Is it really lonely at the top? Alexander Gutzmer reports on a survey of CEOs that shows why leaders become insulated – and how they combat destructive isolation.
Things became disconcertingly quiet around Rudolf Schulten when he took over the helm at the Mannheim-based power company MVV Energie. “As the CEO,” he says, “I suddenly discovered I was leading quite a solitary existence within my own organization, because no one was on the same hierarchical level as myself.” Schulten attempted to counteract the situation by placing key allies as direct reports. Now, two years later, the situation has improved.
Despite Schulten’s scenario, the solitary existence of CEOs, however, is not simply a function of a concrete and destructive corporate culture surrounding some of them. Many CEOs and executive directors of large companies have similar stories to tell. There seems to be a system behind it. The air at the top, it seems, is not only thin but cold as well. Employees, when interacting with their bosses, keep their distance. And although this might be a response to the common perception that senior executives have a kind of “tunnel vision”, this dysfunctional insularity (or a lack of connection) not only emanates from CEOs but also from the employees themselves. The amount of power a CEO has creates a certain distrust among those some steps further down the corporate ladder.
Consequently, CEOs tend to spend more time talking to their peers in other companies. The people in charge, one could say, set up their own little decision maker’s self-help groups.
Bastian Fassin, head of the candy company Katjes, says, “CEOs need to discuss issues pertinent to them in the same way that physicians at a conference might discuss issues particular to their work. So, informal organizations and small discussion groups offer good forums for the discussion of key issues. Furthermore, entrepreneurs and a trusting environment are essential as the means to make these kinds of exchanges effective.”
A personal network is vital not only (as is common knowledge) for young professionals, but also for those at the top. It is becoming a critical success factor for today’s crop of CEOs. Says Torsten Oltmanns, Global Marketing Director for Roland Berger Strategy Consultants, “A personal network gives them an opportunity to discuss ideas, economic and political issues, as well as new management models.” It is a well-considered assessment, since Oltmanns, together with his team at the Technical University of Munich (TUM), has carried out two studies that focus on the biggest players in the German economy.
It is unique research: the consultants managed to deeply explore an intrinsically shy species. Though CEOs are often the centre of heated debate, often fuelled by envy and mistrust, they seldom discuss what they do or argue their own value to their companies. Add their public “shyness” to their million-dollar salaries and seemingly misanthropic decisions relating to where businesses operate and whom they employ, and it’s easy to understand the backlash against the CEOs of large companies. As a type of leader, they are becoming more and more unpopular. Also, wrongdoings by individual managers (as we have seen during the sub-prime crisis) are influencing badly the image of business executives as a whole.
In turn, many CEOs are increasingly reluctant to have their motivations and sentiments revealed. Few of us know who they are, what makes them tick, how they obtain information or how they make decisions. These are the types of questions to which Oltmanns and his assisting consultants sought to find answers. Their interviews gave them insights into the inner workings of today’s corporate CEO.
One finding is that CEOs are barely trustful of many of the main social opinion leaders. In fact, CEOs trust, for instance, research institutes and academics less than their own employees and colleagues in other companies. The higher one goes in the company chain of command, the more readily discernible the disparity becomes. Using the orchestra as an analogy, the Roland Berger consultants identified three types of leaders: conductors, soloists and orchestral musicians. They all function as decision makers, but only the “conductors” set the tone. CEOs and core members of executive boards differ in terms of where they seek out their information, which reflects the mixed experiences many CEOs have had in dealing with those who provide input from an external perspective.
Bad news for the other big group of key decision makers, politicians: executives at higher levels place almost no trust in politicians at all. In fact, 10 per cent find them completely untrustworthy and 70 per cent consider them only marginally so. Apparently, ignorance of necessary economic policies and a tendency toward short-lived populism, as can be evidenced in many European countries, cause trust to erode.
Accordingly, the alphas of the business world are very reluctant to approach the elected policy makers. Says Alexander Rittweger, head of the Munichbased Loyalty Partners (known for its “Payback” bonus programme), “I believe that managing directors would do well to keep their distance from the political realm.” Otherwise, they will tend to find themselves back on the slippery slope “that could be more damaging than beneficial to themselves and their companies”. Moreover, it does little to improve the perceived incompetence of government officials in regard to economic policies.