Do You Have What It Takes to be a Successful CEO?
There are a myriad of studies and books on leadership characteristics that relate to the success of any organization. That said, we've discovered a recent – yet controversial – study and compared it to a classic business book on how leaders build great companies. We have addressed similarities of the two to see what it takes to be a successful CEO in today's credit union marketplace. Check out our discoveries and see how you can relate these characteristics and remedies to your leadership skills.
A new controversial study by three University of Chicago business school professors researched how the effectiveness of CEO characteristics translates to success of their companies. [“Which CEO Characteristics and Abilities Matter?”, by S. Kaplan, M. Klebanov, and M Sorensen, June 2007 ] The study, which analyzed the success variance of about 300 CEOs, found consistencies in CEO qualities that correlated with successful companies. The results of the study indicate that “hard skills” are common predictors of success. These hard skills are defined as: persistence, setting high standards, removing underperformers, efficiency, aggressive, moves fast, proactive, work ethic, and holds people accountable. The study's controversial nature, especially with respect to the credit union industry, reveals that a leader's “soft side” was notably not the most important criteria set for running a successful company. “Soft skills” are defined as: develops people, treats people with respect, flexibility, integrity, listening, open to criticism, and teamwork. In our experience, the credit union industry typically sees these soft skills as predictors of success – not necessarily the hard skills.
Complementing the University of Chicago study, author Jim Collins, in his book Good to Great , translates the research he did around the characteristics of CEOs leading “great” companies. He describes five levels of capabilities – only people at Level 5 lead sustainable, great companies. A Level 5 leader requires the capabilities of all the lower levels – plus the special characteristics of Level 5. The five levels are:
- Level 5 Executive : builds enduring greatness through a paradoxical combination of personal humility plus professional will
- Level 4 Effective Leader : catalyzes commitment to and vigorous pursuit of a clear and compelling vision, stimulates the group to high performance standards
- Level 3 Competent Manager : organizes people and resources toward the effective and efficient pursuit of predetermined objectives
- Level 2 Contributing Team Member : contributes to the achievement of group objectives, work effectively with others in a group setting
- Level 1 Highly Capable Individual : makes productive contributions through talent, knowledge, skills, and good work habits
Both the University of Chicago and Collins' studies do have common successful CEO characteristics and themes – the most important of which are: persistence, setting high standards, removing underperformers (getting the right people on the bus), and holding people accountable.
Now that the studies' commonalities have been identified, below are explanations of these important characteristics. Use these descriptions to assess your organization's leadership. Are there developmental opportunities? Use the explanations to brainstorm remedies to close any gaps.
- Persistence: someone who demonstrates unwavering resolve to do whatever must be done to produce the best long-term results – no matter how difficult. Some hints to persistence might include not taking rejection personally, going back with different strategies for more tries to accomplish the goal, or not confusing personal “have to do's” with what most needs to be done.
- Setting High Standards: a leader who creates superb results – and sets the standard of building a great company and will settle for nothing less. Some hints would be to design work and manage time from the member's point of view, standardize work processes enterprise wide – creating less variance and more predictability around the member experience. You can't have on-going high standard experiences unless you create, and benchmark, standard work processes. Only then can it be improved upon and replicated throughout the organization. This requires organizational discipline – a key cultural behavior in successful companies.
- Removing Underperformers: Collins says a great leader gets “the right people” on the bus – and the wrong people “off the bus.” Leaders who are effectively confronting underperforming employees are timely, consistent, focus on performance gaps, pitch in and help the person succeed. The employee may even be reassigned to find the appropriate “seat on the bus.” And if the efforts fail, the person is quickly separated from the organization. Many surveys suggest a reason for problems in this area is that employees don't get the on-going feedback they need to improve performance. Without on-going feedback, it's almost impossible for the employee to improve – and from an HR perspective, it also makes it harder to quickly get the person “off the bus.”
- Holding People Accountable: this is one of the more difficult skills for most CEOs and executives to master. Before people can be held accountable, it must be crystal clear what their responsibilities are – and clarity around work and goals is often poorly developed and communicated. Providing multi-channel feedback loops, as well as measuring activity and results, are very important to accountability. The CEO must “inspect what he/she expects” and there must be timely rewards or consequences for results.
Today's fast changing business environment is forcing credit unions to look at their CEO's leadership style – and that of their successors – to ensure they are ready to lead future growth of the enterprise.
The dilemma, however, is that as credit unions grow; complexity in organizational structure, communication loops, market-place trends, and interaction with members are all significantly changing the credit union's business model. Is the leadership profile of the CEO and CEO successors being developed to handle this “new business world?”
The purpose of this article was to share some research describing characteristics of successful CEOs. Take this opportunity for self-evaluation. See if there is a balance of “soft and hard” skills in your organization's leadership. Once you've analyzed these characteristics – soft and hard, you can take the proper steps to march your credit union down the road to higher success.
For more information on enhancing your organization's leadership skills and practices, please contact Jim Cardwell or Karla Norwood at Cardwell, 800-395-1410. Or visit our Connections Online website: www.connectionsonline.net