Heads Together and Row - Creating CEO resilience

5 October 2018

Heads Together and Row - Creating CEO resilience

A new role for the Board Chair?

In the latest blog post from our Heads Together and Row research team, Dr Caroline Rook and Dr Filipe Morais consider the importance of building CEO resilience.

When asked what are seen as the key leadership capabilities for the 21st century, a range of high-profile CEOs told McKinsey that resilience is key, among being able to create a network of leaders and keeping a long-term lens in order to keep up with the fast-paced and complex world of business. Why was resilience mentioned among key leadership capabilities? Typically, when thinking about leadership, we think about the ability to inspire others and create a vision.

When we look into the media over the past few years, we find many high profile cases of executives and especially CEOs going on sick leave because of burnout due to excessive occupational and personal stress. But this is not just a concern because of the temporary effects on executives’ and organisations’ health and performance.

Cases of mental health issues and suicides among CEOs are increasingly being covered in the media. Recent examples have included CEOs who felt burdened by the need to be available 24/7, as well as unrelenting pressure and finding it hard to switch off. Pressures from aggressive performance targets and feared humiliation of quitting a C-suite position might have also played a role.

Following two high profile cases in 2013, Fortune magazine asked: “Has life at the top of these global behemoths become an unbearable pressure cooker, given to explosive conflicts, especially during tough economic times? And are profit motives trampling on human ones among executives?”

Indeed, CEO resilience is increasingly on the agenda for boards. We found in recent research* that within the critical and pivotal relationship with the CEO, Chairs begin to see their responsibilities more broadly to include checking on the CEO’s emotional health. The myth of the CEO super-human has contributed to boards and chairs dismissing CEO emotional well-being as a sign of weakness. This may mean individuals who are emotionally challenged or even ill may be making decisions that affect thousands if not millions of ordinary people.

Our research has found that this is particularly true when there is a significant disruption to the business. In situations such as hostile bids, strategic turnarounds, large restructurings and reputational crisis our study finds that many CEOs do become emotionally challenged as the pressures and tensions multiply from shareholders to employees, and media to government. Some CEOs grapple with the multiple demands and contradictory expectations, or simply become unable to cope with situations they feel they no longer control. In today’s business environment marked by constant discontinuities, we find that Chairs are beginning to give more weight to counselling the CEO and importantly CEOs are welcoming this kind of support.

Effective Chairs maintain a dialogue with their CEO that goes beyond being a sounding board for strategies and plans, but also for providing perspective and bringing a ‘calmness’ to some contentious and tense situations the CEO might be facing. There are, after all, situations that affect the CEO directly in their personal beliefs and values and can precipitate a departure, escalating conflicts and/or poor decision-making. One Chair explained: ‘Provided you believe your chief executive is part of the answer rather than part of the problem – which is what we had believed and I’ve conveyed it very strongly to the CEO on a number of occasions – because some of this stuff is very hard to take, particularly if it cuts against everything you stand for and is in your DNA.’

This counselling role helps the CEO to maintain an objective view and personal well-being. Indeed, over time, the Chair can help the CEO build resilience: through enabling learning from setbacks and supporting ways of working that enable the CEO to build capacity to bounce back quickly from sometimes inevitable mistakes. The idea that Chairs need to remain independent of the CEO to be able to act as vigilant monitors, does not preclude Chairs from delving into the more human and emotional side of their CEO. On the contrary, we find that this is an integral and important part of their monitoring function. This can be done whilst maintaining independence.

To help CEOs build resilience in difficult scenarios is an important aspect of the Chair role. How many good CEOs need we to lose or how much poor decision-making do we need to endure before Chairs start taking this aspect of their role seriously?

*Morais, F, Kakabadse, A, and Kakabadse, N, The chairperson buffering role in turbulent environments. Paper presented at the 3rd International Corporate Governance Society Conference, September 2017.