Chak de India is an entertaining movie with an important message: teams win, and individuals who play for their own glory make teams lose. It describes the forging of a winning team by harnessing individual egos, and also how a match was lost when a captain put himself ahead of his team.
Chak de India’s message runs counter to the cult of the CEO that has been building up in the business world. The media loves celebrity CEOs. Their pictures appear on magazine covers; their sound-bites make good copy; the salaries they earn turn heads; their personal lives provide entertainment on society pages. Awards for the ‘best CEO’ provide the media more stuff to publish. It is customary for award winners to step on stage and say they would not have got the award if it were not for the great people in their organization and that the award is humbly accepted on their behalf. Nevertheless the pictures on TV and in the newspapers, and the stories about challenges undertaken and decisions made, are always about the CEO who got the award. Thus the media projects the performance of the company into the persona of the CEO and the myth is perpetrated in the public mind that only the CEO matters.
The million dollar question is, “Is the cult of the CEO good for the sustainable performance of a company?” In the early months of 1999, a strange thing happened in the USA. The stock of a high performing computer company fell sharply. It was strange because the internet bubble had not yet burst and this was not even an internet company. This was the very successful Dell computer company whose direct delivery model was up-turning the industry. A Wall Street reporter gave a surprising explanation but, in the circumstances, the only plausible one. Michael Dell’s biography had just appeared with much fanfare. Here was a young guy, dressed casually, who liked flipping hamburgers in his yard. According to the reporter, investors were disconcerted. This was no steely eyed Jack Welch or hard talking Bill Gates, the most common images of successful CEOs at that time—this was just a kid! Imagine sitting in the back seat of a New York cab, weaving through the traffic at high speed, and suddenly realizing that your driver is an inexperienced teen-ager. Hey, stop! Let me off this cab, you would say.
This story makes two points. Public relations experts who urge companies to brand their CEOs are right: the image of the CEO does matter. However, it is more important that the image satisfies the requirements of the public. Should it not; or should a high profile CEO get embroiled in an unpleasant controversy, the company’s reputation will take a hit. The imperative of managing the CEO brand spins a reinforcing cycle between media, CEOs, and their PR advisors that fuels the CEO cult industry with undesirable side-effects on the performance and culture of companies.
Boards scramble to find star CEOs. Head hunters, with fees linked to the salaries of the CEOs they place, are eager to assist them. The result is that CEO salaries have gone out of earthly orbit. They have become de-linked from the salaries of others in the organization—in America, CEO salaries are now reported to be 140 times the salaries of average employees. Some analysts explain that CEO compensation, though large in comparison with salaries of other employees, is very small in relation to the revenues and profits of the firms they manage. It is affordable, so boards avoid unpleasant discussions about inequity within the organization, let alone the much more ideologically charged subject of the effect that soaring compensation at the top has on society in general.
CEOs are often compared to conductors of symphony orchestras. The analogy may serve to justify the case for the high salaries of CEOs. Conductors are indeed a breed apart from the instrument players in the orchestra. Their names help to promote their orchestras; and they are paid much more. However the analogy is wrong because a business organization is structurally different to an orchestra. For one, the orchestra plays a pre-scripted score whereas a business team must devise its strategy while it is performing. And, whereas an orchestra performs its pre-rehearsed music within a controlled environment, a business team must respond dynamically to the moves of its competitors, and change its tactics—the music it plays—accordingly. Since the interaction between a business team’s members and its captain must be much closer, the captain cannot be on a pedestal apart from the team like an orchestra conductor. He or she must be on the field and play along with them. Thus a business team is much more like the hockey team in Chak de India than a symphony orchestra. The captain must often step back to let others score and let them be feted accordingly in the media for their achievements.
The fact is that performances of great companies result from many initiatives and many significant contributions. However the stories of other members of the team are rarely given the same respect, if mentioned at all, as the role of the CEO in the history of the firm’s performance. It is much easier to write a story with one hero, as any author knows. It also makes it easier for the reader not to keep guessing who the real hero is. While this may be convenient for both writer and reader, it is not an accurate representation of reality. Research in organizational performance improvement and transformational change has brought out the many-faceted nature of these processes and the critical roles played by many in them. The research reveals that change-agents at lower levels within the firm often confront challenges and career-ending risks comparable to the risks taken by the CEO. Whereas CEOs often have golden parachutes to help them land comfortably if they are ejected, lower level change agents risk very hard landings should they fail.
At the end of the day, CEOs, like the rest, are human beings. They want appreciation and relish admiration by their peers. However, too much adulation can go to anyone’s head. CEOs can begin to believe their own press, which is managed by sophisticated PR professionals ostensibly for the company’s benefit. Following the spate of corporate governance scandals in America and Europe a few years back (Enron, WorldCom, Tyco, and many others) the Dutch business federation examined the numbers of times CEOs of various companies had been mentioned in the media in previous years, invariably favorably. There was a surprising correlation: CEOs of the companies that got into the most trouble were the ones who had been portrayed and lionized most often.
Business journals, whose super-ordinate purpose should be to contribute to improvement of business management practices, must critically examine the effects of the stories they write and the awards they give. By exaggerating the role of the CEO, are they perpetrating a fallacy about how good businesses really function? For the CEOs, standing on a pedestal can be an exhilarating experience. However the space to maneuver on the public platform is narrowly circumscribed by public scrutiny. Any misstep can lead to a fall. The Dutch federation’s advice to CEOs: ‘Prevent yourself from becoming ‘sun kings’. Just say no to journalists!’