Problem-solving top bosses can become redundant after crises: Study

Extraordinary situations demand extraordinary leadership. But once the situation is diffused, the very remarkable traits in a leader can at times lead him to his redundancy. In 1945, even after Winston Churchill successfully led Britain through World War II, displaying super leadership qualities, he lost the election. People voted for Clement Attlee although they admittedly hero-worshipped Churchill. 

Cut to the present: Vikram Pandit, a year after he was named CEO of Citigroup , had to fire-fight a rather unforeseen crisis situation that gripped the global financial world. Some doubted his capabilities, but after suffering deep losses, the bank under Pandit’s leadership returned to profit in 2010 after paying off the government aid which it got in a bailout in 2008. 

Last week Pandit resigned, much to the shock of the investor fraternity even as talks about differences with board members surfaced. He said in a statement, given the progress the bank had made in the last few years, now was the right time for someone else to take the helm at Citigroup. 

Whatever be the reasons behind Pandit’s ouster, management gurus believe the move re-establishes the fact that a leader who is best suited as CEO when the organization is in a particular phase of growth, may not fit the bill in another phase. That could explain why Vijay Mallya’s flamboyance , which helped him build his liquor empire, didn’t help in his foray into aviation, a business that requires high levels of economizing skills. 

According to Marc Effron, president of the US-based The Talent Strategy Group, boards should review on an annual basis the growth phase of the company and assess the fit of the CEO. The various stages of growth an organization typically transcends include entrepreneurial , operational, economical and revival — all of which require different capabilities from a CEO. 

“The board should find a CEO who can help the company win in the lifecycle stage that they’ll be in for the next three-five years — a CEO who ‘fits’ . For example, in the US, IBM had two smart, capable internal executives in the running for the CEO post — Michael E Daniels and Virginia Rometty. Daniels had a deeper history in operations and with efficiency-focused businesses like outsourcing. 

Rometty had more experience with sales. The organization’s strategic focus over the next five years will be continued growth through new products and services more than trying to win through being the most efficient provider of services. That suggests that Rometty would be a better choice, and she did get that job,” said Effron . Even at Apple, which is moving into a phase where operational efficiency is nearly as important as innovation, selecting Tim Cook over a marketer or design expert reflects an appropriate choice based on where Apple is in its life cycle. 

Pandit’s ouster also underscores that CEO tenures are indeed becoming shorter. “These days, the CEO’s tenure in the US — on an average — is slightly less than four years. He (Pandit ) has survived over four years and, in the movie called ‘Too Big To Fail’ starring William Hurt as Hank Paulson, it is clear Vikram did a great role in a crisis in 2008. And now in 2012 he is out. It is important every CEO should have a golden (may be platinum) parachute and you will need that in for years time,” said Bala Balachandran, J L Kellogg Distinguished Professor of Accounting and Information Management, North-western University. 

Overarching philosophy, according to Santrupt Misra, CEO, group HR director, Aditya Birla Group, needs to be clearly communicated by the board to the CEO. 

CHURN AT THE HELM 
Winston Churchill lost the 1945 UK elections after he brilliantly steered a beleaguered nation through World War II Vikram Pandit’s shock resignation last week was after his successfully led Citigroup during the 2008 crisis, returning it to profit in 2010 Mgmt gurus maintain a CEO who fits a co’s needs during a particular phase of growth may not suit it in another phase That’s probably why Vijay Mallya’s flamboyance with liquor biz didn’t keep his airline aloft for long, say experts.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s