Ceo Crisis

A Vicious Cycle in a Crisis Cries for Leadership

April 23, 2020
If your team can't relate to your reasoning, the foundation for effective, solution-oriented co-operation has crumbled.

Daughter is messed up and mother is helpless! This stock-listed company has a wholly owned legal entity in another country. The subsidiary has been artificially kept alive for years by the mother. Huge amounts of cash have been injected into it by the daughter.

The CEO of the group is faced year after year with the dire state of the daughter’s company, and injecting cash hurts the group balance sheet.

Selling is no longer an option, because the daughter owes so much money to her mother.

Despite this continuing state, there is no sign that anything will change soon.

One top manager after another blames the situation on the employees. Several consultants have visited, and numerous plans with clear actions have been created but not followed through on.

The CEO and top management’s constant firefighting has forced this company into a vicious cycle. It cannot get out of it. The cycle just forces them to go in circles faster.

Worse, CEO and top management do not trust middle-level management. Instead they are constantly asking for reports and analysis.

Employees are almost never clearly informed of planning of corrective actions. This undermines trust again.

To make matters worse, upper management, including the CEO, does not stick to its plans. Silently plans and execution fade away. Employees and middle level management wonder what has happened.

This lack of clear communication over current plans that have to be adjusted—or even over completely new plans still in development—is not building trust. People need plausible communication. If they cannot relate to the CEO’s reasoning, the foundation for effective solution-oriented co-operation has crumbled.

To cut the vicious cycle, the CEO must take following actions:

  1. Define with the team a maximum of two priority actions
  2. Pull these actions through
  3. Delegate to middle management
  4. Give middle management peace to work
  5. Do not ask for laborious and frequent reports
  6. Be available any time for the management team and employees

It is the CEO’s priority to keep the direction. It is clear that along the way, some firefighting must be done. However, as soon as the fire is extinguished, the CEO must make sure that the top-priority actions have their full attention again.

The actions point is the most difficult. It requires nerves of steel not be distracted by all the potential and real issues that would also need attention. The chairman of the board of directors is also required to keep steady. The worst thing that happens in these situations is that the CEO and his team decide to focus on something important and then suddenly a disturbance comes from the board.

The most ridiculous thing I have seen is when a chairman tells the CEO to focus on a complaint coming from a company owned by a friend of his. And then all focus is suddenly on this matter and not in systematic improvement projects. Usually, employees have very little respect for these kinds of actions.

Once the two action points are defined and turning into action, and results are slowly coming, the feeling of success in the whole company can become the new momentum for change.

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