When CEOs block Growth

Usually, when we consider CEO Behaviours, the focus tends to land on ‘toxic’ behaviours such as narcissism, coercive and Dark Triad behaviours.

And then when we consider how CEOs promote growth, the focus is invariably on the strategy or organisational changes they implement or make.

While these factors deserve attention, it has unfortunately also led to CEO behaviour as a whole flying under our attentional radar. Also as the head of the organisational hierarchy, may not be receiving the feedback they need. This may mean overall CEO behaviour is a major blind spot in organisational performance.

But what does this matter? As long as the CEO is not a psychopath or narcissist, and as long as they create and deliver on a strategy that hits target numbers and enhances the organisation’s competitive advantage, why should we care?

Can ‘normal’ CEO behaviours be a blocker to Company Growth?

First, let me be clear on what I mean by ‘normal’ behaviours here. When we consider narcissism or other Dark Triad traits, these are clinical conditions – or in other words, not 'normal' and also very difficult if not impossible to change.

The vast majority of CEOs though do not have these traits. The question is, setting aside this and the effectiveness of the strategy, how much do their normal, day-to-day behaviours influence company growth and performance?

The consultancy firm Zenger Folkman set out to answer this question, and cross-referencing their database of 750,000 360° reports against company sales data, found this correlation:

Bear in mind that this is the perspective of each firm’s overall leadership effectiveness – yet we can still see at least a correlation with growth in sales vs the prior year. While this data is somewhat noisy, the difference between the top 10% and the next 25% for many companies would run into the $10s of millions on this basis – so we should really be paying more attention.

But let’s now look at how senior leader behaviours have been found to influence those throughout the organisation as a whole.

Zenger Folkman considered this question in terms of discretionary effort – this is a fancy way of saying ‘the motivation to go the extra mile’. And the findings are quite emphatic: no employee is ultimately able to increase their own discretionary effort above that of the level of the CEO. Have a look:

What this suggests is that if the CEO’s behaviours are sub-par – so will everyone else’s be. Employees are thus condemned to operate at the level of their CEO, and will never be able to transcend this.

Cascade and Contagion – How the CEO can throw either sunlight or shadow

In the ‘real world’ of an organisation, a CEO may say certain things. We get it. But it’s what they do that is picked up on by everyone around them – and this can be felt either as sunlight or shadow. This is why the phrase ‘Leadership starts at the top’ is straightforward common sense.

Unfortunately, in the absence of any coherent leadership development in companies today, we are seeing an awful lot of shadows being cast by senior leadership who do not seem to attend to their own behaviours as, say, a sportsperson would be expected to at the level they are at.

This is not only creating ceilings and barriers for everyone else, it is also costing companies $tens of millions as these subpar behaviours cascade and wash around the organisation, unfortunately blocking growth for all.