Category: team dynamics

Stress & the CEO: What role for the NED?

There’s no doubt its a tough job being a CEO, but it goes stratospheric when you have to manage a game-changing situation that has the potential to destroy or seriously damage the size and shape of your organisation.  Take the challenge of access to capital for instance, as it is one of the top concerns for scale-up entrepreneurs and SME CEOs and consequently one of the top stresses. Which is hardly surprising when its quite usual for the process of raising finance to be more lengthy, more onerous, more incomprehensible and less within the CEO’s control than anyone had forethought.

I read recently that some financing professionals claim the rigorous and stressful process of raising capital ensures that only the best companies (i.e., those most likely to succeed) receive funding. There may be some truth in this, as I’ve certainly seen companies produce clearer, more thorough and more strategically robust business and financial plans as a response to external scrutiny and criticism. But, if only it’s a perfect world, as for every good outcome of the process of raising capital, I’ve also seen a bad one:  spurious demands for data, reports and analysis; legal documents full of irrelevant clauses (only inserted to be negotiated out); and, worst of all, processes that seem to be going swimmingly only to be derailed just when nearing the finish line. Go figure that persistence and resilience are considered the most vital qualities needed by CEOs of companies trying to raise capital.

It also means that money, or the lack of it, becomes the focus of conversation around the Board table and, consequently, as the CEO bears responsibility for raising capital, they face mounting pressure. We also expect them to shield employees from this pressure and to retain a calm, positive and contained exterior for fear that otherwise others in the company will get stressed and performance will go downhill.

Crikey, who’d take on that job?

This is a good reminder to NEDs: the CEO is only human and more than likely the situation is causing them extreme frustration, irritation and disappointment to the extent that they are probably wondering what possessed them not to take the sensible job which was on offer at Google. So allowing the CEO time to vent is imperative, especially because those who hold the power over the investment cheque can make unexplained decisions perceived as unjust and unfair. Its elementary human psychology to want to be listened to, and so it is crucial that Non-Execs don’t just jump in with ‘solutions’. Neither should they suggest inane actions that have already been pursued, nor should they express opinions such as “if only the CEO had spoken to so-and-so” if they themselves have not offered any practical help to introduce the CEO to this seemingly very important person known to them.

So once the gripes and frustrations have been aired, the team needs to constructively turn their attention to “if not this, then how else?” and when the leader of the company is experiencing significant stress, NED’s need to be allies not critics. Studies have shown that to build resilience, you need to buffer collective stress and support is essential for stress management within groups. While you don’t need to be the best friend of everyone around the Board table, you do have to work together and cultivate a collective belonging and belief in the talents of the team to get through this crisis.

The good NED then brings perspective, experience, wisdom, clear thinking and contacts. We all know the importance of being forced to pause and reflect when in the thick of a fight and this is where intervention from the NEDs can be so helpful, using the clarity that comes from not being in the day-to-day miasma. They can identify strengths that may be being overlooked, focus the executive team on being data-driven (as the enemy of anxiety is good information) and offer practical help. NEDs should deliver a dose of realism, but they should not be unduly negative as openly reflecting on the dire nature of the situation and being a harbinger of doom helps no-one.

Adding to some CEOs stress is, of course, the underlying concern that the Chairman of the Board can ultimately sack them. Believe me, though, it also adds to the Board’s heightened anxiety that the CEO ultimately can resign! Either way, you will always find pundits who want to introduce someone new to boost the chances of improving a business’s fortunes.  Realistically, finding a CEO replacement at short notice for a company that is strapped for cash is nigh-on impossible, but introducing additional firepower is certainly an option that everyone involved should entertain as anything that helps the company live to fight another day is worthy of being explored.

Times like these are extraordinary so they call for an ‘all hands to the pump’ mentality.  This will help a business raise the capital. For instance, NEDs can introduce possible new investors from their networks or behind the scenes they can use their influence with the external decision makers or, just simply, they can add credibility to the plan by publically voicing their support for the CEO and executive team.  The stress on the CEO will only be worse, and the outcome less favourable, if the resources around the Board table aren’t used and this stress can become toxic and highly unproductive so the absolute last thing your CEO needs in this circumstance is a ritual beating.

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Of course, I hope all the CEOs out this predicament weather the crisis, but realistically there are times when it just doesn’t work out.  In these cases, having NEDs on your Board who have experienced it before can help with the practicalities of winding up a company, but when they also have the capacity to be phlegmatic, reflective and supportive it could be the difference between giving up your entrepreneurial dreams or trying again.

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Avoiding and managing a “Iwan Thomas” in your workplace

Every so often I get snared by popular TV and, shamefully, this month I’ve been glued to watching Bear Grylls’ Celebrity Island.   This extraordinary exposé of cringe-worthy team dynamics, painful character flaws and conflict has been riveting with the most entertainment undoubtedly coming from Iwan Thomas, former Olympic athlete, whose ‘self-appointed’ leadership caused pretty much all of the aggravation.  Of course, we don’t endure starvation, tropical storms, marauding mosquitoes and zero facilities in our workplaces, but what it showed is how difficult it is to have successful group dynamics when you have no expert knowledge, no-one knowing their particular roles and no means for conflict resolution.

Since leaving the Island, Iwan Thomas has admitted he was a bit of jerk.   A recent McKinsey study identified 62% of respondents saying they had been treated rudely by a work colleague at least once a month.  It’s not rocket science to see that this damages morale and so isn’t good for productivity and efficiency in your workplace.  But what was additionally frustrating about Iwan’s behaviour, was that he made decisions without any expertise or knowledge and led the group repeatedly into making the same mistakes.    It took the full four-weeks before the group started to acknowledge each other’s strengths and weaknesses, leading to more defined roles and responsibilities based on true capabilities and, unsurprisingly, the endless the cycle of failures was broken.

Celebrity Island is a crude analogy but it reminds us of why it is so crucial to recruit the right people and provide them with job descriptions with set expectations and boundaries.  Working with CEOs as I do, I cannot stress enough the benefit that comes from having the right team around you.  Do interview candidates hard and if you need a certain skill set, test them on it.  Recently I was asked to explain a cash-flow statement in a Non-Executive Director interview.  That surprised me, but my being financially literate obviously was very important and putting me on the spot was better than just assuming I could because my CV suggested so.  For senior roles, interview multiple times and in different settings, both social and formal, and ask your team how this person has interacted with them outside of the interview.    Take up references and where possible informally reference too and don’t just listen to referees spout on about how good the candidate is, ask them to give examples.  Finally, be wary of trusting your own instinct as we are all plagued by unconscious bias which happens when our brains make incredibly quick judgments and assessments of people without us realising. Our biases are influenced by our background, cultural environment and personal experiences and they generally will hinder you from making the best hiring decisions.

On the Island we saw lots of conflict and, if I’d been there, it would have tested every conflict resolution skill I’ve ever learned from the mediation training I’ve done and from life (as I have two small children, need I say more?).  I’ve lifted this from a recent article by Lionel Valdellon, titled, “Team Conflict & Conflict Resolution: The 2-Minute Guide” as it is a great synopsis of things everyone can do to manage team conflict:

  • Keep calm. If you’re agitated, you will resolve nothing.
  • Stay alert! If you’re attentive, you can read the situation and interpret verbal and nonverbal communication.
  • Communicate without threatening.  Talking like a fascist dictator will only frighten everyone more. No one will listen to you. Your nonverbal communication is as important as your words.
  • Respect all differences. Keep language and tone neutral, and avoid disrespectful words. Problems aren’t solved by calling people “idiots” and “drama queens.”
  • Use humour carefully. A well-timed, non-insulting joke can defuse a situation faster than anything.
  • Be generous. Keep in mind that resolving the conflict is more important for the working relationship than “winning” the fight. Which is why generosity is needed. Know when to let go of grudges. Know when to forgive and forget. Learn to hear the apology that was never said.

So, my advice is to avoid hiring a ‘Iwan Thomas’ in the first place by careful selection of your team, but, not wishing to be too derogatory about poor Iwan (who did almost redeem himself on the programme), people can be managed by good conflict resolution skills and these skills are hugely useful in business because, however hard you try to avoid it, you are going to have someone at some point behave like a jerk in your office.