The Number One Killer in Corporate America: Ineffective Leadership
Companies that fail to keep their employees engaged, including senior executives, “will create a fast-moving pipeline of quality candidates that feeds their own competitors and failure,” staffing professional Eva Jenkins predicts.
Jenkins sees a continuing trend toward a diverse array of high-quality job opportunities being offered to a shrinking pool of qualified candidates. “When it comes to employment, it is truly a Sellers’ Market,” she asserts, a point of contention for corporate America. “Retention of current employees will be just as critical as recruiting new employees.”
Jenkins is a recognized expert in human capital management and the force behind VIP Staffing and VIP Innovations in Washington, D.C. She is also the co-author of Conversations on Success, a collection of illuminating interviews with successful entrepreneurs across a range of industries.
Jenkins’ examination of traditional corporate culture uncovered a causal link between poor leadership and business failure. “CEOs who are solely focused on a business’s value-per-share have overlooked something of true value – human capital.”
And any business that wastes its resources is doomed to “eventual” failure. “When senior executives begin a mass exodus, businesses will begin ‘rotting’ internally…empty and eviscerated.”
No Longer Severely Attached to a Job for Life
After 25 years of service, the days of earning a gold watch are long gone. According to studies, the average working American will have between three and five careers and between ten and twelve jobs throughout his or her lifetime. Thus, Jenkins asserts, compounding the dangers of a tight labor market is “eroding corporate loyalty.”
Corporate scandals and the disappearance of pension funds have eroded employees’ trust in their employers. Similarly, stories have emerged of corporate executives receiving larger-than-life compensation packages, sometimes up to 500 percent higher than the average employee. “Employees at all levels are left with the impression that ‘No one is looking out for me,’…and they are correct,” Jenkins observes. “As a result, they seek greener pastures elsewhere.”
The CEOs are not entirely to blame. They, too, may sense danger. “Compensation for executive compensation is a double-edged sword,” Jenkins explains. “Boards are more than willing to approve exorbitant compensation packages as a result of their own greed and desire for someone to generate profits.” These same Boards, however, are equally prepared to remove a CEO if the company’s and stock’s performance fall short of their financial expectations.
“This means that even the most well-intentioned CEOs who truly value their employees will alter their business practices to ensure that Board members and stockholders are satisfied with the company’s earnings,” Jenkins observes. This is why the unattractive metamorphoses occur.
“Formerly humanistic CEOs quickly become self-protective, which causes them to lose sight of the big picture. Instead of considering the long-term success of the business they were hired to run, they devolve into greedy robots doing whatever it takes to show a profit.”
The Exorbitant Price of Unhappiness
Constant loss of low- and mid-level employees has always been a costly proposition for businesses, but not fatal. However, the inability to retain senior management will jeopardize the success of even the most stable business. “The costs of staffing and re-staffing are substantial,” Jenkins observes, referring to the financial impact of continuous hiring and training.
However, when highly qualified, experienced, and critical upper-level executives abandon ship, “The negative impact can rock a business to its core. The ability to function normally is almost certainly insurmountable “Jenkins makes a comment.
“Given the quantity, but also the quality, of emerging employment opportunities, Jenkins advises businesses to identify the factors that cause key executives to leave “and make adjustments to their business model that eliminate those factors.”
A Fear Culture
Numerous studies have identified common reasons for employed executives’ dissatisfaction with their jobs: a lack of challenge or opportunity for personal growth, a lack of advancement opportunities, and unfavorable company prospects. Jenkins believes they are critical to effective staff retention, particularly in terms of a company’s growth and health.
According to Jenkins, the dominant characteristic of 21st-century corporate culture is fear, not support. She notes that senior executives are constantly concerned about the Board of Directors’ and CEO’s proclivity to “scapegoat individuals for missed earnings.” As a result, senior executives attempt to minimize negative news and maintain a positive public image in the hope of being spared in the event of a crisis.
“This results in a massive breakdown in communication,” Jenkins explains. “Executives are fearful of pointing out problems for fear of being held accountable. As a result, issues are never addressed or, more importantly, resolved.”
Communication Prevails Over Fear
Jenkins cites effective communication as the most effective method of eradicating fear. She encourages leaders to model open dialogue and collaborative problem-solving through their own actions.
A sobering reality check is that the majority of CEOs rarely hear the candid truth, and when they do, it is sanitized and couched in such a way that the true message is lost. To “correct” this blatant and pervasive poor behavior, “CEOs must work diligently to keep senior executives informed…aware of the big picture and possessing a “truthful, realistic” attitude so that their decision-making can be proactive rather than reactive,” Jenkins writes. “This instills confidence in executives, allowing them to continue to thrive as professionals. It establishes a networked corporate environment that rewards collaborative effort and success and promotes healthy growth rather than fearful stagnation.