The firings of high-profile CEOs suggest that corporate boards are recognizing that imperial CEOs may not be the best CEOs. In 2005, CEO Carly Fiorina was fired by the board of Hewlett-Packard (HPQ). Hank Greenberg, was forced out at American International Group (AIG) after three decades. Perhaps the most visible case was the firing of Bob Nardelli by Home Depot (HD) following his dreadful decision to have his board of directors not attend the company’s annual meeting.
When Frank Blake became the new CEO of Home Depot he recognized the importance of moving away from the imperial leadership style of his predecessor. In addition to taking a much lower salary, Blake discontinued the catered executive luncheon that the company’s top management team had enjoyed under Bob Nardelli and “suggested” that the members of senior management eat in the cafeteria with the other employees. This sent a clear message to the employees that Blake intended to be a different kind of leader.
Perhaps the most common mistake top executives make in all types of organizations is not recognizing the importance of communicating directly and effectively with employees. One CEO who does recognize the importance of this is Jim McNerney, CEO of Boeing (BA). Boeing has a global workforce of 160,000, so communicating with everyone is not a simple task. When asked recently if he was going to spend more time with customers and stock analysts, he replied that it is more important for him to spend time with Boeing’s employees than to spend it on raising his profile and visibility in the press. According to him, employees “have got to know that working with them is more important to me than public forums where I’m making big speeches.”
In an Human Capital centric organization, the gap between leader and led should never be large. It is simply too important for leaders to gather information from others and to be seen as role models. Leaders need to be approachable. They need to be told when they do something wrong or have made a mistake, and they need to acknowledge it and change. Only if they are understood and respected by the critical capital in the organization, which is the talent that works there, will the leaders be able to create a high-performance organization.
In addition, managers need to demonstrate visibly that they value employees. When cost-cutting is a priority, they should explore alternatives before cutting staff. When it is necessary, they should be sure cuts are executed in a way that fits their employer brand. When there is leadership training, they should take part. When it is time for talent reviews, they should lead the process.
Simply put, the days of rigid business hierarchies cannot continue, and senior management need to acknowledge that a company’s human capital is its most valuable and sustainable competitive asset. As businesses make the decision to adopt an HC-centric approach, an imperialistic attitude toward leadership is not an option if they expect to thrive while attracting and retaining top talent.