Dear CEOs, It’s Time to Change the Org Chart

By: Bonnie Hagemann, CEO, Executive Development Associates, Inc.

There is a saying that you have probably all heard, “Common sense is really not that common.” I certainly can think of many scenarios where common sense is lacking in today’s business environment, but I grew up on a large farm in Western Oklahoma where a lack of common sense just wasn’t tolerated. Every day on the farm had lessons built in, common sense lessons.

One of the lessons that I think about often is when my dad was teaching me how to drive a tractor. I was probably around the age of 12. I had been riding in the tractor with him all my life, so I had a general idea of what to do, but he put me in the driver’s seat and began to show me how to run each component. I practiced raising and lowering the plow. I practiced going forward and backing up. I adjusted the seat to be well positioned and the mirrors and well, the radio. But then my dad pointed to the gauges. He told me where each gauge should be within a range. He said, “never forget to keep an eye on the gauges.” If the tractor was low on oil, I could ruin the engine. I could run it out of fuel, etc. I understood that this was a very important part of the lesson and have always in every vehicle I’ve ever driven kept an eye on the gauges. As the CEO, you are driving the vehicle/organization that you lead and like watching the gauges on a vehicle, you need to be able to keep a close watch on the most important gauges. That means that you need the most important functions reporting directly to you.

Historically, most CEOs have had the COO, CFO, General Council, Sales and Marketing, Research and other key functions reporting directly, but the landscape is changing. Today, there are two important gauges that need to be in your line of sight that most CEOs do not have on their dashboard, technology and culture.

The CEO and Technology

I’m getting ready to give a talk in September entitled CIOs to CEOs because the leaders of technology may soon become the leaders of more and more companies because today, almost every company is in some way a technology company. The titles for the technology leader may be Chief Technical Officer or Chief Digital Officer, but the point is whomever is the leader over technology, is in a good position to advance to CEO, if he or she develops the leadership and financial skills to lead other areas. As I prepare for this talk, I have been interviewing technology futurists and CIOs and what I’ve learned is that technology is touching every part of every business in one way or another and the CIO will often know more about the overall business than the other senior leaders.

Technology can and should be one of the ways that organizations are leap-frogging into the future, changing the game, and becoming more innovative. Your technology, like your talent, should be your strategic advantage. So, why do we still have the leader of technology reporting one or two levels below the CEO?

One reason is the CIOs are often very technical people who have not been developed into leaders and therefore do not have the necessary skills to operate as one of the most senior leadership team. As CEO you can do several things to remedy the situation.

  • First, you can appoint a business leader with some technical acumen as CIO. The more the leader understands the technology, the better, but a good business leader can learn what they don’t know. They do not have to become a coder, they just have to know enough about coding to ask good questions and lead the technology teams in a way that advances the business.
  • Second, you can begin to emphasize the importance of developing your technical high potentials into leaders. You want those who care about leadership to be able to advance their career by gaining leadership skills and you also want to keep your top talent who prefer to just become better and better as technical experts and to be able to advance their skills in other ways. Along this line, you may want to develop two career tracks for your technical talent, one for technical expertise and one for leadership.

Many technology employees are more interested in learning new things and working on progressive projects than climbing a ladder, so it helps to take time to have all leaders throughout your organization to have career discussions with their employees to learn what motivates each person. This serves two purposes, it helps each leader know how to motivate the employees and the employees feel valued and are likely to feel more connected to the organization. Much research on organizational connectedness shows that having it increases overall performance and decreases turnover. Both paths should provide opportunity for increase in pay and responsibility. The increase in responsibility for the leadership track will include managing and leading people. The increase in responsibility for the technical track may be that, finally, you can recruit technology leaders who also have business acumen. Sometimes, recruiting from the outside is the best way to go, especially when you need to advance the organization through technology and to date you haven’t been able to when you need fresh eyes in the organization and over the technology.

The CEO and Culture

As the CEO, the second gauge you need to watch closely is culture. From the board to the shareholder, culture is becoming one of the hottest business topics today, as we begin to understand the impact of culture on organizational performance. Culture in its simplest terms is “the way we do things around here.” Every culture is unique and cannot be accurately measured in a comparison against other cultures. Just like every country, city and even neighborhood has its own culture, so does every company. What’s important is to ensure that you are shaping your culture in a way that it helps to advance your vision and strategy.

Culture is shaped driven through leadership and leadership belongs to the CEO. So, the person who is over developing your leaders needs to be as close to you as your financial leader and that means a direct report. You as the CEO will set the tone for the organization whether you do it intentionally or unintentionally, so consider intentionally setting the tone. Imagine the way you want the organization to be and then begin to shape it through your own words and behaviors and through the other leaders throughout your organization.

An organization’s most sustainable source of competitive advantage is its leadership talent, yet leadership development typically falls layers down in the organization, often buried under a Human Resources Vice President who often does not have the ear of the CEO and who may not be trained in the leadership side of the human capital space. Human resource professionals and leadership development professionals are fundamentally different in their focus and in their training. I often make the case for separating these two functions with HR reporting to legal and Leadership Development reporting directly to the CEO.

  • Human Resource training and job functions lean toward the legal side of the house in that they cover recruiting, hiring, performance evaluations, reorganizations, diversity issues, grievances, benefits, salary, employee discipline, records for federal and state requirements, layoffs and firings. I believe that a case can be made for separating HR and Leadership development completely with HR reporting to the General Council due to the litigious nature of the role and Leadership Development reporting to the CEO.
  • Executive and Leadership Development professionals are corporate educators. They cover management and leadership development. They conduct needs assessments for the entire organization as well as its divisions and business units to evaluate current skills against business objectives, and then develops programs to close gaps.

The person over executive and leadership development needs to work closely with the CEO and senior management team across the enterprise to identify and anticipate learning needs of the front-line to senior level leaders and ensure that the right people are ready when the company needs talent for key roles. If he/she has a seat at the senior leadership table and can hear the daily struggles of the business, then he/she can recommend the best methods to educate and train the workforce to tackle the business barriers and achieve the desired goals. Furthermore, he/she can learn of new lines of business, new geographies and products in the strategy and ensure that the talent pool is packed full of prepared leaders to run the new critical positions.

You, as the CEO, then, become the champion for leadership development by utilizing the function to achieve real and practical business results. The days of floating corporate education with no real tie to the performance of the organization are over.

Technology and culture will continue to increase in importance and the most strategic CEOs who want to intentionally lead their organization into the future, will acknowledge their importance by pulling the leaders over these functions into their direct reports.

As CEO, set aside some time to think about your organizational dashboard. Do you have the most important “gauges” directly in your line of sight? Are they the right gauges for today’s business landscape? If not, make some changes. Choose the best talent you can find for your senior team and make sure that your senior team reflects the dashboard that you need to be able to see to drive the organization into the future.

About the Author:

Bonnie Hagemann is the CEO of Executive Development Associates. She has over 15 years of experience successfully leading consulting firms through times of rapid growth and acquisitions as well as economic downturn and downsizing, in addition to 25+ years of experience coaching, educating and developing leaders.

Hagemann is a highly sought Executive Coach for CEOs and C-Suite Leaders, as well as a trusted advisor to members of the board. To date, Hagemann has provided coaching for over 232 leaders, including 12 CEOs. Most of her coaching clients receive a promotion, a better position and/or an increase in salary during or upon completion of the coaching process.

Bonnie has over 30 published works including a book on the shifting workforce demographics and their impact on leadership entitled Decades of Differences. Her newest book, Leading with Vision: The Leader’s Blueprint for Creating a Compelling Vision and Engaging the Workforce, hit shelves in May 2017.

She leads research initiatives and publishes results in the areas of Trends in Executive Development, Executive Coaching and High Potential Development.

*This article was originally published on MoneyInc.com: https://bit.ly/2P3m8bv