One of the things that drives me nuts when I look at corporate policies is stupid practices that have become institutionalized. For instance—and I’m not pointing to any specific company—when a person is promoted to a level beyond their capability and fail, they are typically fired rather than returned to the level where they were successful. Or when an executive or employee leaves the company, they fall off the map rather than get put on a list of potential priority candidates as known quantities.
What brought this up is Pat Gelsinger—who doesn’t officially start at Intel until February—has already started bringing back retired CPU architects. Apparently, his move is creating some waves at Intel, but let’s talk about why doing this should be a best practice rather than on the fringe of management behavior.
Why CEOs Fail
I’ve worked on several post-mortem efforts on company and CEO failures, and one of the recurring themes is that the CEO never got the support they needed from the company they led. Often this starts because other executives in critical positions think they can do the job better and believe if the CEO fails, they’ll get their shot. Other times, it is merely a widespread belief that the CEO is clueless (which initially is often true due to the nature of the job), so they don’t follow the CEO’s intended direction. Finally, there are issues where the CEO is isolated by his or her direct reports and kept in the dark concerning critical problems. Now there are issues where the company may be unrecoverable, or the CEO was poorly selected and misacts, but these are board problems and not within the CEO’s control.
The best practice I advocate for a new CEO is to build a core team of people that you trust and that trust you. If you can assure the information stream to your desk, assuming you are capable, you can then make timely decisions to ensure the company’s performance. If you can’t trust the people who report to you or they don’t trust you, then you are almost certain to fail because you’ll be undermined at almost every turn.
Now bringing people in from the outside is how this circle of trust is often created, but that approach creates a secondary problem. As the CEO, those people are new to the job. They may not be trusted or trust their subordinates and letting this decision trickle down through management would result in the impossible task of effectively restaffing the company.
But, if you can pull people who are loyal to you who used to work at the company, then they are a known quantity, can hit the ground running, and they already know which of their subordinates (in many but not all cases depending on how long they were gone) that they can trust. In effect, it provides an external candidate—like Pat currently is to Intel—with one of the significant advantages of a true internal candidate because he can build a team that is both personally loyal and highly competent on day one.
One Other Bad Practice
There is one other bad practice I’d like to bring up, related to the Peter Principle. This rule states that people tend to rise to their incompetence level where they stay and do damage but often get fired. So why not, rather than firing them, return them to that lower level where they were successful as a known entity? This practice is problematic in management because they were likely backfilled and demoting the person they replaced wouldn’t play well. But for first-line managers, you could return them to rank and file employees far more quickly. At IBM, I watched as we forced one of our most successful woman sales reps out of the company because she sucked as a manager; that decision likely cost us millions in lost sales. Why not instead preserve that employee as a known successful salesperson?
Pat Gelsinger was ranked as CEO of the year because he handled employees better than anyone else, so it shouldn’t be a surprise that he uses what should be a best practice to build his team. But rather than being critical of his approach, it would be far better to use his example as a teaching moment and start to realize that the successful employees that have left the company are a known resource that could better assure the firm’s future and would have greater loyalty to the person hiring them than the folks that let them go—effectively killing two birds with one stone.
Something to noodle on this week.
- Lenovo’s Quarterly Financial Report: A Showcase of Best Practices - August 12, 2022
- Siggraph and NVIDIA: Preparing for the Metaverse Revolution - August 8, 2022
- A Closer Look at Intel Quarterly Results - July 30, 2022