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Case Analysis: CEO Challenges

Not only have the Board been doing the CEO’s tasks, it would appear this has been the case for eight years

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A CEO is in charge of things and takes full ownership of everything that happens in the organisation. After eight years in the position, Anand Mitra comes across as a novice, unclear about the role of a CEO. Regardless of how the sales targets were set, he communicated them to all stakeholders and must stand behind them — he cannot be blaming others and not owning them months later. He appears more like a whining schoolboy than a CEO. He is now raising questions about the role of a CEO and that of the Board, which should have been asked and resolved eight years ago. Clearly Gemmet’s problems start with Anand but there are more issues than just a poor CEO.

What should be the role of a CEO and that of the Board?

In most MNCs, country CEOs are not true CEOs, just sales managers expected to execute strategies decided at headquarters following a tried and tested global business model. In such situations, the Board is typically filled with full-time company executives based abroad, who are the bosses of the CEO. If Gemmet follows this structure, the behaviour described in the case would be normal. However, then there is no reason for Anand to feel angst as the rules of the game should have been clear from the beginning. Given his reactions, let us assume for this analysis that Gemmet does not have the typical MNC structure.

In a normal independent company with a true CEO running it and a Board that is non-executive and external, clearly the Board should not be taking operating decisions as is happening in Gemmet India. However, Anand clearly has not been playing a true CEO role. Had he been doing so, sales growth targets and decisions on firing a manager would not have been taken by the Board. Equally, the Director (HR) would not have a meeting with a Board member and discuss the sacking of the Head of Sales without any prior discussion with his boss: the CEO! In fact, when the Director (HR) informed Anand of the decision to sack Abhiram Murthy, any CEO would have exploded and demanded an explanation from the Director (HR) for bypassing him. Instead, Anand waits for days wallowing in self-pity while further actions are being taken by HR to carry out the sacking (opening confidential files, etc.)

The fact that Anand is playing the role of a sales and marketing manager rather than a CEO seems to be forcing the Board to get involved in operating decisions. Having said this, a well-run Board should certainly not have allowed themselves to get into the CEO role. Not only have they been doing the CEO’s tasks, it would appear this has been the case for eight years. They should have pushed decision making down to the CEO right from the start and changed him if he were not capable of doing the job. It would appear, therefore, that Gemmet has a Board that wants the power to get into operating matters and is enjoying meddling without carrying full accountability for their actions. Their choice of Anand as the CEO eight years ago was to ensure that they would have a compliant, relatively weak person willing to allow the meddling.

However, it would appear that the majority of CEOs display some or many of these weaknesses. It is extremely difficult to find good CEOs who will take full ownership of the organisation — not just operating results but also long term strategy, organisation building and people development to create an organisation significantly better than when they took over. In particular, this requires a high sense of security, strong ethical standards and a vision for transforming the organisation over a decade. Someone just doing a job is inadequate.

Gemmet India management is dysfunctional and needs to do a full reset. Resigning is inappropriate and typical of Anand’s weak character — a flight response to difficulties! Having allowed this state of affairs to develop over eight years, he cannot suddenly think of what “his sons would say about Dad!”

Anand should now fix a meeting with the Board without the MC (his subordinates) as there could be some unpleasant discussions which subordinates should not be exposed to. Anand should start the meeting by suggesting the need to start a fresh relationship with the Board. Given his commitment to fairness, he should own responsibility for all failures of his, taking ownership for the company’s targets and performance. Equally he needs to tell the Board to lay off operating matters, set some ground rules on the amount of time the Board members spend on the company, what areas they should focus on, the nature of interaction with other managers, particularly when Anand needs to be in the loop and when not. He should then address the matter of Abhiram, how the process of taking this decision bypassing him was wrong and that the circumstances do not warrant any sacking. He must insist on reversing this decision as a critical element of the new basis for going forward.

Thereafter, once clarity of roles and dos and don’ts between the Board and the CEO have been established, Anand needs to have a similar discussion with the MC clarifying their roles vis-à-vis that of the CEO and ensuring that bypassing him will never happen again on important matters.

From all accounts, Abhiram is a decent performer and the decision to sack him was whimsical. Such an act would be a travesty of justice and destroy the values and culture of the organisation. One should question the values of the Director (HR) who raised this idea. HR should be the one resisting such moves. It would appear that the Director (HR) neither cares for people nor has clear personal ethical standards. I would seriously consider getting rid of him!

Naman Firoze is an interesting character. He appears smart and understands Anand’s weaknesses. As with all good coaches, he uses appreciative inquiry very well to get Anand to confront his issues and talk himself towards clarity and solution. However, Naman seems to have a bit of an axe to grind as he subtly encourages Anand to revolt!

Naman is formally the coach for the MC and not for the CEO hence he does not know Anand and his work well. In this situation, Anand feels the need to talk to someone and Naman is the only possibility. It was, therefore, appropriate for Anand to have approached Naman. At the moment, Anand is under severe stress and just speaking to Naman has provided significant relief. This raises a related issue — the top job is a lonely one and aspirants to the CEO need to recognise this and have the inner strength to be able to carry on doing the role for years with conviction. This will come from a strong sense of values and confidence in these values, as well as a sense of security. It is necessary to test for these characteristics during CEO selections.

Given his lack of role clarity and the confused way of working with the Board, it would have been better for Anand to have appointed a coach for himself many years ago. The loneliness at the top can partially be relieved by having a partner to bounce concerns off and a coach can be such a partner in a confidential and non-threatening manner. A good coach could have helped Anand improve his self-confidence, sense of security and therefore his ability to set the ground rules with the Board many years ago and could have avoided reaching the present impasse. Anand’s weaknesses are ideally addressed by coaching — few alternative interventions would be as effective as coaching for him.

Whether the coach to the CEO should be a separate person or could also coach the MC, depends on how trustworthy the coach is in keeping Chinese walls in his mind between the different individuals he is coaching in the organisation. It is critical that full confidentiality of all discussions is maintained and that he does not share insights from one person with another. The chances are that even if the coach is circumspect, members of the MC would suspect that their discussions get shared with their boss and would not be fully open. For this reason, it is probably best to appoint a separate CEO coach.

Anand needs to introspect, embrace the issues explained above and fully accept his failures. If he is really able to do this, he can make a go of setting right the climate in Gemmet India over the next three years and retire with a sense of accomplishment. If he cannot accept the facts and, in particular, his weaknesses, it may be best for Gemmet that he leaves right away.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Viju Parameshwar

The writer has had a 40-year corporate career running different businesses throughout this period. He was a CEO of global companies for 18 years

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