be harder than it sounds. Your board members, after all, don’t work in the office down the hall; they may not even live in the same country. This is why close relationships between CEOs and board members rarely just fall into place like they often do between CEOs and key members of the leadership team. Instead, building relationships with board members often requires conscious effort. New CEOs will need to go out of their way to creatively engage their directors on a regular basis outside of the formal strictures of the boardroom.
The CEO job can be one of the most rewarding jobs in business. It is also unquestionably one of the most difficult. Incoming first-time CEOs should expect the role to bring a variety of changes to their lives, most of them positive, some of them negative, others downright confusing. By surrounding yourself with trusted advisors, by consulting mentors, and by hiring a coach, both new and seasoned CEOs can minimize their isolation and get the feedback they need for success.