As a CEO, you can make a good name for yourself. You can be remembered by your peers and employees. People may be talking about you and what you did for your company a decade or more from now, and whether what you did was good or bad.
In the history of business, there are CEOs memorialized for the good they have done, and there are CEOs notorious for scams, failures, or just plain poor leadership. A few names come to mind when people talk about famously incompetent CEOs.
Famously Incompetent CEOs
Kay R. Whitmore led Eastman Kodak during the 1990s. Kodak was the leading company in cameras and film from 1880 through the twentieth century. However, when its competitor Fuji came on the market selling film for less, Whitmore refused to compete by lowering prices, believing the Kodak brand would win out in the end. It didn’t. A few years later, as digital camera technology was transforming the industry, he failed to adjust and change course, sticking with traditional film as the company’s staple. Needless to say, Kodak is no longer the leading company in cameras.
Compaq was once the leader in PC computers. When Eckardt Pfeiffer was CEO in the 1980s and 90s, he made a series of poor business decisions, opting to buy other companies that were expensive and strayed from Compaq’s core business model. Pfeiffer was eventually fired by the board and Compaq was bought by HP.
And then of course there’s Ken Lay, the notorious CEO of Enron, who was responsible for one of—if not the—biggest energy company scandals of the twentieth century. Ken, along with other executives, hid debt from investors and used questionable off-the book accounting practices. He was accused of fraud, and the company eventually had to file for bankruptcy.
Craig Kaiser and I are no strangers to these types of CEOs. In fact, we both worked for Compaq during the Eckard Pfeiffer era as in-house counsel. I worked for Enron right before its bankruptcy in 2001 and stayed on as Assistant General Counsel for the Enron Bankruptcy Estate. We understand the havoc an incompetent CEO can wreak, which is one reason we provide our General Counsel Services to clients, so we can help you spot any red flags with potential new executive hires.
While CEOs vary vastly in personality, experience and management style, there are a few common qualities to look out for that are hallmarks of an incompetent CEO.
4 Signs of an Incompetent CEO
1. Failure to thank or acknowledge other team members
Drew McManigle, founder and CEO of MACCO, says this is a major red flag. A CEO who takes all the credit and doesn’t recognize the team around him is “a classic bad CEO giveaway.” This type of behavior is indicative of a narcissistic personality where every win and achievement is about him or her. Eventually, employees and staff will resent this, resignations will start rolling in, and the company will suffer by the loss of great talent.
2. A lack of vision
Writing for Forbes, HR expert Liz Ryan says, “A CEO without a vision is a waste of space and salary.” A CEO’s primary role is to cast vision for the company, establishing it as a stand-out in the industry that’s making a difference in the world. A CEO who is short-sighted can’t do this. In addition, she says, even if a CEO has vision, a failure to implement it is equally detrimental. Knowing how to delegate, what teams to put in motion, and how a vision can be realized is just as important as having one to begin with.
3. Resistance to change
This is another trait Ryan points out. Especially in today’s changing technological landscape, leaders must be able to change and adapt. Take our Kodak example above. Today, Kodak still sells film for cameras but doesn’t have a presence in the digital world. They missed a huge opportunity because their leader was resistant to change.
4. Inability to compromise
Writing for “CEO Magazine,” Michelle Gibbings, the author of Bad Boss: What to Do If You Work for One, Manage One, or Are One, says if a CEO can’t compromise, she can’t lead. If a leader is constantly pushing what she wants, not stopping until she gets it and not listening to others’ pushback, she can’t take a company in the direction it needs to go. She can only take it where she wants it to go, and that’s not always going to be in the right direction.
Our General Counsel Services
We are no strangers to bad CEOs and the harm they can cause a company. Our in-house experience along with our General Counsel Services can help protect you from this risk in the hiring process.
We are here to guide a CEO and a company in making the best decisions possible to reach their goals, realize their vision and ensure you have the right leadership team in place to set you up for success.