MANY YOUNG people aspire to become the chief executive officer (CEO) of a company, and that is a very good thing. We need a lot more people to go into business and have the chance of being very good business leaders.

Many CEOs last a long time in their jobs for all kinds of different and good reasons. However, very few of these aspirants, share-holders, media-practitioners, board members, or even new CEOs have a thorough appreciation of how risky is the job of the CEO.

EVANGELIST AND BELIEF-BREAKER

A person who is going to be judged (generally in hindsight) as an excellent CEO has to be an evangelist and an iconoclast. Evangelists are often not believed and sometimes stoned to death. Iconoclasts are despised and ostracised. Any CEO who aspires to be excellent invariably has to set about to break some long-held and wrong, or useless, beliefs. He or she then has to launch a long-term campaign with confidence for those beliefs and changes in processes and practices that will bring positive results to the company, but also require serious changes to colleagues’ current behaviour.

Such an evangelical and iconoclastic approach will, certainly in the initial phases of his or her campaign when the changes are being put in and begin to require rearrangement in the existing behaviour of people in the company, gain the CEO labels such as ‘culturally out of touch’, a ‘faddist’, or the worst – non-quantitative, totally subjective, epithet of all, arrogant. Mind you, stubbornness is confused regularly with arrogance.

Arrogance is indeed a behaviour pattern and attitude that CEOs must guard against. Giving a fair hearing to views opposite to those of the CEO and to the ‘little people’ in the company will guard against this. The wise CEO listens to his opponents very carefully anyway, because they are always trying to cut him down and if he, without fanfare, addresses their criticisms he will generally effectively neutralise these critics and run ahead of them. After all this, very often, he or she will still, at some time, be called arrogant. That truth is another of the reasons why the CEO position is a high-risk job.

In a highly competitive and globalised world in which information moves extremely fast and decisions have to be made quickly and consistently well, the best board of directors hire CEOs in large part because they have the capacity, guts and talent to take the calculated and well-thought-out risks. To arrive at sometimes scores of decisions on a daily basis CEOs are required to juggle the needs of their customers and the marketplace, the requirements of their people, availability (or otherwise) of resources, the need to cut costs, and the ever-present demand to grow revenues and margins in order to satisfy the needs of shareholders.

There are other constituents that have to be satisfied. The needs of regulators, auditors, board members, the general public, and the press must be addressed. Very often, the results of the company are reviewed every month at board meetings and, in the case of publicly traded companies, every three months by the investing public. In addition to occupying a high-risk job, the CEO is constantly under stress.

FIRING YOUR BOSS OR THE BOARD OF DIRECTORS

There are many good reasons to save your money as a CEO. The need to look after one’s family, pay school fees, mortgages, or pay for vacation and cars are some common ones. But, there is also another great reason – to have the money in order to fire your boss or your board when the time comes. Also, because the CEO’s job is so risky and stressful, the occupant must be careful to negotiate and secure proper compensation and severance packages.

Wise and experienced CEOs know that as long as they have a piece of white paper, they are equal to their bosses or boards. The boards can fire them or they can fire the board. The latter is called a resignation.

Boards must know when their CEOs’ performance just will not cut it anymore. They need to know when CEOs can no longer deliver to the performance targets. After exercising patience and counselling, the board is then obliged to fire the CEO.

There are also times when a board may become unreasonable and far too interfering in the day-to-day running of the company for which the CEO is responsible. The relationship between the board and the CEO may have deteriorated badly and may even become abusive. Such is the right time for the CEO to get out his or her piece of white paper, check the employment contract, and fire the board.
Just resign – the job was a high risk adventure anyway.

Aubyn Hill is managing partner of Corporate Strategies Limited, a restructuring and financial advisory firm. Respond to: writerhill@gmail.com