Lack of clarity can cost CEOs more than productivity, competitive advantage and trust - it can cost them their jobs. Gary F Grates, president and global managing director of Edelman Change and Employee Engagement, explains how leaders can defuse this potential time bomb.
The superficially good news for CEOs is that their turnover rates appear to be dropping: for the first two months of 2011, according to Challenger, Gray & Christmas, CEO departures were down 15% from the comparable time frame in 2010. According to the annual 'trust barometer' issued by Edelman, public trust in CEOs is beginning to see an uptick, a dramatic swing from two years ago when financial crises and related factors relegated them to near the bottom in terms of credibility.
And yet, the typical tenure of a Fortune 500 CEO, according to Fortune magazine, is only three and a half years - less than that of a one-term US president.
What this analysis continues to tell us is that leadership is still a fleeting opportunity. But what is often overlooked when assessing CEO tenure is just how important employee engagement and connectivity is to a leader's ultimate ability to succeed. It all begins with organisational clarity or the ability for people to comprehend, discuss, debate and assimilate strategy, drawing a line of sight from their work to the marketplace.
Recent research suggests that only one in five workers truly understand their organisation's strategy, direction and competitive positioning. If we all agree that workers are the ultimate funnel through which organisations convert their strategic imperatives and performance goals into reality, the inevitable results of this lack of understanding - and associated lack of acceptance and buy-in - are operational and behavioural mis-steps such as lesser productivity, inferior innovation, slower time-to-market, poorer employee recruitment and retention, and general employee malaise. These are all factors that cause organisations to flounder - and cause CEOs to lose employee trust and, eventually, their jobs.
It's therefore no overstatement to view a lack of internal clarity as a ticking time bomb: organisations and their CEOs can maintain business as usual as the fuse shortens, but at some point an explosion is going to happen, with the CEO a likely casualty.
Subtle yet powerful
It's likely that nearly all CEOs intuitively recognise the need for optimal organisational clarity, and make good-faith attempts to achieve it. Unfortunately, too many CEOs fail to appreciate the subtlety and strategy involved in generating organisational clarity, often mistaking false signals such as an abundance of organisational rhetoric, 'activity' and documented 'key messages' as the equivalent of effective communications. Worse, poorly developed research and misinterpreted results often leave leaders with a false sense of optimism regarding clarity and employee engagement.
In these companies, the overriding philosophy is "if we build it, employees will come". Strategies are conceived as inflexible directives from on high, to be sold to the organisation in campaign-like fashion rather than conceived with the benefit of enterprise-wide input.
In this mindset, tactical execution is equated with communicating. Once the tactic takes place - be it a town hall meeting, a memo, a poster or a meeting - it is checked off the proverbial list, without due thought given to the actual result of the tactical efforts. Rather, CEOs with this mindset tend to think, "OK, we've now communicated".
Above all, in these companies, CEOs tend to go extraordinary lengths to explain process - "here are the specifics of our strategy" - rather than offer the context of "here's why this is our strategy. Here's how we defined it. Here's the context for our actions that will follow".
In the end, it's crucial for CEOs to understand that their employees are best equipped to embrace organisational strategies, concepts, ideas and transformations when they're motivated and driven by self-interest that, of course, coincides with the larger interests of the organisation.
Why? Because we're long past the command-and-control inclinations of the past. Generally speaking, today's employees recognise that change - even painful change - is inevitable. In exchange, they expect context for why CEOs choose to embark on specific strategies, and they expect opportunities to weigh in on those strategies, based on their own unique perspectives of the marketplace.
The good news is that social media now allows leaders to socialise strategy inside the organisation, allowing people to comment, discuss, debate and listen to other's opinions all in an effort to learn and grow.
A time to listen
A key is for CEOs to consider where the motivation lies for their employees. The most effective way to learn this is for CEOs and their staff to have frequent, open interactions with employees, and by gauging the effectiveness of the tactical approaches that are already part of their communications arsenal. Most of all, it's about listening to conversations internally rather than simply talking at people, and gauging effectiveness on outputs rather than outcomes.
CEOs are understandably focused on harnessing creativity and initiative throughout the organisation, from the bottom up. But organisational clarity begins at the top, with CEOs and their senior teams ensuring that they fully define and understand organisational strategy, and that they have a strong sense of how to translate strategy into a narrative that is reflected in all internal communications, within all communications platforms.
This leads to organisational clarity, which diffuses the ticking time bomb that threatens to decimate both organisations and their CEOs' careers.
