Think of a prominent global-company CEO. Sir Martin Sorrell? Indra Nooyi? Elon Musk?
Now, name the CFO and CMO. I bet you can’t. This is the challenge we face. Today's company leaders aren't just top-tier managers, they’re increasingly the only person we associate with the organisation. Its successes or failures. And, in fact, with any of its business decisions at all.
The cult of the CEO
For much too long, companies and investors have been members of the so-called ‘cult of the CEO’. Creating and then worshiping the image of their own all-powerful company leader. This cult has been driven, at least partly, by the growth of media attention over the last few decades, whose relentless focus has pushed the CEO out of the boardroom and firmly into the spotlight.
But the cult has also been aided and abetted by companies themselves too. They have bought into the myth that CEOs stand alone at the top – rarely acknowledging the role played by the management team for fear that this signals a company weakness of some kind.
And it’s rapidly getting worse. Companies and their CEOs are becoming more interconnected. According to research by Notre Dame University and the University of Georgia, the death of a CEO causes a company's value to fluctuate by $65 million more today than it did 60 years ago (adjusted for inflation).
The damage it does to bosses
This focus has a devastating impact on the lives of CEOs. Conscientious, successful leaders go above and beyond as a matter of course. But the relentless pressure to be all-seeing and all-knowing, to be overtly visible and proactive both within and outside the company, often leads to unmanageable stress and enormous workloads.
In addition, thanks to the cult, company CEOs are often held accountable for poor company performance caused by things completely outside their control, such as market volatility. So alongside the stress of running a multinational organisation, they know that their head is on the chopping block if something happens that they were powerless to stop.
The result is that a startling 100% of CEOs report that they suffer from stress and, according to research by Apollo Life, one in four say they struggle with insomnia. Many multinationals have launched expensive well-being programmes in response, but these just wallpaper over the core problem: CEOs unnecessarily carry the full weight of company performance on their shoulders.
The damage it does to investors
The ‘cult of the CEO’ also puts financial performance in jeopardy. When a company is so tightly tied to the leadership of a single individual, the market cap of the company relies on them staying in place.
But what happens when they leave? The markets end up panic-selling the stock, and investors take the losses. Today, investors are constantly committing the allegorical sin of putting all their eggs in one basket.
The resignation of a CEO of one of the world's largest companies can knock its value by as much as $1.8bn, according to research by Strategy&. In 2002, when Lifeway Foods CEO Michael Smolyansky died suddenly, the company's value dropped by 11.7%.
Solving the problem starts with communication
The good news is that the problem is not as hard to solve as you might expect. CEOs are not alone at the top. We just like to pretend that they are. The CEO is already part of a wider management team, filled with individuals who already hold a great deal of power and make many of the critical day-to-day decisions that drive company performance.
You just wouldn't know it from the annual report, market statements, or media coverage. These highly capable management team members are so often sidelined that they have, in many companies, become faceless – even interchangeable. And that gets to the heart of the problem: communication.
Companies need to increase the visibility of their management teams. Little things matter: replacing the CEO photo in the annual report with a photograph of the executive team; spreading the load of public engagements and interviews between other members of the executive team – even the biggest ones; as well as giving the company’s CTO or CMO the space to update investors in the annual report.
This is something companies need to do further down their organisations too, refocusing attention away from A-star performers to team contributions. Just like highlighting the contributions of the management team, this spreads the workload and recognises the reality that success and failure is, more often than not, a result of teamwork.
Ultimately though, misconceptions around the ‘cult of the CEO’ will take time to shift. The idea of an all-powerful commander at the top of a company, leading it in their own image, is wedged firmly in many people's heads. Collectively as an industry, we need to wage war on this picture – both internally and publicly.
We need to tear down the cult of the CEO. If we’re successful, not only will companies benefit. Not only will investors benefit. But CEOs will too.
Ab Banerjee is CEO and Founder of ViewsHub, the team-to-team ratings and feedback tool
Image source: OnInnovation/flickr