1: It was the 1990s. DBS Group CEO Piyush Gupta was working at Citibank and was halfway through a three-year assignment within the bank.
One afternoon, he sat down with his executive coach, who asked him to identify the A, B, and C players on the team he was leading.
Piyush had some A players. But many of those on his team were B and C players.
“The coach bluntly told him that he was already halfway through his tenure and he didn’t have an A team,” McKinsey consultants Carolyn Dewar, Scott Keller, and Vikram Malhotra write in CEO Excellence. “When he was transferred in a year or so, he’d leave his successor with at best a B team, and that’s not the way to provide an appropriate return to the shareholder.”
The lesson made a lasting impact on Piyush.
“My rule used to be, if I think somebody has a fifty-fifty chance of making it, I’d work with them to try and help them get to their potential. But I changed my benchmarks to: If I think you have a seventy-five percent shot at succeeding, I’ll work with you. If it’s anything less than that, I figure bite the bullet and find somebody who has a better shot at succeeding.”
The best CEOs realize the importance of making hard decisions early in their tenure.
“Make your changes early,” says Lockheed Martin CEO Marillyn Hewson. “You want to test your hypothesis and assess it. But because people expect you as a new leader to come in and make change. If you don’t, people get comfortable with that, and then if you finally get around to it, it feels to them that all of a sudden you knocked the props out from under them. Then your job is even harder.”
Westpac CEO Gail Kelly makes the same point from a different perspective: “I’ve seen it so often where a person has potential and you want them to succeed, but they just aren’t getting there. It very rarely gets better,” she reflects.
“That’s why you want to make those decisions early,” she says, “because it’s best for that person, and it’s best for the company. It’s the most elegant way of dealing with it, because you can discuss that it’s not the right fit. If you let it go on too long, you can’t have that discussion.”
2: Yet, the best CEOs are intentional about making these decisions.
“Conventional CEO wisdom states that you should move faster on people,” Majid Al Futtaim CEO Alain Bejjani reflects. “But I think that’s a very shortsighted and stubborn view.
“It’s true that you can’t make people change,” he notes. “I can barely change my children, let alone members of my team. But you can create an environment that supports people in learning, adapting, and evolving to the extent that they can or want to do so.”
Lars Rebien Sørensen was named by the Harvard Business Review as the top-ranked CEO in the world in 2015. Early in his career, the Danish pharmaceutical company Novo Nordisk’s former CEO felt “pressured to remove a division head because that business was seen as not scaling up fast enough to meet market demand,” Carolyn, Scott, and Vik write.
Lars resisted firing the leader because he believed “that the poor performance was the result of the company’s not investing enough in manufacturing capacity,” the authors write.
He stuck to his guns. In time, the executive was given the necessary resources, addressed the shortfalls, and kept his job.
Former Intuit CEO Brad Smith says, “Any coach who needs to replace all the players isn’t a good coach as they think they are.”
Carolyn, Scott, and Vik share that the best CEOs ask the following questions before removing someone from the team:
- Does the team member know exactly what’s expected of them, i.e., what the agenda is and what jobs need to be done to drive that agenda?
- Have they been given the needed tools and resources and a chance to build the necessary skills and confidence to use them effectively?
- Are they surrounded by others (including the CEO) who are aligned on a common direction and display the desired mindsets and behaviors?
- Is it clear what the consequences are if they don’t get on board and deliver?
3: Aon CEO Greg Case offers final advice: “Be mindful of how you think about transitioning a senior leader. Your colleagues watch whether you handle it with compassion or not. It’s important to clarify that just because somebody is not going to be on the field going forward does not in any way mean that they’re not a great person or haven’t made a tremendous contribution in the past.
“The firm wouldn’t be the same without them, and they can take a great deal of pride in what they’ve helped the firm achieve throughout their tenure. Celebrate successes and celebrate transition.”
Indeed.
More tomorrow.
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Reflection: Identify the A, B, and C players on the team I am leading. What are the percentages? Am I leading a team of A players?
Action: Journal about my answers.
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