Matters of
trust: How outsider CEOs tackle internal dissent
Neelima
Mahajan | TNN
The
chances of the body rejecting a new organ are extremely high. It’s
much the same thing when a new CEO is appointed. The team may decide not
to co-operate with a new man at the helm. So what does a CEO do when he
inherits a team that is less than perfect, resistant to change, or just
plain un-cooperative?
“It is very lonely at the top,’’ says Gautam Khanna (name
changed), CEO of a mid-sized pharma company, who was brought in from a
multinational corporation to engineer a major turnaround. “From Day
One the team viewed me with mistrust and didn’t listen to me at
all.’’
The reason was simple: there were two other managers also contending for
the top job. Both resented the fact that an outsider was chosen over
them. “Criticism is always sharper as we go higher,’’ says Khanna.
The problem is not peculiar to CEOs hired from outside. In companies
where an insider is promoted to the top job, he is slightly better off
because he is familiar with the ways of the company. But he may still
face the ire of others who were in the race. “An internal CEO has
grown up with his peers who were his equals till a while ago.’’ says
Govind Iyer, partner, Egon Zehnder International. That makes it tough
for him to assert authority, he adds. So what is a new CEO to do?
The 90-Day Rule
Iyer believes a lot hinges
on the first 90 days one spends in office. This is when, he says, CEOs
ought to put their people into one of the three silos. Are they partners
for growth? Are they capable but dissenters? And finally, are they plain
incompetent, but dissenting nevertheless? The last class is the one a
CEO ought to bother about most.
Having done that, a CEO needs to slowly convince and align the
dissenters by explaining his point of view to them and understanding
theirs. “It is easier for people to buy into a vision rather than a
person,’’ says Utpal Sengupta, president, Agrotech Foods, who, as a
new CEO in the late 1990s, saw his company through a transition.
Align a Core Team
Sunil Lulla, CEO of Times
Now, adds a word of caution. No new CEO has the opportunity to lie low
and figure out how things will shape up. They need to quickly form a
core team, of people who are able and willing to drive change. What he
means is simple: the core team buys into the idea and in turn, each
member has his or her set of key people. That way, the goal is
communicated all the way down the ranks, with hopefully everyone buying
into the idea. This core team doesn’t necessarily mean senior-level
people alone.
Establish Credibility
Says Khanna, “It is
important to notch up some early successes. They help establish your
credibility and cut through the dissent.’’ For instance, when he was
hired, the business was doing badly. In the middle of all this, the old
CEO, who was fairly popular with the people, had quit. The new CEO had
virtually nothing going for him. Soon after he took over, he took some
hard stances to set things right. This could mean even small things like
exceeding targets in one month’s sales or launching a new product.
“It showed the people that he meant business,’’ says Purvi Sheth,
vice-president, Shilputsi Consultants, a leading HR consulting firm.
Guard Your Flanks With New Hires
Soon after they join, new
CEOs often hire a few key people from outside, usually from their
previous organisation. This is to ‘cushion’ their transition into a
new job. Besides, since the CEO is already aware of their capabilities
and working styles, he can use them to drive the change agenda in the
absence of support from the existing team.
Opinion is divided on whether getting people from
outside is a good idea in the first place. Says Sheth, “In the new
scheme of things, this is not what every leader can pull off. There is
no point hiring unless these people are bringing in a specific
capability that you don’t otherwise have.’’ Manoj Dutt, managing
director of bulk chemicals manufacturer Solaris ChemTech, who saw his
company through a major transition soon after he joined, thinks
otherwise. He says, “Often in such situations you do need to bring in
people from outside. But do it sequentially and not in one go so that
others don’t feel threatened.’’
Shape Up or Ship Out
Despite the new guy’s
best efforts, there often are 2-3 people who still continue to be
‘disruptors’, so to speak. Says Lulla, “This is more common in
older organisations where these people create serious resistance. If
despite all efforts to align them, they don’t change, don’t go
further. They have to be told to leave.’’
While doing that though, be careful. For instance, the
person may be great at resolving labour issues. In a manufacturing
set-up, losing him could be fatal. More importantly, assess the impact.
Is he an opinion leader? Will his exist prompt other loyalists to quit?
If yes, are they indispensable?
Moral of the story: It isn’t rocket science.
Breaking in
Taking over the reigns
often turns out to be a nightmare for a new CEO. His biggest challenge,
as it turns out to be, is not external market conditions, but the team
he inherits from his predecessor. What must he do if they are too
stubborn or less-than-perfect?
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