Few moments in life are more rewarding and exciting than being named CEO of a major national brand company. Moving into the corner office can represent the capstone of years of diligent service, either in the company you’re going to lead or one that you’ve known and admired for much of your life. It’s your chance to take the organization from the achievements of the past into a bright future of unlimited possibilities.
Being named CEO may also mean that the stagnation, dysfunction and even corruption of prior administrations have been dumped onto your lap. When you were an executive, you could keep your head down, do your job and keep your nose out of the business of your peers. But now that you’re the CEO, everything they do has become your business and your responsibility. The buck now stops at your desk — and so does the infighting, shirking of responsibility, lack of respect and sometimes even criminal behavior. It all lands in your inbox, and it won’t go away.
Being both moral and ambitious, your first task is to fix the obvious problems while building a company culture based on mutual respect, emotional connectedness and high ethical standards. You know organizations that are transparent, trustworthy and have a positive vision of the future also happen to be the most profitable in the long term. History is replete with tales of ruthless, take-no-prisoner leaders who cared only about boosting this quarter’s profits, only to crash and burn, leaving misery in their wake. That’s not the path you want to take.
The Right Way To Turn Around A Dysfunctional Company
Restoring health to a company in crisis is not an easy task, and it’s not a popularity contest. You have to make painful choices and ask people to give up their old comfortable ways. But there’s a wrong way and a right way to get the job done.
The wrong way is to pound your fist, threaten, grandstand and intimidate because you think the circumstances demand high drama. The wrong way is to cater only to the fantasies of investors — who don’t have to actually work at the company — while treating your employees like replaceable cogs. Being a tyrant may earn you short-term applause from Wall Street, but it will ensure the long-term decline of your company.
The right way is to offer ethical, transparent leadership that encourages healthy emotional ties between stakeholders and the organization. You need to offer a vision of a bright future while asking for sacrifice in the present.
Here are two examples of CEOs who have turned around declining organizations the right way.
Chip Bergh At Levi Strauss & Co.
Who in America hasn’t owned and worn a pair of Levi’s jeans? For most of the late 20th century, the iconic brand founded in 1853 by namesake Levi Strauss dominated the casual clothing market. In 1997, the brand reached its peak annual sales of $7.1 billion. But competition sharpened, and by the turn of the 21st century, well-heeled shoppers had a range of high-end denim choices, while at the lower end rivals like Lee and Wrangler took a big bite from Levi’s market share.
By 2003, Levi’s revenues had dwindled to $4.2 billion. Levi’s designs looked less classic than drab, and sales stagnated. The company needed a fresh start.
In September 2011, Chip Bergh, who was then president of global grooming at Procter & Gamble, took over as CEO of the stagnant company. He soon discovered that Levi’s decline was not just a matter of happenstance but had tangible causes that could be corrected — and most of the problems were internal.
One of Bergh’s first tasks was to interview the top 60 employees for an hour apiece. Their answers revealed the company’s senior management team didn’t know how poorly the company was doing, and they had little incentive to perform. The company’s culture was one of complacency. Bergh made the tough decisions, and he quickly replaced nine of his 11 direct reports. In rebuilding his team, Bergh hired people based on their leadership abilities, commitment to transparency and desire to work together in an ego-free environment.
For a company in crisis, Bergh’s solution was to strengthen the emotional connectedness between the brand and the employees while making the tough, heartfelt decisions to benefit the greater good.
Mary Barra At General Motors
On January 15, 2014, when Mary Barra, a “lifer” at GM who had started with the company as a co-op student at age 18, was named chairman and CEO of General Motors Company, the iconic American carmaker was days away from being slammed with a massive scandal that went to the core of the company’s dysfunctional culture.
On February 6, GM announced the recall of 800,000 of its small cars due to faulty ignition switches. Ultimately, the company recalled nearly 30 million cars worldwide, paid compensation for 124 deaths and, to avoid prosecution, agreed to forfeit $900 million to the United States government.
Perhaps the most significant part of the problem was that many individuals within GM had known about the defect for least a decade prior to the recall being declared. As the new chairman and CEO, Barra overturned the traditional GM approach, which was to ignore these issues, fight them and stonewall the company’s critics. According to Fortune, Barra tackled the company’s culture problem head-on. “’I never want to put this behind us,’ she told employees at a town hall meeting that stunned many of them. ‘I want to put this painful experience permanently in our collective memories.’” After visiting with the families of crash victims, she said, “I believe that our response has been unprecedented in terms of candor, cooperation, transparency, and compassion.”
“We’ve never seen anybody run GM like this. She’s breaking all the rules,” said Rebecca Lindland, executive analyst for Kelley Blue Book.
By working with quiet authority and forging new emotional bonds between stakeholders and the company, Mary Barra has transformed what was arguably one of the most dysfunctional corporate cultures in America and provided an example of what strong, heartfelt leadership can accomplish.
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