In any business, from startup to Fortune 500, the CEO is the only individual who is peerless. (Of course, I am dismissing the rare exception when co-CEOs exist.) Overwhelmingly, a CEO has no equal within the organization. If we accept the challenge that our best people should be on our biggest opportunities, then the CEO must exert their influence and take on the role of CLO (chief leadership officer).
This issue will not “sort itself out.” There needs to be bold, courageous, and direct action from the very top. Similar to crisis communications, when employees need to hear the importance of building leadership into a company’s DNA from the president/CEO, organizations need to hear from the chief leadership officer. When the word comes from the top, people tend to listen.
Change Takes Courage
I do realize becoming the Chief Leadership Officer is easier said than done. This will require courageous leadership from all CEOs. It will be critical for them to have the managerial courage of putting their name and reputations behind the idea of replicating and reproducing leaders at all levels. In my upcoming book, The Leadership Decade: A Playbook for an Extraordinary Era, I discuss how the CEO can make sure everyone in their organization is aligned with the commitment of reproducing and replicating leadership at all levels. Attracting and retaining talent in today’s market place is not a human resources issue. It is a strategic challenge.
The Best CEOs
It is the CEO who ultimately sets the company’s vision and decides where “the bus is headed.” In McKinsey & Company’s research to determine what practices distinguish the best CEOs, they found that top CEOs reframe what winning means. I strongly believe part of this reframing needs to be the attraction and retention of talent. Turnover cannot be accepted as a cost of doing business. Losing top performers cannot be blamed on this new generation. The CEO, in the role of CLO, must reframe what winning means. Winning should be defined as assembling, retaining, and developing a world-class workforce.
McKinsey goes on to point out that the top CEOs make bold strategic moves, and the sooner they make these bold moves, the more successful they are. Their research shows that CEOs who make these moves earlier outperform those who hesitate. Attracting and retaining top talent is not going to get easier. In fact, it is a statistical certainty that it is going to get more difficult. Chief executive officers who act quickly will have a distinct strategic advantage over those who hesitate. Organizations that implement innovative solutions will win. Organizations that hesitate, overly collaborate, try to gain buy-in for every single move, and use watered-down 20th-century solutions will be left in the dust.
It Takes Focus
McKinsey also points out that a CEO must stay active with resource allocation. Where a business invests money is critical to its ongoing success. McKinsey & Company states, “a third of companies reallocate a mere 1% of the capital from year to year.” One major change all businesses need to embrace is the investment in future leaders. Investment dollars need to be reallocated to what was traditionally viewed as a “training expense.”
A major part of this is for CEO/CLOs to embrace the idea of investing in future leaders versus only budgeting “expense dollars” when times are good. Leadership development must be built into every organization’s DNA, and only the CEO/CLO can drive that throughout the organization strategically. Businesses exist to replicate themselves—especially their leadership.
Key Roles Ignored!
To paraphrase Jim Collins in the book Good to Great, top leaders set up their successors for success. McKinsey’s research supports this truism and even goes one step further. McKinsey found that “a crucial first step is discovering which roles matter most. Of the fifty most value-creating roles in any given organization, only 10% normally report to the CEO directly.”
McKinsey says, “Once these roles are identified, the CEO can work with other executives to see that these roles are managed with increased rigor and are occupied by the right people.” This certainly sounds like a job for the chief leadership officer!
For far too long, proactive leadership development has been either nonexistent or looked at as an expense to be slashed when times were tough. Taking this approach, organizations have unconsciously developed what Jim Collins describes as a “doom loop.”
Collins contends that the stop-start nature of strategic initiatives, often launched very publicly, becomes an extraordinarily negative part of a culture. People begin disbelieving announcements for new initiatives and start to take a “this too shall pass“ mentality. Failure to keep a constant focus on critical initiatives erodes trust throughout the entire organization. Thus creating a “doom loop.”
In order for true change to take place, senior leaders must exert their senior leadership. When you want to drastically change your methodology to attract and retain talent, you must develop the guidelines and have a major say on the plan moving forward. This is more than just stating one’s “vision” and delegating the task to others.
Adapted from our best-selling book, The Leadership Decade: A Playbook for an Extraordinary Era. If you’d like to purchase a copy, please visit s21.us/tldbook for a hardback book or s21.us/tldebook for an ebook. For even more information, check out theleadershipdecade.com.