It’s time for CEOs to rethink the open door policy

The CFO presented it to me as a problem, and maybe it was—for him. But it was a brilliant idea by the CEO. When I mention this to other CEOs, they get a faraway look in their eyes, because many are lucky if they can block off five minutes to think. Instead, they’re continually asked by the people on their senior team to resolve problems, answer questions, and make decisions. Some of those may be important, but many  should be getting handled without the CEO’s involvement. 

The issue shows up in PwC’s 26th Annual Global CEO Survey, where CEOs say they spend more time than they’d like on short-term, operational performance, and not enough time on big-picture, strategic issues. One major cause of this disconnect is the fact that some senior teams aren’t sufficiently autonomous. Among CEOs in the sample:

• Just 23% say that leaders often or usually make strategic decisions for their function or division without consulting the CEO.

• Only 56% say that the leaders in their organisation encourage dissent and debate.

• 46% say that company leaders tolerate small-scale failures.

The issue may be getting worse. Last week I spoke with a CEO of a major global company about the CEO Survey results. He told me that he—along with two other FTSE100 CEOs he knows—were getting asked by their board to roll up their sleeves and dig into operational details. 

These two issues—the scarcity of CEO time to focus on future reinvention and the apparent lack of autonomy among leaders below them—are intertwined. If CEOs can build more self-reliant, self-sufficient teams, they’re better able to break free from firefighting mode, as well as the tyranny of the next fiscal quarter, and solve the bigger problems they face. Here are four ways to get started: 

1. Invest in leadership development for your senior leaders. Most companies have leadership and executive training programs for high-potential people in middle management, but that stops after people reach more senior levels. At that level, the thinking goes, they already know everything they need to know. But that’s just not true. In the current fast-changing environment, these leaders need just as much executive training and coaching—maybe even more—if they’re going to make sound decisions on their own.
2. Move people around. The career path for most senior leaders tends to be linear—the best accountants become finance managers, the best finance managers become CFOs. Today, with the level of interconnected challenges and uncertainty, leaders can’t rely on narrow, domain-specific expertise. They have to navigate ambiguity.
   
   Companies can support them by shaking up career paths and moving leaders into situations where they have no expertise. That sounds counterintuitive, but it works. I currently live in Singapore, where the government makes these kinds of moves among senior leaders all the time. Its senior people move frequently to new roles and responsibilities, from professional services to design, from running health agencies to overseeing education.
   
   These kinds of nonlinear career paths have two benefits: people quickly start to understand other points of view, and they build great networks. Both of these attributes are fantastic in managing complexity and learning to make decisions without asking for the CEO’s input.
   
   
3. Encourage failures. When leaders and organisations don’t tolerate small-scale failures, they create the conditions for large-scale ones. I thought of this recently when I heard a podcast featuring Toto Wolff, principal and CEO of the Mercedes-AMG Petronas F1 team. F1 cars race at speeds of roughly 350 kilometres per hour, and races are won or lost by thousandths of a second. In that environment, small failures have large consequences. Yet Wolff’s leadership style is to treat small-scale failures as a process issue rather than a personal issue. If something goes wrong—and something always goes wrong—analysing it through a process lens helps the team make systematic changes to prevent that mistake from happening again.
4. Set clear parameters. Last, and most important, CEOs can help their teams become more independent by setting clear parameters. That means a vision, strategy and purpose—all communicated repeatedly and emphatically by the CEO to ensure that everyone is aligned. When CEOs set a bold vision like that, they give their senior team a clear set of overarching principles to apply in making decisions independently.

Philips is a good example. As laid out in a strategy+business article about digital transformation, the Dutch conglomerate had a sprawling portfolio of somewhat related business units a decade ago, including consumer electronics, lighting and medical equipment. Without a clear organisational focus, the company was underperforming. When a new CEO took over, he made an explicit decision to move away from lower-growth businesses and reorient the business around health technology. That meant shedding some units that had been central to the company’s DNA, but it worked—with all leaders rowing in the same direction, Philips has outperformed most of its competitors since the move.

The bottom line? Equip senior teams to solve the problems of today so that CEOs can be freed up to solve the problems of tomorrow.