Reviewing publicly traded companies, the study’s findings also revealed that companies are redefining the CEO role—separating it from the Chairman of the Board and often moving the former CEO into the Chair position. One advantage to such an arrangement is the deep knowledge the Chair can offer the current CEO. The disadvantage is the increased pressure on the CEO to perform well or risk being replaced.

Therein lies the main trends Booz & Company identifies: “… convergence and compression contribute to a high global churn rate among the world’s top CEOs. In 2009, CEO succession on a worldwide basis remained steady at the relatively high level of 14.3 percent, a level at which CEO turnover appears to have plateaued during the past five years” (Favaro et al 3).

Turnover and Succession Planning

Turnover occurs for a variety of reasons: corporate acquisition, dismissal, or planned departure. The study notes that the majority of turnover in North America (71%) and Japan (84%) were planned events; CEOs chose to leave or retire. The study also indicates that companies look for CEOs with previous executive experience that can offer stability and proven leadership. With such high percentages of executives willingly leaving office, the question of successful replacement arises. The answer to that question is succession planning.

While succession planning helps cultivate leadership, it can also reduce the amount of time new CEOs have to set the corporate agenda and achieve organizational change; the average time in office dropped from 8.1 to 6.3 years from 2000 to 2009 (Favaro et al 7).

If a CEO’s performance does not achieve desired results on time, a replacement is already in training. That training requires time and careful cultivation. A CEO must understand the company—its potential for growth and possible pitfalls. A CEO must build trust in order to guide the company. Trust requires time and strong relationships, so more often than not replacements come from within the company.

Strategic Alignment in Succession Planning

The study by Booz & Company provides evidence of the trends we’ve observed at Insight Strategic Concepts. Successful succession planning requires strategic alignment. “This alignment requires looking forward to the future requirements of key positions within your organization more than the past requirements. As markets rapidly change, the strategic positioning and purpose of roles and their alignment to one other to achieve strategic success requires playing out the possible scenarios, multiple strategies and overlapping requirements that identify the organizational design required to compete for the future. Most organizations do not take the time to create strategic scenarios for the future and they hire at the spur of the moment based on short-term needs versus those that await in the months ahead. This leaves organizations with a misalignment of talent and inability to make decisions in times of change and uncertainty. Taking time to create a vision and the people required to make it happen is invaluable in creating the greatest asset you can build in your organization – your people.”

How does your organization approach succession planning?

Reference

Favaro, Ken, Per-Ola Karlsson, and Gary L. Neilson. “A Decade of Convergence and Compression.” Strategy & Business Summer 2010: 2-15. http://www.booz.com/media/uploads/BoozCo-CEO-Succession-2010.pdf

1. Acknowledge the need for feedback. People need feedback to improve, just as processes do. We get feedback from our customers in the form of market research and sometimes in the form of complaints, from our processes in the form of data, and from our fellow employees via nonverbal communications, frustrations, or inquiries.
2. Give both positive and negative feedback. Feedback offers us not only recognition of our strengths, but also help for those areas where we can improve.
3. Understand the context of the feedback. Feedback is sometimes harder to receive than to give, so understand what led up to the giving of feedback. When giving feedback plan it carefully; pay attention to where it will occur and why.
4. Know when to offer feedback. As with all communication, the receiver must be in a position to hear it without defensiveness or anger. So pay attention to the timing and deliver the feedback within a context of listening to and caring about the group, the individual, and the process.
5. Most importantly, know how to give feedback:

• Be specific and descriptive.

• Describe specific behavior rather than using labels to categorize and generalize.

• Be honest and careful in your choice of words.

• Be caring and helpful.

• Beware of attributing motivation to someone’s or a group’s behavior.

• Speak only for yourself.

• Help people hear you.

Tips for Providing (and Training Employees) Effective Feedback

At Insight, we help our clients develop strong leadership skills. We talk about team building and collaboration and about leadership credibility. We also talk about feedback and resolution—how to listen and how to achieve constructive conversations. Believe it or not, the feedback process is one that can make or break your organization’s ability to succeed.

The most important thing for a leader to keep in mind is that the approach to feedback is as important as the feedback itself because it establishes you as a trustworthy leader. Once you know that, you can better communicate your perspective on a performance situation, gather quality feedback, and make improvements.

Be direct. Engage the employee.

The T.A.L.K. Method for Giving Feedback

Tell it like you see it. Ask for feedback. Lead toward a solution. Keep at it until it sticks.

Tell It Like You See It

In order to tell an employee how you see their performance, you have to clarify the issue for yourself. Start the conversation with your direct perception about how you see the situation, and be clear about what you feel is certain (e.g. what you directly experienced) and not certain (e.g. what others feel). When you both see the situation in the same way, then you can develop a solution.

Things to Avoid When Giving Feedback

Once you’ve thought through the issue, you need to consider a few things before opening the conversation. Do not give feedback if:

• You have insufficient history with the person
• You won’t be able to follow up after the feedback
• The receiver is low in his or her reserve of self-esteem
• You are low in your reserve of self-esteem
• Your true intention is to demonstrate your own perceptiveness or authority
• The time, place, or circumstances are inappropriate

Ask for Feedback

As you engage the employee in dialog, one of the best ways to clarify the issue is to ask the employee some open-ended questions that will better help you understand the situation from their perspective. In general, the more certain you are about the issue, the more you should use close-ended questions; the less certain you are, the more you should ask open-ended questions to draw out facts and meaning.

Lead Toward a Solution

It’s imperative to have the employee help determine the solution to a performance problem. That said, it’s helpful to have a few options to suggest if the employee is unsure of how to fix the problem. To do that, look at some of the concerns you identified and identify possible solutions. Just remember that the employee needs to be a part of the decision as to which solution works best for them.

Keep At It Until It Sticks

Follow-through matters. The main action managers can take to encourage employees to follow through is to follow through themselves by setting a follow up meeting. The meeting shows the employee that you care and also gives them a timeline of what is expected and a sense of accountability.

With my marketing background, I also know about the realities of cognitive dissonance, which these statistics do not always track. People say they will buy rice cakes because they want to lose weight, but do they? Employees say they will change their jobs when the time is right, but do they? When is the time right?

For years to come, there will be turmoil in global relations, economic pressures, and environmental threats. The pace of change will not change; in fact, it will speed up. Over the past two years many business owners have made many tough decisions. They figure it out as they go, and in our experience many business owners are in fact more scared than their employees. With their homes and livelihood on the line, decision making becomes a pressure-cooker situation. Many business owners will do all they can to avoid tough decisions in the face of uncertainty. As we have witnessed, often this leadership complacency is what employees misconstrue as “unethical” or not right.

It is a tough call. What causes such “unethical” behavior? First, it is important to closely examine what is being accused as “unethical.” Then it is necessary to understand the cause of what leadership is really trying to hide.

Where leadership goes wrong is in not being honest about not knowing what to do and then trying to cover complacency. Employees simply want to know the truth and then be a part of building a new plan.

Transparency is Key

Transparency is required for achieving strategic alignment with employees. Share the facts and engage employees in the results. Leaders don’t need to have all the answers. They simply need to provide the dialog for strategy and collaboration to create solutions.

Transparency is the only road to accountability. Employees know fact from fiction. When they see the genuine effort by leadership to inform, they engage whole-heartedly. Perhaps this is really why people stay in their jobs – employees ultimately see the fear of the unknown, and they stay out of dedication to help the best way they can. (After all, if 65% and 48% of executives believe that trust and transparency are the factors leading to voluntary turnover then this awareness of realistic leaders must keep people employed. It is the oblivious leaders that lose people regardless of the times.)

Every employee wants to make a difference. No matter the degree of engagement, tapping into talent and identifying clear proof of performance is where people are seen and will engage.  (In fact this is what inspired us to create BLOOM®, our talent alignment software that forces such alignment between strategy and talent within an organization.)

Trust is an outcome of transparency. Freely sharing information, engaging in employee performance planning, setting individual development goals, and assigning special projects are just some genuine ways to be transparent and build trust that lasts.

Nothing replaces honesty. Everyone knows when they are getting a shady deal. Lack of sharing is as bad as lying in tough times. This type of withholding is often when employees will engage their imaginations to create “unethical” behaviors. Silence in uncertain times is dishonest. Furthermore, letting rumors get out of control starts a path for repetitive abuse and turmoil that can easily become uncontrollable.

Share Your Experience

How does your organization use transparency to develop its workforce?

Understand why strategy is important

In their book Strategic Planning: A Practical Guide, Peter Rea, Ph.D. and Harold Kernzer, Ph.D. note that no strategic approach fits all situations, and as a result “contingency theory rules the day” (2). What is equally true, the authors say, is that all strategies require good sense and judgment. Further, while there is no singular school of thought on strategic planning all definitions speak to these concepts:

• Formulation of long-term goals and allocation of resources
• Serves as a “vision of success” and how to achieve it
• Necessity of free will and intentional design (qtd. in Rea and Kerzner 2)

Strategic planning sets the course for your organization’s future and as a result impacts not just the organization as a whole but each team and employee as well. Strategic planning, say Rea and Kerzner, “must function beyond an office of well-educated executives who are insulated from those who make the organization work” (3).

Strategic planning determines your organization’s direction, and a lack of focus leads to an erratic, uncontrolled lurching into tomorrow.

Formulate a strategic plan when conditions are right

If your organization has skills, resources, and the commitment of key decision makers then creating an implementing a strategic plan will serve you well (qtd. in Rea and Kerzner 9). Without this trifecta that forms a stable foundation, though, any plan you make will not endure. Further, your strategic plan must head in a direction that others are willing to follow (Rea and Kerzner 9); this may mean initially making decisions and changes that are agreeable to most everyone, and once those pay off push a bit further with more innovative plans.

Strategic Planning offers several questions to use as a basic framework for any organization’s strategy:

• Strategic issues
• Competitive advantages
• Compatibility of products/services and customers
• Innovation and growth
• Stakeholders’ satisfaction
• Strategy integration/measurement (Rea and Kerzner 11-12).

Think about the many ways your organization can grow

Insight has identified 44 diverse ways to grow – from sales to profit to people. Specific examples include ideas like branching into e-commerce or licensing, diversifying offerings, empowering employees as experts, and implementing a performance management system enables management to track progress. We encourage you to review the 44 strategies for yourself by downloading the PDF.

Get ready to make your organization BLOOM®

Our proprietary performance management system, BLOOM®, enables administrators, managers, and employees to form the big picture – the strategic plan – organize it into meaningful goals and milestones and then into actionable tasks, and see where each employee fits into the overall plan. Administrators provide the vision, managers provide the necessary notes and resources (e.g. spreadsheets and PDF files), and employees help carry out the plan to reach the goal. Because BLOOM® includes timelines and due dates anyone can see when a milestone has been completed and what’s past-due. Contact us for more information or to schedule a demo of BLOOM®.

Written by Paul J. H. Schoemaker, Profiting from Uncertainty: Strategies for Succeeding No Matter What the Future Brings, paints a clear picture of how responses to uncertainty can make or break a company.

In this post we offer a taste of the first chapter, “Embracing Uncertainty,” because it addresses many of the concepts that Insight does when we work with clients to grow and transform their businesses.

Embracing Uncertainty: An Overview

There is no sure-fire way to plan for the unknown, but let’s be clear: risk is not the unknown. Risk is calculated by identifying known contributors and variables; uncertainty is the space outside of risk. It is the unknowable. “The most challenging uncertainties that managers face,” says Schoemaker, “are those they haven’t a clue about – when they wake up one day to find that the Berlin Wall has crashed to the ground or to recognize that the Internet has merged or faded as a powerful new market space” (2).

Why should managers focus on something so unpredictable as uncertainty?

“Firm-specific actions account for just over half the value of a firm,” and the remainder is attributable to external forces that cannot be controlled, but that a company can prepare for through scenario planning (Schoemaker 6).

A few reasons to give uncertainty due consideration:

• Uncertainty affects the external environment
• The level of uncertainty appears to be increasing significantly
• Humans have inherent limitations in dealing with uncertainty 
(Schoemaker 5).

It is also, says Schoemaker, the only source of superior profits (3). A brief look at past examples reveals that stakes are high and that a future that managers fail to see is the one they failed to prepare for (Schoemaker 3-5).

Why is uncertainty increasing?

There are innumerable factors that contribute to uncertainty. A few that are easily identifiable include:

• More complex socioeconomic systems
• New technologies
• Demographic changes
• Changing values
  (Schoemaker 7)

Discomfort with uncertainty is a human response

Humans prefer the predictable. We have myopic eyes that limit our range of sight and timid souls that miss the bigger picture (13). We tend to trust our instincts, but the inherent problem is that instincts develop from past experiences, and uncertainty assumes that the future will differ greatly from the past (Schoemaker 14-15).

Uncertainty = opportunity

You can profit from uncertainties if you’re prepared, and you can prepare with scenario planning. “The less ambiguity we experience, the more we feel a problem can be structured, managed, planned for, and controlled. But competitors can do this as well, so the opportunity for advantage is diminished. We must learn how to welcome and indeed embrace ambiguity” (Schoemaker 10).

Schoemaker’s book includes a number of approaches that help prepare for uncertainty:

• Scenario planning
• Key success factors
• Robustness analysis
• Strategic vision
• Options thinking
• Dynamic monitoring (17)

Schoemaker, Paul J.H. Profiting from Uncertainty: Strategies for Succeeding No Matter What the Future Brings. New York: The Free Press, 2002.

8 building blocks that support an innovation mindset

To achieve a true mindset of innovation takes commitment. Kuczmarski submits that eight building blocks that rest on three interconnected platforms:

1. Planning for innovation
2. Defining the innovation process
3. Crafting a holistic innovation organization

Platform One: Planning for Innovation

Building Block #1: Create an innovation vision and blueprint

A vision enables you to see beyond what you’re currently doing to what you want to become (Kuczmarski 126). Kuczmarski says that, while related to the corporate vision, an innovation vision more specifically:

• Highlights the role that new elements will play
• Describes mission and purpose
• Examines how strategic direction is effected by innovation (128)

Give the innovation vision some parameters and structure by developing an innovation blueprint to guide the way.

Building Block #2: Develop an innovation strategy

To set the vision in motion you need more than a blueprint: you need a plan to implement what the blueprint outlines. That plan is innovation strategy, and it clarifies expectations and defines:

• Financial growth gaps that will be filled
• Financial objectives to meet
• Strategic roles

Building Block #3: Design a technology and innovation portfolio

“Aligned to each strategic role should be an identification of the core technologies or technical expertise areas that you anticipate will be necessary for developing new products” (Kuczmarski 136). In other words, what core technologies do you already have that you can (and will) use to develop new products? Using existing technologies will give you a leg up on your competition.

Platform Two: Defining the Development Process

Building Block #4: Design a staged development process

To transition from a concept to a tangible product your innovation team (see block #5 below) will need a process to follow. Such a process, says Kuczmarski, will:

• Provide a logical approach and system
• Articulate the required approvals
• Offer a framework to manage multiple new concepts (137)

Platform Three: Crafting a Holistic Innovation Organization

Building Block #5: Form innovation teams

To be effective you need a team effort, and the team should consider itself committed for the long haul. When forming an innovation team include these components:

• Cross-functional representation, including expertise, perspective, and experience (140)
• Full-time, dedicated leaders who can motivate, communicate, and solve problems (142)
• Performance-based rewards to motivate team members and recognize a job well done (e.g. peer recognition and career advancement) (145)
• Regular meetings

Building Block #6: Establish reward systems

Rewards do not have to be financial, but they do have to motivate. Particularly for an innovation team whose objective inherently involves taking big risks there is opportunity for big reward, which may come in the form of career advancement, option to buy stock, or some other form of compensation.

Building Block #7: Measure progress and returns

Because the members of innovation teams are pushing boundaries and working to expand the company in new directions they are taking risks. This puts them in a different position than other employees who are supporting the current product and service lines. For the innovation team evaluate members with company-wide, team innovation, and individual innovation measures; having a unique evaluation format further signals a commitment to innovation and cultivates that mindset in the innovation team (151).

Building Block #8: Infuse innovation norms and values

Norms and values, while somewhat informal, help a team establish a sense of community because they form a common set of standards and expectations. When the team members understand the ground rules, there’s no need for rules or regulations (Kuczmarski 153).

Kuczmarski, Thomas D. Innovation: leadership strategies for the competitive edge. Chicago: NTC Business Books, 1996.

8 Steps of Leading Change

1. Establish a sense of urgency

True change takes a lot of effort by a lot of people. If you don’t have buy-in and support from at least 25% of your workforce then road is going to be even more perilous.

To generate support and gain momentum you need a sense of urgency – if you don’t have one then create one. Urgency leads to cooperation to accomplish the goal. If there’s no sense of urgency then there’s likely a high rate of complacency, which becomes a huge obstacle from the onset. Complacency results from sources like low performance standards, senior management communicating exclusively optimistic messages, and “the absence of a major and visible crisis” (Kotter 40).

Three Ways to Counter Complacency

• Set higher standards
• Change internal measurement systems that focus on the wrong indexes
• Reward honest conversation and a willingness to confront problems

Three Ways to Increase the Sense of Urgency

Kotter identifies a number of ways to increase the sense of urgency, among them are to:

• Eliminate obvious excesses
• Require employees to regularly talk with unsatisfied customers
• Highlight opportunities that exist that the company cannot yet pursue

2. Create the guiding coalition

As noted above, you need support to effect change. You also need strong leadership that identifies the goal, sets the course, and guides the way.

Rather than one person who thinks and acts in isolation you need a group that brings a wealth of knowledge. The group, or guiding coalition, must have the right composition, a high level of trust, and a shared objective (Kotter 53). Members must have positions of power, expertise, credibility, and leadership in order to move the organization forward (Kotter 57).

3. Develop a vision and strategy

“Vision refers to a picture of the future with some implicit or explicit commentary on why people should strive to create that future” (Kotter 68).

Kotter outlines three purposes of a good vision for change:

• To clarify the general direction of change
• To motivate people to take action
• To help coordinate action (69)

4. Communicate the change vision

For your employees to understand impending change and its necessity, you must communicate with them. It’s that simple. How you communicate depends somewhat on your company’s structure, but the basic premise is that you must use focused, simple language so that it is easy to understand and sticks in people’s minds. Kotter recommends simplicity, repetition, various forums (e.g. meetings and information conversations), and leading by example (93).

5. Empower employees for broad-based action

If your employees feel powerless then they won’t see the important role they play. Barriers to empowerment that Kotter identifies include formal structures and a lack of needed skills (102). Enable people to take the necessary action.

6. Generate short-term wins

When your employees see evidence that changes are making positive impacts, they see the value and may get a clearer view of the overall vision. If it’s visible, unambiguous, and “clearly related to the change effort” then it’s a short-term win (Kotter 122).

7. Consolidate gains and produce more change

In leading a successful change effort you’ll see more help, support from senior management, and fewer unnecessary interdependencies (Kotter 143). It’s valuable to look to short-term wins to maintain momentum, but be wary of over-celebration that can derail plans you’ve set in motion and completely hijack your vision for change.

8. Anchoring new approaches in the culture

Once you’ve achieved the desired change and experienced positive results it may be tempting to sit back and admire your work. Don’t. The philosophies, norms, and approaches adopted to effect change must be ingrained in the culture in order for them to take hold and sustain themselves. If one person or team was the glue that held everything together, as soon as they’re gone old habits may return if the culture hasn’t fully embraced the changes (Kotter 157).

Kotter, John P. Leading Change. United States: Harvard Business School Press, 1996.

In his November 2009 article “The use and abuse of scenarios,” Charles Roxburgh discusses the ways that scenario planning helps leaders to identify extreme events and their potential outcomes and responses. He notes four features that lead to understanding uncertainty and developing strategy:

• Expand your thinking. “You will think more broadly if you develop a range of possible outcomes, each backed by the sequence of events that would lead to them.”
• Uncover inevitable or near-inevitable futures. “As the analysis underlying each scenario proceeds, you often identify some particularly powerful drivers of change. These drivers result in outcomes that are the inevitable consequence of events that have already happened, or of trends that are already well developed.”
• Protect against “groupthink.” “Often, the power structure within companies inhibits the free flow of debate. People in meetings typically agree with whatever the most senior person in the room says.”
• Allow people to challenge conventional wisdom. “Scenarios provide a less threatening way to lay out alternative futures in which these assumptions may no longer be true.”

He also offers some good rules of thumb:

• Always develop at least four scenarios
• “Crunch” the quadrants
• There should always be a base or central case
• Scenarios must have catchy names to make it part of your organization
• Learn from being totally wrong
• Listen to the contrary voices
• Even modest environmental changes can have enormous impact

We highly recommend that you read the article to get a stronger sense of what we’ve summarized here.

In December of 2008 McKinsey & Company published an interview with Hugh Courtney, an associate dean of executive programs and professor of strategy at the University of Maryland’s Rober H. Smith School of Business, who had recently published a book entitled 20/20 Foresight: Crafting Strategy in an Uncertain World.

Highlights from the Interview

Courtney developed a four-part framework to help managers think about the level of uncertainly that surrounds strategic decisions:

• Level 1: a clear, single view of the future
• Level 2: a limited set of possible future outcomes
• Level 3: a range of possible future outcomes
• Level 4: a limitless range of possible future outcomes

Following the September 11 attacks and then the financial crisis, Courtney identifies the shift not in the uncertainties that exist, but in the human perception of them:

The financial crisis has actually brought greater clarity because it has forced us to recognize that we have a lot more level three and level four situations than we would have admitted a few months ago. They probably were there all along, yet the bias was toward thinking that issues were more at level one and level two. Specifically, we have learned how interdependent our financial markets are and how systemic failure in any important node of the network can work very rapidly through the system and bring liquidity to a halt. So our scenarios about the availability of capital around the world have changed significantly.

Where to go from here?

Courtney says to rethink your planning process and we at Insight agree as we assist organizations with this process:

Have you been doing strategic planning on an annual basis as a paper-pushing exercise? That will have to change. In the months to come, you’re going to have to make decisions very quickly on fundamental opportunities that may drive your earnings performance for the next decade or more, and you’ve got to be prepared to make these decisions in real time.

When it comes to your organization’s future, scenario planning is one of the tools you must regularly sharpen in order to adapt as necessary. Contact us for more information or to schedule a consultation.

Tom Coughlin. Bobby Knight. Both are names you might recognize; they’re coaches whose unique — even controversial — coaching styles have led to great success.

Coach Coughlin adapted to team needs

Coughlin is known for his “if you’re not five minutes early you’re already late” and “no white socks with dress slacks” rules for his professional football teams. His traditional style challenged his team to change and adapt their ways to his norm, yet his disciplinarian style left him disconnected from his 2006-2007 team and caused discontent among the players. Given another year to turn the team around, Coughlin made some key modifications:

• He listened to the feedback and intentionally became more approachable, forming a team leadership council to get input from players. The council gave players insight into what the coach was thinking and why, and it gave them a sense of involvement that led to buy-in.
• He began to look like he enjoyed his job – even smiling more often. In press conferences he used words like “fun” and “enjoy. ” He took the team bowling during the preseason.

Coughlin’s changes were not extreme, yet they changed the team’s dynamic to one of high morale and unity.

Coach Knight put his beliefs into practice

Volumes have been written on Bobby Knight’s leadership style, though two key points stand high above the rest:

1. Knight has led by his values: discipline, effort, execution, and dedication. He lives what he believes. His dedication extends to his players past and present, which his record of a 98% graduation rate among his four-year players demonstrates.
2. Knight is loyal. His loyalties include his inner circle of friends, past players, and causes he believes in. When coaching at Indiana University, Knight was known to show up in the children’s wards of the local hospitals to spend time with kids and their families.

What their examples show us

Coughlin coached the New York Giants well enough for the team to turn its mediocre season into a 2008 Super Bowl victory over the New England Patriots. Knight is the winningest men’s coach in NCAA basketball history. Both men are leaders. Both men are intense, no-nonsense individuals. Both have earned reputations for their firebrand, disciplinarian, and controlling coaching styles.

Both are also examples that teach us about personal uniqueness and leadership:

• Good leaders are never too old to learn, to listen to feedback, to be introspective, and to adapt in order to best lead.
• Leadership involves buy-in. If you’re leading and no one is following, then you’re not actually leading. You need involvement and interaction. Be a strong leader, but be human.
• There is no cookie cutter leadership style. Authentic leadership must be a reflection of who we truly are – and that style must also be able to adapt to the team’s needs.
• Leadership involves loyalty and care.

What are some effective leaders or style you’ve found helpful? What are some ways you’ve adjusted your own leadership approach to better lead your team?

4 reasons why it’s lonely at the top

A variety of unique factors contribute to a CEOs’ isolation from employees, organizations, and their own emotional needs and desires:

1. The nature of their responsibilities and duties can alienate CEOs from other executives and employees. CEOs are privy to highly confidential information that cannot usually be shared with former coworkers and advisors. As a result, “colleagues who were once peers and confidants may no longer be accessible because of confidentiality requirements. What once could be discussed with coworkers is now private, inside information. Social support is often diminished or even becomes non-existent.”
2. CEOs hold positions of power and authority that can lead to their real or felt sense of alienation. While good news can quickly rise to the top, bad news moves at an exponentially slower vertical rate. Jack Welch observes that “bad news festers in the trenches where those who possess it hope they can make it go away before anyone notices.” With lower-level employees guarding higher-ups from bad news, CEOs can find themselves increasingly insulated.
3. CEOs may emotionally isolate themselves to maintain an appearance of confidence. While this tactic may sustain overall morale, CEOs then pay a great emotional and relational cost to keep up the facade. As a result they may experience isolation to do the pervasive but false perception that it is an admission of weakness for leaders to ask questions or to see outside help.
4. Some CEOs struggle with feelings of insecurity, others with their own inflated egos. Some may surround themselves with “yes people” whose constant affirmation may lead a CEO to develop a distorted sense of themselves and the business; such unchecked egos overpower good business sense and jeopardize the organization’s health.

The solution to loneliness and alienation lies in peer groups

Rather than turning to friends or family members for support, CEOs can turn to peers in business who can fully appreciate the situation and provide truly informed empathy.

When considering potential confidants, it’s important for a leader to seek honest opinions and perspectives and to avoid constant reassurance, information isolation, and undermining intentions.

Peer Pressure, Peer Support

Peer groups can provide informed empathy for the isolated CEO that is likely not being provided by other relationships. CEO peer groups are informal gatherings where leaders from non-competing industries meet on a regular basis to discuss their business and personal struggles, share and receive practical advice, network, and generally socialize among equals. They provide a safe forum for CEOs to express their fears and anxieties without risking their business interests or reputations. By expressing their fears in conversation rather than suppressing or denying them, group members can acknowledge their fears as legitimate and appropriate feelings, but also place them in proper scope and context. Not all conversations must be about crisis – nearly any topic is appropriate.

Many such groups require members to sign non-disclosure agreements, thus formalizing a social contract of confidentiality. In the case of publicly traded companies, these groups often prohibit their members from trading in each other’s stock.

Insight facilitates a peer group for CEOs of privately held companies that functions in many ways like an informal board of advisers. “I use Insight’s Chief Executive Series like a board of directors,” comments Jim Abbott, CEO of Nimet Industries, Inc. “Every meeting has new, valuable information, and it has never been a waste of my time. I call the CEO members when I have a problem to solve and need advice. It can be lonely at the top, and it has been great to have this group for support.”

Peer groups constitute a valuable resource of knowledge and experience; CEOs can gain advice from other seasoned businesspeople that have likely faced similarly challenging circumstances. Listening to how a peer solved a particular problem might spark fresh thoughts on a variety of topics. Additionally, the direction of the global business market toward horizontal relationships highlights the importance of the ability to network resources and collaboratively outsource, or “growthsource” non-core needs to the expertise of business partners.

With peer groups comes accountability

Peer groups can provide CEOs, who are often answer to very few individuals, social accountability for constructively dealing with specific problems they’ve shared during group meetings. Although this kind of accountability is informal, it’s invaluable. In sharing his experience in a CEO peer group based in Bend, Oregon, one member shared that “one of our group members knew he had to make a termination . . . At the next meeting the first thing his peers asked was, ‘Well, did you do it?’ The group forces you to take actions you don’t always want to take.” This informal accountability can help motivate CEOs whose energy, motivation levels, and general focus have decreased due to the lack of accountability at the highest level of leadership.