A Tale of Two CEOs
It is generally accepted that leadership skills are not limited by personality type, background, education, ethnicity, gender, or any other diversity classification. A wide range of individuals who belong to our organizations are successful. However, we argue that those who rise to the top of organizations, such as the CEO of a company, are often very similar in the way they define success, the values their organizations expect them to pursue, and how these values shape the way they make decisions. We also argue that these definitions, values, and decisions are often flawed.
To explore this further, let’s look at the fictional profiles of two CEOs.
Our first fictional profile is named “Peter,” a name that was chosen only because it is a common first name among real CEOs. Peter’s job is to maximize profit for shareholders, and he takes this responsibility very seriously. To maximize profit, his company will eliminate waste, reduce defects in existing products or services, and innovate and improve new products or services to achieve increased market shares. As the company and profits grow, the stock price improves, and employees get better bonuses and better pay, resulting in a happier workforce. Peter wants a diverse, bright, and highly motivated workforce. Peter believes success is a natural outcome of hard work combined with personal motivation, confident decision-making, and determination in the face of adversity. His goal is to inspire his people to be their best at work. He envisions his influence and motivation to succeed trickling down through the organization to team leaders who drive results.
As you read this description, how do you feel about Peter? You likely feel fine or even good about Peter, as he reflects well-accepted business norms in our society.
However, let’s dive deeper into the common outputs of Peter’s management style. Peter’s livelihood depends on profit, and success or failure is determined in short periods of time. When profit goals are threatened, Peter acts. Peter makes long-term decisions that affect short-term profit goals. Peter is under pressure, so he takes command and makes decisions. He passes the pressure he feels down to his direct reports, who then do the same with their own direct reports. These decisions often flow top down, with critical choices being made and informed at high levels of the organization. Peter’s natural value system drives him to display high confidence and minimize dissenting opinions. Peter believes that he will make the right choice and that his team will follow his leadership and challenge where needed. Peter reacts but is very risk averse. And Peter must be risk averse because he has a frequent pass/fail test—in the form of quarterly business reports. Peter can’t risk several negative reports in a row, nor can he put doubt in the minds of the shareholders. Therefore, Peter follows common business norms; he goes with the proven and not the unknown. Peter is not incentivized to invest in efforts that will result in only long-term success. If Peter sticks his neck out to embrace non-traditional business practices or management, and there is a decline in profit or stock, his leadership will be questioned. There’s little incentive to change, given that the requirements of his stakeholders—the board and the shareholders—do not change.
Now that we have learned a bit more about Peter, let’s dive into the profile of our second fictional CEO, “Avery.” Avery’s job is to maximize the value of the company. Avery defines value by what adds value to humanity, which is evaluated from the perspective of three key stakeholders: the customer/community, the employee, and the environment. Avery knows that all companies have “waste”, but the CEOs job is to tip the scales, improving where possible to sustain a net positive value to humanity. Avery sees profit as important, but as a means and not the end goal itself. Profit is the way that the organization continues to exist and to reinvest in itself. Avery makes important decisions by relying on fundamental principles, even if it means taking a more difficult path. Avery is often an early adopter of new practices simply because the needs of Avery’s stakeholders—customers/community, employees, environment—are evolving and changing. One of Avery’s fundamental principles is that success is determined by the outputs of their efforts, not by how far they can climb the management ladder. Decisions resulting in promotions are a combination of factors and are frequently the result of the work of the people who are lower in the organizational hierarchy. Therefore, the best strategy to achieve good outputs is to enable those doing the work. Avery does not assume that they know what these employees need to do their best work, and instead seeks out that information so that they may understand these requirements and make them a reality. Unlike Peter, Avery does not want “hard work” from their employees. They want work to be a natural and, as much as possible, enjoyable part of people’s lives. Avery also wants to bring out the best in people, but their vision is for employees to increase their output by tapping into their skills without the hindrance of company politics or bureaucracy, to voice opinions without fear of consequence, and to build trust that stems from a sense of fairness and transparency. Avery envisions work and life existing in harmony for a happy and productive employee.
How are you feeling about the Avery profile? A little uncomfortable? Do you worry that profit will plummet? Worry that Avery’s approach to enjoying work will result in employees “slacking off,” and in the end, the company’s productivity falling? If so, that makes complete sense! We argue that it would be very difficult for this type of thinking to be common or accepted in a CEO today. We are more likely to find Avery’s approach in organizations where long-term success and the well-being of a “family” of employees is highly valued and even prioritized over quarterly business results.
So, perhaps at this point, you know Peter, and despite his possible blind spots, you’d pick him over Avery to run your company. Perhaps you think, “Working for Avery sounds nice, but I want to get my end of year bonus and don’t want to work for a company that is going to fold due to their lack of a (short term) profit-focused decision-making approach.” Maybe you are right. After all, we see little evidence that Averys exist, while Peters are abundant. In order to better gauge these leadership models, let’s evaluate a recent decision made by many leaders at companies large and small and see which leadership approach would have the most positive effect on the organization. Let’s look at “Return to Office.”
In 2020 and 2021, as a result of the Covid-19 Pandemic, a business continuity and employee accommodation strategy for many businesses was to ask or allow employees to work from home. Meeting rooms converted to Zoom rooms and many people adjusted their lives in response to vastly different work norms, changing decisions like where they lived, cars or transportation they used, and child care requirements. Many people found renewed work-life balance as their commute requirements were removed and the ability to flex between work and home responsibilities improved. However, businesses that relied on commuters suffered and shut down, resulting in degradation of city centers, less tax revenue flowing to these municipalities. Now in 2023, for reasons not fully known, we see a trend of businesses starting to mandate some forms of ”return to office”. The reasons cited are slightly varied, some claims of increasing creativity and sustaining culture, while others blatantly accuse those working from home as not being productive. Regardless, we will likely never know the pluses and minuses discussed in the boardrooms where these decisions were made (surely this was not decided on a video call, right?).
What would Peter do and how would he make the decision whether or not his workers should “Return to the Office”? Peter will first consider the most important part of his job- profits and the bottom line. Office buildings are expensive and are being wasted. He lacks control in this “work from home” world. What if employees are taking advantage of working from home, that would result in a loss from top line and bottom line and negative influence to shareholders. Is that a risk he is willing to take? We must remember that Peter’s natural belief system results in the assumption that he is needed to drive decisions downward, to have his direction trickle down through the organization. Surely this would occur better in the physical workplace. The freedom of working at home implies that employees are trusted to do what is best and be productive, which implies that a bottoms up flow of information would work, which implies that there is no need for the “Thumb” after all, and that oversight-style management was never needed. While these exact thoughts are not likely to be running through Peter’s head, embracing the idea that the workplace itself is not needed as a truth will send a ripple effect, shattering many elements of Peter’s belief system. Peter’s belief system justifies his worth, therefore Peter defaults to concluding that some level of returning to office (RTO) is needed. With RTO, the pesky very large line items of office expenses on the income statement no longer are seen as shareholders money wasted, but instead the cost of doing business. The difficult, disruptive, and untested decision to decrease physical footprint and find other ways to engage with employees to eliminate those expenses is no longer a decision that must be made. Peter is at ease, except for the fact that Peter knows this decision will upset many of his employees. He even thinks, “many of my employees may be angry at me, or even hate me”. How does Peter reconcile this? Well, he falls back on his belief system. He doesn’t want people to feel bad or dislike him, but that isn’t his job or priority. He thinks, “Work is naturally hard, it shouldn’t be easy. Being on top is difficult, I must make decisions that people don’t like. For their own good. Because inherently I know what is best. That is why they made me CEO.”
Now let’s look at how Avery would address this decision. Avery’s job is to maximize value for humanity, so they evaluate the decision accordingly. The employees and the disruption to their lives must be considered. In addition, there is the impact to the environment - the increase in car traffic, the resources required to run the office buildings. Finally, Avery considers the community and the customer. The families of the employees will likely be happier if given the choice of whether to return to the office. The local businesses near the office, however, are suffering. Avery decides that they do not have enough information to decide and seeks out additional knowledge. The most important source of information is from the employees- do they want a required RTO for all employees? Do they feel less productive at home? What are they looking for in their work location- what is required for them to be at their best? Remember one of Avery’s primary beliefs is that their job is to enable others to be at their best. Survey results and anonymously voiced anecdotes are very clear from the employees. While some people want to return to the office, very few want a mandate. While employees want to engage with their team, few thought that a return to office mandate was the best approach. On the other side, Avery sought out guidance around how remote work affects culture, productivity, morale, and creativity. After a thorough review of expert advice, Avery found very little evidence supporting the idea that being in the office a minimum number of days per week was required to protect culture, boost productivity or improve morale. Avery wondered, “Did these other CEOs have access to different information? Were they unabashedly selling their anecdotes as facts? Did they believe that they inherently knew what was best simply because they were the CEO? Or, worse, were they just lying about why they made the decision?”
We mentioned that Avery made decisions based on fundamental principles. Another of these principles is that the relationship between the company and the employees is of utmost value. Avery knows that if you want to have a good relationship, then you need honesty, trust, and communication - the other party must not be taken advantage of. With this principle in place, and with the knowledge of how to nurture the company/employee relationship, the talking points being given by other CEOs about mandated Return to Office were baffling to Avery. Avery wondered why so many employees accepted condescending deception as a form of communication from their leaders.
Avery decided not to mandate Return to Office but instead to enable the things that were important to employees such as team building and collaboration. Avery trusted the managers of the organization to figure out how to make that happen. Avery also trusted the managers to gauge productivity and to be productive. In cases where people abused trust, a viable relationship is no longer possible, and their managers would address these situations. Avery saw a long road ahead of figuring out how to reduce unnecessary office space overhead while supporting those that wanted it or needed it, but it was clear this was the best choice for the employees and for the environment. Avery also recognized that this would negatively affect some businesses and started a task force to investigate how to offset that impact, where appropriate, using the same value for humanity principles to decide how to proceed. The extreme tension between the employee and their company that resulted from the RTO mandate was never an option for Avery, as extreme tension is not viable for functional relationships.
Which decision was the right decision? To answer that we must decide how we define the right decision. We would argue that the right decision is the one that adds the most value to humanity. Further, we would argue that following this rule leads to the long term success of the organization in many ways, including the ability to sustain profits over time. The seeds of employee resentment planted by the RTO mandate are clear in news articles, LinkedIn posts, and employee message boards. As these seeds spoil the relationship between the employer and employee, we believe that long term harm to the company in the form of talent retention and reputation are unavoidable. While currently some employees feel “tied” to their employer, those ties are temporary, and many employees will break free soon. But we could be wrong, retaining good talent and forming trusting relationships with your employees could have nothing to do with long term success of the company. What do you think?
We want to hear from you, what is your experience?
What decision making process do you think will result in the best long-term result for the company? The best short-term result?
Why is Peter’s decision-making process less clear? What did we miss about Peter’s thought process?
Why is inherent tension between an employee and employer an accepted element of the workplace environment? What are the assumptions behind that? Are they true? Is it possible that companies of the future can challenge this notion?
We hope you enjoyed diving deeper into two possible CEO Profiles. Thanks for reading and engaging with us on this controversial and interesting topic.
