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Updated: June 12, 2011 14:17 IST

Seven behaviours that CEOs should avoid

D. Murali
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Book cover of Defining Moments, What every reader should know about balancing Life by Kees van der Graaf.
The Hindu Book cover of Defining Moments, What every reader should know about balancing Life by Kees van der Graaf.

Greed tops the list of seven ‘behaviours to avoid’ in ‘Defining Moments: What every leader should know about balancing life’ by Kees van der Graaf (www.imd.org). “Some business leaders have certain characteristics that really irritate and upset me,” begins Kees. “These are probably the root cause of the problems we are now facing in the economy, and they are also why some large multinationals have difficulty dealing with their negative perceptions and images.”

In the author’s view, greed is at the heart of most issues. You can see greed in action when leaders always want more and more money for themselves. Pointing out that salaries are becoming far too high, and bonuses particularly in financial services are outrageous, Kees cautions that such a bonus culture leads to the wrong decisions and the wrong behaviours. He, therefore, advises industry leaders to come together and take proactive action before the legislators mandate unworkable solutions.

On a related note, the second behaviour to avoid is selfishness. Celebrity CEOs who appear in the press too often and put their own interests ahead of the interests of the firm often develop superiority complexes, instructs Kees. “With their know-it-all attitudes, they tend not to listen to others, which results in them becoming more and more isolated.”

The natural consequence of isolation is to operate from an ivory tower, the third irritating characteristic of CEOs. Leaders who are too remote from the reality of the marketplace and the real business may be operating from historical experience that is dated, the author warns.

Compounding this problem can be the fourth in the list, ‘listening to the wrong people.’ Some CEOs are surrounded by a large number of staff who ‘protect’ them from being influenced by the front-liners in the organisation, observes Kees. “However, the front-line people are often more experienced and insightful than the armies of consultants that are hired to help the company gain a so-called external perspective.”

Blaming the predecessor all the time, for the current state of affairs, is the fifth undesirable behaviour, one learns. How does blaming help anyway? This makes it possible for the CEO to clear the decks at huge cost and then get full credit for the restructuring, explains Kees.

A lesser sin perhaps, though with an immense damage potential, is the sixth, the ‘short-term outlook,’ pressured by which CEOs work at delivering on quarterly expectations for the financial analysts, rather than driving sustainable results. Behind this pressure, the author finds the opportunist-investors who want volatility and love ‘news’ because this creates movement in the stock prices, which is where they earn their money and their ridiculous bonuses. The real investors, in contrast, buy a stock because they believe in the future prospects of the business; they behave like owners of the firm and stimulate management to deliver long-term results, he distinguishes.

Last in the list of avoidable behaviours is the putting of shareholder value maximisation ahead of stakeholder value creation. Rues Kees that it is still a common belief in certain circles and even among some faculty of well-known business schools that the only purpose of a business is to maximise profits. The time has come, he notes, for leaders to realise that you do not simply take without giving anything back. Urging leaders to act more responsibly in the areas of sustainability and social responsibility, Kees makes a fervent plea, thus: “The world in which we live, the planet that we occupy, will be ruined if we do not change this attitude and, instead, focus on total value creation, which satisfies the needs of a multi-stakeholder configuration.”

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