CEOs as Change Agents

Bringing in change on a large scale is a demanding task for any CEO. He needs to leverage the forces for change talent in the organization to ensure successful change. A CEO has to be clear about his role and his plan of action. Translating a powerful new strategy into effective action needs an active leader at the helm, a constructive corporate staff, and a compatible organizational structure. Suitable management processes and a supportive corporate environment are essential for change to take place.

These are basic assumptions a CEO has to keep in mind:

1.    Organizations are unique, and so are the working systems in these organizations

2.    Leadership is the engine that drives the vehicle called a change in the organization.

3.    Leading change is a process, not an event.

4.    Managers in an organization know the direction of change

5.    Change has to be driven, both bottom-up, and top-down.

6.    People participation is the key that unlocks change. People support what they create.

7.    Organizations are systems.

8.    Change can involve both rational and non-rational situations

9.    A sense of timing is as important a leadership is, in ensuring change.

The change process might get derailed if the CEO falls into certain some traps on the way. As he is heading the organization he is expected to be impartial, and to ensure uniformity in the organization in terms of the goals the business units pursue, the organizational structure they adhere to, the various business activities they engage in, the rewards they are bestowed with, and the strategies they adopt. This effort to maintain uniformity across the organization is praiseworthy if the business units are similar in all aspects. However, this treatment is inappropriate in the case of diversified organizations. In such organizations, each business unit has different priorities and needs a different approach to meet the new situations it faces.

The CEO is responsible and accountable to the company’s shareholders. There are situations in which he has to be conservative. But if conservative behavior becomes the norm, it may stifle creativity in the organization. In an uncertain business environment, risk cannot be entirely eliminated but it can be anticipated and managed. A CEO who is overly conservative in his approach discourages creative initiatives that come with a certain level of risk. When a CEO is trying to avoid risks like this, other managers and employees in the organization also adopt the same approach and become fault-finders rather than catalysts for change.

In most cases, the CEO has many years of line experience in the industry concerned. This should not lead him to believe that he is totally conversant with whatever is happening in the marketplace. The CEO should not also accept changes in strategic plans suggested by the senior managers in the organization, without scrutinizing them carefully. He should question the hidden assumptions that underlie the strategic plans drawn up for the organization.

A CEO heading a large and diversified organization learns to delegate his authority. As a result, he tends to lose the first-hand experience. Subsequently, he loses the feel or business activities. He may be forced to rely on his subordinates for crucial information. To ensure that he obtains such critical information, the CEO should encourage open communication. He should be prepared to discuss issues of which he himself is uncertain, with his subordinates. He should encourage them to convey all the information they have, irrespective of whether it carries good news or bad news.

Corporate strategy is the prime instrument for ushering in change in an organization. When the CEO is keen to bring in change, he should not delegate the responsibility of creating a corporate strategy to others. Managers should be allowed to formulate strategies, at the level of their business units. But it is the CEO who has to define the vision for the organization. This vision must be consistent with the corporate strategy he is formulating. A CEO’s intimate involvement in the formulation of corporate strategy should not mean that he is the only one to be involved in the process. He has to take the help of his subordinates to analyze and define important components of the vision. A CEO can send signals about the intended change, in the following situations:

1.    While guiding the activities of staff employees

2.    When defining a specific vision for the company

3.    During discussions

4.    By issuing public statements

Thus a coordinated program of change, backed by sound and relevant strategy, and led by an active chief executive, can ensure significant progress in the desired direction in an organization.

In case you missed it, my last post was 9 Leadership Steps For Corporate Culture Change

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Acknowledgement: Leadership & Change Management book by ICFAI

 

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