Enron, WorldCom, Bernie Madoff, Lehman Brothers, Freddie Mac, Satyam Computer Services – are some of the major corporate meltdowns amongst a list of many others the worlds has seen.
What is common amongst all of above?
Unearthing of financial fraud coming from bad leadership behaviors.
Consequently, people and investors lost trust that they placed in the financial markets and the big corporations to safeguard their assets and interests. The loss in confidence resulted in big drops of valuations seen in the stock markets around the world.
There are other corporations who are still standing but have taken a huge beating on their reputations
· the automotive giant in the West that played with the fuel emission parameters on vehicles
· the venerable electronics corporation in the East that covered liabilities and reported fictitious revenues.
Last week I engaged with senior group of industry executives from the India and MEA region, who were sharing their concerns on getting the right fit in executive management while they continued to be excited about seeking growth.
There is this case of a skillful Chartered Accountant with a few other vocational qualifications that was hired into a Trading company to head up the function as the Director of Finance. In his past role, this professional served in a big-name consulting firm and happened to be well regarded at delivering sharp analysis, planning detailed outcomes and designing control measures for clients.
Armed with an ivy league education and previous haloed corporate experience – the professional was seen and revered inside the Trading company like a star acquisition.
Typically, the first 2 quarters are the settling in period for any large company, however this period is only getting shorter to a quarter and less – as companies seek out people that hit the ground running.
Within the second quarter this Director understandably got anxious with processes that needed fixing and other variables that needed to be managed. In the middle of the third quarter, things got so strained – that communication and trust was impaired between this professional and the regional accounting teams. The CEO & the HR Director deliberated what went wrong and sought ways to retain the ‘star’ talent, without the teams going to executive burnout and get the team chemistry to work like it did with the predecessor.
What happened here?
In my own experience working with large corporations, I’ve experienced that the rise to the top comes about as a result of a great skillset plus work performance and is sustained thereafter with good leadership behaviors.
Your skillsets got you there but it won’t keep you there for long – as the question becomes more of leadership behaviors at the top. These behaviors are the result of years of corporate upbringing and you are a product of your environment.
What are the challenge facing executives in their stay at the top?
Undefined company culture
For many of the companies there is no defined culture. We understand culture as ‘the-way-things-are done-here’ and new hires onboarded face a great risk, if they don’t observe acutely and sense out the unspecified company culture. This sometimes leads to a cultural disconnect as the new hire possibly came in from a very different culture and takes time to adapt to the new environment and sometimes results in separation within the probation period – if the individual is not perceptive enough.
CHRO’s and CEO’s in large corporates sometimes define the Culture note that is adorned on the walls of conference room – but when the same is not practiced from the top remains as a formality. This must have been the case with some of the large corporates – who defined Sustenance as a Culture but failed to implement sustenance and monitoring and resulted in their downfall.
Executive’s combative mindset